Proposed Increases to Micro-Purchase, Simplified Acquisition, and Other Thresholds

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Every five years, the government is required by 41 U.S.C. § 1908 to adjust the statutory acquisition thresholds for inflation, such as the Micro-Purchase Threshold, Simplified Acquisition Threshold, and others. It just so happens that the last such adjustment occurred back in 2020. As such, the government is once again looking to increase these thresholds in light of the inflation that has occurred over the past five years. In this post, we will look at the proposed increases.

On November 29, 2024, the FAR Council (DoD, GSA, and NASA), issued their proposed rule to adjust acquisition-related thresholds for inflation. Here are some of the proposed new thresholds for the FAR.

  • The Micro-Purchase Threshold would be increased from $10,000 to $15,000.
  • The Simplified Acquisition Threshold would be increased from $250,000 to $350,000.
  • The threshold for limiting competition to eligible 8(a) awards would be increased from $25 million to $30 million (mainly impacting entity-owned 8(a) companies).
  • The ceiling for simplified procedures for certain commercial products and commercial services under FAR 13.500 would be increased from $7.5 million to $9.5 million.
  • The prime contractor subcontracting plan (FAR 19.702) floor will increase from $750,000 to $950,000.
  • 8(a) sole source authority under FAR 19.805-1 would increase from $4.5 to $5.5 million for most acquisitions and from $7 million to $8.5 million for manufacturing acquisitions. This would impact most all 8(a) Participants.

These are not necessarily the final figures that will be utilized. The FAR Council notes that the figures are based on a consumer price index for March 2025 of 323.193 (although we are not sure what this number consists of). If the actual consumer price index differs, the figures may be adjusted. Furthermore, the FAR Council welcomes comment by January 28, 2025, if you want to make your thoughts heard on this matter.

The increase in the Micro-Purchase Threshold is expected to allow for increased use of purchases without competition, as micro-purchases may be awarded without soliciting competitive quotations, if the contracting officer or individual appointed considers the price to be reasonable. If the proposed Micro-Purchase Threshold was in place from FY2022 through FY2024, it would have affected nearly 50,000 awards. Those micro-purchases, though, do not have to be set aside for small businesses.

However, increasing the Simplified Acquisition Threshold should result in more small business purchases. Purchases “above the micro-purchase threshold, but not over the simplified acquisition threshold, shall be set aside for small businesses” if there are two or more small business offerors expected to compete. FAR 19.502-2. Similar to the Micro-Purchase Threshold change, if the proposed Simplified Acquisition Threshold was in place from FY2022 through FY2024, it would have affected about 5,000 awards.

In summary, the increases proposed are nothing unexpected, but still are important to note. This will allow for more contracts to be awarded under the Micro-Purchase and Simplified Acquisition Thresholds. Those acquisitions are more streamlined, so if you often perform contracts with values that hover around these figures, be alert.

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