Acquisition Thresholds Would Increase With FAR Council’s Proposed Rule

As 2025 approaches, the FAR Council has released its proposed adjusted acquisition thresholds. The proposed adjustment increases the thresholds to account for inflation and the Consumer Price Index. The most heavily used thresholds affected by the proposed increase are the micro-purchase threshold (MPT) and the simplified acquisition threshold (SAT). While the proposed adjustment affects several acquisition thresholds, it is important to note it does not apply to the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standard statute, performance and payment bonds, or trade agreement thresholds.

What is the Micro-Purchase Threshold?

The proposed rule increases the MPT from $10,000 to $15,000. For purchases at or below the MPT, authorized agency officials can use a Governmentwide commercial purchase card, which is similar to a commercial credit card, to make purchases without soliciting bids from competing offerors. The average number of awards valued at or below the MPT of $10,000 from FY 2022 through FY 2024 was approximately 562,324. FPDS data indicates another 49,321 awards were made for amounts between $10,000 and the proposed amount of $15,000 during that period. The FAR Council approximates a 9% increase in the number of actions that would be considered under the proposed MPT.

What is the Simplified Acquisition Threshold?

Under the proposed rule, the SAT would increase from $250,000 to $350,000. Contracts with amounts at or below the SAT are eligible for streamlined procurement procedures designed to reduce administrative costs, promote efficiency and economy, and avoid unnecessary burden for agencies and contractors. Since most contracts that fall between the MPT and SAT are set aside for small businesses, SAT procedures tend to benefit small, small disadvantaged, women-owned, HUBZone, veteran-owned, and service-disabled veteran-owned small business concerns. From FY 2022 through FY 2024, an average of 235,020 awards were made for contract actions above the MPT but below the SAT. The FAR Council approximates another 5,150 contract actions could be awarded under the proposed SAT which would be a 2% increase. That might not sound like much, but 5,000 additional contracts at, let’s say an average of $200,000 is a pool of $1 billion that should be almost totally set aside for small businesses.

Potential Benefits and Drawbacks of Changes to the Simplified Acquisition Threshold and Micro-Purchase Threshold

The aforementioned $1 billion comes to mind as a potential benefit. Further, with a higher MPT and SAT, agencies and small businesses can side-step the burdensome procurement procedures required for larger contracts. However, some contracts that were formerly open to competition would become eligible for MPT or SAT procedures. Even though the proposed rule would slightly stifle competition, the FAR Council’s intention is to maintain the status quo for federal procurements by adjusting the acquisition thresholds to correspond with the decreasing value of the dollar.

Comments

Interested parties may submit written comments in response to the proposed rule on the Federal eRulemaking portal at https://www.regulations.gov by searching for “FAR Case 2024-001”. Comments must be made on or before January 28^th, 2025, to be considered in the formation of the final rule.

Please contact us if you have questions regarding the proposed adjustments to acquisition thresholds.