On Nov. 29, the Department of Defense (DoD), National Aeronautics and Space Administration (NASA), and General Services Administration (collectively, the FAR Council) issued a proposed rule to adjust several acquisition-related thresholds to account for inflation.

The proposed rule would amend multiple parts of the Federal Acquisition Regulation to implement 41 U.S.C. § 1908, which requires an adjustment every five years (on Oct. 1 of each year evenly divisible by five) for inflation. The last such review took place under FAR Case 2019-013 during fiscal year 2020. This proposed rule is only the fifth threshold review since Section 1908 was passed on Oct. 28, 2004.

The FAR Council’s proposal includes the following acquisition-related adjustments:

• The micro-purchase threshold in FAR 2.101 will increase from $10,000 to $15,000.
• The simplified acquisition threshold in FAR 2.101 will increase from $250,000 to $350,000.
• The threshold for reporting first-tier subcontract information, including executive compensation in FAR subpart 4.14, will increase from $30,000 to $40,000.
• The preaward and postaward notices in FAR part 5 will remain at $25,000 because of trade agreements.
• The threshold requirement for limiting competition to eligible 8(a) awards over $25 million in FAR part 6 is increased to $30 million.
• Approval thresholds of justifications for other than full and open competition in FAR 6.304 will increase from $750,000 to $950,000. Paragraphs (a)(3) and (4) will increase from $15 million to $20 million and from $75 million to $95 million, respectively. The $100 million threshold applicable to DoD, NASA, and the Coast Guard will increase to $150 million.
• The ceiling for using simplified procedures for certain commercial products and commercial services in FAR 13.500 will increase from $7.5 million to $9.5 million. For acquisitions described at FAR 13.500(c), the ceiling will increase from $15 million to $20 million.
• The cost or pricing data threshold in FAR 15.403-4 will increase from $2 million to $2.5 million.
• The threshold for justifications of single-award indefinite-delivery contracts in FAR 16.504(c)(1)(ii)(D)(1) will increase from $100 million to $150 million.
• The prime contractor subcontracting plan floor in FAR 19.702 will increase from $750,000 to $950,000. The construction threshold will increase from $1.5 million to $2 million.

The proposed rule also provides adjustments for thresholds under FAR Part 19 relating to sole-source awards for 8(a), HUBZone, WOSB, and SDVOSB concerns. Additionally, the proposed rule would increase the competitive thresholds for manufacturing NAICS codes from $7 million to $8.5 million and $4.5 million to $5.5 million for all other acquisitions.

The FAR Council clarified that the proposed rule does not address thresholds that are not acquisition-related. Examples of thresholds that are not “acquisition-related,” as defined in the proposed rule, include thresholds relating to claims, penalties, withholding, payments, required levels of insurance, small business size standards, liquidated damages, and protests.

Overall, the inflation adjustment is great news for those in the federal contracting industry as it allows acquisition-related thresholds to keep up with the pace of inflation. Individuals can share their excitement, or other commentary, with the Regulatory Secretariat Division on or before Jan. 28, 2025.