Government Contracts Proposed FAR Rule Addresses Applicability of Threshold Adjustments
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Thursday, July 18, 2019

Proposed FAR Rule Addresses Applicability of Threshold Adjustments

By Government Contracts Editorial Staff

The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation to address inflation adjustments of statutory acquisition-related thresholds. The rule implements section 821 of the National Defense Authorization Act for Fiscal Year 2018 (PL 115-91). A proposed change to FAR 1.109 explains that section 821 requires five-year inflationary adjustments under 41 USC 1908 to be applied to contracts and subcontracts without regard to the date of the contract or subcontract award. Therefore, if a threshold is adjusted for inflation under §1908, the new threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment.

Numerical Values Removed. The rule would replace numerical values throughout the FAR with the term “micro-purchase threshold” or “simplified acquisition threshold.” Also, a proposed change to FAR 15.403-4 explains that if a clause refers to the certified cost or pricing data threshold, and if the threshold is adjusted for inflation, then the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. Further, a proposed change to FAR 30.201-1 states that the lower threshold for Cost Accounting Standards applicability is the amount set forth in 10 USC 2306a(a)(1)(A)(i), as adjusted for inflation. Section 1908 requires inflationary adjustment of acquisition-related thresholds every five years using the Consumer Price Index for All Urban Consumers. Adjustments are not required for the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, or trade agreement thresholds. A complete listing of the FAR sections affected by the rule appears in the regulation table below. Comments referencing FAR Case 2018-007 are due August 23, 2019. For the text of the proposed rule, see ¶70,006.337.

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