Government Contracts Rule Updates FAR’s Acquisition Thresholds for Inflation
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Monday, October 26, 2020

Rule Updates FAR’s Acquisition Thresholds for Inflation

By Government Contracts Editorial Staff

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have issued Federal Acquisition Circular 2021-01, which contains one final rule amending the Federal Acquisition Regulation: Inflation Adjustment of Acquisition—Related Thresholds (FAR Case 2019-013). The rule implements 41 USC 1908, which requires five-year inflationary adjustments of statutory acquisition-related thresholds using the Consumer Price Index for all urban consumers. The adjustments do not apply to the Construction Wage Rate Requirements statute (Davis-Bacon Act), the Service Contract Labor Standards statute, or trade agreement thresholds (see FAR 1.109). As a matter of policy, the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration also use the same methodology to adjust nonstatutory FAR acquisition-related thresholds. This is the fourth review of FAR acquisition-related thresholds. The rule changes some thresholds and leaves others in place as indicated below:

  • The micro-purchase threshold at FAR 2.101 was raised to $10,000 by statute (see FAC 2020-07, FAR Case 2018-004). The rule does not make any further increase to the basic threshold, as there has been insufficient inflation. However, paragraph 3(ii) of the definition for acquisitions to support contingency operations or to facilitate defense against certain attacks increases from $30,000 to $35,000.
  • The simplified acquisition threshold at FAR 2.101 was changed to $250,000 by statute (see FAC 2020-07, FAR Case 2018-004). The rule does not make any further increase to the basic threshold, as there has been insufficient inflation. However, paragraph (1)(i) of the definition for acquisitions to support contingency operations or to facilitate defense against certain attacks increases from $750,000 to $800,000.
  • The preaward and post-award notices (FAR Part 5) remain at $25,000 because of trade agreements.
  • The requirements for limiting competition (FAR Part 6) to be eligible for 8(a) awards over $22 million increase to $25 million.
  • The simplified procedures for certain commercial items ceiling (FAR 13.500) increases from $7 million to $7.5 million. For acquisitions described at FAR 13.500(c), the ceiling increases from $13.5 million to $15 million.
  • The cost or pricing data threshold (FAR 15.403-4) was increased by statute from $750,000 to $2 million (see FAC 2020-07, FAR Case 2018-005). There is no further increase.
  • The prime contractor subcontracting plan (FAR 19.702) increases from $700,000 to $750,000, but the construction threshold of $1.5 million stays the same.
  • The threshold for reporting first-tier subcontract information, including executive compensation, does not change (FAR Subpart 4.14 and FAR 52.204-10).

The final rule makes minor edits to the proposed rule (¶70,006.356) to account for baseline updates caused by publication of other FAR interim or final rules. The FAC also includes a Small Entity Compliance Guide, which indicates that a regulatory flexibility analysis has been prepared for this rule. A full listing of the regulations impacted by this rule appears in table below. For the text of FAC 2021-01, see ¶70,002.222.

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