Every 5 years the FAR Councils revisit the various FAR acquisition thresholds and update them to account for inflation. As you might expect, the last time the thresholds were revised was back in 2010. We blogged about those changes here.

The changes are a good thing, since the thresholds tend to indicate the inflection points at which additional compliance requirements are established. For example, back in 2010 the threshold at which “cost and pricing data” (which would now be called “certified cost or pricing data”) must be obtained moved from $650,000 to $700,000. That seemingly minor change reduced the number of subcontractor proposals on which the prime contractors were required to obtain cost or pricing data to support their price and cost analyses—thus reducing (somewhat) the workload of the analysts. In addition, that change led, ultimately, to a similar increase to the threshold at which a contract became subject to Cost Accounting Standards. (See FAR 9903.201-1(b)(2).)

The first change to the acquisition thresholds was made to the DFARS values, via DFARS Case 2014-D025, and published as a final rule on June, 26, 2015. We looked at those threshold changes and didn’t see anything we need to call out on an individual basis. If you’d like, you can follow the link and check for yourself.

The second change to the acquisition thresholds was made to the values in the FAR, via FAR Case 2014-022, published as a final rule in Federal Acquisition Circular (FAC) 2005-83 on July 2, 2015. This revision had some significant changes. We point some of them out below. We suggest you visit the FAR Case and review all the changes.

Significant threshold revisions include:

• The micro-purchase threshold moved from $3,000 to $3,500. The NBRC micro-purchase threshold moved from $15,000 to $20.000.

• The threshold for applying the FAR’s Ethics and Business Conduct clause into a contract moved from $5 million to $5.5 million, meaning that fewer contracts will require a contractor to develop and implement a Code of Ethics and Business Conduct. (We suggest contractors seeking to do business with the Federal government ignore this change, and develop and implement a Code anyway.)

• The threshold for making sole-source awards to Section 8(a) small businesses moved from $20 million to $22 million.

• The various thresholds involved in determining the Simplified Acquisition Threshold (SAT) increased. It’s complicated and we hesitate to make any single-sentence general statements; however, in general, the SAT range is from $20,000 to $150,000, except for NBRC-related acquisitions, in which case it ranges up to $350,000. This matters because acquisitions within the SAT are reserved solely for small businesses.

• The FAR Part 15 threshold for obtaining certified cost or pricing data is now $750,000—which means that the CAS applicability threshold is now the same. For contracts valued below that threshold, no certified cost or pricing data should be obtained, and the awarded contract will be exempt from CAS.

• An entire host of solicitation provisions and contract clauses was updated to reflect the new acquisition thresholds. You should click the link (above) and see how your favorite provision or clause was updated.

Note that the rule is not effective immediately. It is effective on October 15, 2015. We are unclear as to why it will take more than three months to be effective, when other rule changes are effective in much shorter time periods. Perhaps it is timed that way to give prime contractors (and higher tier subcontractors) sufficient warning to update their own procurement policies and procedures. Those entities subject to Contractor Purchasing System Reviews (CPSRs) should probably get moving on implementing these changes right away.