Heads up! Inflation Adjustments To Acquisition Thresholds Are Jus

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Heads up! Inflation Adjustments To Acquisition Thresholds Are Just Around The Corner

by: Franklin C. Turner of Sheppard, Mullin, Richter & Hampton LLP - Government Contracts, Investigations & International Trade Law Blog

Thursday, July 30, 2015

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On July 2, 2015, the FAR Council issued a Final Rule that amends the FAR, effective October 1, 2015, to implement inflation-based adjustments to certain acquisition-related monetary thresholds. 80 Fed. Reg. 38293. The modifications will be made to comply with 41 U.S.C. § 1908, which requires the FAR Council to calculate the adjustments every five years based on the Consumer Price Index for all urban consumers. The statute does not require adjustments to thresholds established by the Construction Wage Rate Requirements statute (the Davis-Bacon Act), the Service Contract Labor Standards statute, or the United States Trade Representative, pursuant to Title III of the Trade Agreements Act of 1979.

Although multiple sections of the FAR will be modified, the Preamble to the Final Rule identifies the following “frequently-used” thresholds that will be increased:

The micro-purchase base threshold will increase from $3,000 to $3,500. FAR 2.101.
The ceiling for the use of simplified acquisition procedures for the purchase of commercial items will increase from $6.5 million to $7 million. FAR 13.500.
The threshold for obtaining certified cost or pricing data will increase from $700,000 to $750,000. FAR 15.403-4.
The threshold for applicability of the Cost Accounting Standards will increase from $700,000 to $750,000. FAR 30.201-4; FAR 52.230-1–52.230-5.
The prime contractor subcontracting plan floor will increase from $650,000 to $700,000, although the construction threshold will remain $1.5 million. FAR 19.702.
The threshold for reporting first-tier subcontract information, including executive compensation, will increase from $25,000 to $30,000. FAR Subpart 4.14; FAR 52.204‑10.

80 Fed. Reg. 38294. There will not be changes to either the $150,000 simplified acquisition threshold (FAR 2.101) or to the FedBizOpps pre- and post-award notices threshold of $25,000 (FAR Part 5).

Contractors should ensure that these new thresholds are applied appropriately in contracts and subcontracts entered into after October 1, 2015. Contractors should also revise their standard form subcontracts and supplier agreements to reflect the new thresholds.