By Gloria Larkin
The U.S. Federal Government remains the world’s Fortune One customer, meaning it spends more with businesses of all sizes than any other single entity world-wide. Growth-oriented businesses are paying attention to the upcoming proposed changes to the Simplified Acquisition Thresholds (SAT) to win more business. The FAR Council has proposed the increased thresholds to address inflation and impact all levels of the SAT.
Micro Purchases increase to $15,000
Micro purchases are often thought of as procurement card or credit card purchases made by any federal employee who hold a federal purchase card for any service or product. The proposed limit increase from $10,000 to $15,000 per transaction is driven by inflation.
However, if the situation supports contingency operations the increase is from $20,000 to $25,000 and if the need facilitates defense against certain attacks the increase is from $35,000 to $40,000 (FAR 2.101)
These credit card purchases amounted to over $40 Billion with large and small businesses in FY 2024, and that total is expected to increase in FY 2025.
Simplified Acquisition Threshold increase from $250,000 to $350,000
The FAR Council consisting of the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration has proposed addressing inflationary costs and increasing the SAT to $350,000. This satisfies 41 U.S.C 1908, which requires the FAR Council to adjust the SAT for inflation every five years. These reviews took place in FY2005, FY2010, FY 2015, and FY2020.
The ceiling for using simplified acquisition procedures for certain commercial services and products will increase from $7.5 million to $9.5 million. The ceiling will increase from $15 million to $20 million for acquisitions described in FAR 13.500c which are to be used in support of a contingency operation; to facilitate the defense against or recovery from cyber, nuclear, biological, chemical, or radiological attack; to support international disaster assistance; or to support response to an emergency or major disaster.
Sole-Source or Direct Awards Raised
The proposed rule will also adjust thresholds under FAR Part 19 relating to sole-source awards for 8(a), WOSB, HUBZone, and SDVOSB businesses where manufacturing NAICS codes from $7 million to $8.5 million and all other NAICS from $4.5 million to $5.5 million
Other Ceilings Lifted
In addition to the SAT inflationary increases, the inflation threshold for limiting competition to eligible 8(a) awards over $25 million is increased to $30 million.
Approval thresholds of justifications for direct awards will increase from $750,000 to $950,000. Paragraphs (a) (3) will increase from $15 million to $20 million and (4) will increase from $75 million to $95 million. The $100 million threshold applicable to DOD, NASA, and the Coast Guard will increase to $150 million.
The threshold for justifications of single-award indefinite-delivery contracts will increase from $100 million to $150 million.
Comments on the proposed changes closed on January 28, 2025. Stay tuned to TargetGov for the final rule. If you are not receiving our bi-weekly newsletter with critical contracting updates, sign up here: www.targetgov.com. Email FAST@targetgov.com or call 410-579-1346 x 325 to discuss how this impacts your federal business growth.