On February 16, 2018, the Civilian Agency Acquisition Council (CAAC) rolled out CAAC Letter No. 2018-02 to Federal agencies which was tantamount to the slight deviation to the Federal Acquisition Regulation (FAR) for implementing the newly increased government micro purchase threshold and simplified acquisition threshold (SAT). Does this mean that more small businesses will get work? In theory, one would think so. However, it’s too early to tell.
The Small Business Act, 15 USC 644(a), states that “small businesses shall receive any award or contract” if it is in the interest of “assuring that a fair proportion of the total purchase and contracts for good and services. . . are awarded to small business concerns.” 15 USC 644(a). As implemented in the Small Business Administration’s Rule of Two, requires agencies to set aside for small business participation a procurement valued over the simplified acquisition threshold if there is a reasonable expectation of receiving fair market offers from at least two small business concerns. 13 CFR 125.2(f)(2); FAR 19.502-2(b). See also SBA Certificate of Competency COC Program & Bid Protests.
FAR Micro purchase Threshold Amount
The FAR micro purchase threshold amount increased from $3,500 to $10,000 under Section 806 of NDAA 2018. The micropurchase thresholds for acquisitions involving services and construction services remain unchanged.
- The threshold for services is still $2,500 (Service Contract Labor Standards—formerly the Service Contract Act of 1965).
- The micro purchase threshold for construction services is still $2,000 (Construction Wage Rate Requirements Statute—formerly the Davis-Bacon Act).
A few exceptions to the new $10,000 micropurchase threshold apply. For example, federal government acquisitions for supplies or services, as determined by the Agency Head, to be used to support contingency operations; to facilitate defense against, or recovery from cyber, nuclear, biological, chemical or radiological attack; to support a request from the Secretary of State or the Administrator of the United States Agency for International Development to facilitate provisions of international disaster assistance or to support a response to an emergency or major disaster (except for construction) have a higher micropurchase threshold, $20,000 in the case of any contract to be awarded performed, or purchase to be made, inside the United States, and $30,000 if outside the United States. See Urgent and Compelling Circumstances in Government Contracting.
- This allows for more flexibility during certain levels of procurement.
What is the Simplified Acquisition Threshold (SAT)?
The SAT allows government contracting agencies to use more relaxed source selection procedures when the procurement is valued at less than the threshold amount Which is now $250,000.00 under Section 805 of NDAA 2018. See information about SDVOSB requirements.
Can agencies abuse the SAT?
Some may say yes because the agency could essentially parcel what would arguably be combined procurements valued above the simplified acquisition threshold and trim into small bites to avoid the heightened level of source selections. The SAT increase may very well allow federal contracting officers to buy more efficiently using FAR Part 13. See Signs of Being Under Investigation (Federal)
Difference between the simplified acquisition procedure and the simplified acquisition threshold?
The primary difference between procurements under the SAT and simplified acquisition procedure is that for buys above the $250,000 threshold, then the contracting agency has to jump through a few more hoops and be subject to more scrutiny. Learn how to minimize criminal liability in government investigations.
Government contracting agencies must consult with the Federal Awardee Performance and Integrity Information System (FAPIIS) for any federal procurement valued about the SAT.
What is the Impact of the New Simplified Acquisition Threshold Regulations?
According to the Federal Register, the below points highlight the impact of the new rules.
- The micro-purchase threshold at FAR 2.101 was raised to $10,000 by statute (see FAR Case 2018-004). No further increase to the basic threshold is made at this time, as there has been insufficient inflation. Paragraph 3(ii) of the definition, for acquisitions to support contingency operations or to facilitate defense against certain attacks, is increasing from $30,000 to $35,000.
- The simplified acquisition threshold was changed to $250,000 by statute (see FAR Case 2018-004). No further increase in the basic threshold is proposed, as there has been insufficient inflation. Paragraph (1)(i) of the definition for acquisitions to support contingency operations or to facilitate defense against certain attacks, is increasing 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 eligible 8(a) awards over $22 million is increased to $25 million.
- The simplified procedures for certain commercial items ceiling (FAR 13.500) is increased from $7 million to $7.5 million. For acquisitions described at 13.500(c), the ceiling is increasing 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 FAR Case 2018-005) and is not increasing in this case.
- The prime contractor subcontracting plan (FAR 19.702) threshold is increasing from $700,000 to
Implication to Contracts at or Below the Simplified Acquisition Threshold (SAT) and for Commercial Items, Including Commercially Available Off-the-Shelf (COTS) Items
This final rule does not create any new provisions or clauses, nor does it change the applicability or burden of any existing provisions or clauses included in solicitations and contracts valued at or below the SAT, or for commercial items, including COTS items, except for the changes in the thresholds themselves. Id.
For help and consulting about the simplified acquisition threshold and government micro purchase process, please call our government contracts attorneys at 1-866-601-5518.