Increased Micropurchase and Simplified Acquisition Thresholds May be Implemented Sooner than Later

By Wayne Simpson, CFCM, CSCM

Good news for Federal contractors and buyers.  On February 16, 2018, the Civilian Agency Acquisition Council (CAAC) issued CAAC Letter No. 2018-02 to Federal agencies regarding a class deviation to the Federal Acquisition Regulation (FAR) for implementing the new increased micropurchase and simplified acquisition thresholds.  The National Defense Authorization Act (NDAA) for Fiscal Year 2018 (Public Law 115-91, December 12, 2017) (NDAA 2018), raises the micropurchase and simplified acquisition thresholds for Federal acquisitions.

Section 806 of NDAA 2018 increases the micropurchase threshold for products only from $3,500 to $10,000.  The micropurchase thresholds for acquisitions involving services and construction services remain unchanged.  The micropurchase threshold for services remains $2,500 (Service Contract Labor Standards—formerly the Service Contract Act of 1965), and $2,000 for construction services (Construction Wage Rate Requirements Statute—formerly the Davis-Bacon Act).

Section 805 of NDAA 2018 increases the simplified acquisition threshold from $150,000 to $250,000.

FAR Case 2018-004 was established to implement these statutory changes in the FAR.  CAAC Letter No. 2018-02 indicates agencies may have a need to use the increased thresholds prior to publication of the FAR changes.  The CAAC letter constitutes the consultation required under FAR with the CAAC allowing agencies to authorize a class deviation to implement the changes effective immediately.  Some agencies may elect to implement through a FAR class deviation immediately, while others may wait for publication of the actual rule.

A change to the micropurchase threshold contained in Section 217(b) of NDAA for Fiscal Year 2017 (Public Law 114-238) (NDAA 2017), not yet implemented, was overtaken by NDAA 2018.  NDAA 2017 changed a portion of the micropurchase threshold definition in FAR 2.101, to increase the micropurchase threshold for acquisitions from institutions of higher education or related or affiliated nonprofit entities, or from nonprofit research organizations or independent research institutes to $10,000.  The new micropurchase threshold of $10,000 set by NDAA 2018 makes no such distinction.

There are some exceptions to the new $10,000 micropurchase threshold.  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.

The simplified acquisition threshold increase will affect the applicability of many FAR-prescribed provisions and clauses which are tied to the simplified acquisition threshold, as well as FAR Part 13, Simplified Acquisition Procedures.  The increase will allow government contracting officers to buy more efficiently using FAR Part 13.  FAR clauses applicable at the new simplified acquisition threshold should benefit government contractors by reducing the compliance burden for those clauses and provisions.

Please also note changes to FAR Part 19, Small Business Programs because of the threshold changes.  Specifically, FAR 19.203, Relationship Among Small Business Programs, requires the acquisition of supplies and services with anticipated values exceeding $10,000 (and the exceptions noted above) and $250,000 are automatically reserved for small business (see also FAR 19.502-1).

There are also some exceptions to the new $250,000 simplified acquisition threshold.

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 U.S. Aid to facilitate provisions of international disaster assistance or to support a response to an emergency or major disaster (except for construction) is $750,000 in the case of any contract to be awarded performed, or purchase to be made, inside the United States, and $1.5 Million if outside the United States.

Lastly, the simplified acquisition threshold for acquisitions for supplies or services, as determined by Agency heads, to be used to support a humanitarian or peacekeeping operation is $500,000.