Mar 8, 2018

By Wayne Simpson, Centre Consultant, 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.

About the Author:

Wayne Simpson
Consultant
Wayne Simpson is retired from the U.S. Department of Veterans Affairs (VA) after 38 years of federal service. He served as the Executive Assistant to VA’s Deputy Assistant Secretary for Acquisition and Logistics where he was the primary staff advisor to the Deputy Assistant Secretary, who serves concurrently as VA’s Senior Procurement Executive and Debarring Official.

 

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  • Ben French says:

    Sir,
    Thank you for the information.
    Do the SATs apply to just a single line item (CLIN) or to the total value of the contract over the base and any option years?

  • Leanne Hankey says:

    Thanks for this notice Wayne. This is good news for us small contractors. I’m wondering if the previous two procurement categories under the Simplified Acquisition Threshold ($3,500 – $25,000 and $25,000 – $150,000) are no longer applicable and it’ll just be one new procurement price range of $10,000 – $250,000?

    • Wayne Simpson says:

      Hi Ms. Hankey,

      Thanks for your inquiry. Yes, this is good news for small business (and government buyers alike). The $150,000 simplified acquisition threshold (SAT) is being replaced by the new higher, $250,000 threshold. You may see some clauses in the FAR will still be applicable at the $150,000 level, as some clauses are written with the $150,000 amount in the clause, while others are written to cite the SAT. These clauses and provisions will only be tied to the increased SAT and will be applicable at $250,000 and above.

      The micro-purchase threshold increases to $10,000, up from $3,500 (except for services and construction, which remain at $2,500 and $2,000, respectively). The Civilian Agency Acquisition Council issued a letter to all agencies on February 16, 2018, authorizing them to issue class deviations to the Federal Acquisition regulations, if they want to implement the new thresholds ahead of the final rule implementing the provisions of NDAA 2018. It seems agencies are biting at the bit to get this underway–will save them lots of work!

      I hope this information is helpful. Best wishes to you for every continued success in the Federal Marketplace!