Under 41 U.S.C. § 1908, every five years, the Federal Acquisition Regulation (“FAR”) Council must adjust statutory acquisition-related thresholds for economic inflation. These statutory acquisition-related threshold shifts will materially affect government contract sourcing strategies, documentation requirements, and small business planning. These adjustments do not apply to the Davis-Bacon Act, Service Contract Labor Standards, or trade agreements thresholds. The FAR Council’s latest round of modifications for inflation was finalized on August 27, 2025, and became effective October 1, 2025. The final rule was published in the Federal Register as 90 FR 41872. Below are some notable changes and what federal contractors should expect from them.
Major Threshold Changes
- Micro-Purchase Threshold (FAR 2.101): $10,000 → $15,000 (with support contingency and defense support Micro-Purchase Thresholds (“MPTs”) moving from $20,000 → $25,000 and $35,000 → $40,000, respectively). Purchases at or below the new thresholds can be made without soliciting competitive quotes and bids do not need substantiation of competition.
- Simplified Acquisition Threshold (FAR 2.101): $250,000 → $350,000. This expands FAR part 13 usage and may expedite awards with reduced procedures. Like with the MPT increase, the raised Simplified Acquisition Threshold (“SAT”) limit could mean fewer formal requirements, fewer proposal volumes, and faster award cycles. Expect more Requests for Quotations and fewer Part 15, “Contracting by Negotiation”-style competitions below the threshold.
- Certified Cost or Pricing Data for Post-July 1, 2018 Contract Awards (FAR 15.403-4): $2M → $2.5M (pre-July 2018 legacy threshold rose to $950,000). This reduces how often Truth in Negotiations Act (“TINA”)-style certifications are triggered on moderate-size ($2-2.5M) contract actions.
- Prime Contractor Subcontracting Plans (FAR 19.702): $750,000 → $900,000 (construction $1.5M → $2M). At the lower end of the respective thresholds, it is less likely that a large prime contractor will need a subcontracting plan.
- 8(a) Sole-Source Justification Ceiling (FAR 6.204(b)): $25M → $30M. Contracting officers can now award sole source eligible 8(a) Business Development Program contracts without a separate justification or determination for contracts up to $30M.
- 8(a) Sole-Source Authority (FAR 19.805-1): $4.5M → $5.5M for most acquisitions ($7M → $8.5M for manufacturing acquisitions), affecting many 8(a) participants.
- Commercial Item “Certain” Simplified Procedures (FAR 13.500): $7.5M → $9M (the special $15M ceiling in FAR 13.500(c) for emergencies and contingencies stays $15M). Small businesses now have a better chance of winning higher value contracts under simplified rules.
