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Alert

FAR Council Increases Acquisition-Related Thresholds for Inflation

The Federal Acquisition Regulatory Council issued a final rule adjusting numerous acquisition-related thresholds for inflation as required under 41 U.S.C. § 1908.

By Matt Carter, Richard B. Oliver, David B. Dixon

Alert

By Matt Carter, Richard B. Oliver, David B. Dixon

Takeaways

Key increases include raising the micro-purchase threshold from $10,000 to $15,000 and the simplified acquisition threshold from $250,000 to $350,000.
The rule also increases thresholds across multiple FAR provisions, including subcontracting and cost/pricing data.
The revised thresholds take effect October 1, 2025.

08.28.25

Section 1908 of Title 41 of the United States Code requires that statutory acquisition-related thresholds be adjusted for inflation every five years, using the Consumer Price Index for All Urban Consumers (CPI). The statute excludes certain thresholds such as those under the Davis-Bacon Act, Service Contract Labor Standards, performance and payment bonds, and trade agreements. On August 27, 2025, the FAR Council—comprising the Office of Federal Procurement Policy, the Department of Defense (DoD), the General Services Administration, and the National Aeronautics and Space Administration (NASA)—issued a final rule that adjusted numerous acquisition-related thresholds for inflation as follows:

  • Micro-Purchase Threshold (FAR 2.101): Increased from $10,000 to $15,000; contingency-related thresholds raised to $25,000 (domestic) and $40,000 (overseas).
  • Simplified Acquisition Threshold (FAR 2.101): Increased from $250,000 to $350,000; raised to $1 million for domestic contingency operations and $2 million for overseas contingency operations; and $650,000 for humanitarian/peacekeeping operations.
  • Thresholds for Justifications for Other Than Full and Open Competition (FAR 6.304): Increased from $750,000 to $900,000 at paragraphs (a)(1) and (2). In paragraphs (a)(2) through (4), the figure of $15 million increased to $20 million and the figure of $75 million increased to $90 million. The $100 million threshold applicable to DoD, NASA and the Coast Guard increased to $150 million.
  • Cost or Pricing Data Threshold (FAR 15.403-4): Increased from $2 million to $2.5 million for contracts issued on or after July 1, 2018, and for pre-July 2018 contracts, from $750,000 to $950,000.
  • Prime Contractor Subcontracting Plan (FAR 19.702): Increased from $750,000 to $900,000, with construction contracts increasing from $1.5 million to $2 million.
  • Ceiling for Simplified Procedures for Certain Commercial Products/Services (FAR 13.500): Increased from $7.5 million to $9 million.

These adjustments, though generally modest, will have practical effects on procurement strategy and compliance obligations. Contractors may benefit from greater use of streamlined procedures under the higher micro-purchase and simplified acquisition thresholds, reduced burdens associated with cost or pricing data and subcontracting plans, and expanded opportunities for sole-source awards under raised justification thresholds. Small businesses in particular may see compliance relief, as higher thresholds reduce the frequency with which more onerous requirements apply.

The new thresholds are effective October 1, 2025, and will apply to new solicitations and contracts issued on or after that date. Contractors should review upcoming procurements to determine where the revised thresholds may ease participation or compliance. Contractors should also update internal policies and training materials to reflect the new FAR values and monitor agency-specific guidance for any further implementation details.

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Government Contracts & Disputes
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