Summary: FAR threshold adjustments directly impact federal contractors, acquisition professionals, and small businesses. These updates drive shifts in acquisition policy, small business strategies, and procedural requirements, introducing reduced actions, higher-level approvals, and new compliance triggers. Collectively, these changes also streamline processes and accelerate award timelines.
Introduction
Effective October 1, 2025, the Federal Acquisition Regulatory (FAR) Council implemented inflation adjusted acquisition thresholds that raise key limits, including the Micro Purchase Threshold (MPT) to $15,000 and the Simplified Acquisition Threshold (SAT) to $350,000. The FAR Council is represented by the Office of Federal Procurement Policy (OFPP), the Department of War (DOW), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA).
Under 41 U.S.C. 1908, the FAR Council must periodically update all statutory acquisition-related dollar thresholds in the FAR to account for inflation. These updates occur every five years and are based on the Consumer Price Index for All Urban Consumers (CPI-U). This applies for all urban consumers, except for the Construction Wage Rate Requirements statute (Davis-Bacon Act), the Service Contract Labor Standards statute, performance and payment bonds, and trade agreements thresholds.
Understanding these adjustments is critical because they directly impact federal contractors, acquisition professionals, and small businesses.
Overview of Key FAR & NDAA Threshold Changes
As of October 1, 2025, there have been changes to a total of 63 distinct FAR threshold categories. We have summarized the changes in the tables below.
Several thresholds are listed as not retained in deviation, meaning that certain parts or provisions of the FAR are not being implemented in the RFO model deviation, often because they were deemed redundant, unnecessary, or will be addressed separately.
The average threshold increase across all 63 categories was 29%. Of note, CPI-U aggregate percentage increase was approximately 20.5% from September 2020 to September 2025.
The FY26 National Defense Authorization Act (NDAA), signed on December 18, 2025, introduces significant increases to several acquisition-related dollar thresholds, particularly those under the Truthful Cost or Pricing Data statute (TINA) and Cost Accounting Standards (CAS). Congress plans to raise the threshold for requiring certified cost or pricing data to a substantially higher level, reducing the number of contracts subject to these disclosure requirements and making it easier for commercial firms to engage with DOW. Similarly, the NDAA seeks to increase the CAS applicability threshold, narrowing the pool of contractors required to comply with complex cost accounting rules and aligning these requirements with modern acquisition practices.
Together, these changes reflect a broader congressional effort to streamline procurement, reduce administrative burdens, and expand the DIB by encouraging greater participation from commercial companies. The new thresholds will apply to contracts entered into after June 30, 2026. Contracting officers have the authority to deviate from existing clauses in advance of the FAR update and to sync with updated NDAA thresholds but must ultimately follow their agency’s guidance.
Table 1: FAR Threshold Changes
| CATEGORY | OLD THRESHOLD | NEW THRESHOLD | CATEGORY DEFINITION |
|---|---|---|---|
| Micro‑purchase Threshold (MPT) | $10,000 | $15,000 | Micro-purchase means an acquisition of supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the micro-purchase threshold. |
| Competition advocates annual report on orders under multiple award contracts | $1,000,000 | $1,500,000 | Agency advocates for competition shall prepare and submit an annual report to the agency’s Senior Procurement Executive (SPE) and Chief Acquisition Officer (CAO). |
| Single-award BPA justification (FSS) | $100,000,000 | $150,000,000 | Limited-source justifications (excluding brand name) for Federal Supply Schedule (FSS) orders or blanket purchase agreements with an estimated value greater than the simplified acquisition threshold must be posted. |
| Federal tax delinquency notice to agency suspending and debarring official | $10,000.00 | $15,000.00 | The contracting officer (CO) shall notify the agency official responsible for initiating debarment or suspension, where an offeror indicates the existence of an indictment, charge, conviction, civil judgment, or federal tax delinquency with an amount exceeding $15,000. |
| Limitations on use of requirements contracts for advisory and assistance services | $100,000,000.00 | $150,000,000.00 | No requirements contract in an amount estimated to exceed $150 million (including all options) may be awarded to a single source unless a determination is executed. |
| Certification relating to transactions with Iran’s Revolutionary Guard Corps | $10,000.00 | $15,000.00 | Each offeror must certify that the offeror, and any person owned or controlled by the offeror, does not knowingly engage in any significant transaction (i.e., a transaction exceeding $15,000), with Iran’s Revolutionary Guard Corps or any of its officials, agents, or affiliates. |
| Justification Thresholds (Other Than Full & Open Competition) | $750,000 $15,000,000 $75,000,000 $100,000,000 |
$900,000 $20,000,000 $90,000,000 $150,000,000 |
The justification for other than full and open competition shall be approved in writing. For a proposed contract not exceeding $900,000, the contracting officer’s certification required by 6.303-2(b)(12) will serve as approval, unless a higher approving level is established in agency procedures. |
| Simplified Procedures – Commercial Products and Commercial Services Sole Source Justification |
$750,000 $15,000,000 $75,000,000 $100,000,000 |
$900,000 $20,000,000 $90,000,000 $150,000,000 |
For a proposed contract exceeding the SAT but not over $900,000, the contracting officer’s certification that the justification is accurate and complete to the best of the contracting officer’s knowledge and belief will serve as approval, unless a higher approval level is established in accordance with agency procedures. |
| Fair Opportunity Exception Approval (Orders under multiple-award contracts) | $750,000 $15,000,000 $75,000,000 $100,000,000 |
$900,000 $20,000,000 $90,000,000 $150,000,000 |
For proposed orders exceeding the SAT but not over $900,000, the ordering activity contracting officer’s certification that the justification is accurate and complete to the best of the ordering activity contracting officer’s knowledge and belief will serve as approval, unless a higher approval level is established in accordance with agency procedures. |
A complete overview of this year’s FAR threshold changes can be found here.
Table 2: NDAA Threshold Changes
| CATEGORY | OLD THRESHOLD | NEW THRESHOLD | CATEGORY DEFINITION | POTENTIAL IMPACT |
|---|---|---|---|---|
| TINA Disclosure of Certified Cost or Pricing Data from Contractors and Subcontractors | $2,500,000 | $10,000,000 | NDAA Section 1804, June 30, 2026, or later | Reduced administrative burden on contractors |
| Prime Contract Threshold for Providing Certified Cost and Pricing Data | $2,000,000 | $10,000,000 | NDAA Section 1804, June 30, 2026, or later | Reduced administrative burden on contractors |
| Sole Source Awards | $10,000,000 | $100,000,000 | NDAA Section 1804, June 30, 2026, or later | Fewer approvals for sole source justifications |
| Contract Threshold for CAS Applicability (including Modified CAS) | $2,500,000 | $35,000,000 | NDAA Section 1806(d), June 30, 2026, or later | Reduced administrative burden on contractors and government |
| Full CAS Compliance | $50,000,000 | $100,000,000 | NDAA Section 1806, June 30, 2026, or later | Reduced administrative burden on contractors and government |
The complete National Defense Authorization Act for Fiscal Year 2026 can be found here.
Federal Procurement Data System (FPDS) Data
FPDS data shows that between FY 2022-2024, 562,324 awards were at or below the current MPT of $10,000, and some 49,321 awards fell between $10,000 and the proposed $15,000 threshold, an approximate 9% increase in actions qualifying under the MPT. For actions above the MPT but at or below the current SAT of $250,000, there were 235,020 awards, with an additional 5,150 awards (2%) between $250,000 and the proposed $350,000 threshold.
While these changes are modest, they reflect rising procurement values and help offset inflation’s impact. The rule does not alter contracting officer guidance or change requirements for offerors and contractors but simply adjusts thresholds to maintain purchasing power.
Practical Implications: Guide for Contracting Officers and Contractors
For Contracting Officers
The recent FAR and NDAA threshold changes provide greater flexibility and speed in awarding contracts under simplified acquisition procedures. With higher thresholds for the Simplified Acquisition Threshold (SAT) and Micro-Purchase Threshold (MPT), more procurements qualify for streamlined methods, reducing lead times and enabling faster responses to operational needs.
Highlights:
- The SAT increase (from $250,000 to $350,000) and the expanded ceiling for commercial items allow larger acquisitions to use simplified procedures, which are particularly beneficial in contingency or humanitarian scenarios.
- Fewer transactions now require compliance with complex requirements (e.g., Truthful Cost or Pricing Data, subcontracting plans) because of higher thresholds for cost or pricing data and subcontracting plans.
This means:
- Contracting officers can devote less time on paperwork and compliance reviews to focus on strategic high-value procurements.
- Lower organizational levels now have more authority, empowering more decisions to be made at the CO level without escalation to senior executives, supporting a more agile acquisition structure. This approach empowers officers to act quickly, consistent with DOW’s emphasis on speed, risk tolerance, and mission-focused execution.
- Additional opportunities for small businesses, reinforcing DOW’S push toward commercial-first solutions and flexible acquisition instruments.
For Contractors
These changes open the door to greater opportunities for small businesses. With a higher SAT and MPT, more procurements fall under streamlined procedures, reducing barriers to entry and compliance hurdles.
This means:
- Small businesses can compete for a larger share of federal contracts without facing the same level of regulatory scrutiny.
- Increased competition from expanded thresholds for set-aside programs create a more dynamic marketplace for firms that can respond quickly and offer competitive pricing.
- A reassessment of internal compliance and pricing strategies will be necessary to update policies. For example, the FAR and NDAA increase in the Truthful Cost or Pricing Data threshold (from $2 million to $2.5 million and $2.5 million to $10 million, respectively) reduces the number of procurements requiring certified cost data, which can influence pricing models and negotiation tactics.
- The NDAA’s updated thresholds reduce compliance burdens, expand access to simplified acquisition pathways, and make it easier and faster for industry contractors, especially commercial firms and small businesses, to compete for work by raising TINA, CAS, and other acquisition related limits.
- Firms that adapt quickly by revising internal controls, training staff, and aligning pricing strategies with simplified acquisition procedures will be better positioned to capitalize on these opportunities.
- There is potential for more competition as “non-traditional” government contractors enter the federal marketplace.
Final Thoughts
In summary, the final rule is intended to adjust acquisition-related thresholds for inflation, as required by 41 U.S.C. 1908. The most notable changes involve increases to the Micro-Purchase Threshold (MPT) and Simplified Acquisition Threshold (SAT).
Organizations should conduct a comprehensive review of their acquisition policies, procedures, and compliance frameworks to ensure alignment with the updated FAR thresholds. This includes revising internal guidance documents, updating approval workflows, and adjusting risk management protocols to reflect new limits for simplified acquisitions and micro-purchases. Proactive education and policy updates will help prevent delays, reduce compliance risks, and enable teams to capitalize on the flexibility these threshold adjustments provide.
While the FAR thresholds have been adjusted, many agencies, including the DOW through the Defense Federal Acquisition Regulation Supplement (DFARS), issue their own supplements that often mirror or expand upon FAR changes. These supplements may introduce additional requirements, exceptions, or guidance that impact acquisition strategies, compliance obligations, and reporting. Organizations should establish a process to regularly monitor DFARS and other agency-specific regulations (e.g., NASA FAR Supplement, GSA Acquisition Manual) for corresponding updates.
Consider seeking the help of a compliance officer or acquisition policy team to track these updates, subscribe to official alerts, and integrate changes into your training and workflow documentation promptly. With deep technical and industry experience in federal procurement, Aprio’s Government Contracting Compliance team can help your organization adapt to recent FAR threshold changes and their impacts with confidence.
