Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds

DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION <CFR>48 CFR Parts 1, 2, 3, 4, 5, 6, 8, 9, 10, 12, 13, 15, 16, 17, 19, 22, 23, 25, 26, 30, 32, 36, 42, 50, and 52</CFR> <DEPDOC>[FAR Case 2024-001, Docket No. FAR-2024-0001, Sequence No. 1]</DEPDOC> <RIN>RIN 9000-AO73</RIN> <SUBJECT>Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to further implement the statute, which requires an adjustment every five years of statutory acquisition-related thresholds for inflation. The adjustment uses the Consumer Price Index for all urban consumers and does not apply to the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, performance and payment bonds, and trade agreements thresholds. DoD, GSA, and NASA are also proposing to use the same methodology to adjust nonstatutory FAR acquisition-related thresholds in 2025. </SUM> <DATES> <HD SOURCE="HED">DATES:</HD> Interested parties should submit written comments to the Regulatory Secretariat Division at the address shown below on or before January 28, 2025 to be considered in the formation of the final rule. </DATES> <HD SOURCE="HED">ADDRESSES:</HD> Submit comments in response to FAR case 2024-001 to Federal eRulemaking portal at <E T="03">https://www.regulations.gov</E> by searching for “FAR Case 2024-001”. Select the link “Comment Now” that corresponds with “FAR Case 2024-001”. Follow the instructions provided on the “Comment Now” screen. Please include your name, company name (if any), and “FAR Case 2024-001” on your attached document. If your comment cannot be submitted using <E T="03">https://www.regulations.gov,</E> call or email the points of contact in the <E T="02">FOR FURTHER INFORMATION CONTACT</E> section of this document for alternate instructions. <E T="03">Instructions:</E> Please submit comments only and cite “FAR Case 2024-001” in all correspondence related to this case. Comments received generally will be posted without change to <E T="03">https://www.regulations.gov,</E> including any personal and/or business confidential information provided. Public comments may be submitted as an individual, as an organization, or anonymously (see frequently asked questions at <E T="03">https://www.regulations.gov/faq</E> ). To confirm receipt of your comment(s), please check <E T="03">https://www.regulations.gov,</E> approximately two to three days after submission to verify posting. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For clarification of content, contact Mr. Michael O. Jackson, Procurement Analyst, at 202-821-9776 or by email at <E T="03">michaelo.jackson@gsa.gov.</E> For information pertaining to status, publication schedules, or alternate instructions for submitting comments if <E T="03">https://www.regulations.gov</E> cannot be used, contact the Regulatory Secretariat Division at 202-501-4755 or <E T="03">GSARegSec@gsa.gov.</E> Please cite FAR Case 2024-001. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> This rule proposes to amend multiple FAR parts to further implement 41 U.S.C. 1908. Section 1908 requires an adjustment every five years (on October 1 of each year evenly divisible by five) of statutory acquisition-related thresholds for inflation, using the Consumer Price Index (CPI) for all urban consumers, except for the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, performance and payment bonds, and trade agreements thresholds (see FAR 1.109). As a matter of policy, DoD, GSA, and NASA are also proposing to use the same methodology to adjust nonstatutory FAR acquisition-related thresholds on October 1, 2025. This is the fifth review of FAR acquisition-related thresholds since the statute was passed on October 28, 2004 (section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005). The last review was conducted under FAR Case 2019-013 during fiscal year (FY) 2020. The final rule under that case was published in the <E T="04">Federal Register</E> on October 2, 2020 (85 FR 62485), effective October 1, 2020. <HD SOURCE="HD1">II. Discussion and Analysis</HD> <HD SOURCE="HD2">A. What is an acquisition-related threshold?</HD> This case builds on the review of FAR thresholds in FY 2005, FY 2010, FY 2015, and FY 2020, using the same interpretation of an acquisition-related threshold. 41 U.S.C. 1908 is applicable to “a dollar threshold that is specified in law as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law to the procurement of property or services by an executive agency, as the Federal Acquisition Regulatory Council (the Council) determines.” There are other thresholds in the FAR that, while not specified in law, nevertheless meet all the other criteria. These thresholds may have their origin in Executive order or regulation. Therefore, the Council has determined that in this case “acquisition-related threshold” has a broader meaning, <E T="03">i.e.,</E> a threshold that is specified in law, Executive order, or regulation as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law, Executive order, or regulation to the procurement of property or services by an Executive agency. DoD, GSA, and NASA conclude that acquisition-related thresholds are generally tied to the value of a contract, subcontract, or modification. This rule does not address thresholds that are not acquisition-related. Examples of thresholds that are not “acquisition-related,” as defined in this proposed rule, include thresholds relating to claims, penalties, withholding, payments, required levels of insurance, small business size standards, liquidated damages, and protests. <HD SOURCE="HD2">B. What acquisition-related thresholds are not subject to escalation adjustment under this case?</HD> 41 U.S.C. 1908 does not permit escalation of acquisition-related thresholds established by the Construction Wage Rate Requirements statute (Davis Bacon Act), the Service Contract Labor Standards statute, performance and payment bonds (formerly the Miller Act), or the United States Trade Representative pursuant to the authority of the Trade Agreements Act of 1979. Also, the statute does not authorize the FAR to escalate thresholds originating in Executive order or the implementing agency (such as the Department of Labor or the Small Business Administration), unless the Executive order or agency regulations are first amended. <HD SOURCE="HD2">C. How do the Defense Acquisition Regulations Council and the Civilian Agency Acquisition Council (the Councils) analyze a statutory acquisition-related threshold?</HD> If an acquisition-related threshold is based on statute, the matrix at <E T="03">https://www.regulations.gov</E> identifies the statute and the statutory threshold, including the original threshold and any FAR revisions. With the exception of thresholds set by the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, performance and payment bonds (formerly the Miller Act), and the United States Trade Representative pursuant to the authority of the Trade Agreements Act of 1979, 41 U.S.C. 1908 requires that the Councils adjust the acquisition-related thresholds for inflation using the CPI for all urban consumers. Acquisition-related thresholds in statutes that were in effect on October 1, 2000, are only subject to escalation from that date forward. For purposes of this proposed rule, the matrix includes calculation of escalation based on the estimated CPI value for March 2025 (currently projected at 323.193) divided by the CPI for the date of enactment of the statute or regulation (October 2000, for statutes enacted prior to October 1, 2000). The Councils will subsequently adjust as necessary before issuance of the final rule. Once the escalation factor is applied to the acquisition-related threshold, then the threshold must be rounded as follows: <GPOTABLE COLS="2" OPTS="L2,tp0,p1,8/9,i1" CDEF="s25,r25"> <TTITLE> </TTITLE> <CHED H="1"> </CHED> <CHED H="1"> </CHED> <ROW> <ENT I="01"><$10,000 </ENT> <ENT>Nearest $500.</ENT> </ROW> <ROW> <ENT I="01">$10,000-<$100,000 </ENT> <ENT>Nearest $5,000.</ENT> </ROW> <ROW> <ENT I="01">$100,000-<$1 million </ENT> <ENT>Nearest $50,000.</ENT> </ROW> <ROW> <ENT I="01">$1 million-<$10 million </ENT> <ENT>Nearest $500,000.</ENT> </ROW> <ROW> <ENT I="01">$10 million-<$100 million </ENT> <ENT>Nearest $5 million.</ENT> </ROW> <ROW> <ENT I="01">$100 million-<$1 billion </ENT> <ENT>Nearest $50 million.</ENT> </ROW> <ROW> <ENT I="01">$1 billion or more </ENT> <ENT>Nearest $500 million.</ENT> </ROW> </GPOTABLE> The calculations in this proposed rule are all based on the base year amount, because escalated amounts in the 2020 rule were subject to rounding. Therefore, using those amounts as the base would distort future calculations. In 2020, some thresholds, although subject to inflation calculation, did not actually change, because the inflation in 2020 was insufficient to overcome the rounding requirements— <E T="03">i.e.,</E> the escalation factor when applied did not cause the escalated values to be high enough to round to the next higher value. However, in FY 2025 many thresholds t ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 53k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━