Defense Federal Acquisition Regulation Supplement: Inflation Adjustment of Acquisition-Related Thresholds (DFARS Case 2024-D002)

<RULE> DEPARTMENT OF DEFENSE <SUBAGY>Defense Acquisition Regulations System</SUBAGY> <CFR>48 CFR Parts 203, 205, 209, 211, 212, 215, 216, 217, 219, 225, 236, 246, 250, and 252</CFR> <DEPDOC>[Docket DARS-2024-0039]</DEPDOC> <RIN>RIN 0750-AL99</RIN> <SUBJECT>Defense Federal Acquisition Regulation Supplement: Inflation Adjustment of Acquisition-Related Thresholds (DFARS Case 2024-D002)</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Defense Acquisition Regulations System, Department of Defense (DoD). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to further implement the statute that requires an adjustment every 5 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 also used the same methodology to adjust some nonstatutory DFARS acquisition-related thresholds in 2025. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Effective October 1, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Ms. Kimberly R. Ziegler, telephone 703-901-3176. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> This final rule amends multiple DFARS 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 is also using the same methodology to adjust nonstatutory DFARS acquisition-related thresholds on October 1, 2025. Federal Acquisition Regulation (FAR) Case 2024-001 provides comparable changes to acquisition-related thresholds in the FAR. DoD published a proposed rule in the <E T="04">Federal Register</E> at 90 FR 5799 on January 17, 2025. The preamble to the proposed rule contained detailed explanation of— • What an acquisition-related threshold is; • What acquisition-related thresholds are not subject to escalation adjustment under this case; and • How DoD analyzes escalation of statutory and non-statutory acquisition-related thresholds. This is the fifth review of DFARS acquisition-related thresholds since the statute was enacted 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 DFARS Case 2019-D036 during fiscal year (FY) 2020. The final rule under that case was published in the <E T="04">Federal Register</E> on September 29, 2020 (85 FR 61502), effective October 1, 2020. No respondents submitted public comments in response to the proposed rule. <HD SOURCE="HD1">II. Discussion and Analysis</HD> DoD has historically used the March CPI as the factor to calculate the final escalatory amounts, although the statute does not specify a certain month. The proposed rule estimated the March 2025 CPI for all urban consumers at 323.193. The actual March 2025 CPI was 319.799. This final rule uses the April 2025 CPI of 320.795. DoD has elected to use the April 2025 CPI because the April CPI was available for use in the final rule, and it provides a more accurate reflection of inflation. As a result, the thresholds at DFARS 205.303(a)(i), 211.503(b), 217.171(d), 217.172, 225.7201, 250.102-1, and the solicitation provision at DFARS 252.225-7003 will not escalate to the extent provided in the proposed rule. Some thresholds published in the proposed rule were very close but did not reach the statutory calculation formula amount for escalation and are removed from this final rule. DoD has removed the proposed escalation for the thresholds described at DFARS 206.303-1 through 206.304, 219.808, 236.601, and 237.170-2. DoD also corrected the statutory citation and basis for escalation at 237.170-2, which reduced the outcome of the escalation calculation. <HD SOURCE="HD1">III. Applicability to Contracts at or Below the Simplified Acquisition Threshold (SAT), for Commercial Products (Including Commercially Available Off-the-Shelf (COTS) Items), and for Commercial Services</HD> This final rule amends the provisions and clause at DFARS 252.204-7007, Alternate A, Annual Representations and Certifications; 252.215-7016, Notification to Offerors—Postaward Debriefings; 252.216-7010, Postaward Debriefings for Task Orders and Delivery Orders; and 252.225-7003, Report of Intended Performance Outside the United States and Canada—Submission with Offer. However, the rule does not impose any new requirements on contracts at or below the SAT, for commercial products including COTS items, or for commercial services. This final rule does not change the applicability of the provisions and clause to acquisitions at or below the SAT, to acquisitions of commercial products including or excluding COTS items, and to acquisitions of commercial services. <HD SOURCE="HD1">IV. Expected Impact of the Rule</HD> DoD does not expect this final rule to have a significant impact on the public or the Government because the rule is intended to maintain the status quo by adjusting acquisition-related thresholds for inflation. The escalation of statutory acquisition-related thresholds is mandated by 41 U.S.C. 1908, including how to calculate the escalation. DoD expects this rule to provide the adjustments necessary to mitigate the impact of inflation on both the public and the Government as intended under 41 U.S.C. 1908. The rule does not change direction to contracting officers, nor does it change the applicability of any requirements for offerors and contractors. <HD SOURCE="HD1">V. Executive Orders 12866 and 13563</HD> Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, as amended. <HD SOURCE="HD1">VI. Executive Order 14192</HD> This final rule is not subject to E.O. 14192, because the final rule is not a significant regulatory action under E.O. 12866. <HD SOURCE="HD1">VII. Congressional Review Act</HD> As required by the Congressional Review Act (5 U.S.C. 801-808) before an interim or final rule takes effect, DoD will submit a copy of the interim or final rule with the form, Submission of Federal Rules Under the Congressional Review Act, to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. A major rule under the Congressional Review Act cannot take effect until 60 days after it is published in the <E T="04">Federal Register</E> . The Office of Information and Regulatory Affairs has determined that this rule is not a major rule as defined by 5 U.S.C. 804. <HD SOURCE="HD1">VIII. Regulatory Flexibility Act</HD> A final regulatory flexibility analysis has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, <E T="03">et seq.</E> and is summarized as follows: This final rule amends the Defense Federal Acquisition Regulation Supplement (DFARS) to implement 41 U.S.C. 1908 and to amend other acquisition-related dollar thresholds that are based on policy rather than statute in order to adjust for the changing value of the dollar. The statute at 41 U.S.C. 1908 requires adjustment every 5 years of statutory acquisition-related dollar thresholds, except for the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, performance and payment bonds (formerly the Miller Act), and trade agreements thresholds. The objective of the rule is to maintain the status quo by adjusting acquisition-related thresholds for inflation. There were no significant issues raised by the public in response to the initial regulatory flexibility analysis provided in the proposed rule. This final rule will have a minimal impact on small entities that submit offers or are awarded contracts by DoD. However, most of the threshold changes in this rule are not expected to have any significant economic impact on small entities because the threshold changes are intended to maintain the status quo by adjusting for changes in the value of the dollar. Often any impact will be beneficial, by preventing burdensome requirements from applying to more and more acquisitions, as the dollar loses value. According to the System for Award Management (SAM), as of December 2023, there were 361,685 entities registered as small businesses under any North American Industry Classification System code. This final rule assumes that any of the 361,685 small entities registered in SAM may experience some benefit from a reduction in burden as a result of the changes. The final rule does not impose any new reporting, recordkeeping, or compliance requirements. There are no practical alternatives that will accomplish the objectives of the statute. <HD SOURCE="HD1">IX. Paperwork Reduction Act</HD> The Paperwork Reduction Act (44 U.S.C. chapter ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 32k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━