In case you have not heard, the 2018 (FY18) National Defense Authorization Act (NDAA) increased the simplified acquisition threshold (SAT) from $150,000 to $250,000 and the micro-purchase threshold from $3,500 to $10,000.  The last increase in the SAT occurred in 2010 when it increased from $100,000 and in 2015 when the micro purchase threshold increased from $3,000; however, a DFARS deviation was issued in 2017 allowing for micro purchases up to $5,000.  So, what does this mean for you, the small business owner?

This change means more opportunities for the small business concern since everything between the micro-purchase threshold and SAT is reserved for small businesses offering supplies and services, to include construction, research and development, and commercial items.  Taking into consideration the micro-purchase threshold increase, there is now an extra $146,500 automatically set-aside for small business.  I can tell you as a former construction CO, the ability to do a minor construction project using simplified procedures is a great benefit since you do not have to abide by the synopsis periods and formal acquisition approaches described in FAR Part 14 and 15; this is a win for small business since it streamlines proposal submission.   In addition, many will find that these requirements are issued by  offices whose sole function is for requirements below the SAT.  These offices are well versed in the streamlined processes afforded in the FAR and are more willing to help a small business.

From the micro purchase perspective opportunities are more than doubled.  Although these requirements are not set-aside for small businesses, many small business suppliers do well in this area capitalizing on the streamlined acquisition approach and benefit of quick payments.  Under these actions you will find that you no longer have to deal with a procurement process and numerous provisions and clauses.  Instead, the card holder (not a contracting officer) is able to make a purchase to satisfy the requiring agencies need.  In fact, the card holder is normally from the requiring agency so you are able to deal directly with the customer that will use the product.  How great is it when you can deal directly with the true customer versus having to work through a contracting officer?   The threshold increase in this area will not likely apply to services and construction requirements since they are subject to mandatory provisions and clauses regarding minimum wages and benefits for anything over $2,500 and $2,000, respectively.

With that said, you will not see contracting officers following these new thresholds until they are incorporated into the Federal Acquisition Regulations.  FAR case number 2018-004 has been opened to incorporate these changes and a report is due March 21, 2018 that will provide a summary of public comments received and a draft FAR rule.  However, federal agencies may proceed with issuing a deviation under their own supplements to implement the new thresholds prior to incorporation in the FAR.  But, we will have to wait and see how the Department of Defense handles the micro purchase change, since DFARS Case 2017-D027 is still pending which will make the DFARS micro purchase threshold deviation permanent at $5,000.

In the coming months stay tuned to this issue to see when your supported agencies incorporates the new thresholds via deviation or the FAR case is closed with issuance of a final rule.