Overview
FAR 1.109 mandates the periodic adjustment of statutory acquisition-related dollar thresholds for inflation every five years to maintain the intended scope of procurement policies and regulations. It ensures that the economic triggers for various FAR requirements remain current with the Consumer Price Index for All Urban Consumers (CPI-U).
Key Rules
- Adjustment Frequency: The FAR Council must recalculate thresholds every five years (starting from October 2005) using the CPI-U.
- Definition of Threshold: An "acquisition-related dollar threshold" is a specific dollar amount set by law that determines whether a policy, procedure, or restriction applies to a procurement.
- Statutory Exceptions: Inflation adjustments are prohibited for thresholds related to:
- Construction Bonds (40 U.S.C. chapter 31, Subchapter III).
- Construction Wage Rate Requirements/Davis-Bacon Act (40 U.S.C. chapter 31, Subchapter IV).
- Service Contract Labor Standards (41 U.S.C. chapter 67).
- Trade Agreements Act thresholds (19 U.S.C. 2511 et seq.).
- Universal Application: Adjustments apply to all contracts and subcontracts regardless of the award date; the new threshold governs the remaining term of the contract immediately upon implementation.
Practical Implications
- Dynamic Compliance: Contractors and Contracting Officers must stay updated on five-year cycles, as a threshold change (such as the Simplified Acquisition Threshold) applies to existing contracts, potentially altering ongoing reporting or compliance obligations.
- Standardization: Because adjustments apply regardless of the contract award date, agencies avoid the administrative burden of managing multiple sets of thresholds for different contract "vintages."