1.109 Statutory acquisition–related dollar thresholds-adjustment for inflation
Source: FAR 1.109 on acquisition.gov
Do not assume statutory FAR thresholds are locked at award—many are inflation-adjusted every 5 years and can apply to existing contracts and subcontracts throughout performance.
Overview
- FAR 1.109 implements 41 U.S.C. 1908, which requires the FAR Council to adjust most statutory acquisition-related dollar thresholds for inflation every 5 years, beginning in October 2005.
- The adjustment uses the Consumer Price Index for All Urban Consumers (CPI-U) and overrides other laws that might otherwise provide a different adjustment method for those covered thresholds.
Key Rules
- Periodic inflation adjustment of statutory thresholds
- The FAR Council must recalculate covered acquisition-related dollar thresholds on a 5-year cycle. These thresholds are statutory dollar amounts that determine when certain procurement policies, procedures, requirements, or restrictions apply.
- Definition of acquisition-related dollar threshold
- A covered threshold is one established in law and used to define the applicability of procurement rules for supplies or services acquired by executive agencies, as determined by the FAR Council.
- Excluded thresholds
- Certain thresholds cannot be escalated under this authority, including those tied to Miller Act bonds, construction wage rate requirements, Service Contract Labor Standards, and thresholds set by the U.S. Trade Representative under the Trade Agreements Act.
- Application to existing contracts and subcontracts
- Adjusted thresholds apply without regard to date of award. Once changed, the new threshold applies during the remaining term of the contract or subcontract unless a later adjustment occurs.
- Reference materials
- The FAR provides a public matrix of the most recent calculations through regulations.gov under FAR Case 2024-001.
Responsibilities
- Contracting Officers: Apply current inflation-adjusted statutory thresholds and ensure they are used on both new and existing contracts and subcontracts when relevant.
- Contractors: Monitor threshold changes that may alter compliance obligations during contract performance, even after award.
- Agencies: Use the FAR Council’s updated thresholds consistently and rely on the published escalation matrix for reference.
Practical Implications
- This section exists to keep statutory procurement thresholds aligned with inflation and maintain consistent governmentwide application.
- It affects clause applicability, reporting triggers, and procedural requirements that depend on dollar values.
- A common pitfall is assuming the threshold in effect at award remains fixed for the life of the contract; under FAR 1.109, many adjusted thresholds can change mid-performance.
(a) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section1908&num=0&edition=prelim" target="_blank">41 U.S.C. 1908 requires that the FAR Council periodically adjust all statutory acquisition-related dollar thresholds in the FAR for inflation, except as provided in paragraph (c) of this section. This adjustment is calculated every 5 years, starting in October 2005, using the Consumer Price Index for All Urban Consumers (CPI-U), and supersedes the applicability of any other provision of law that provides for the adjustment of such acquisition-related dollar thresholds.
(b) The statute defines an acquisition-related dollar threshold as 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 supplies or services by an executive agency, as determined by the FAR Council.
(c) The statute does not permit escalation of acquisition-related dollar thresholds established by:
(i) Subchapter III, Bonds; and
(ii) Subchapter IV, Wage Rate Requirements (Construction);
(2) http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter67&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">41 U.S.C. chapter 67, Service Contract Labor Standards; or
(3) The United States Trade Representative pursuant to the authority of the Trade Agreements Act of 1979 (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title19-section2511&num=0&edition=prelim" target="_blank">19 U.S.C. 2511 et seq.).
(d) The statute, as amended by section 821 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91), requires the adjustment described in paragraph (a) of this section be applied to contracts and subcontracts without regard to the date of award of the contract or subcontract. Therefore, if a threshold is adjusted for inflation as set forth in paragraph (a) of this section, then the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment.
(e) A matrix showing calculation of the most recent escalation adjustments of statutory acquisition-related dollar thresholds is available via the Internet at http://www.regulations.gov" target="_blank">http://www.regulations.gov (search FAR Case 2024-001, open the docket folder, and go to the supporting documents file).