Statutory acquisition–related dollar thresholds-adjustment for inflation
FAR 1.109 requires that most statutory acquisition-related dollar thresholds in the FAR are adjusted for inflation every five years, and these updated thresholds apply to all contracts and subcontracts regardless of award date.
Overview
FAR 1.109 establishes the requirement for periodic adjustment of statutory acquisition-related dollar thresholds in the FAR to account for inflation, as mandated by 41 U.S.C. 1908. These adjustments are made every five years, beginning in October 2005, using the Consumer Price Index for All Urban Consumers (CPI-U). The rule ensures that acquisition thresholds remain current and relevant, superseding other laws that might otherwise govern such adjustments. However, certain thresholds—such as those related to bonds, wage rate requirements for construction, service contract labor standards, and thresholds set by the U.S. Trade Representative under the Trade Agreements Act—are excluded from these inflation adjustments. Adjusted thresholds apply to all contracts and subcontracts, regardless of their award date, and remain effective for the contract's duration unless further adjusted. A matrix detailing the most recent adjustments is available online for reference.
Key Rules
- Periodic Inflation Adjustment
- Statutory acquisition-related dollar thresholds in the FAR are adjusted for inflation every five years using the CPI-U.
- Scope of Thresholds
- Only thresholds defined in law as factors for procurement policy applicability are adjusted, as determined by the FAR Council.
- Exclusions
- Certain thresholds (bonds, wage rates, service contract labor standards, and Trade Agreements Act thresholds) are not subject to inflation adjustment.
- Application to Contracts
- Adjusted thresholds apply to all contracts and subcontracts, regardless of when awarded, for the remainder of their term.
- Reference Matrix
- The latest adjustment calculations are published online for public access.
Responsibilities
- Contracting Officers: Must apply the most current, adjusted thresholds to all applicable contracts and subcontracts, and consult the published matrix for reference.
- Contractors: Should be aware of and comply with the current thresholds as they may affect eligibility, requirements, and compliance obligations.
- Agencies: Ensure oversight of proper application of adjusted thresholds and maintain awareness of exclusions.
Practical Implications
This section ensures acquisition-related thresholds keep pace with inflation, maintaining their intended regulatory impact. Contractors and contracting officers must stay updated on current thresholds, as changes can affect contract eligibility, reporting, and compliance. Common pitfalls include applying outdated thresholds or misunderstanding which thresholds are excluded from adjustment.