1.109
Statutory acquisition–related dollar thresholds-adjustment for inflation
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.