The Department of Defense (DoD) has finalized changes to acquisition-related thresholds in the Defense Federal Acquisition Regulation Supplement (DFARS) to reflect inflation. Published in the Federal Register on August 25, 2025, and effective October 1, 2025, this rule (DFARS Case 2024-D002) fulfills the statutory requirement under 41 U.S.C. 1908 to review and adjust thresholds every five years using the Consumer Price Index (CPI) for all urban consumers.
These adjustments are designed to preserve the intent of acquisition thresholds by preventing inflation from unintentionally expanding the scope of contracts subject to additional requirements. DoD also applied the same methodology to adjust certain non-statutory DFARS thresholds for consistency.
Why Did DoD Issue This Rule?
Acquisition thresholds determine when specific requirements, such as competition, reporting, or oversight, apply to contracts. Without regular adjustment, inflation would cause more contracts to exceed these thresholds, unintentionally increasing the number of acquisitions subject to additional rules and requirements.
By applying a CPI-based formula, DoD ensures thresholds continue to reflect Congress’s original intent. This adjustment process has been required every five years since the FY 2005 NDAA, and this is the fifth such review. The final rule aligns DFARS thresholds with comparable changes being made to the Federal Acquisition Regulation (FAR).
Key Changes in the 2025 DFARS Threshold Adjustment
Effective October 1, 2025, contractors will see revised thresholds across multiple DFARS parts. Key updates include:
- Contract Award Announcements (DFARS 205.303): Reporting threshold raised from $7.5 million to $9 million. DoD is required to make a public announcement and inform members of Congress whose districts are impact by the contractual actions, including modifications, exceeding the threshold
- Liquidated Damages in Construction Contracts (DFARS 211.503): Threshold increased from $750,000 to $900,000. DoD is required to include FAR 52.211-12, Liquidated Damages—Construction, in all construction contracts exceeding the threshold, except cost-plus-fixed-fee contracts or contracts where the contractor cannot control the pace of the work.
- Truthful Cost or Pricing Data Waivers (DFARS 215.403-1): Threshold raised from $20 million to $25 million. DoD is required by November 30th of each year, to report to the Office of the Principal Director, Defense Pricing, Contracting, and Acquisition Policy, (Price, Cost and Finance), of all waivers granted under FAR 15.403-1(b)(4), during the previous fiscal year, for any contract, subcontract, or modification expected to have a value of greater than the threshold.
- Postaward Debriefings (DFARS 215.506(b), 216.505(b)(6), 252.216-7010): Threshold for required debriefings increased from $10 million to $15 million.
- Multiyear Service Contracting (DFARS 217.171(d)): Threshold increased from $750 million to $900 million. DoD may not initiate a multiyear contract for services if the value of the multiyear contract exceeds the threshold unless a law specifically provides authority for the contract (10 U.S.C. 3531(d)(2)).
- Multiyear Supply Contracting (DFARS 217.172(f)(1)): Threshold increased from $750 million to $900 million. DoD must not enter into or extend a multiyear contract that exceeds $750 million (when entered into or extended) until the Secretary of Defense identifies the contract and any extension in a report submitted to the congressional defense committees (10 U.S.C. 3501(l)(5)).
- Small Business Set-Asides (DFARS 219.502-2): Construction threshold raised to $3.5 million and dredging to $2 million.
- Performance Outside the United States and Canada Reporting:
- (DFARS 225.7201): Reporting threshold increased from $750,000 to $900,000. Contractors are required by 10 U.S.C. 4603g to notify DoD of any intention to perform any part of a DoD contract outside the United States and Canada.
- (DFARS 225.7204): The threshold increased from $15 million to $20 million related to the use of the DFARS provision at 252.225-7003 and contract clause at 252.225-7004.
These are just some of the numerous adjustments made across DFARS Parts 203, 205, 209, 211, 212, 215, 216, 217, 219, 225, 236, 246, 250, and 252.
Applicability
The updated thresholds apply to DoD acquisitions beginning on or after October 1, 2025.
Key Takeaways for Government Contractors
This adjustment is not about creating new obligations but about preserving the balance Congress intended when setting statutory thresholds. Government contractors should:
- Update internal policies and procedures to reflect the new thresholds.
- Review templates, checklists, and automated systems to ensure updates are applied by October 1, 2025.
- Communicate changes to procurement and compliance teams to ensure consistent application of thresholds.
How Redstone GCI Can Help
Redstone Government Consulting helps government contractors adapt to acquisition policy changes such as DFARS threshold adjustments. Our team works with clients to update policies, procurement files, and internal systems to reflect the revised dollar amounts, while also training teams on how these changes affect competition, reporting, and oversight. By partnering with Redstone GCI, contractors can ensure updates are applied consistently and that their organizations remain prepared for future revisions to acquisition rules.
