The Federal Acquisition Regulatory (FAR) Council, consisting of the Office of Federal Procurement Policy (OFPP), DoD, GSA, and NASA, has finalized changes to acquisition-related thresholds in the FAR to account for inflation. Published in the Federal Register on August 27, 2025, and effective October 1, 2025, this rule (FAR Case 2024-001, FAC 2025-06) 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 intended to preserve the intent of statutory acquisition thresholds by preventing inflation from expanding the scope of contracts subject to additional requirements. The FAR Council also applied the same methodology to adjust certain non-statutory thresholds for consistency.
Why Did the FAR Council Issue This Rule?
Acquisition thresholds determine when specific requirements, such as competition, reporting, subcontracting, and oversight, apply to federal contracts. Without periodic adjustment, inflation would cause more contracts to exceed these thresholds, unintentionally expanding regulatory obligations.
By applying a CPI-based formula, the FAR Council 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 FAR updates align with comparable DFARS changes effective October 1, 2025.
Key Changes in the 2025 FAR Threshold Adjustment
Effective October 1, 2025, contractors will see revised thresholds across multiple FAR parts. Key updates include:
- Micro-Purchase Threshold (FAR 2.101): Increased from $10,000 to $15,000, with higher limits for contingency, emergency, and overseas acquisitions.
- Simplified Acquisition Threshold (FAR 2.101): Increased from $250,000 to $350,000, with higher values for contingency, humanitarian, and peacekeeping operations.
- Subcontract Reporting (FAR 4.1401): First-tier subcontract reporting threshold increased from $30,000 to $40,000.
- Sole-Source 8(a) Awards (FAR 6.204(b)): Threshold for requiring justification for limiting competition to eligible 8(a) participants increased from $25 million to $30 million.
- Justification for Other than Full and Open Competition (FAR 6.304): Approval thresholds increased to:
- Non-DoD, NASA, and Coast Guard
- $900,000 for contracting officer certification,
- $20 million for approval by procuring an activity competition advocate,
- $90 million for approval by the head of the procuring activity, and
- Over $90 million in approval by the senior procurement executive of the agency.
- DoD, NASA, and Coast Guard
- $900,000 for contracting officer certification,
- $20 million for approval by procuring an activity competition advocate,
- $150 million for approval by the head of the procuring activity, and
- Over $150 million approval by the senior procurement executive of the agency.
- Non-DoD, NASA, and Coast Guard
- Simplified Procedures for Certain Commercial Products and Services (FAR 13.500(a)): Ceiling increased from $7.5 million to $9 million.
- Cost or Pricing Data Threshold (FAR 15.403-4): Increased from $2 million to $2.5 million.
- Subcontracting Plans (FAR 19.702): Threshold increased from $750,000 to $900,000, and from $1.5 million to $2 million for construction.
These are among numerous adjustments made across FAR Parts 1, 2, 3, 4, 5, 6, 8, 9, 10, 12, 13, 15, 16, 17, 19, 22, 23, 25, 26, 30, 32, 36, 42, 50, and 52.
Applicability
The updated thresholds apply to federal acquisitions beginning on or after October 1, 2025.
Key Takeaways for Government Contractors
This update is not about introducing new obligations, but rather about preserving the balance Congress intended when setting statutory thresholds. Government contractors should:
- Update internal policies and procedures to reflect the new thresholds.
- Review automated systems and procurement files to ensure updates are applied by October 1, 2025.
- Train procurement and compliance teams on how these changes impact competition, subcontracting, and reporting.
How Redstone GCI Can Help
Redstone Government Consulting helps government contractors adapt to acquisition policy changes such as FAR threshold adjustments. Our team works with clients to update policies, procurement documentation, and internal processes 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.
