DoD Preparing to Raise Some Acquisition-Related Thresholds

Every five years or so the Government goes through its procurement regulations and decides whether to raise certain acquisition-related dollar thresholds. For example, the TINA (Truth In Negotiations Act) threshold was last raised back in 2010 from $650 thousand to $700 thousand. Look for another bump next year, in 2015. Most of these threshold adjustments are required by statute or regulation and the changes are based on published indices such as the CPI.

The Department of Defense has just published a proposed change to its FAR Supplement (DFARS) that will affect many of the dollar thresholds found in the supplement. Most of these would not interest contractors as they pertain to internal policies, guidance, and instructions. We were able however to find a few changes that might be of interest to contractors and prospective contractors.

Simplified Acquisition Threshold. According to FAR 2.101, the simplified acquisition threshold is essentially $150 thousand except when needed to support contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack, doubles to $300 thousand. FAR also sets the a threshold of $1 million for contracts awarded and performed outside the US. The DFARS lowers the overseas threshold to $300 thousand for humanitarian and peacekeeping operations. That $300 thousand threshold will rise to $400 thousand under this new proposal.

Contract Code of Business Ethics and Conduct. Currently, DFARS requires contractors with contracts exceeding $5 million to display a Hotline Poster. The new regulation raises that threshold to $5.5 million. Its probably a good idea for all contractors to display hotline posters regardless of contract value. Its part of a setting the "tone at the top" and contributes to good internal controls.

Commercial Items. FAR prohibits contracting officers from requiring cost or pricing data where there is adequate competition, when prices are set by law or regulation or for the acquisition of commercial items. Waivers are available for exceptional circumstances. DFARS requires an annual report for any waivers granted on acquisitions expected to exceed $15 million. The proposed regulation will increase that threshold to $20 million.

There is probably nothing here that is going to change the way contractors bid or perform contracts. The Hotline Poster requirement, at least, is a good reminder for contractors that are not complying with the current requirement. We've wandered the halls of many contractors and subcontractors who have five million dollar contracts and are not complying with the hotline poster requirement.