Monday, December 1, 2014

Additional Inflation-Related Acquisition Thresholds to be Increased

Last week, we reported on the proposed increase in the TINA (Truth-in-Negotiation Act) threshold from $700 thousand to $750 thousand - an inflation related adjustment. That same proposal included many other inflation related thresholds requiring changes to 91 different sections of FAR (Federal Acquisition Regulations). Most of these changes relate to internal Government procedures but a few will be of interest to Government contractors.

Micro-Purchase Threshold. Micro-purchases are acquisitions of supplies and services where the Government uses simplified acquisition procedures, the aggregate amount of which does not exceed the micro-purchase threshold. That threshold will increase from $3,000 to $3,500 under the new rules. The simplified acquisition procedures for micro-purchases are covered in FAR 13.2 and generally means the Government will use commercial purchase cards. The use of these procedures do not require provisions or clauses.

Subcontracting Plans. Any contractor receiving a contract for more than the simplified acquisition threshold (currently $150 thousand) must agree that small business, veteran-owned small business, service disabled veteran-owned small business, HUBZone small business, small disadvantaged businesses, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with efficient performance. When the contract exceeds $650,000, the contractor is required to submit a formal "subcontracting plan". Under the proposed rule, the threshold for the formal subcontracting plan will increase from $650 thousand to $700 thousand.

Reporting Executive Compensation and First-Tier Subcontract Awards. FAR 4.14 (and FAR 52.204-10) requires contractors to report subcontract award data and the total compensation of the five most highly compensated executives of the contractor and subcontractor. This applies to all contracts exceeding $25,000. Failure to comply is a reportable condition in the performance rating system. Under the proposed rule, the threshold for reporting will increase from $25,000 to $30,000. The subcontract award information is publicly available at Compensation data is not publicly available.

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