Increased Statutory Acquisition Thresholds

On July 2, 2020, the acquisition councils published a final rule incorporating into the FAR the statutory changes (by the NDAAs for 2018, 2019) for the Simplified Acquisition Threshold (SAT) and Micro-Purchase Threshold (MPT). The changes are summarized in FAC 2020-07 (federal register) and acquisition.gov. The raised SAT is $250,000 and the MPT is $10,000. The changes (and updated FAR clause citations) are reflected in Pillar’s subscriber content. One FAR clause which was changed by the final rule, was E-Verify – changing its coverage threshold from the SAT to a fixed dollar amount which is lower than the SAT.

On October 2, 2019, the acquisition councils issued the Proposed Rule (PR) to amend the FAR for the statutory increases to the SAT and MPT (see Pillar’s blog). The PR estimated that the increase to the SAT (from $150,000 to $250,000) would result in an additional $450 million in federal contracts falling below the SAT (about 10% of total federal contracts). The PR also changed the coverage threshold for E-Verify (see PR, referencing FAR 22.1803) from the “Simplified Acquisition Threshold” to a fixed dollar amount (equal to the then existing FAR defined SAT, $150,000) thereby not exempting contracts between $150,000 and $250,000 from E-Verify. The PR did not provide a reason for the change nor provide cost estimates for changing the coverage threshold definition, and thereby not exempting certain contracts (the cost savings estimates in the PR only included those associated with bid preparation, not compliance, and for compliance costs, E-Verify is not insignificant). Note that EO 13465 authorizes the acquisition councils to set the coverage threshold for E-Verify, which they did in 2008 as the SAT, not a dollar amount (E-Verify Final Rule); when increasing the SAT for inflation in 2010, they left the coverage threshold at the SAT, and did not change it to a fixed dollar amount equal to the (then) existing FAR defined SAT ($100,000 before the inflation adjustment); but they did do that in this proposed (and final) rule. Pillar submitted a comment (October 2019) to the proposed rule, pointing out two issues with the (then proposed) change: first, the Federal Acquisition Streamlining Act of 1994 (41 U.S.C. 1905(b)(2)) requires the councils to justify in writing the application of any law, if not specified to be applicable to contracts under the SAT, to contracts below the SAT; and second, the councils previously authorized contracts to be made with the E-Verify threshold definition unchanged and at the (new) SAT ($250,000), prior to the new SAT definition’s incorporation into the FAR (CAAC Letter 2018-02 – civilian agencies, and DFARS Class Deviation 2018-O0018 – DoD, effective for contracts made or amended in February and April 2018, respectively), and that new contractors would rely on that acquisition definition from February 2018, until the time this final rule would be implemented – now over 2 years. In the Response to that comment in the final rule’s discussion, the councils did not address the issue of new contractors relying on and entering into contracts with E-Verify’s acquisition threshold being $250,000; did not address or provide cost estimates for the change; and, on the issue of written justification for applying E-Verify to contracts below the SAT (41 U.S.C. 1905(b)(2)), provided the following:

The Administration has stated its broad desire to “require the use of the electronic status-verification system (“E-Verify”) to ensure the maintenance of a legal workforce in the United States.” See: https://www.whitehouse.gov/​briefings-statements/​president-donald-j-trumps-letter-house-senate-leaders-immigration-principles-policies/​. Exempting contracts between $150,000 and $250,000 would run counter to the stated policy objective.