Finally Something Good for Government Contractors About Inflation
Leave a CommentIt’s not often that inflation has a positive impact on federal procurement. But three rules issued in the last days of August fall into that category.
First, on August 22, Small Business Administration published a proposed rule that would increase all of the revenue-based size standards for 263 NAICS codes, as part of SBA’s statutorily required five-year review of all SBA size standards. SBA also decided not to adjust the size standard for any of the 213 NAICS codes that would otherwise have seen a reduction, potentially affecting almost 8,000 firms. However, further rulemaking is required before this proposed rule becomes effective.
Second, on August 25, the Department of Defense published a final rule, effective October 1, 2025, making inflation adjustments to its acquisition-related thresholds, as part of the statutory requirement for a five-year adjustment of statutory acquisition-related thresholds for inflation. Among the numerous DFARS changes is an increase to $15 million in the floor for post-award debriefing when requested by a small business (although the information required to be provided does not change).
Third, on August 27, the FAR Council published a final rule, effective October 1, 2025, making inflation adjustments to Federal Acquisition Regulations acquisition-related thresholds, as part of the same statutory requirement for a five-year adjustment of statutory acquisition-related thresholds for inflation. Among the numerous FAR changes are an increase in the micro-purchase threshold (MPT) from its current $10,000 to $15,000 while increasing the levels for existing exceptions and raising the Simplified Acquisition Threshold (SAT) – and by implication the small business reservation threshold – from $250,000 to $350,000. The rule increases the ceiling for using FAR Part 13 Simplified Acquisition Procedures from $7.5 million to $9.0 million and raises the TINA threshold under FAR 15.403-4 from the current $2 million to $2.5 million.
Conclusion
These numerous adjustments have a significant impact on the entire government marketplace, for both federal agencies and for government contractors. Particularly when the SBA size standard are finalized, most companies will benefit from the higher levels, and some will even being able to retain their small business status. Watch for this final rule late in this calendar year.
As to the FAR and DFARS adjustments, remember that many of these thresholds are either floors affecting when actions become available, or new ceilings below which certain benefits apply. After October 1, be sure to watch for the applicability of these revised thresholds in new solicitations and how they will apply to your particular contractual actions.
If you have any questions or need any additional information, please do not hesitate to contact the author at achvotkin@protoraelaw.com or the Protorae Law attorney with whom you normally work.
1- SBA proposed rule “Small Business Size Standards: Monetary-Based Industry Size Standards”, August 22, 2025, available at 2025-16142.pdf. Last viewed September 2, 2025.
2- DFARS final rule “Inflation Adjustment of Acquisition-Related Thresholds”, August 25, 2025, available at 2025-16205.pdf Last viewed September 2, 2025.
3- FAR final rule “Inflation Adjustment of Acquisition-Related Thresholds”, August 27, 2025, available at 2025-16412.pdf. Last viewed September 2, 2025.
4- “TINA” formerly referred to as the “Truth In Negotiations Act,” requires contractors to provide current, complete and accurate cost and pricing data when negotiating government contracts in certain circumstances; it has been renamed the “Truthful Cost or Pricing Data” but everyone still calls it “TINA.”Â