FAR 1.109—Statutory acquisition–related dollar thresholds-adjustment for inflation.
Plain-English Summary
FAR 1.109 explains how statutory acquisition-related dollar thresholds are adjusted for inflation and how those adjusted thresholds are applied in federal procurement. It covers the FAR Council’s duty to periodically revise covered statutory thresholds every five years using the Consumer Price Index for All Urban Consumers (CPI-U), the legal definition of an acquisition-related dollar threshold, and the important exceptions for certain labor, bond, and trade-related thresholds that are not escalated under this rule. It also addresses a key practical issue: once a threshold is adjusted, the new amount applies to existing contracts and subcontracts for the remainder of their term, regardless of award date, unless a later adjustment occurs. Finally, it points users to the current escalation matrix available through Regulations.gov, which is the reference source for the most recent adjusted amounts. In practice, this section matters because it determines which statutory requirements, restrictions, and procedures apply at a given dollar value, and those values can change over time in ways that affect competition, compliance, reporting, and contract administration.
Key Rules
Five-year inflation adjustments
The FAR Council must periodically adjust statutory acquisition-related dollar thresholds for inflation every five years, beginning in October 2005. The adjustment is based on the CPI-U and is intended to keep statutory thresholds aligned with economic conditions.
Covers statutory acquisition thresholds
An acquisition-related dollar threshold is a dollar amount set by statute that determines whether a procurement policy, procedure, requirement, or restriction applies to executive agency purchases of supplies or services. The FAR Council determines which statutory thresholds fall within this definition for FAR adjustment purposes.
Supersedes other adjustment laws
The FAR’s inflation-adjustment mechanism controls even if another law would otherwise provide a different method for adjusting the same acquisition-related threshold. In other words, the FAR Council’s statutory adjustment process is the governing rule for covered thresholds.
Important exclusions
Certain thresholds are not adjusted under this section. These include thresholds under 40 U.S.C. chapter 31 for bonds and construction wage rate requirements, thresholds under the Service Contract Labor Standards statute, and thresholds established by the U.S. Trade Representative under the Trade Agreements Act authority.
Applies to existing contracts
When a threshold is adjusted, the new amount applies to contracts and subcontracts without regard to the date of award. The adjusted threshold governs the remaining term of the contract unless a later threshold adjustment changes it again.
Current matrix is authoritative reference
The most recent escalation adjustments are published in a matrix available through Regulations.gov. Contracting personnel should use that current matrix to confirm the applicable threshold amounts rather than relying on outdated figures.
Responsibilities
FAR Council
Determine which statutory thresholds are acquisition-related, calculate inflation adjustments every five years using CPI-U, publish the adjusted thresholds, and maintain the current escalation matrix.
Contracting Officers
Apply the current adjusted threshold amounts when determining whether statutory requirements, restrictions, or procedures apply to a procurement or existing contract, and ensure solicitations and contract administration reflect the correct threshold.
Contractors
Monitor threshold changes that may affect compliance obligations during contract performance, including requirements that can apply or stop applying because of an adjusted dollar threshold.
Agencies
Use the updated thresholds in procurement planning, policy implementation, and oversight, and ensure internal guidance and systems reflect the current FAR-adjusted amounts.
Subcontractors
Follow any threshold-based requirements that flow down to subcontracts and recognize that adjusted thresholds may apply during the subcontract term even if the subcontract was awarded earlier.
Practical Implications
Thresholds can change during performance, so a contract that was compliant at award may become subject to different statutory rules later in its life.
Contracting officers should not assume the award-date threshold controls; the current adjusted threshold may apply for the rest of the contract term.
Users must check the latest FAR threshold matrix before making coverage determinations, especially for requirements tied to dollar-value triggers.
Do not apply this inflation-adjustment rule to excluded thresholds such as Davis-Bacon, Service Contract Labor Standards, bond thresholds, or Trade Agreements Act thresholds.
A common mistake is relying on an old threshold amount from a prior solicitation, clause, or policy memo instead of the current FAR-published amount.
Official Regulatory Text
(a) 41 U.S.C. 1908 requires that the FAR Council periodically adjust all statutory acquisition-related dollar thresholds in the FAR for inflation, except as provided in paragraph (c) of this section. This adjustment is calculated every 5 years, starting in October 2005, using the Consumer Price Index for All Urban Consumers (CPI-U), and supersedes the applicability of any other provision of law that provides for the adjustment of such acquisition-related dollar thresholds. (b) The statute defines an acquisition-related dollar threshold as a dollar threshold that is specified in law as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law to the procurement of supplies or services by an executive agency, as determined by the FAR Council. (c) The statute does not permit escalation of acquisition-related dollar thresholds established by: (1) 40 U.S.C. chapter 31 — (i) Subchapter III, Bonds; and (ii) Subchapter IV, Wage Rate Requirements (Construction); (2) 41 U.S.C. chapter 67 , Service Contract Labor Standards; or (3) The United States Trade Representative pursuant to the authority of the Trade Agreements Act of 1979 ( 19 U.S.C. 2511 et seq.). (d) The statute, as amended by section 821 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91), requires the adjustment described in paragraph (a) of this section be applied to contracts and subcontracts without regard to the date of award of the contract or subcontract. Therefore, if a threshold is adjusted for inflation as set forth in paragraph (a) of this section, then the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. (e) A matrix showing calculation of the most recent escalation adjustments of statutory acquisition-related dollar thresholds is available via the Internet at http://www.regulations.gov (search FAR Case 2024-001, open the docket folder, and go to the supporting documents file).