Jarrod Mock, J.D. Candidate, 2028

In May 2025, the Office of Management and Budget (OMB) proposed a major overhaul of the Federal Acquisition Regulation (FAR)— a comprehensive set of rules that governs the acquisition process for goods and services for all executive agencies of the U.S. federal government. FAR covers everything from the initial planning of a procurement to the final contract closeout and is meant to ensure that federal government procurements are conducted in an economically efficient, fair, and uniform manner.

However, critics of FAR argue that its complexity and extensive procedural requirements hinder efficiency and raise costs in the federal procurement process in practice. Critics, such as the Defense Innovation Board, which advises top Pentagon leaders on commercial sector innovation, point to FAR’s many layers of bureaucracy, extensive compliance checks, and lengthy approval processes as the main drivers of this inefficiency. Small businesses, in particular, have raised concerns that FAR’s rigid rules and administrative burdens make it difficult for them to earn revenue from government contracts, leading to less market participants, less competition, and higher prices for the government.

The OMB’s stated goal in enacting the May 2025 overhaul was to streamline acquisitions, lower transaction costs, and increase competition. Part of that overhaul included proposed changes to certain thresholds defined in Part 2 (Definitions of Words and Terms), which prove likely to alleviate regulatory burdens on small and medium-sized businesses.

Part 2 provides specific dollar thresholds for government acquisition transactions which, if exceeded, require those transactions to undergo more extensive regulatory review. For small and medium-sized businesses that either provide services, such as small-scale information technology or catering services, or sell supplies, such as printer toner cartridges or laptops, to the federal government, two of these dollar thresholds are particularly applicable: the Micro-Purchase Threshold (MPT) and the Simplified Acquisition Threshold (SAT). If a transaction is below MPT, it is not subject to a requirement for solicitation for quotations from multiple vendors, documentation standards are more lenient, and a Government Purchase Card (GPC) may be used to make the transaction. A GPC is a credit card issued to government employees used to pay for supplies and services on behalf of the U.S. government. A purchase made using a GPC replaces a paper-based, time-consuming purchase order process. This results in the transacting business being able to instantly receive funds rather than being required to wait for an invoice to be processed.

If a transaction is below SAT, then the transacting company is exempted from a series of onerous contracting rules. Such rules, outlined in FAR 13.005, include allowing the government to inspect the contracting company’s facilities and accounting records and requiring contracting companies to implement and administrate a Drug-Free Workplace program. Given the limited resources of small and medium-sized businesses, it is likely most advantageous for them to target transactions below the MPT and SAT.

As part of the May 2025 FAR overhaul, OMB has proposed raising both the MPT and SAT: The MPT is proposed to be raised from $10,000 to $15,000, and the SAT is proposed to be raised from $250,000 to $350,000. Companies who prove likely to gain the most from this threshold increase include small and medium-sized businesses who provide services to federal agencies. For example, Aldevra, a disabled veteran-owned small business that provides services such as installation of refrigerators and other food service equipment to federal executive agencies, would be able to more efficiently earn revenue from government contracts because the services it offers—kitchen equipment sales and healthcare services—are more likely to result in contracts whose total value is less than $350,000.

Another likely benefit of these changes to FAR acquisition thresholds is the freeing up of federal resources to evaluate larger procurement transactions that require greater oversight. Any prospective savings in federal human resources driven by decreased oversight requirements for small transactions may prove beneficial for the oversight of more costly projects such as U.S. Navy warships (which can cost from $2.5 billion for Destroyers and $15 billion for nuclear-powered Aircraft Carriers) and NASA’s Orion deep space capsule (which has cost $20.4 billion since its inception). These programs are well-known for their cost overruns and arguably require greater scrutiny by more government personnel. The possible reassignment of any federal employees from teams that provide oversight of smaller transactions to teams that provide oversight of major systems could bode well for restraining the cost overruns associated with the latter.

Admittedly, these projected changes to MPT and SAT alone are unlikely to revolutionize government procurement cost efficiency. Transactions below the previous MPT and SAT thresholds account for about 11% of government procurements, and it is unrealistic to believe that the resulting personnel efficiencies will resolve billion-dollar challenges in major systems procurement transactions. Nevertheless, incremental improvements in government efficiency remain valuable, and the cumulative gains across all the proposed FAR changes could ultimately yield a meaningful impact.