Simplified Acquisition Threshold (SAT)

How It Works

The Simplified Acquisition Threshold (SAT), set at $250,000 for most agencies by the NDAA for FY2018 (raised from $150,000), is a key dollar threshold that unlocks streamlined purchasing under FAR Part 13. Below the SAT, contracting officers can use simplified acquisition procedures that skip many of the formal requirements of Parts 14 (sealed bidding) and 15 (contracting by negotiation), getting multiple quotes is encouraged but full-and-open competition is not required. Between the Micro-Purchase Threshold ($10,000 for most purchases, $2,500 for construction subject to Davis-Bacon, $2,500 for services subject to Service Contract Act) and the SAT, agencies must generally set aside acquisitions exclusively for small businesses under the Rule of Two (FAR 19.502-2(a)). Above the SAT, standard FAR Part 15 source-selection procedures apply with formal solicitations, proposal evaluation, and written source-selection decisions. Special thresholds apply in emergency contingency operations (raised to $800,000 domestic and $1.5 million overseas during declared contingencies) and for commercial items (raised to $7.5 million under FAR 13.500). The Micro-Purchase Threshold of $10,000 allows purchases with a government purchase card without competitive quoting, enabling roughly $20 billion in annual small-dollar buys across the government through the SmartPay program. These thresholds are periodically indexed for inflation. Understanding which threshold applies is essential because it determines competition requirements, set-aside eligibility, synopsizing requirements on SAM.gov, and administrative overhead. The SAT also governs clause applicability: contracts below the SAT omit dozens of FAR clauses that apply only above the threshold, such as Cost Accounting Standards, Service Contract Act wage determinations for some service contracts, and Subcontracting Plan requirements. This creates meaningful transaction-cost differences between a $249,000 award and a $251,000 award, and agencies sometimes split requirements to stay under the SAT, a practice prohibited as "anti-splitting" under FAR 13.003(c)(2) when done to avoid competition or thresholds.

Related Terms

• Federal Acquisition Regulation (FAR), The comprehensive rule book governing how federal agencies buy goods and services, covering everything from how to write a solicitation to when to use competitive bidding.
• Federal Contract, A legally binding agreement between the U.S. government and a private company to provide goods or services, from fighter jets to IT consulting.
• Competitive Bidding (Full and Open Competition), The standard procurement process where the government publicly solicits proposals from multiple vendors and selects the best offer based on price, quality, and capability.
• Small Business Set-Aside, A federal contracting provision that reserves certain contracts exclusively for small businesses, part of the government's goal of awarding 23% of contract dollars to small firms.