Government purchasing thresholds

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The Federal Acquisition Streamlining Act of 1994 (FASA) had a great impact on the federal acquisition process. But, before the law could be fully implemented, the Federal Acquisition Reform Act of 1996 (FARA) was passed to correct some shortcomings in the earlier legislation and to make more changes.

This table illustrates the significance of the FASA to the interests of small businesses.

Government Purchasing Thresholds
Micro-purchases (credit cards)	for contracts up to $2,500
Simplified Acquisition Procedures (SAP)	for contracts for $2,501 to $100,000
Simplified Commercial	for contracts $100,000 to $5,000,000
Commercial Off the Shelf (COTS)	no dollar limits, any dollar size contract
Commercial Items	for contracts over $2,500
Sealed Bids/Negotiations	FAR Parts 14 & 15 apply for contracts $100,000 and up

The federal government has designated the following goals* for awarding prime contracts to small businesses:

23% to small businesses
5% to small disadvantaged businesses for prime and subcontracts
5% to small women-owned businesses for prime and subcontracts
5% to HUBZone small businesses
3% to small service-disabled, veteran-owned businesses for prime and subcontracts

* Keep in mind that these are government goals, not quotas. Quotas are set objectives that one must achieve, while goals are set objectives that one must attempt to achieve. The government doesn’t award contract just to reach its goals. As in any commercial setting, contracts are awarded on the basis of what makes good business sense, with regard to price, quality, and performance.

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