DoD Class Deviation Increases Micro-purchase Threshold, But Statutory Exceptions Remain Unchanged

On Aug. 31, 2018, the U.S. Department of Defense (DoD) issued Class Deviation 2018-O00018, which increases the micro-purchase threshold for DoD procurements from $5,000 to $10,000. The deviation implements Section 821 of the 2019 National Defense Authorization Act (NDAA), and diverges from the FAR and DFARS. Effective immediately, DoD contracting officers are required to use the revised threshold in accordance with the deviation. As part of the deviation, DoD also deleted the definition of “micro-purchase threshold” in its entirety at DFARS 202.101. The new deviation supersedes DoD’s April 13, 2018, Class Deviation 2018-O0013, which previously increased the micro-purchase and simplified acquisitions thresholds.

Actions at or below the micro-purchase threshold, may be made through a government purchase card. Micro-purchases do not require provisions or clauses, except as provided at FAR 13.202 and 32.1110. Micro-purchases may be awarded without soliciting competitive quotations if the contracting officer considers the price to be reasonable. 

Notably, the DoD’s new deviation does not increase the statutory micro-purchase threshold exceptions established for certain construction wage rate requirements and for acquisition of services under the Service Contract Labor Standards. These exceptions remain $2,000 and $2,500 and have not increased from 1931 and 1965. As these requirements are statutory, DoD cannot issue a deviation to change them.  However, if properly adjusted for inflation, the exceptions would be over $30,000 and approximately $20,000 today. 

This new increased gap between the standard micro-purchase threshold and the exceptions is significant, as before the April 2018 deviation, the micro-purchase threshold was close to these statutory exceptions at $3,500. Now, the exceptions are 1/4 and 1/5 of the value of the standard micro-purchase threshold, and are bound to cause confusion to contractors. Given the noticeable gap between the DoD’s new class deviation and the exceptions, it is important for contractors to be aware that a procurement that would typically be awarded under the standard micro-purchase threshold may be treated as exceeding the micro-purchase threshold if it relates to certain construction or Service Contract Labor Standards wages. This confusion is likely to become more severe as dollar thresholds in other part of the FAR and DFARS are replaced with the term “micro-purchase threshold.”