The Office of Management and Budget and the General Services Administration sent Congress a package of 20 legislative proposals to overhaul federal acquisition law in July 2026, asking lawmakers to raise the simplified acquisition threshold to $500,000, lift the micro-purchase cap to $100,000, and extend a defense-style task-order protest threshold to every civilian agency.
Background
The proposals arrive on GSA's acquisition-policy legislative-proposals page, updated in July 2026, as the administration's formal input into this year's defense authorization and acquisition-reform debate. Unlike a regulatory rulemaking, the 20 proposals require congressional action; OMB and GSA cannot raise statutory thresholds like the simplified acquisition threshold or the micro-purchase threshold on their own, since both are set in law rather than in the Federal Acquisition Regulation. That distinction is why the package has been routed to Capitol Hill as legislative text rather than issued as a proposed FAR rule.
The proposals land alongside a narrower, already-passed House bill, the FIT Procurement Act (H.R. 4123), which cleared the House on July 20, 2026, and would raise the micro-purchase threshold to $25,000 and the simplified acquisition threshold to $500,000. The gap between the two efforts on the micro-purchase number, $25,000 in the House bill versus $100,000 in OMB's package, sets up a reconciliation fight if both proposals move forward in the same legislative window.
Rich Beutel of the George Mason University Baroni Center for Government Contracting described the OMB package as a good first step, according to Federal News Network's July 31, 2026 report. Beutel also said the proposals reached Capitol Hill too late in the legislative calendar for standalone passage this year, and that attaching them to the defense policy bill is the most likely path to getting them enacted. Alan Thomas, a former GSA Federal Acquisition Service commissioner, focused his comments on the administration's emphasis on fixed-price contracts and on commercial products and services under the simplified-acquisition-threshold proposal.
Key Details
Proposal 1, "Streamlining Compliance," would raise the simplified acquisition threshold from its current level to $500,000 across all acquisitions. For commercial products and services, the threshold would climb further, to $10 million, phased in through 2030.
Proposal 2, "Common Sense Procedures," would raise the micro-purchase threshold from $15,000 to $100,000 in phases through 2030. It also creates a new, permanent $15,000 cap below which purchases would be decoupled from Buy American Act review; purchases above that line would still face BAA scrutiny. Federal News Network reported that the phased micro-purchase increase would eventually touch more than 500,000 federal transactions annually once the threshold reaches its full $100,000 level. The report separately noted that the simplified acquisition threshold proposal is projected to affect more than 100,000 transactions and capture an additional 14.6% of federal spend.
Proposal 12, "Task and Delivery Order Protest Parity," would raise the civilian-agency threshold for protesting task and delivery orders from $10 million to $35 million, matching the threshold that already applies to defense agencies. The proposal would also extend government-wide the incumbent-protest-payment-withholding mechanism created by Section 875 of the FY2026 NDAA, which withholds 5% of payment from a contractor when an incumbent loses a follow-on bid protest.
The package includes several other changes. One would make the Commercial Solutions Opening pilot permanent at GSA, NASA and the Department of Homeland Security; the pilot is otherwise scheduled to expire September 30, 2027. GSA data reported by Federal News Network shows CSO awards have come in 19 days faster than comparable FAR-based contracts, with 67% of CSO awardees having no prior GSA contracting experience, a pattern consistent with the pilot pulling in newer, often smaller vendors rather than simply speeding up awards to incumbents. Without congressional action, the pilot's September 2027 expiration would end that on-ramp for GSA, NASA and DHS, which is what makes the permanence proposal significant beyond a simple extension.
Another proposal would raise the share of GSA schedule fees allocated to the Federal Acquisition Institute's training fund from 5% to 7.5%, directing more money toward acquisition-workforce training at a time when agencies across government have flagged workforce capacity as a bottleneck on contract execution. A separate proposal would give NASA other transaction authority to move prototypes into full production, extending an authority that has typically applied to the research and prototyping phase rather than the production phase of a program.
What It Means for Contractors
A $500,000 simplified acquisition threshold and a $100,000 micro-purchase cap would pull a large share of small-dollar federal buying out of full FAR competition and compliance requirements, benefiting small businesses and nontraditional vendors that have struggled with the paperwork burden of even modest contracts. Companies that rely on the Commercial Solutions Opening pathway, or are considering it, have reason to watch the CSO permanence provision closely: the faster-award and higher-first-time-participation data reported by Federal News Network suggests the pilot has been a meaningful on-ramp for companies without established FAR-contracting infrastructure.
The protest-threshold proposal matters most to companies bidding as incumbents or challengers on civilian task and delivery orders. Raising the threshold to $35 million and extending the 5% payment-withholding mechanism from Section 875 government-wide would put civilian agencies on the same footing defense agencies already occupy, changing the calculus for both incumbents defending a recompete and challengers weighing whether a protest is worth the financial exposure if they lose as the incumbent on a future round.
None of this is law yet. The proposals are administration requests to Congress, not enacted statute, and they compete with the House-passed FIT Procurement Act's more conservative numbers on the same thresholds. Contractors should treat the $500,000 and $100,000 figures as targets under negotiation rather than current law, and watch whether House and Senate negotiators reconcile the two approaches inside the FY2027 NDAA process rather than through standalone legislation. Companies with acquisition strategy tied to threshold-dependent set-asides or sole-source authorities should model both the House and OMB versions until one prevails.
The Federal Acquisition Institute funding increase is a secondary but real signal for contractors that sell training, consulting or workforce-development services into the government market: a larger training-fund allocation from GSA schedule fees points to more federal spending on acquisition-workforce development over the next several years, regardless of whether the threshold provisions survive reconciliation with the House bill intact. Contractors who track GSA schedule policy should also watch how the training-fund change interacts with schedule pricing, since the increase is funded out of fees GSA already collects from schedule holders rather than new appropriations.
