Contracting officers and small business contractors must work from accurate threshold data to ensure proper set-aside determinations, competition decisions, and procurement channel selections. The current thresholds reflect two significant regulatory updates: FAC 2025-06, effective February 2026, which raised the core micro-purchase and simplified acquisition thresholds, and FAC 2026-01, effective March 13, 2026, which introduced new multiple-award contract rules for set-aside ordering. The controlling authority for all threshold definitions is FAR 2.101 at Acquisition.gov, the official home of the Federal Acquisition Regulation.
Micro-Purchase Threshold: Current Figures by Context
The micro-purchase threshold is the dollar level below which agencies may award without soliciting competitive quotations, using a government purchase card or similar simplified mechanism. FAC 2025-06 raised the standard micro-purchase threshold from $10,000 to $15,000, effective February 2026. However, the threshold is not a single number — it varies by contract type and circumstance, and contracting professionals who apply the standard figure in all situations risk compliance errors.
The current micro-purchase thresholds by category:
- Standard (supplies and most services): $15,000
- Construction subject to Davis-Bacon wage requirements: $2,000 — this figure has not changed and reflects the statutory floor set by the Davis-Bacon Act
- Services subject to Service Contract Labor Standards (SCLS): $2,500 — also unchanged, reflecting Service Contract Act statutory requirements
- Contingency operations, cyber defense operations, or emergency response: $25,000 domestic, $40,000 overseas
- Acquisitions by higher education institutions and nonprofit research organizations: $15,000 or higher, per agency determination — institutions have flexibility to set higher thresholds for their internal micro-purchase programs
The Davis-Bacon and SCLS exceptions are frequently overlooked. A contracting officer awarding a small janitorial or grounds services contract must apply the $2,500 SCLS threshold, not the $15,000 standard figure, when the contract falls under the Service Contract Labor Standards. Misapplying the standard threshold in these cases can expose the agency to audit findings and labor standards violations.
Simplified Acquisition Threshold: The SAT and Its Variants
The simplified acquisition threshold (SAT) is the dollar level below which agencies may use simplified acquisition procedures instead of full and open competition requirements. FAC 2025-06 raised the standard SAT from $250,000 to $350,000, effective February 2026. Like the micro-purchase threshold, the SAT has context-specific variants that contracting professionals must know:
- Standard: $350,000
- Contingency operations or emergency response (domestic): $1,000,000
- Contingency operations or emergency response (overseas): $2,000,000
- Humanitarian or peacekeeping operations (overseas): $650,000
The SAT increase from $250,000 to $350,000 has practical significance for small business competition. Below the SAT, set-asides for small businesses are more straightforward to execute and are mandatory under FAR 19.502-2 when the rule of two is met. Raising the SAT expands the dollar range within which the mandatory small business set-aside trigger applies under simplified acquisition procedures.
The Rule of Two: When Set-Asides Are Required
FAR 19.502-2 establishes the "rule of two" — the foundational test for when a contracting officer must set aside an acquisition for small businesses. The rule requires a set-aside when there is a reasonable expectation that offers will be obtained from at least two responsible small business concerns and that award will be made at fair market prices. The reasonable expectation standard does not require certainty — it requires a reasoned judgment based on market research.
The rule of two applies differently depending on contract value relative to the SAT. For acquisitions below the SAT, set-asides are mandatory unless the contracting officer makes a written determination that the rule of two cannot be met. For acquisitions above the SAT, set-asides are required when two small business offers are reasonably expected at fair market price — but the contracting officer has more procedural flexibility in how that determination is documented and structured.
Past acquisition history is relevant but not determinative. A contracting officer cannot rely solely on prior competitive history to determine whether the rule of two is met for a new acquisition. Market research — including RFIs, industry days, capability statements, and review of relevant databases — drives the determination. A market that previously supported only large business competition may have matured enough for small business competition. The converse is also true.
Socioeconomic Programs and Order of Precedence
FAR 19.203 governs the relationship among the four major socioeconomic small business programs: 8(a) Business Development, HUBZone, Service-Disabled Veteran-Owned Small Business (SDVOSB), and Women-Owned Small Business (WOSB). For acquisitions above the simplified acquisition threshold, FAR 19.203 establishes that there is no mandatory order of precedence among these programs. A contracting officer with a requirement above the SAT may set aside for any of these programs when the applicable criteria are met, without being required to favor one program over another.
FAC 2026-01, effective March 13, 2026, introduced a significant rule for multiple-award contracts issued after October 1, 2028. Under this rule, agencies may divide acquisitions into distinct portions with separate NAICS codes — and apply different set-aside designations to each portion. This structural change gives agencies a new tool for maximizing small business participation on complex, multi-discipline contracts where a single set-aside designation would otherwise limit competition across the full scope of work.
What It Means for Contractors
The SAT increase to $350,000 is directly favorable to small businesses. A broader range of federal requirements now falls within the simplified acquisition zone where mandatory set-aside rules apply and competition is concentrated among smaller firms. Small business contractors should be especially attentive to opportunities in the $250,000–$350,000 range that were previously competed above the old SAT — those requirements may now receive mandatory small business set-asides that were not required before February 2026.
The FAC 2026-01 multiple-award contract rule for post-October 2028 awards creates a strategic planning consideration for large GWAC and IDIQ competitions that agencies are currently scoping. If an agency is designing a vehicle with mixed IT and professional services scope, the ability to split NAICS codes and apply different set-aside treatments to each portion changes how small businesses and large businesses alike should think about teaming, pricing, and proposal strategy. Contractors watching pre-solicitation notices for large IDIQ awards should look for this structure beginning in solicitations drafted for post-2028 awards.
The controlling authority for all these thresholds is FAR 19.502-2 at Acquisition.gov. Contractors who encounter set-aside determinations they believe are incorrect should cite the specific FAR provisions and request the contracting officer's written determination — a right that exists regardless of acquisition dollar value.
