The Small Business Administration just published a final rule to modify its method for calculating annual revenues used to prescribe size standards for small businesses. The final rule is effective Jan. 6, 2020.
SAT and MPT are officially increasing under the FAR. The new law will allow more contracts to be granted to small businesses, which will undoubtedly increase opportunities for federal contractors.
Increases in the Simplified Acquisition Threshold (SAT) and Micro-purchase Threshold (MPT) will finally be official in the Federal Procurement Regulations (FAR) thanks to a law proposed by the Department of Defense (DOD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA).
Increasing small businesses federal contracts per year
Thanks to the new law, the SAT will increase from $150,000 to $250,000 and the MPT, from $3,500 to $10,000. Previously, Congress had already approved these thresholds for fiscal years 2017 and 2018, and some agencies had put them into practice, but now they will be officially registered by the FAR with the consequent extension of their use.
Under the proposed regulation, the Federal Government estimates an additional $300 million increase in small businesses contracts per year. Similarly, it forecasts an additional $2.4 million in purchases from small businesses in the same period.
Advantages of the new law
The new law will bring changes to the federal contracting landscape and will result in the issuance of more contracts under the SAT and the MPT. In other words: it will allow more contracts to be awarded without so many heavy regulations and there will be more opportunities for federal contractors, who will also have to pay less for the proposals they make.
DOD, GSA and NASA expect this law to have a significant economic impact on a substantial number of small businesses. Under the SAM registry, for example, almost 340,000 businesses have said they meet the small size requirement. The new law, therefore, will benefit the same number of small businesses when they respond to solicitations included in the SAT and the MPT.
Other benefits of the law reflect that it does not include any new reports, record keeping or other compliance requirements. Therefore, it reduces the burden on contractors by increasing the thresholds at which various regulatory charges begin to apply.
Similarly, the law does not duplicate, overlap or conflict with any other federal regulation and is applicable to all entities that do business with Uncle Sam.
DOD, GSA and NASA are inviting all federal contractors to provide comments on this law before December 2.
If you are a government contractor and want to know more about this regulation, as well as give your opinion on it, click here to access the Federal Register website.