Gordon Rees Scully Mansukhani presents the latest insights from our Government Contracts group, offering a comprehensive overview of recent significant decisions, regulatory changes, and essential updates for businesses contracting with federal and state governments. Our team compiled the most pertinent legal developments to keep you informed in the dynamic landscape of government contracts.
Tune in to The Essential GovCon Brief podcast on Spotify or YouTube for an in-depth discussion of the issues highlighted here.
Agency Update
FAR Council Issues Final Rule Raising Acquisition Thresholds for Inflation
On August 27, 2025, the Federal Acquisition Regulatory (FAR) Council published a final rule adjusting numerous acquisition-related thresholds across the FAR to account for inflation. This rule, which takes effect on October 1, 2025, is issued under 41 U.S.C. § 1908, a statute that requires review and inflation adjustment of statutory thresholds every five years based on the Consumer Price Index for All Urban Consumers (CPI-U).
The changes increase several key thresholds, including the micro-purchase threshold, the simplified acquisition threshold (SAT), and the levels that trigger certain justification and approval requirements, as well as the cost or pricing data threshold and subcontracting plan requirements. The FAR Council also adjusted non-statutory thresholds using the same inflation-based methodology. Certain thresholds tied to statutes such as the Davis-Bacon Act, Service Contract Labor Standards, performance and payment bonds, and trade agreements are excluded from this rule.
One area in which the rule makes a noticeable impact is contingency operations. A “contingency operation” refers to a military operation designated by the Secretary of Defense in which U.S. armed forces are or may become involved in hostilities or a situation in which active duty is required during a national emergency declared by the president or Congress. In practice, contingency operations often involve military deployments, disaster relief, or overseas stability missions. For these circumstances, the FAR sets higher micro-purchase and simplified acquisition thresholds to give contracting officers more flexibility and speed in urgent or unpredictable environments.
Key Threshold Increases
1. Micro-Purchase Threshold (FAR 2.101)
The micro-purchase threshold sets the dollar limit under which agencies can buy goods and services directly, without seeking competitive quotes, to streamline low-value purchases.
- General Purchases: from $10,000 → $15,000
- Domestic Contingency Operations: from $20,000 → $25,000
- Overseas Contingency Operations: from $35,000 → $40,000
2. Simplified Acquisition Threshold (SAT)
The simplified acquisition threshold marks the level below which agencies can use streamlined buying procedures to reduce paperwork and speed up contract awards.
- Standard: $250,000 → $350,000
- Domestic Contingency Operations: $800,000 → $1 million
- Overseas Contingency Operations: : $1 million → $2 million
- Humanitarian/Peacekeeping Operations: $500,000 → $650,000
3. Justifications for Other Than Full and Open Competition (FAR 6.304)
When agencies award a contract without full and open competition, the justification must be approved at increasingly senior levels depending on the dollar value. The inflation adjustment raises those approval thresholds as follows:
- Contracting Officer Approval: from $750,000 → $900,000
- Competition Advocate Approval: from $15 million → $20 million
- Head of Procuring Activity Approval: from $75 million → $90 million
- Senior Procurement Executive (DoD, NASA, Coast Guard): from $100 million → $150 million
4. Cost or Pricing Data Threshold (FAR 15.403-4)
The rule also raises the threshold at which contractors must submit “cost or pricing data,” which is detailed information about costs, such as labor, materials, and overhead, that the government uses to determine whether a price is fair and reasonable in the absence of market competition. The new limits are:
- Pre-July 1, 2018: $750,000 → $950,000
- Post-July 1, 2018: $2 million → $2.5 million
5. Subcontracting Plan Threshold (FAR 19.702)
The subcontracting plan threshold refers to the point at which large businesses must submit a plan showing how they will provide subcontracting opportunities for small businesses. These plans outline goals for awarding a share of the work to small, disadvantaged, veteran-owned, women-owned, and HUBZone businesses. Under the new rule, the thresholds increase as follows:
- Prime Contracts: $750,000 → $900,000
- Construction: $1.5 million → $2 million
6. Simplified Procedures – Commercial Products/Services (FAR 13.500(a))
Simplified procedures for commercial products and services allow agencies to use easier, less formal buying methods when acquiring widely available items, up to the stated dollar cap.
- Standard Threshold: $7.5 million → $9 million
- Special/Emergency Threshold: $15 million cap (unchanged)
FAR Council Finalizes Clarification on SAM Pre-Award Registration Timing
On August 7, 2025, the FAR Council issued a final rule that clarifies when contractors must be registered in the System for Award Management (SAM) to compete for federal contracts. The rule adopts, without change, the interim rule published in 2023 and is now effective.
The clarification is simple but important: contractors must be registered in SAM at two points only—when submitting an offer and at the time of contract award. Continuous registration during the period between proposal submission and award is not required. In the past, agencies and offerors often treated continuous registration as mandatory, which created unnecessary risk of disqualification if a registration briefly lapsed.
This change provides welcome relief, particularly for small businesses, by removing the administrative burden of ensuring uninterrupted registration throughout what can sometimes be a lengthy procurement process. At the same time, contractors should remember that SAM registration must remain active once a contract is awarded and throughout performance until final payment.
What This Means for Contractors
- No Penalty for Brief Lapses: A temporary gap in SAM registration between proposal and award will not automatically disqualify an offeror.
- Less Administrative Stress: Contractors no longer need to worry about losing eligibility because of minor, mid-process lapses in registration.
- Post-Award Obligations Remain: Active registration in SAM is still required during contract performance and through final payment.
Takeaway
The final rule restores clarity and flexibility to the SAM registration requirement. By narrowing the focus to the two critical moments, bid submission and contract award, the FAR Council has removed a technical obstacle that often causes disproportionate consequences. Contractors should still take care to maintain SAM registration but can be confident that minor lapses between submission and award will no longer derail their bids.
Recent Decisions
Court Remands SDVOSB Status Protest due to Deficiencies in OHA’s Status Determination
In Veteran Elevated Solutions, LLC v. United States, the Court of Federal Claims reviewed a protest over a Department of Veterans Affairs elevator upgrade contract reserved for service-disabled veteran-owned small businesses (SDVOSBs). The VA awarded the contract to Armstrong Elevator Company (AEC), but competitor Veteran Elevated Solutions (VES) challenged the award on the grounds that AEC’s owner, Roy Armstrong, did not exercise the control required for SDVOSB eligibility.
The SBA’s Office of Hearings and Appeals (OHA) initially denied VES’s protest, but its decision raised concerns. OHA relied heavily on AEC’s 2022 certification file and a 2023 VA disability letter while offering little explanation of how it evaluated the new evidence the parties submitted regarding eligibility as of the bid date, April 29, 2024. The court identified several deficiencies in OHA’s analysis:
- Outside Business Interests: VES alleged that Mr. Armstrong’s management of other businesses limited his ability to devote the time and attention necessary to control AEC. Under SBA regulations, a veteran must have ultimate authority over both long-term decision making and day-to-day operations, and outside employment that interferes with those obligations can defeat SDVOSB status. OHA’s decision did not meaningfully address these conflicts.
- Tax Records: VES pointed to AEC’s tax records, which allegedly reflected fluctuating levels of Mr. Armstrong’s compensation and time commitment to the company over the years. These records could have shed light on whether he consistently worked full-time for AEC or divided his efforts among other ventures. OHA failed to explain how, or if, these records factored into its conclusion.
- Reliance on Limited Evidence: OHA placed significant weight on attorney arguments and a signed statement from Mr. Armstrong but did not explain why this was more persuasive than the affidavits and exhibits provided by both parties.
- Day-to-Day Management Allegations: VES specifically argued that non-veteran employees, including a senior manager, may have exercised real operational control, raising doubts about whether Mr. Armstrong was directing daily operations in April 2024. OHA’s decision did not analyze these claims or explain why it found AEC’s evidence sufficient to rebut them.
Because OHA did not demonstrate how it weighed the evidence or responded to these key issues, the court could not determine whether its conclusion that AEC was eligible as an SDVOSB at the time of proposal was supported by substantial evidence. The court remanded the case to OHA, ordering it to reevaluate AEC’s eligibility, review all of the evidence submitted by both sides, and provide a clearer rationale for its findings. Contract performance is stayed until OHA issues a new decision.
Contractor Takeaway
This decision highlights that SDVOSB eligibility must be proven as of the bid date, not just at the time of certification. Contractors must be prepared to show that the service-disabled veteran truly controls the company, with evidence covering both strategic authority and daily operations. Outside business commitments, compensation records, and the actual role of other managers can all be relevant in assessing control. If challenged, OHA must analyze this evidence, not simply rely on outdated certification files or broad statements. For SDVOSBs, the lesson is clear: keep detailed, up-to-date documentation of ownership and control, and be ready to demonstrate that the veteran’s leadership is both real and continuous.
Citation: Veteran Elevated Solutions, LLC v. United States, No. 24-1882, 2025 WL 2180774 (Fed. Cl. Aug. 1, 2025).
GRSM Government Contracts Practice Group
GRSM’s Government Contracts team has considerable experience defending and enforcing the rights of our contractor clients in disputes against government entities and private businesses. In addition to litigating claims in state and federal courts, we routinely handle matters before administrative tribunals, such as the Government Accountability Office, the Small Business Administration, and the Armed Services Board of Contract Appeals.
Our team of attorneys is located throughout the United States, which allows the firm to represent contractors, regardless of size, and in a wide variety of industries, including defense, information technology, construction, and aerospace, among others.
Please contact Patrick Burns, Meredith Thielbahr, and Laegan Meyers for further information or with any questions.