Pentagon Adjusts Spending Limits for Inflation After Five Years
Published Date: 1/17/2025
Proposed Rule
Summary
The Department of Defense is updating its buying rules to keep up with inflation by raising certain dollar limits for contracts and purchases starting in 2025. This affects companies and contractors working with the DoD, making sure thresholds reflect current prices using the Consumer Price Index. Some special rules won’t change, and the public can comment on these updates until March 18, 2025.
Analyzed Economic Effects
3 provisions identified: 2 benefits, 1 costs, 0 mixed.
Statutory Acquisition Thresholds Rise with CPI
DoD proposes to adjust statutory acquisition-related dollar thresholds for inflation every five years using the Consumer Price Index for All Urban Consumers (CPI-U). The adjustment uses an escalation factor (for this proposal DoD used an estimated March 2025 CPI of 323.193 divided by the CPI at the statute’s enactment date, e.g., October 2000 for older statutes), with the next adjustment applied on October 1, 2025.
Nonstatutory DFARS Thresholds Also Adjusted
DoD is proposing to apply the same CPI-U escalation methodology to some nonstatutory DFARS acquisition-related thresholds, with those adjustments effective October 1, 2025. This means certain DFARS thresholds that come from regulation or Executive order (but are within DFARS scope) would be raised using the same CPI calculation.
Some Statutory Thresholds Will Not Change
The inflation adjustment required by 41 U.S.C. 1908 does not apply to thresholds from the Construction Wage Rate Requirements statute (Davis-Bacon Act), the Service Contract Labor Standards statute, performance and payment bonds (formerly the Miller Act), or trade agreements thresholds. DoD also will not escalate thresholds that originate in an Executive order or an implementing agency regulation unless that Executive order or agency rule is amended first.
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Key Dates
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