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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


January 2018
Vol. XIX, No. 1
[pdf version]

CONTENTS


2018 Defense Authorization Act Increases Simplified Acquisition, Micro-Purchase Thresholds
Trade Agreements Thresholds Revised
DOD Finishes 2017 with a Flourish
Prompt Payment Interest Rates Set at 2 5/8%



2018 Defense Authorization Act Increases
Simplified Acquisition, Micro-Purchase Thresholds

On December 12, President Trump signed into law the $696 billion National Defense Authorization Act for Fiscal Year 2018 (Public Law 115-91). Title VIII, Acquisition Policy, Acquisition Management, and Related Matters (Sections 801-891), contains the sections that usually have the most significant provisions ones for the Department of Defense (DOD) acquisition community (and sometimes the civilian acquisition community, too). This year, the most important changes made by the Defense Authorization Act are the increases in the simplified acquisition and micro-purchase thresholds and the authorizing of federal agencies to use commercial e-commerce portals to acquire commercial products instead of the Federal Supply Schedules.



Trade Agreements Thresholds Revised

On December 11, the U.S. Trade Representative performed the biennial adjustment of the thresholds for the various trade agreements into which the United States has entered with other countries. The adjustments are made to account for inflation that occurred in the previous two years and changes in the value of the respective currencies. These thresholds will be incorporated into FAR part 25, Foreign Acquisition, (specifically FAR subpart 25.4, Trade Agreements).

The following are the revised thresholds (with the previous thresholds in parentheses):

Within a few days of the U.S. Trade Representative’s action, the Civilian Agency Acquisition Council (CAAC) issued a class deviation allowing civilian agencies to use the revised thresholds instead of the ones in FAR subpart 25.4, and the DOD issued a final rule incorporating the revised thresholds into DFARS part 225, Foreign Acquisition.



DOD Finishes 2017 with a Flourish

Besides issuing the final rule implementing changes to the trade agreements thresholds (see above article), the Department of Defense (DOD) issued another final rule revising the DFARS and six class deviations. In addition, the Office of Defense Pricing/Defense Procurement and Acquisition Policy issued instructions on the mass modifications of contracts to implement earlier guidance.



Prompt Payment Interest Rates Set at 2 5/8%

The Treasury Department has established 2 5/8% (2.625%) as the interest rate for the computation of payments made between January 1, 2018, and June 30, 2018, under the Prompt Payment Act and the Contracts Disputes Act. This rate is also used in facilities capital cost of money calculations.

The interest rate for the prior six-month period (July 1, 2017, through December 31, 2017) was 2 3/8% (2.375%). The interest rate for January 1, 2017, through June 30, 2017, was 2 1/2% (2.5%).

All prompt payment interest rates since 1980 (in six-month increments) are available at https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/rates.htm.

FAR subpart 32.9, Prompt Payment; FAR subpart 33.2, Disputes and Appeals; FAR 31.205-10, Cost of Money; and Cost Accounting Standard (CAS) 9904.414, Cost of Money as an Element of the Cost of Facilities Capital, are affected by this interest rate.





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