The federal government uses various thresholds to determine who qualifies for government procurement opportunities. One key threshold in this context is the Simplified Acquisition Threshold (SAT). If you’ve familiarized yourself with the similarities and differences between the Micro-Purchase Threshold (MPT) vs. the Simplified Acquisition Threshold (SAT), we strongly encourage you to follow up more about the SAT as there are a lot of contract rules in accordance to the Federal Acquisition Regulation (FAR). This blog post defines the Simplified Acquisition Threshold (SAT), its purpose, its impact on small businesses, and what you should do when searching for opportunities within the set threshold.
What is the Simplified Acquisition Threshold (SAT)?
The Simplified Acquisition Threshold (SAT) ensures that government agencies are promoting fair competition. If a Contracting Officer (CO) wants to solicit a product or service between or above a certain dollar threshold, then they will need to go through a solicitation process and follow certain procedures.
In accordance with the Small Business Act and implemented in regulation at FAR 19.201(a), it is the policy of the government to provide maximum practicable opportunities to small businesses including veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. The SAT helps achieve this goal—so let’s dive in.
Above the SAT
In FAR Part 2.101, the SAT is currently set at $250,000—this means for contracts above $250,000 the federal government must solicit a Request for Proposal (RFP) such as on GSA eBuy or send to as many contracts as possible. Generally, if it’s above the SAT, Simplified Acquisition Procedures (SAP) cannot be used unless market research and the nature of the supplies/services proves only commercial solutions will be used (as stated in FAR Part 13.5).
This threshold has historically gone through periodic changes to account for factors such as inflation and changes in purchasing needs. The latest change took place in 2022 when there was an increase from $150,000 to $250,000 in 2022 to provide relief from the COVID-19 pandemic. This dollar value has not changed as we’re currently in FY 2024.
Below the SAT
What’s important for contractors to understand, especially small businesses, is what happens when a contract is below the SAT, but above the Micro-purchase Threshold (MPT) of $10,000. Anything below $10,000 does not require many procedures and government buyers can use a Government Purchase Card to secure supplies/services. This is something we see on GSA Advantage!.
It’s what is between $10,000 and $250,000 that we want to pay attention to. In this area, FAR Part 13 states that contracts must be set aside for small businesses. Simplified Acquisition Procedures are used in this range as well, meaning the acquisition process is streamlined but competition must still be considered. Generally, Contracting Officers must:
- Prepare a scope of work and establish evaluation criteria if applicable
- Give preference to small businesses
- Seek a price reduction
- Perform market research for a minimum of 3 contractors that may fulfill their desired need through the GSA Advantage! website, OR
- Review at least 3 contractor price lists found in eLibrary, OR
- Request quotations for at least 3 GSA Schedule contractors
Now that you have familiarized yourself with the basic structure of this threshold, you may be wondering how your business may fit into all of this. Well, if you’re a small business you want to make sure you qualify and are taking advantage of all the opportunities.
The Government's Definition of a “Small Business”
If you are considering pursuing an opportunity that falls below SAT, it's important to ensure that your company fits the criteria for being designated as a small business. This can be done by researching guidelines and small business definitions, also known as size standards. Size standards are typically determined by either average annual receipts or the number of employees.
Size can be based on average gross annual receipts over the past three years. This average depends on your primary North American Industrial Classification System (NAICS) code. If your average annual receipts fall below the specified amount for that NAICS Code, your business is considered small. The number of employees is also another determining factor used in place of annual receipts.
Are You Actively Submitting Bids?
If you’re actively submitting bids, familiarizing yourself with the SAT, its purpose, and the associated rules and regulations will better position your business for success. The SAT is designed to promote opportunities and growth within the federal marketplace. By conducting market research, understanding your NAICS Codes, and searching for relevant contracting opportunities, you can strategically position your business for success in pursuing government bids. If you want to learn more about contracting opportunities, check out these blogs:
- Where to Find Government Contracting Opportunities
- Identify Your Best Opportunities with NAICS Codes
- 3 Tips for a Successful RFP Response
If you have questions about becoming a small business contractor or need help understanding the world of government contracting, our consultants are ready to assist. From whatever stage you’re in from prospective to veteran contractor, we can help answer your questions and help your business succeed in the federal marketplace.
