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  • Question

    Does the Service Contract Threshold of $2500.00 apply to the entire cost of the repair? - or is only the Labor portion of the repair used with parts excluded from that total?


    Answer

    When procurements exceed the micro-purchase threshold, we then have to pick a NAICS. The answer to your question can be found in how to pick the right NAICS in FAR 19.102(b). This is important for your procurement due to the different micro-purchase thresholds for supplies and services.

    "Primary consideration is given to the industry descriptions in the U.S. NAICS Manual, the product or service descriptions in the solicitation, the relative value and importance of the components of the requirement making up the end item being procured, and the function of the goods or services being purchased. A procurement is usually classified according to the component that accounts for the greatest percentage of contract value."

    Given this language found in FAR part 19, a reasonable determination if a procurement is a supply or a service can be made based on the greatest percentage of contract value. If the value of this repair tied to the service is 51% or greater, then it would be reasonable to consider it a service and the micro-purchase threshold of $2,500 will apply. If the value of this repair tied to the supply items needed is 51% or greater, then the buy can be considered a supply item, and the DoD micro-purchase threshold of $10K would apply.

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