What is the simplified acquisition threshold, and why does everyone tell new vendors to start below it?

The simplified acquisition threshold (SAT) is a dollar amount that dictates how federal agencies conduct procurements. Agencies use simplified acquisition procedures for purchases of supplies or services that do not exceed the SAT, as outlined in FAR 13.003(a). This threshold impacts set-aside rules; each acquisition above the micro-purchase threshold but not over the SAT must be set aside for small businesses, unless the contracting officer determines there is no reasonable expectation of competitive offers from two or more responsible small businesses (FAR 19.502-2(a)). Above the SAT, the contracting officer sets aside the acquisition for small businesses when there is a reasonable expectation of offers from at least two responsible small business concerns at fair market prices, known as the Rule of Two (FAR 19.502-2(b)). The current dollar amount for the SAT is provided in FAR 2.101, FAC 2026-01, effective March 13, 2026.