[Federal Register Volume 77, Number 95 (Wednesday, May 16, 2012)]
[Proposed Rules]
[Pages 29130-29165]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-11317]
[[Page 29129]]
Vol. 77
Wednesday,
No. 95
May 16, 2012
Part VI
Small Business Administration
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13 CFR Parts 121, 124, 125 et al.
Acquisition Process: Task and Delivery Order Contracts, Bundling,
Consolidation; Proposed Rule
Federal Register / Vol. 77 , No. 95 / Wednesday, May 16, 2012 /
Proposed Rules
[[Page 29130]]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 121, 124, 125, 126, and 127
[Docket No.: SBA-2011-011]
RIN 3245-AG20
Acquisition Process: Task and Delivery Order Contracts, Bundling,
Consolidation
AGENCY: Small Business Administration.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The U.S. Small Business Administration (SBA) proposes to amend
its regulations governing small business contracting procedures. This
proposed rule would amend SBA's regulations to implement the following
sections of the Small Business Jobs Act of 2010: section 1311
(definition of multiple award contract); section 1313 (consolidation of
contracts definitions, policy, limitations on use, determination on
necessary and justified); and section 1331 (reservation and set-aside
of multiple award contracts and orders against multiple award contracts
for small businesses). In addition, the proposed rule revises 13 CFR
part 125 by reorganizing the part for clarity and creating a definition
section.
DATES: You must submit your comments on or before July 16, 2012.
ADDRESSES: You may submit comments, identified by RIN: 3245-AG20, by
any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail, Hand Delivery/Courier: Dean Koppel, Assistant
Director, Office of Policy and Research, Office of Government
Contracting, U.S. Small Business Administration, 409 Third Street SW.,
Washington, DC 20416.
All comments will be posted on http://www.regulations.gov. If you
wish to submit confidential business information (CBI) as defined in
the User Notice at http://www.regulations.gov, please submit the
comments to Dean Koppel and highlight the information that you consider
to be CBI and explain why you believe this information should be held
confidential. SBA will make a final determination as to whether the
comments will be published or not.
FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Director,
Office of Policy and Research, Office of Government Contracting, U.S.
Small Business Administration, 409 Third Street SW., Washington, DC
20416, (202) 205-7322.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
This proposed rule seeks to ensure the increased consideration of
small businesses in connection with the establishment and use of
multiple award contracts and acquisitions that consolidate contracts,
consistent with sections 1311, 1313, and 1331 of the Jobs Act. Over the
past 15 years, Federal agencies have increasingly used multiple award
contracts--including the Multiple Award Schedules (MAS) contracts
managed by the General Services Administration (GSA), governmentwide
acquisition contracts, multi-agency contracts, and agency-specific
indefinite-delivery indefinite-quantity (IDIQ) contracts--to acquire a
wide range of products and services. They have also consolidated
acquisitions, often through the use of multiple award contracts, to
eliminate duplicative efforts, save money by pooling their buying
power, and reduce administrative costs. While these actions provide an
important foundation for achieving greater fiscal responsibility, they
have also created challenges for agencies seeking to take full
advantage of the many benefits that small business provide to our
taxpayers: creativity, innovation, cost-effective technical expertise,
and job growth and economic expansion, as well as maximizing awards to
small businesses as both prime and subcontractors in fulfilling the
Government's statutory small business goals.
In September 2010, the President's Interagency Task Force on Small
Business Contracting made a series of recommendations to increase
procurement opportunities for small businesses in the federal
marketplace. These recommendations included a strengthened policy on
set-asides that ``rationalizes and appropriately balances the need for
efficiency with the need to maximize opportunities for small
businesses.'' The Task Force further recommended guidance to clarify
practices and strategies to prevent unjustified contract bundling and
mitigate any negative effects of justified contract bundling on small
businesses. The same month these recommendations were issued, the
President signed the Jobs Act which included provisions that address
both of these issues. Both actions recognize the significant
opportunities that exist to increase small business participation on
multiple award contracts and the ability of set asides--the most
powerful small business contracting tool--to unlock these
opportunities. These actions also recognize the continued attention
that is required to ensure agencies avoid unjustified bundling and
mitigate the negative effects of justified bundling. This proposed rule
is designed to address these important issues and implement the
provisions of the Jobs Act that deal with them.
A. Multiple Award Contracts and the Use of Set-Asides, Partial Set-
Asides and Reserves
Section 1331 of the Jobs Act requires the Administrator for the
Office of Federal Procurement Policy (OFPP) and the Administrator for
the Small Business Administration (SBA), in consultation with the
Administrator of GSA, to establish regulations under which Federal
agencies may: (1) Set-aside part or parts of a multiple award contract
for small business, (2) reserve one or more awards on multiple award
contracts that are established through full and open competition, and
(3) set aside orders under multiple award contracts awarded pursuant to
full and open competition that have not been set aside, partially set
aside, or include a reserve for small businesses. Section 1331 of the
Jobs Act does not revise or repeal the requirement for a contracting
officer to set aside a contract for exclusive small business
participation if the contracting officer determines that capable small
businesses can meet the contract's requirements.
Last November, SBA and OFPP, in consultation with GSA, requested
that the Department of Defense (DOD), GSA, and the National Aeronautics
and Space Administration (NASA) publish an interim rule in order to
provide agencies with initial guidance that they can use to take
advantage of the authorities addressed in section 1331. Among other
things, the interim rule makes clear that set-asides may be used in
connection with the placement of orders under multiple award contracts,
notwithstanding the requirement to provide each contract holder a fair
opportunity to be considered, and further makes clear that order set-
asides may be used in connection with the placement of orders and
blanket purchase agreements under Multiple Award Schedule contracts.
While the interim rule amends existing solicitation provisions and
contract clauses to provide notice of set-asides, it does not define
terms, such as ``reserve''; nor does it provide guidance for how to
apply the various section 1331 authorities.
This proposed rule provides more specific guidance to ensure both
that meaningful consideration of set-asides and reserves is given in
connection with the award of multiple award contracts
[[Page 29131]]
and task and delivery orders placed against them, and that these tools
are used in a consistent manner across agencies. To achieve these
results, including the requirement in section 1331 that use of the
tools be left to the discretion of agencies, SBA's proposed rule takes
the following four steps:
1. Definition of terms and processes. As stated above, section 1331
covers three authorities: (i) Partial set-asides, (ii) contract
reserves, and (iii) order set-asides for small businesses. The proposed
rule provides guidance on each of these authorities, defining key terms
and laying out processes for each tool.
(i) Partial set-asides. The proposed rule explains at Sec.
125.1(n) that the term ``partial set-aside'' for a multiple award
contract means a contracting vehicle that can be used when market
research indicates that a total set-aside is not appropriate but the
procurement can be broken up into smaller discrete portions or
categories (such as contract line items) and two or more small business
concerns, including 8(a) Business Development (BD) Participants,
Historically Underutilized Business Zone (HUBZone) small business
concerns, Service Disabled Veteran-Owned small business concerns (SDVO
SBCs) and Women-Owned Small businesses concerns (WOSBs) or Economically
Disadvantaged WOSBs are expected to submit an offer on the set-aside
part or parts of the requirement at a fair market price. The rule would
allow for small businesses to submit an offer on the set-aside portion,
non-set aside portion, or both. See proposed Sec. 125.2(e)(3). This
approach would replace the more cumbersome process currently found at
Federal Acquisition Regulation (FAR) Sec. 19.502-3 that requires small
businesses to first submit responsive offers on the non-set-aside
portion in order to be considered for the set-aside portion. The FAR's
partial set-aside process has proven to be unnecessarily complicated,
which has resulted in its underutilization over time.
(ii) Contract reserves. The proposed rule establishes a process, at
Sec. 125.2(e)(4), for agencies to reserve awards for small businesses
(including Small Business Teaming Arrangements) under a multiple award
contract awarded pursuant to full and open competition if the
requirement cannot be broken into discrete components to support a
partial set-aside and market research shows that either at least two
small businesses could perform on a part of the contract or at least
one small business could perform all of the contract. Reserves have
been used by a number of agencies, but there has not been a common
understanding of what the term means or a uniform approach to its
application. Many agencies have reserved awards for small businesses
only to make them compete on an unrestricted basis with other-than-
small business contract holders because of the statutory requirement to
provide a fair opportunity for all multiple award contract holders to
be considered. Small businesses were especially vocal in providing
feedback to SBA during its 2011 Jobs Tour about their frustration at
having to expend resources to become contract holders only to find
themselves repeatedly competing against large businesses for work when
two or more small businesses were available under the contract and
could have competed effectively under a set-aside to perform work at a
fair and reasonable price. To address this concern, the rule provides
that orders must be set-aside aside for small businesses if the rule-
of-two or any alternative set-aside requirements provided in SBA's
small business program have been met.
(iii) Order set-asides. The proposed rule also lays out processes,
at Sec. 125.2(e)(6), that permit agencies, when awarding multiple
award contracts pursuant to full and open competition without either
partial set-asides or reserves, to make commitments to set aside
orders, or preserve the right to consider set-asides, when the rule of
two is met. The contracting officer would state in the solicitation and
resulting contract what process would be used--e.g., automatic
application of set-asidesor preservation of right to consider set-
asides. These alternatives maximize agencies' flexibility in exercising
their discretion to determine when and how best to use set-asides under
multiple award contracts.
Finally, the proposed rule states at Sec. 125.1(k) that the term
``multiple award contract'' includes MAS contracts issued by GSA--or
agencies to which GSA has delegated authority. This clarification is
consistent with the interim FAR rule which, as explained above, states
(at FAR 8.405-5(a)) that order set-asides may be used in connection
with the placement of orders and BPAs under MAS contracts. The MAS
Program provides an important contracting gateway to help agencies
reach small businesses. It is the largest acquisition program in the
Federal Government built on MACs; nearly $40 billion in sales went
through the MAS contracts managed by GSA in FY 2011. As a general
matter, SBA anticipates that Schedule orders would be conducted using a
modified version of the process set forth at 125.2(e)(6). A contracting
officer, at his or her discretion, may set aside a Schedule order by
including language in its request for quote that the order is a set
aside for small business and only quotes submitted by a small business
concern (or a specific category of small businesses) will be accepted.
GSA's Federal Acquisition Service is modifying its schedules to include
all appropriate set-aside clauses and has developed both written and
webinar training for agency customers. For additional information on
using set-asides on orders, agencies should go to www.gsa.gov.
2. Documentation of consideration given to section 1331
authorities. SBA seeks to ensure that agencies give meaningful
consideration to the tools provided by section 1331 without either
prescribing use of any specific tool in any given circumstance or
imposing significant new burdens. The proposed rule recognizes that
consideration of these tools, which can open up new and previously
untapped opportunities for small businesses, is especially important
for agencies that have not met their small business goals. For this
reason, the proposed rule would require at Sec. 125.2(e)(1)(iii) that
the contracting officer document the contract file to provide an
explanation if the contracting officer decided not to use any of the
1331 tools in connection with the award of a multiple-award contract
when at least one of these authorities could have been used--i.e.,
partial contract set-aside, contract reserve, or contract clause that
commits the agency to setting aside orders, or preserving the right to
set aside orders, when the rule of two is met. In addition, where an
agency commits to using or preserving the right to use set-asides for
orders under multiple award contracts that have not been set-aside,
partially set-aside or reserved, the agency must document the file
whenever a task order or delivery order is not set-aside for a small
business.
Although these documentation requirements are spelled out in the
proposed rule, SBA does not view them as creating new burdens for
agency contracting officers. To the contrary, SBA believes these
requirements reinforce responsibilities which serve the purpose of
increasing opportunities for small businesses that already are in the
FAR, such as FAR 19.501(c), which states, as a general matter, that
``the contracting officer shall perform market research and document
why a small business set-aside is inappropriate when an acquisition is
not set aside for small business.''
[[Page 29132]]
3. Preservation of agency discretion. The proposed rule preserves
the discretion that section 1331 vests in agencies to decide whether or
not to use any of the enumerated set-aside and reserve tools. See
proposed Sec. 125.2(e)(1)(ii). There is nothing in the rule that
compels an agency to award a multiple award contract with a partial
set-aside, contract reserve, or contract clause that commits (or
preserves the right) to set aside orders when the rule of two is met.
The rule only requires that agencies consider these tools before
awarding the multiple award contract and, if they choose not to use any
of them, document the rationale. This discretion would not apply to
total set-asides, which, as explained above, are not addressed by
section 1331. Consistent with current policies in SBA's regulations and
the FAR, agencies are required to set aside a multiple award contract
if the requirements for a set-aside are met. This includes set-asides
for small businesses, 8(a) Participants, HUBZone SBCs, SDVO SBCs,
WOSBs, or EDWOSBs.
Agencies have the discretion to forego using the section 1331 tools
even if the rule of two could be met; they simply need to explain how
their planned action is consistent with the best interests of the
agency (e.g., agency met its small business goal in the last year;
agency has a history of successfully awarding significant amounts of
work to small businesses for the stated requirements under multiple
award contracts without set-asides, and has received substantial value
from being able to select from among small and other than small
businesses as needs arise; agency can get better overall value by using
the fair opportunity process without restriction for the stated
requirements and has developed a strategy with the help of its Office
of Small Disadvantaged Business Utilization (OSDBU) or Office of Small
Business Programs (OSBP) that involves use of order set asides whenever
the rule of two is met on a number of multiple award contracts for
other requirements). Once an agency has exercised its discretion to use
one of the Sec. 1331 tools, it must honor the commitment when placing
orders. For example, if an agency inserts a clause in a multiple award
contract awarded pursuant to full and open competition stating that it
will set-aside orders when the rule of two is met, it must do so.
Alternatively, if the agency preserves the right to set aside orders,
they would not be required to set aside an order every time the rule of
two can be met, but should document the file with an explanation when
they do not do so.
SBA's procurement center representatives (PCRs) may review
acquisitions involving the award of multiple award contracts or orders
issued against such contracts that are not set-aside for small
businesses or where no awards have been reserved for small businesses.
See proposed Sec. 125.2(b). This review process is consistent with
PCRs' longstanding responsibility to assist small business concerns in
obtaining a fair share of Federal Government contracting opportunities.
As these authorities are implemented, PCRs may look to work more
closely with agencies that have not met their small business goals in
the prior year. However, the ultimate decision of whether to apply a
Sec. 1331 tool to any given procurement action is a decision of the
contracting officer, as expressly stated in proposed Sec.
125.2(e)(1)(ii).
In issuing their interim rule, the FAR signatories (i.e., DoD, GSA,
and NASA) made clear that agencies are expected to consider using the
1331 tools. SBA joins in this expectation for careful and meaningful
consideration. While use of the 1331 tools is discretionary, the
responsibility to give small businesses maximum practicable opportunity
is mandatory and agencies will be held accountable for taking all
reasonable steps to meet their small business goals. This means that
each agency must figure out how best to use these tools with others
already available to increase awards to small businesses and help the
Federal Government meet and exceed its government-wide small business
contracting goals year over year.
SBA seeks to strike the best balance to maximize small business
participation on multiple award contracts without compromising the
greater flexibility and leverage agencies gain in conducting
procurements through multiple award contracts. Throughout the preamble,
SBA poses a number of questions to draw attention to particular aspects
of the rule on which it is particularly interested in receiving comment
to evaluate if the proposed rule has achieved this balance, such as:
Whether the proposed definitions and processes make sense,
including the proposal to require set-asides of orders under reserves
if the rule of two can be met; and
Whether the proposed documentation requirements are
adequate, too stringent, or too weak. For respondents who believe the
documentation requirements are too weak, they are encouraged to comment
on how they should be strengthened (e.g., by requiring higher level
approval and/or posting online concurrent with the issuance of the
solicitation, similar to steps that agencies will need to take in the
context of explaining decisions to consolidate contracts). For
respondents who believe the documentation requirements are too
stringent, they are encouraged to offer views on what changes might be
considered.
4. Application of size standards to multiple award contracts. Under
SBA's current rules, a North American Industry Classification System
(NAICS) code and size standard is required for all contracts, and for
all orders under long-term contracts greater than five years. In some
instances, SBA has seen that an agency will assign multiple NAICS codes
to a multiple award contract where a business may be small for one or
more of the NAICs codes, but not all, and the agency receives credit
for an award to a small business even though the business is not small
for the NAICs code assigned or that should have been assigned to that
particular order. The proposed rule provides several alternatives at
Sec. 121.402(c)(i)(A) and (B) to ensure every contract and every order
issued against a contract contains a NAICS code with a corresponding
size standard and that coding for orders more accurately reflects the
size of the business for the work being performed. For example, a
contracting officer may divide a multiple award contract for divergent
goods and services into discrete categories (which could be by contract
line item numbers, special item numbers, functional areas, sectors, or
any other means for identifying various parts of a requirement
identified by the contracting officer), each of which is assigned a
NAICS code with a corresponding size standard. The NAICS code assigned
to the order would be the same as the NAICS code assigned to the
category in the contract. It is SBA's intention in proposing these
changes that only small businesses receive the benefits afforded to
small business concerns and that agencies receive credit only for
awards to small businesses.
B. Consolidation of Contract Requirements
Section 1313 of the Jobs Act amends the Small Business Act to
require that agencies address contract consolidation, which is defined
as use of a solicitation to obtain offers for a single contract or a
multiple award contract to satisfy two or more requirements of the
Federal agency with a total value over $2 million for goods or services
that have
[[Page 29133]]
been provided to or performed for the Federal agency under two or more
separate contracts each lower in cost than the total cost of the
contract for which the offers are solicited. For a number of years, DoD
has had responsibilities, set forth in 10 U.S.C. 2383, to address
contract consolidation. The proposed rule builds on much of DoD's
existing guidance and explains that an agency may not conduct an
acquisition that is a consolidation of contract requirements unless the
senior procurement executive (SPE) or chief acquisition officer (CAO):
(1) Justifies the consolidation by showing that the benefits of the
consolidated acquisition substantially exceed the benefits of each
possible alternative approach that would involve a lesser degree of
consolidation and (2) identifies the negative impact on small
businesses. The proposed rule also requires SBA's PCR to work with the
agency's small business specialist and OSDBU or OSBP to identify
bundled or consolidated requirements and promote set-asides and
reserves.
Additional detail about the proposed rule and the various
considerations that have shaped it is set forth below.
II. Background
On September 27, 2010, the President signed into law the Small
Business Jobs Act of 2010 (Jobs Act), Public Law 111-240, which was
designed to protect the interests of small businesses and boost their
opportunities in the Federal marketplace. The law not only makes
significant improvements to the Small Business Act's procurement
programs, it creates new programs and new initiatives. This proposed
rule addresses two important parts of the Jobs Act: (1) Application of
the SBA's small business programs to multiple award contracts, and (2)
limitations on contract consolidation and bundling.
A. Multiple Award Contracts
The FAR permit agencies to issue several awards to different
offerors that submitted an acceptable response to the same solicitation
for an IDIQ contract.See FAR subpart 16.5 (publicly available at
www.acquisition.gov/far/index.html). In fact, the FAR states that the
contracting officer must give preference to making ``multiple awards''
of IDIQ contracts under a single solicitation for the same or similar
supplies or services to two or more offerors. FAR Sec. 16.504(c).
Hence, these types of contracts are referred to as multiple award
contracts. Agencies issue either task orders (order for services) or
delivery orders (order for supplies) for competition against the
multiple award contract. Multiple award contracts are often used to
support interagency contracting through: (1) Multi-agency contracts
(MACs), which are established by one agency for use by it or other
Government agencies to obtain supplies and services, and (2)
governmentwide acquisition contracts for information technology
requirements, which are established for governmentwide use and operated
by an executive agent designated by the Office of Management and Budget
(OMB). FAR Sec. 2.101.
Multiple award contracts are used by Federal agencies because they
provide greater flexibility and leverage for the agency in conducting
their procurements and obtaining competition. However, until recently,
there had been no clear guidance in regulations on the application of
the SBA's small business programs to multiple award contracts,
including the GSA's MAS Program (which includes Federal Supply
Schedules and other Multiple Award Schedules), although there has been
much discussion on this issue. For example, in Delex Systems, Inc., B-
400403, Oct. 8, 2008, 2008 CPD ] 181 (publicly available at
www.gao.gov/decisions/bidpro/40043.htm), the GAO held that the small
business set-aside provisions of FAR Sec. 19.502-2(b) applied to
competitions for task and delivery orders issued under certain multiple
award contracts. Despite this opinion, many agencies had been reluctant
to set-aside such task and delivery orders for small businesses without
specific procurement guidance or regulations.
On April 26, 2010, the President issued Presidential Memorandum on
the Interagency Task Force on Federal Contracting Opportunities for
Small Businesses, which established an Interagency Task Force on
Federal Contracting Opportunities for Small Business (Interagency Task
Force), co-chaired by the Director of OMB, the SBA Administrator, and
the Secretary of Commerce. The report issued by the task force outlined
several recommendations to further increase opportunities for small
businesses in Federal contracting. In particular, the task force
recommended the following as it relates to multiple award contracts:
That OFPP lead an effort, in close collaboration with SBA
and GSA, as well as the DoD and other contracting agencies, to
determine which steps are (or should be) permitted and encouraged, and
which are required with respect to reserving individual orders for
small businesses under task-and-delivery-order and GSA Multiple Award
Schedule (GSA Schedules) contracts.
In conducting the analysis, OFPP should reach out to
interested stakeholders, including agency CAOs, SPEs, and Small
Business Directors; OSDBU, including the Department of Defense
Directors, OSBP; Procurement Technical Assistance Centers; Congress;
small and large businesses; and professional and trade associations.
When appropriate (taking into account possible statutory
and regulatory changes), OFPP should issue guidance addressing the use
of set-asides and related authorities for limiting consideration for
task and delivery orders to small businesses. Guidance should also
address existing set-aside and related policies, as necessary. General
guidance should be drafted jointly with SBA, and with GSA as to
guidance affecting the Schedules.
Report on Small Business Federal Contracting Opportunities, at pages 9-
10 (publicly available at http://www.sba.gov/sites/default/files/contracting_task_force_report_0.pdf).
Prior to this, the Acquisition Advisory Panel (Advisory Panel),
which was authorized by section 1423 of the Services Acquisition Reform
Act of 2003 (Section 843 of Title VIII of the National Defense
Authorization Act for Fiscal Year 2006 (Pub. L. 109-163)) also
addressed this issue in its Final Report. By law, the Panel was tasked
with reviewing laws, regulations, and Governmentwide acquisition
policies regarding the use of commercial practices, performance-based
contracting, performance of acquisition functions across agency lines
of responsibility, and the use of Governmentwide contracts. In its
final report, which devoted an entire chapter to small business
contracting, the Panel noted that ``[t]he passage of FASA [Federal
Acquisition Streamlining Act of 1994], the enactment of the Clinger-
Cohen Act two years later, and the expansion of the GSA Schedules [MAS]
Program has led to a marked increase in the use of multiple award
indefinite delivery, indefinite quantity (IDIQ) contracting vehicles.''
Final Report, Chapter 4 at 297 (publicly available at https://www.acquisition.gov/comp/aap/documents/Chapter4.pdf).
The report explained that agencies have used innovative means to
ensure small businesses receive some of these multiple award contracts,
such as by ``reserving'' one or more awards for small businesses in an
otherwise full and open competition. The report further explained that
there was no specific statutory authority for such reserves.
[[Page 29134]]
Both reports demonstrated that agency officials needed clear
guidance and they wanted specific statutory authority to apply the
authorities of the SBA's small business programs to multiple award
contracts. The Jobs Act provides the needed guidance and specific
statutory authority on this issue. With respect to multiple award
contracts, the Jobs Acts does two things--it defines the term and it
establishes a framework to address the application of SBA's small
business programs when awarding such a contract, or orders issued
against a multiple award contract. In fact, the Jobs Act broadly
defines the term multiple award contract to include all task and
delivery contracts, which necessarily includes the GSA Multiple Award
Schedules Program and other MACs. The Schedules is the largest
governmentwide program in the Federal government relying on the use of
multiple award contracts. Thus, the Jobs Act provides a needed tool to
further assist agencies in contracting with small businesses.
In addition, the Jobs Act amended the Small Business Act (Act) to
permit Federal agencies to:
Set-aside part or parts of multiple award contracts for
small business concerns, including small business concerns owned and
controlled by socially and economically disadvantaged individuals that
are 8(a) Business Development (BD) Participants, HUBZone small business
concerns, SDVO SBCs, WOSBs, and EDWOSBs;
Set-aside orders placed against multiple award contracts
(notwithstanding the fair opportunity requirements set forth in 10
U.S.C. 2304c and 41 U.S.C. 253j) for small business concerns, including
8(a) BD Participants, HUBZone small business concerns, SDVO SBCs, and
WOSBs or EDWOSBs; and
Reserve one or more contract awards for small business
concerns under full and open competition, when the agency intends to
make multiple contract awards, including reserves for 8(a) BD
Participants, HUBZone small business concerns, SDVO SBCs, and WOSBs or
EDWOSBs.
The legislative history for a precursor bill to the Jobs Act
explains that the purpose of such provisions is to ``correct'' the
mixed level of participation of small businesses in multiple award
contracts since small businesses have had trouble securing contract
awards through the multiple award contract system. See S. Rep. 111-343
at 7 (publicly available at http://thomas.loc.gov/cgi-bin/cpquery/R?cp111:FLD010:@1(sr343)). As an example, the Senate Report explains
that in FY 2007, although small businesses represented about 80.8% of
the contractors under the GSA Multiple Award Schedules Program, they
received only about 37.33% of the sales dollars (i.e., task or delivery
orders). Id. It further explains that although the Small Business Act
and the FAR require Federal agencies to set contracts aside for small
businesses if there is a reasonable expectation that two or more small
businesses would submit offers at reasonable prices, as noted above,
many agencies have not applied these small business set-aside
requirements to multiple award contracts and even fewer have considered
application of these requirements to orders issued against such
contracts
In addition to providing statutory authority to further assist
small businesses in obtaining awards of multiple award contracts and
orders against such contracts, the Jobs Act mandates that SBA and OFPP,
in consultation with the Administrator of GSA, issue regulations
implementing Sec. 1331. The regulatory guidance issued in response to
Sec. 1331 will help agencies leverage opportunities for small
businesses under multiple award contacts that can be secured through
the use of partial contract set-asides, order set-asides, and contract
reserves. The SBA met with OFPP and representatives of GSA and other
major contracting agencies several times over the course of the last
year in an attempt to produce a draft proposed regulation that took
into account the concerns of the various affected parties. In late
2011, SBA and OFPP held the required statutory consultations with
senior GSA officials to further refine the proposed rule.
As a first step to implement Sec. 1331, both SBA and OFPP
requested DoD, GSA, and NASA publish an interim FAR rule so that
agencies could begin taking advantage of this important tool. On
November 2, 2011, the FAR issued an interim final rule that amended the
following FAR subparts:
FAR subpart 8.4 to clarify that agencies may set-asides
orders and blanket purchase agreements for small business concerns
under the Schedule;
FAR subpart 16.5 to clarify that agencies may set-aside
orders for small business concerns in connection with multiple award
contracts, notwithstanding the statutory requirement to provide each
contract holder a fair opportunity to be considered.
FAR subpart 19.5 to add a new section, based on Section
1331, authorizing agencies to: (1) Set aside part or parts of a
multiple-award contract for small business concerns, including set-
asides for small business concerns under the 8(a) Program, the HUBZone
Program, the SDVOSB Program, and the WOSB Program; (2) set-aside orders
placed against multiple-award contracts for small business concerns,
including small businesses in the 8(a), HUBZone, SDVOSB, and WOSB
Programs; and (3) reserve one or more contract awards for small
business concerns, including small businesses in the 8(a), HUBZone,
SDVOSB, and WOSB Programs, under full and open multiple-award
procurements.
See 76 FR 68032.
Although the FAR interim final rule permits agencies to begin using
the Jobs Act authority, there are several issues that still remain to
be addressed. This proposed rule attempts to address those issues as
they relate to the application of SBA's programs to multiple award
contracts. In drafting the rule, the SBA has taken into consideration
all of the above, as well as information obtained from meetings with
various stakeholders concerning these issues.
In sum, this rule seeks to provide adequate tools and assurances
that agencies will maximize small business participation on multiple
award contracts without compromising the greater flexibility and
leverage agencies have in conducting procurements through multiple
award contracts. For example, although the MAS Program already affords
opportunities for small businesses competing for orders, SBA, OFPP, and
GSA hope this rule, which specifically authorizes the use of small
business order set-asides in connection with the MAS Program, will
provide agencies further means to reach more small businesses and
increase awards to small businesses. SBA and OFPP, after consultation
with GSA, have attempted to strike the right balance and seek comments
regarding the proposed rule. The discussion that follows explains in
detail the specific changes the SBA proposes to its regulations to
address this issue.
B. Contract Consolidation/Bundling
The Jobs Act amended the Small Business Act to include provisions
relating to contract consolidation and bundling. Contract bundling and
consolidation have been used in the Federal government for many years
now. Agencies generally consolidate or bundle two or more requirements
into one solicitation in order to streamline the procurement process,
reduce administrative functions (fewer number of contracts for a
contracting officer to administer) and leverage buying power.
[[Page 29135]]
See U.S. Government Accountability Office, GAO-04-454, Impact of
Strategy to Mitigate Effects of Contract Bundling on Small Business is
Uncertain, at 4 (May 2004) (publicly available at http://www.gao.gov/new.items/d04454.pdf). Although such contract consolidation and
bundling may provide efficiency for the Federal government, the end
result often precludes small business participation at the prime
contractor level and generally provides for awards to a fewer number of
contractors. See 15 U.S.C. 631(j); see also S. Rep. No. 105-62, at 21
(1997) (``Often bundling results in contracts of a size or geographic
dispersion that small businesses cannot compete for or obtain. As a
result, the government can experience a dramatic reduction in the
number of offerors. This practice, intended to reduce short term
administrative costs, can result in a monopolistic environment with a
few large businesses controlling the market supply.'')
The Small Business Act contains provisions defining bundling and
limiting the use of bundling and its effect on small businesses. 15
U.S.C. 632(o). Bundling as defined by the Small Business Act is not per
se prohibited; rather, bundling is permissible where an agency can
adequately justify the projected bundled contract.
Despite the provisions in the Small Business Act and implementing
regulations, bundling contracts and orders is still having harmful
effects on the ability of small business concerns to compete for and
receive contracting opportunities and, therefore, mitigation is
necessary. Thus, the Jobs Act has amended the Small Business Act to
provide for certain policies to further reduce contract bundling,
including requiring that agencies publish on Web sites a list of
bundled contracts and rationale for each such bundled contract. It also
requires agencies that bundle requirements to include in their
solicitation for any multiple award contract above the substantial
bundling threshold a provision soliciting offers from any responsible
source, including responsible small business concerns and teams or
joint ventures of small business concerns.
The Small Business Act, however, had never addressed contract
consolidation (although contract consolidation is addressed in 10
U.S.C. 2383 for DoD). Consequently, the Jobs Act has now amended the
Small Business Act to address and define contract consolidation in a
broader manner than bundling. As it is now defined, contract
consolidation occurs when an agency uses a single solicitation to
obtain offers to satisfy two or more requirements of the Federal agency
for goods or services that have been provided to or performed for the
Federal agency under two or more separate contracts lower in cost than
the total cost of the contract for which the offers are solicited in
the single solicitation. Thus, a consolidated contract combines
contracts performed by small or large businesses into one solicitation
while a bundled procurement combines work previously performed only by
small businesses or work that could have been performed only by small
businesses. As with bundling, the statute permits an agency to justify
the consolidation.
We note that the Interagency Task Force also addressed this issue
and outlined several recommendations to increase opportunities for
small businesses in Federal contracting. In particular, the Interagency
Task Force recommended that SBA strengthen the regulations addressing
the reviews of contract bundling to prevent unjustified bundling and
ensure the use of appropriate mitigation strategies. Report on Small
Business Federal Contracting Opportunities, at 10 (publicly available
at http://www.sba.gov/sites/default/files/contracting_task_force_report_0.pdf).
Likewise, the Advisory Panel addressed contract bundling and
consolidation and noted that reports by OFPP and the SBA's Office of
Advocacy indicated that the use of bundled and consolidated contracts
had resulted in a decline of awards to small businesses. The Panel
determined that the contracting community does not properly apply and
follow the governing contract bundling definition and requirements in
planning acquisitions because there is a general misunderstanding of
contract bundling. Final Report, Chapter 4 at 289-90 (publicly
available at https://www.acquisition.gov/comp/aap/documents/Chapter4.pdf).
The proposed rule addresses the statutory amendments to the Small
Business Act as they relate to mitigation of bundling and contract
consolidation. SBA has taken into consideration all of the above when
drafting these rules. The supplementary information below explains in
detail the specific changes the SBA proposes to each of its regulations
to address this issue.
C. Public and Federal Outreach
Last spring, the SBA conducted a Small Business Jobs Act Tour that
covered 13 cities, including: Albuquerque, Miami, Atlanta, Boston,
Chicago, San Antonio, Seattle, Columbus, New York, Huntsville, Denver,
San Diego and Washington, DC. See 76 FR 12395 (March 7, 2011); 76 FR
16703 (March 25, 2011); 76 FR 26948 (May 10, 2011). The objective of
the tour was to provide information and receive input on significant
Jobs Act provisions. In its Federal Register notice announcing the
tour, the SBA set forth some key questions concerning multiple award
contracts, bundling and consolidation, on which it specifically sought
public input. During the tour, the SBA gained valuable information and
insight on small businesses in Federal contracting that it utilized
when drafting the following proposed regulations. The SBA also
requested and received written comments from the public on these
provisions.
Further, the SBA met with various agencies that are members of the
Federal Acquisition Regulatory Council (FAR Council) to discuss the
provisions of the Jobs Act. The input provided during these meetings
was also utilized in drafting these proposed regulations, especially as
they relate to set-asides of multiple award contracts.
Finally, as discussed above, the Jobs Act requires that SBA and
OFPP, after consultation with GSA, issue regulations relating to
partial set-asides, reserves and set-asides of orders against multiple
award contracts. The SBA has met with GSA several times over the course
of the last year, including recently in the latter half of 2011. Many
of GSA's comments have been incorporated into this proposed rule.
III. Proposed Amendments
The SBA is proposing to amend its regulations to address small
business contracting as it relates to multiple award contracts and to
address and clarify the regulations on bundling and contract
consolidation. Because these issues affect the various SBA programs,
the SBA must propose amendments to several sections of its regulations.
In addition, because these two issues require changes to the same
sections of SBA's regulations and some of the issues are
interconnected, the SBA determined it would be best to propose
amendments relating to the two issues in one rule. The proposed
amendments are set forth in a part-by-part analysis below.
A. Part 121--Size
The SBA is proposing to amend its size regulations to address both
bundling and contract consolidation as well as multiple award
contracts. The Small Business Act, 15 U.S.C. 644(e)(4), specifically
states that for bundled
[[Page 29136]]
contracts, a small business concern may submit an offer that provides
for use of a particular team of subcontractors for the performance of
the contract and the agency must evaluate the offer in the same manner
as other offers. Further, the Act states that if a small business
concern forms a team for this purpose (i.e., enters into a formal
written Small Business Teaming Arrangement), it must not affect its
status as a small business concern for any other purpose. The purpose
of this section is to encourage small businesses to form teams to
compete on larger contracts for which, by definition, a small business
is not on its own able to compete. Therefore, the SBA proposes to amend
Sec. 121.103 by creating an exception to affiliation for teams of
small businesses for bundled contracts.
The SBA proposes to amend Sec. 121.402 to explain how small
business size standards are assigned to multiple award contracts and
orders issued against such contracts. Under SBA's current regulations,
a NAICS code and size standard is required for contracts, and all
orders under long-term contracts (i.e., contract greater than five
years). SBA has seen instances where an agency assigns a NAICS code to
a multiple award contract and then issues orders using a different
NAICS code with a different, lower size standard or issues an order
with no NAICS code or size standard assigned. The agency then counts
each of the orders as an award to a small business even if the business
represented it was small for the higher size standard corresponding to
the NAICS code assigned to the contract and not for the lower size
standard assigned to the order. In other instances, SBA has seen that
an agency will assign multiple NAICS codes to a multiple award contract
where a business concern may be small for one or more of the NAICS
codes, but not all, and the agency receives credit on an order for an
award to a ``small business'' even though the business is not small for
the NAICS code assigned or that should have been assigned to that
particular order.
To address this situation, the proposed rule provides a contracting
officer with two different alternatives in assigning NAICS codes on
multiple award contracts. First, a contracting officer may assign one
NAICS code and corresponding size standard to the multiple award
contract if all of the orders issued against that contract can also be
classified under that same NAICS code and corresponding size standard.
Second, the contracting officer may divide a multiple award
contract for divergent goods and services into discrete categories,
each of which is assigned a NAICS code with a corresponding size
standard. The contracting officer is vested with the discretion to
decide how to assign the requirements to the various categories--
whether it is by contract line item numbers (CLINs), special item
numbers (SINs), functional area (FA), sectors, or other method of
identifying various parts of a requirement. Thus, an agency would
assign multiple NAICS codes to a multiple award contract only if the
agency can divide the contract into different categories and can then
compete or award orders in that category, notwithstanding the
nomenclature the procuring agency utilizes to describe the category
(e.g., CLIN, SIN, FA). The NAICS code assigned to the order would be
the same as the NAICS code assigned to the category (e.g. CLIN) in the
contract.
Regardless of which method the contracting officer uses to assign a
NAICS code, the proposed rule requires that every contract and every
order issued against a contract must contain a NAICS code with a
corresponding size standard. With respect to assigning a NAICS code to
an order in cases like the GSA Schedule where an agency can issue an
order against multiple categories on a multiple award contract, the
contracting officer would be required to select the single NAICS code
that best represents the principal nature of the acquisition (i.e.,
usually the component that accounts for the greatest percentage of
contract value) for that order. That would mean if the agency is buying
services and supplies with the order, but the greatest percentage of
the order value is for services, the agency would assign a services
NAICS code for the order. The purpose of this proposal is twofold: to
ensure that agencies receive credit only for awards to small businesses
and to ensure that only small businesses receive the benefits afforded
to such business concerns.
The SBA notes that it considered one alternative to this proposed
rule where an order contains items/services from multiple NAICS codes
and size standards assigned to a multiple award contract. Specifically,
the SBA considered requiring that a business meet only the smallest
size standard corresponding to any NAICS code of any of the items/
services (line items) to be procured under the contract. Any order
issued against the contract, regardless of the NAICS code assigned to
the order, would then be considered an order placed with a small
business. If the contract contained size standards that were receipts-
based and employee-based, the business would have to meet the smallest
receipts-based size standard to be considered small for the contract
and each order.
The SBA welcomes comments on its proposed amendments to Sec.
121.402 explaining how small business size standards are assigned to
multiple award contracts and orders issued against such contracts. SBA
requests comments on the alternatives afforded to contracting officers
under the proposed rule, including whether they offer a workable
alternative and give sufficient discretion to contracting officers.
Specifically, the SBA would like comments addressing any burden that
may be imposed by requiring the contracting officer to divide the
requirement into multiple categories with associated NAICS codes and
size standards on a multiple award contract and placing a NAICS code on
each order that flows down from the underlying contract. The SBA would
also like the comments to address whether this burden is outweighed by
the purpose of the proposed rule--to more effectively capture true
small business participation. Finally, SBA would welcome comments on
the alternative described in the prior paragraph, which was not adopted
in the proposed rule.
Next, the SBA proposes to amend Sec. 121.404, which addresses when
the size status of a small business concern is determined. In order to
provide certainty in the procurement process, SBA's regulations require
that size generally be determined at one specific point in time--size
is determined as of the date a business concern self-certifies its size
status as part of its initial offer including price. When a business
represents that it is small, it is then considered small for the life
of that specific contract, and the concern is not required to again
certify that it qualifies as small for that contract unless the
contract is a long term contract (i.e., the contract exceeds five
years) or there is a merger, acquisition, or novation. If the contract
is greater than five years, then the contractor must recertify its
small business size status no more than 120 days prior to the end of
the fifth year of the contract or prior to exercising any option
thereafter. Similarly, a contractor must also recertify its size status
whenever there has been a contract novation, or merger or acquisition
and no novation has been required.
SBA is proposing to clarify two issues that have been raised under
this recertification rule that SBA issued in 2006. First, while the
regulations clearly required a business that was bought by another
entity to recertify its size status after the acquisition, such a
requirement
[[Page 29137]]
was not as clear where a business that had previously certified itself
to be small acquired another business. SBA believes that re-
certification should be required in either case since the acquisition
may render the concern other than small for the particular contract. As
such, the proposed rule clarifies that recertification is required from
both the acquired concern and the acquiring concern. Second, SBA
proposes to clarify that recertification is required when a participant
in a joint venture is involved in a merger or acquisition, regardless
of whether the participant is the acquired concern or the acquiring
concern.
In addition, the SBA is proposing that, in general, all of these
same rules concerning when size is determined apply to multiple award
contracts. For multiple award contracts, SBA will determine size at the
time of initial offer of the contract based upon the size standard set
forth in the solicitation for that contract. If the contract is divided
into categories (CLINs, SINs, FAs, sectors or the equivalent), then
each such category will have a NAICS code and corresponding size
standard. A business will have to represent its status for each of
those NAICS codes at the time of initial offer of the multiple award
contract. When the agency places an order against the contract, it must
assign a NAICS code with the corresponding size standard to the order
using one of the NAICS codes assigned to the contract which best
describes the principal purpose of the good or service being acquired.
If the business concern represented it was small for that NAICS code at
the time of contract award, then it will be considered small for that
order with the same NAICS code. Of course, a contracting officer may
always, on his or her own initiative, require a business concern to
recertify its size status with respect to each order, but the
regulations do not require that in every instance.
The following examples demonstrate how this would work:
An agency issues a multiple award contract and assigns a
single NAICS code to the contract. A business concern has represented
it is small for that NAICS code. The business concern is small for the
life of the contract and for each order issued against that contract
with the same NAICS code. If the contract exceeds five years or there
has been a contract novation, or merger or acquisition and no novation
has been required, the business concern would be required to recertify
its size status.
An agency issues a multiple award contract that has been
separated into two categories by CLINs--graphic design services and
computer systems design services. The agency assigns two NAICS codes to
the contract, one for the CLIN for graphic design services (with a $7
million size standard) and one for the CLIN for computer systems design
services (with a $25 million size standard). A business concern has
represented that it is small for the NAICS code assigned to the CLIN
for computer systems design services and other-than-small for the NAICS
code assigned to the CLIN for graphic design services. If the agency
issues an order that is predominately for computer systems design
services, it must assign to the order the same NAICS code used in the
contract for computer systems design services. Because the business
represented that it was small for that NAICS code at the time of
initial offer for the contract CLIN for computer systems design
services, it would be considered small for the order. Similarly, if the
agency issues an order that is predominantly for graphic design
services, it must assign to the order the same NAICS code used in the
contract for graphic design services. Because the business represented
that it was other-than-small at the time of initial offer for the
contract CLIN for graphic design services, it would be considered
other-than-small for the order. If the contract exceeds five years or
there has been a contract novation, or merger or acquisition and no
novation has been required, the business concern would be required to
recertify its status for both NAICS codes.
An agency issues an order against the GSA Schedule
Contract. The ordering agency has assigned a single NAICS code to the
order, which corresponds to a NAICS code assigned to the Schedule
category (e.g., SIN). A business concern has represented that it is
small for that NAICS code assigned to the SIN on the GSA Schedule
Contract. The business concern is then considered small for the order.
If the contract exceeds five years or there has been a contract
novation, or merger or acquisition and no novation has been required,
the business concern would be required to recertify its status for the
NAICS code.
The SBA notes that in drafting this proposed rule it considered
requiring businesses to recertify their size for long term orders
(i.e.--orders greater than five years). The SBA is concerned that if an
agency issues a long term order just prior to a business recertifying
its status as other-than-small on a multiple award contract, then the
long term order will be counted as an award to a small business for an
indefinite amount of time. However, the SBA is unsure of how often this
situation occurs and is requesting comments specifically on whether
small businesses should be required to recertify their size and status
for long term orders. The SBA also welcomes comments on all of these
proposed amendments as they relate to size and multiple award
contracts.
In addition to the above, the SBA has proposed amending its
regulations at Sec. 121.404 to address ``Agreements,'' such as Blanket
Purchase Agreements (BPAs), Basic Agreements (BAs) or Basic Ordering
Agreements (BOAs). These Agreements are not considered contracts under
the FAR. See FAR Sec. 16.702(a)(2) (a basic agreement is not a
contract). However, the SBA has seen examples where agencies are
setting aside such Agreements for small businesses. Consequently, the
SBA is proposing an amendment to its regulations to address this
practice.
Specifically, SBA proposes that if such an Agreement is set-aside,
SBA will determine size at the time of the response to the solicitation
for the Agreement, to ensure only small businesses receive the
Agreement. In addition, because such an Agreement is not considered a
contract, the business concern must also qualify as small at the time
it submits its offer or otherwise responds to a solicitation for each
order under the Agreement in order for the procuring agency to count
the award of the order as an award to small business for purposes of
goaling. If agencies were permitted to set aside BPAs, BOAs and other
Agreements to small businesses without having to verify size, then it
is not clear that small businesses would actually be receiving the
awards and it is not clear that the small business would have to meet
the Act's provisions, for example, subcontracting limitations
requirements, which we believe creates a loophole.
The only exception to this proposed rule on Agreements is for BPAs
issued against the GSA Schedule. Because the business will have
represented its status at the time of award of the GSA Schedule
contract, the SBA does not believe there is a need to represent its
size again for the BPA.
The SBA has also proposed amending its size regulations to include
multiple award contracts in the sections addressing who may initiate a
size protest (13 CFR 121.1001) and what time limits apply to size
protests (13 CFR 121.1004).
In addition, SBA proposes to amend Sec. 121.1103 to specify that
NAICS appeals may be filed at SBA's Office of Hearings and Appeals
(OHA) by any concern seeking to be considered a small business for a
challenged
[[Page 29138]]
procurement and regardless of whether the procurement is set aside for
small businesses or unrestricted. This would change OHA's current
policy of declining jurisdiction on NAICS code appeals related to
unrestricted procurements or finding that appellants lack standing in
such appeals. See NAICS Appeal of McKissack & McKissack, SBA No. NAICS-
5154 (2010). Neither the FAR nor SBA's existing regulations place
restrictions on the types of solicitations that may be challenged in a
NAICS appeal. Thus, OHA's current policy prevents an avenue of relief
that SBA intended to be available to a business that is denied the
benefits of its small status by an incorrect NAICS designation. The
proposed rule makes it clear that SBA will adjudicate NAICS appeals on
unrestricted procurements, so long as the appellant is seeking to be
considered a small business for the procurement.
The SBA welcomes comments on all of these proposed amendments to
part 121.
B. Part 125--Small Business Programs
Part 125 of SBA's regulations covers SBA's small business prime
contracting program, subcontracting, the Certificate of Competency
(COC) program and the limitations on subcontracting requirements.
Encompassed in these regulations are issues such as bundling and
Procurement Center Representative (PCR) reviews. Thus, the greatest
number of proposed amendments that address the issues relating to
multiple award contracts and bundling/consolidation have been to part
125.
SBA first reviewed part 125 and determined that it needed better
organization. In Sec. 125.1, SBA has proposed a definitions section
and has moved all of the definitions in part 125 (except for the
definitions relating the SDVO SBC Program) into that one section. SBA
also added all of the definitions and terms set forth in the Jobs Act
to this one section in order to provide ease of use for the readers.
One important definition proposed relates to contract
consolidation. The SBA has implemented the statute and defined that
term to mean a solicitation for a single contract or a multiple award
contract to satisfy two or more requirements of the Federal agency for
goods or services that have been provided to or performed for the
Federal agency under two or more separate contracts each of which was
lower in cost than the total cost of the contract for which the offers
are solicited, the total cost of which exceeds $2 million (including
options). The SBA notes that the $2 million price is a statutory
threshold (see 15 U.S.C. 657q), not subject to amendment by the SBA.
Based upon this definition, an example of a consolidated contract would
include the following:
An agency had two separate contracts for janitorial
services. One was performed by a small business and had a contract
value of $1 million and the other by a large business that had a
contract value of $2 million. The agency places both those requirements
into one solicitation for $3 million. This is a consolidated contract
because it combines two separate contracts into one and the costs of
each of the two contracts is less than the total cost of the
consolidated contract. In addition, the consolidated contract's value
exceeds $2 million.
Another important term SBA defined is ``multiple award contract.''
Section 1311 of the Jobs Act defines the term multiple award contract
to mean: (1) A multiple award contract (either task or delivery order
contract) entered into under the authority of 41 U.S.C. 253h (the
authority for task and delivery order contracts), 41 U.S.C. 253(i) (the
authority for task and delivery order contracts for advisory and
assistance services), 41 U.S.C. 253(j) (issuance of orders off of task
and delivery order contracts) and 41 U.S.C. 253k (definition of task
order contract and delivery order contract); and (2) any other multiple
award, indefinite delivery, indefinite quantity contract that is
entered into by an agency.
The SBA believes that it is important to have a clearly understood
definition of what a multiple award contract is because the Jobs Act
permits those contracts to be conducted as a partial set-aside, or
reserve and further permits the set-aside of orders against such
contracts. In this regard, SBA's proposed rule expressly includes the
GSA Multiple Award Schedules Program within the scope of the definition
of the term ``multiple award contract.'' As noted above the Multiple
Award Schedules Program is the largest contract program in the Federal
Government relying on multiple award contracts. It is fully consistent
with the Jobs Act to defining this term to be inclusive of the
Schedules. Even though the Act does not specifically reference the GSA
Multiple Award Schedules Program in its definition of multiple award
contract, the definition set forth in statute clearly states that a
multiple award contract is ``any other multiple award, indefinite
delivery, indefinite quantity contract that is entered into by an
agency.'' 15 U.S.C. 632(v)(2) (emphasis added). Further, the Jobs Act
states that the Administrator of OFPP and SBA, ``in consultation with
the Administrator of General Services,'' must establish guidance by
regulation that addresses application of the SBA's programs to multiple
award contracts. Id. Sec. 644(r) (emphasis added). Congress' inclusion
of GSA within the consultation process clearly signals its intent to
allow small business set-asides within the context of the GSA Multiple
Award Schedules Program. In addition, the legislative history for a
prior version of a bill similar to the Jobs Act specifically included
GSA Multiple Award Schedules Contracts as multiple award contracts as
follows:
The bill improves small business participation in the
acquisition process. The bill also authorizes small business set-
asides in multiple award multi-agency contracting vehicles in order
to correct the very mixed record of small business participation in
such contracts. These contract types were intended to reduce the
administrative costs of contracting by reducing both the number of
businesses and the types of terms and conditions which had to be
completed for each task or delivery order. Under such contracts, the
government negotiates an up-front agreement on future price
discounts and delivery terms, but no actual work is performed or
paid for until task and delivery orders are issued. In many
instances, small businesses have had trouble securing business
through the multiple-award contract system. For example, within the
GSA Federal Supply Schedules (FSS or Schedules), small businesses
represented about 80.8 percent of Schedule holders, but only 37.33
percent of Schedule sales dollars in FY 2007.
See S. Rep. 111-343 at 7 (publicly available at http://thomas.loc.gov/cgi-bin/cpquery/R?cp111:FLD010:@1(sr343)) (emphasis
added). Further, we note that the Defense Federal Acquisition
Regulation Supplement (DFARS) already includes GSA Schedule Contracts
in its definition of multiple award contracts. See DFARS Sec. 207.170-
2.
We also note that the interim FAR rule, which is co-signed by GSA,
the manager of the MAS Program, amends FAR subpart 8.4 to make clear
that the Jobs Act provisions apply and states that order set-asides may
be used in connection with the placement of orders and blanket purchase
agreements under the MAS Program.
Moreover, the Interagency Task Force sought to determine which
steps are (or should be) permitted and which are required with respect
to reserving individual orders for small businesses under task-and-
delivery-order and GSA Schedule Contracts. Report on Small Business
Federal Contracting Opportunities, at 9 (publicly available at http://www.sba.gov/sites/default/files/contracting_task_force_report_0.pdf).
[[Page 29139]]
Likewise, the Advisory Panel's Final Report noted how inconsistently
agencies were applying the small business regulations to the GSA
Schedule Contracts and recommended that specific guidance be provided
and that the FAR be amended to permit set-asides against the GSA
Schedule. Final Report, Chapter 4 at 310 (publicly available at https://www.acquisition.gov/comp/aap/documents/Chapter4.pdf).
Finally, during the SBA's Jobs Act tour, the SBA received input
from many small businesses that it would be beneficial if multiple
award contracts under the Jobs Act included the GSA MAS Program. Those
small businesses holding GSA Schedule Contracts stated that it was time
consuming to attain the GSA Schedule Contract, and even more difficult
to receive orders against the contract. They noted that if no orders
are placed on the contract within a certain time frame, they would then
lose the contract. Consequently, these small businesses supported the
set-aside of orders against GSA Schedule Contracts. In fact, from the
input received, it would appear that the Jobs Act would have a greater
impact on small businesses if set-asides were permitted against the GSA
Schedule since more small businesses have a GSA Schedule Contract than
other types of multiple award contracts.
Based on all of these considerations, the SBA has proposed to
define the term multiple award contract to mean: (1) A multiple award
schedule contract issued by the GSA (e.g., GSA Federal Supply Schedule
contract) or agencies granted Multiple Award Schedule contract
authority by GSA (e.g., Department of Veterans Affairs) as described in
FAR part 38 and subpart 8.4; (2) a multiple award task-order or
delivery-order contract issued in accordance with FAR subpart 16.5,
including Governmentwide acquisition contracts; and (3) any other IDIQ
contract entered into with two or more sources pursuant to the same
solicitation. SBA notes that although it is proposing to include a
specific reference to GSA Schedules as part of the definition of
multiple award contract, the proposed rule is not meant to infringe
upon GSA's authority for the MAS Program pursuant to 41 U.S.C. 152(3).
The SBA welcomes comments on this definition.
The proposed rule also defines the terms ``partial set-asides'' and
``reserve'' since those terms are used in the Jobs Act as it relates to
multiple award contracts. The SBA has defined those terms in the
definitions section of part 125 (Sec. 125.1), which is discussed next;
however, it has also set forth the mechanics of how such partial set-
asides and reserves work in Sec. 125.2(e), which is discussed later in
the preamble supplementary information to this proposed rule.
With respect to partial set-asides, currently the FAR requires
partial set-asides for small businesses when a total set-aside is not
appropriate; the requirement is severable into two or more economic
production runs or reasonable lots; one or more small business concerns
are expected to have the technical competence and productive capacity
to satisfy the set-aside portion of the requirement at a fair market
price; and the acquisition is not subject to simplified acquisition
procedures. FAR Sec. 19.502-3(a).
In general, the SBA's proposed rule has adopted this definition but
has updated the procedures. For example, instead of dividing the
requirement into production runs or lots, the SBA's proposed rule
recommends severing the acquisition into discrete components or
categories, similar to how SBA proposes NAICS codes can be assigned to
a multiple award contract. Thus, according to the definition in the
proposed rule, a partial set-aside occurs when market research
indicates that the ``rule of two'' (i.e., the contracting officer has a
reasonable expectation that it will receive at least two offers from
small businesses and award can be made at fair market price) will not
be met for the entire requirement (e.g., each CLIN or SIN). However,
the procurement can be broken into smaller, discrete portions such that
the ``rule of two'' can be met and applied for some of those discrete
components or categories (e.g., one or more CLINs). Under a partial
set-aside, orders placed against the multiple award contract must be
set-aside and competed among only small businesses for the portion of
the contract that has been set aside; however, the contracting officer
may state in the solicitation that small businesses can also compete
against other-than-small businesses for the non-set-aside portion if
they also submitted an offer on the non-set-aside portion.
The SBA believes that with this proposed rule, the contracting
officer would not be required to award the non-set-aside portion first
and negotiate with eligible concerns on the set-aside portion only
after all awards have been made on the non-set-aside portion, as
required by the current FAR Sec. 19.502-3(c). Further, small
businesses would not be required to submit offers for both the set-
aside and non-set-aside portions of the solicitation and the
contracting officer would no longer be required to conduct negotiations
only with those offerors who have submitted responsive offers on the
non-set-aside portion, as currently required under the FAR; nor is
there any statutory requirement to do so. The small business could
submit an offer for both or either the set-aside and non-set-aside
portions.
The SBA notes that it considered an additional definition for a
partial set-aside. The SBA has seen instances where an agency issues
one solicitation that is entirely set-aside for some or all of the
various categories of small businesses. The solicitation is divided
into categories where one is for HUBZone small businesses, another is
for SDVO SBCs, etc. The agency then states an intention to issue orders
against the various categories so that only the HUBZone small
businesses would be competing against each other, etc. The SBA believes
that this could be another type of partial set-aside, where the
multiple award contract is set-aside in part for the different small
business programs. The SBA requests comments on this alternative.
The SBA has also defined the term ``reserve,'' which is a term used
in the Jobs Act, but not specifically defined. We understand that
agencies have been ``reserving'' contract awards for small businesses
for several years, but there has been no clear definition of that term
or understanding of a ``reserve.'' For example, we have seen, and heard
during the Jobs Act tour, that agencies ``reserve'' an award for small
business participation, but do not require the small business to meet
any contractor performance requirements (e.g., limitations on
subcontracting). Some agencies then require that the small business
compete with other-than-small businesses for orders, which some small
businesses stated during the Jobs Act tour is difficult to do. This
rule proposes to amend that practice to afford small businesses more
opportunities to compete on orders where a reserve has been used by the
procuring agency for a multiple award contract.
The SBA proposes that a reserve is separate and distinct from a
partial set-aside since the Jobs Act refers separately to both partial
set-asides of multiple award contracts and reserves. In addition, the
Jobs Act explains that an agency may reserve one or more awards for
small businesses--a partial set-aside would require that the ``rule of
two'' be met for the portion that is set-aside for small businesses.
Thus, as proposed, a reserve is used when an acquisition for a
multiple award contract will be conducted using full and open
competition and the contracting officer's market research and recent
past experience evidence that:
[[Page 29140]]
At least two small businesses could perform one part of
the requirement, but the contracting officer was unable to divide the
requirement into smaller discrete categories such that the solicitation
could have been partially set-aside; or
At least one small business can perform the entire
requirement, but there is not a reasonable expectation of receiving at
least two offers from small business concerns at fair market price for
all the work contemplated throughout the term of the contract.
If either is the case, the contracting officer must then state an
intention to make one or more awards to any one type of small business
concern (e.g., small business, 8(a), HUBZone, SDVO SBC, WOSB or EDWOSB)
for the portion of the requirements they can perform and compete any
orders solely amongst the specified types of small business concerns in
accordance with that program's specific procedures. In the alternative,
the contracting officer can state an intention to make several awards
to several different types of small businesses (e.g., one to 8(a), one
to HUBZone, one to SDVO SBC, one to WOSB or EDWOSB) and compete the
orders solely amongst all of the small businesses for the portion of
the requirements they can perform.
The following sets forth two examples of how a set-aside, partial
set-aside and reserve could be used for a multiple award contract:
Table 1
----------------------------------------------------------------------------------------------------------------
Supply requirement Total set-aside Partial set-aside Reserve
----------------------------------------------------------------------------------------------------------------
Description of Requirement........... Five year Five year Five year
requirement for requirement for requirement for
couches and modular couches and modular couches and modular
office furniture. office furniture. office furniture.
No individual No individual Orders for
order expected to order expected to couches and modular
exceed 5 units. exceed 5 units but office furniture could
Total orders for modular range from 5-50 units
requirement not furniture could range per order.
expected to exceed from 5-50 units. Total
1000 units over 5 Total requirement not
years. requirement not expected to exceed
expected to exceed 1000 units over 5
1000 units over 5 years
years.
----------------------------------------------------------------------------------------------------------------
Market Research...................... Shows that many small Shows that many small Shows that many small
businesses can meet businesses can provide businesses can provide
the projected needs. the couches, but none 5-15 units but none
can provide the can provide more than
modular office 25 units at a time.
furniture at the
potential level of
demand.
----------------------------------------------------------------------------------------------------------------
Action............................... Total set-aside of Partial set-aside for Reserve for small
contract for small small businesses-- businesses--announce
businesses. break the requirement in solicitation that
into separate CLINS agency will make one
etc. and set-aside the or more awards to
requirement for small businesses and
couches for small if two or more awards
businesses. Compete to small businesses,
orders for couches apply the rule of two
only among small when placing orders.
business awardees.
----------------------------------------------------------------------------------------------------------------
Table 2
----------------------------------------------------------------------------------------------------------------
Service requirement Total set-aside Partial set-aside Reserve
----------------------------------------------------------------------------------------------------------------
Description of Requirement........... Five year Five year Five year
requirement for IT requirement for IT requirement for IT
services and IT services and IT services and supplies.
supplies. supplies. Orders for IT
No individual No orders services and supplies
order expected to expected to exceed could range from
exceed $250,000. $250,000 for IT $250,000 to $2
Total services in certain million.
requirement not geographic regions, Total
expected to exceed $10 but some orders for IT requirement not
million over 5 years. services could exceed expected to exceed
$500,000 in other $100 million over 5
geographic regions and years.
delivery of IT
supplies must be
accomplished in short
period of time.
Total
requirement not
expected to exceed
$100 million over 5
years
----------------------------------------------------------------------------------------------------------------
Market Research...................... Shows that many small Shows that many small Shows that many small
businesses can meet businesses can provide businesses can provide
the projected needs. the services and IT services and
supplies in certain supplies at certain
geographic regions and dollar thresholds, but
in a certain time none can provide IT
allotment, but none services and supplies
can provide the IT for all orders
services and supplies proposed to be issued
in other regions in up to $2 million.
the abbreviated
timeframe.
----------------------------------------------------------------------------------------------------------------
Action............................... Total set-aside of Partial set-aside for Reserve for small
contract for small small businesses-- businesses--announce
businesses. break the requirement in solicitation that
into separate CLINS agency will make one
for IT services and IT or more awards to
supplies in certain small businesses and
geographic regions. if there are two or
Compete orders for IT more awards to small
services and supplies businesses, apply the
in those regions only rule of two when
among small business placing orders.
awardees.
----------------------------------------------------------------------------------------------------------------
[[Page 29141]]
In the examples above, the contracting officer can reserve one or
more awards for a specific category of small businesses that can show
they can perform some of the work (e.g., an SDVO SBC reserve). In the
alternative, the contracting officer can reserve one or more awards for
several categories of small businesses (e.g., one for 8(a), one for
HUBZone, one for SDVO SBCs, and one for WOSBs or EDWOSBs), which would
be known as a small business reserve. Under a small business reserve,
an agency cannot state that an award will be made to a HUBZone small
business concern only if no award is made to an 8(a) BD Participant or
vice versa. In other words, unless the agency has specific statutory
authority to ``cascade'' the awards as such, it cannot do so. Once
awarded, certain orders will be competed amongst only small business
awardees if the ``rule of two'' is met at the order level. All other
orders will be competed amongst all of the awardees (which can include
the small businesses if their contract includes those supplies or
services).
In addition, the SBA has proposed that a reserve can occur on a
bundled contract where a Small Business Teaming Arrangement will submit
an offer or receive a contract award. In that case, the individual
members of the Small Business Team Arrangement will not be affiliated
for the bundled contract or other purposes, the small business
subcontracting limitations or nonmanufacturer rule requirement will
apply (as applicable) to each order, and the cooperative efforts of the
team members will be able to meet the subcontracting limitations
requirement. Under such a reserve, the Small Business Teaming
Arrangement would be competing on the orders with all awardees.
The SBA is proposing this type of reserve because, as discussed
above, there is a statutory exception to affiliation for the small
business team members in a Small Business Teaming Arrangement for
bundled contracts. Affiliation is important when size would be an
issue, which is generally not the case for bundled contracts, which are
competed using full and open competition. The SBA believes, therefore,
that the purpose of this provision and the exception to affiliation (as
well as the Jobs Act's Small Business Teaming Pilot Program, which will
offer assistance to small business teams and joint ventures) is to
permit such teams to compete on a bundled contract against large
businesses and retain their small business size status for future
federal acquisitions.
Some of the above are types of ``reserves'' SBA has seen used to
promote small businesses as prime contractors when an acquisition is
conducted using full and open competition. The SBA has also seen
instances where agencies will issue a multiple award contract using
full and open competition, but state in the solicitation that all
orders valued at less than a certain dollar threshold (e.g., $150,000)
are ``reserved'' for small businesses. However, we believe that this
could actually be a partial set-aside, since the agency could place
into a separate category all orders at this dollar threshold, but
welcomes comments on this issue.
The SBA understands that a reserve is a new type of procurement
mechanism. Therefore, the SBA specifically requests comments on the
proposed definition of the term ``reserve,'' including: (1) Whether the
definition effectively implements the statutory intent of the Jobs Act;
(2) whether there are other instances of ``reserves'' being used by
Federal agencies that promote small businesses as prime contractors
that would not be covered under the proposed definition; (3) how the
agency should handle the situation where there is only one small
business awardee under a reserve (e.g., award certain task orders
solely to the small business awardee); (4) whether there is a clear
enough distinction between a partial set-aside and a reserve; and (5)
whether the agency should require in the solicitation and contract that
a certain percentage of the orders must be awarded to small businesses
(e.g., a minimum of 30% of total dollar value of contract will be
awarded to small businesses) and, if so, whether this option could be
used in connection with not requiring the agency to compete orders
solely amongst small businesses if the ``rule of two'' is met.
SBA has also proposed adding a definition for a common term used by
procurement professionals--``rule of two''. The ``rule of two'' is the
commonly used phrase to identify the requirement that in order for an
agency to proceed with a set-aside, the contracting officer must have a
reasonable expectation that he or she will obtain offers from at least
two small businesses and award will be made at fair market price. This
basic premise--that at least two offers will be received at fair market
price--serves as the foundation for a set-aside pursuant to the 8(a)
BD, HUBZone, SDVO SBC and WOSB programs as well as small business set-
asides in general. Because the term ``rule of two'' is referenced in
the proposed regulations as it relates to reserves, the SBA believed it
was necessary to propose a definition for the term. This definition of
the ``rule of two'' is not meant in any way to change the set-aside
requirements set forth in SBA's regulations or the FAR (e.g., shall set
aside for small businesses, may set-aside for SDVO SBC). It is simply
meant to be a definition for the ``rule of two''.
SBA also proposed a definition for the term ``Small Business
Teaming Arrangement'' in Sec. 125.1. The Jobs Act requires that
agencies encourage the participation of small business teams for
bundled acquisitions, since by definition, a small business alone could
not perform on a bundled contract. The FAR defines the term
``contractor team arrangements'' in FAR Sec. 9.601 and GSA also
permits Contractor Team Arrangements for orders competed against its
Multiple Award Schedule contracts where two or more GSA Schedule
contractors work together to meet the ordering activity's needs. In
order to avoid confusion, the SBA has proposed the term ``Small
Business Teaming Arrangement'' and set forth a specific definition for
this term.
Under such an arrangement, two or more small businesses can form a
joint venture or enter into a written agreement where one small
business acts as the prime and the other small business or small
businesses are the subcontractors. The SBA requires the agreement be in
writing and submitted to the contracting officer as part of the
proposal so that he/she understands that a small business team has
submitted the proposal.
SBA is also proposing to amend its definition of the term
subcontracting to clarify subcontracting costs. SBA has removed the
language, ``or services'', in order to provide clarity on costs that
should properly be considered subcontracting costs, and not cost for
materials.
In addition to adding a definition section to Sec. 125.1, the SBA
has proposed amending Sec. 125.2. Specifically, the SBA has
reorganized this section by breaking it into specific parts to address
SBA's and the procuring agency's responsibilities when providing small
business contracting assistance. The SBA has not entirely re-written
this section of the rule, but has generally reorganized it for easier
reference.
Paragraph 125.2(a) addresses the general objective of SBA's
contracting programs, which is to assist small businesses in obtaining
a fair share of Federal Government prime contracts, subcontracts,
orders, and property sales.
Proposed paragraph 125.2(b) sets forth SBA's responsibility during
an agency's acquisition planning. At the earliest
[[Page 29142]]
stage possible, the SBA's PCRs work with the buying activity or agency
by reviewing acquisitions and ensuring that it has complied with all
applicable statutory and regulatory small business requirements. SBA's
PCRs work with the procuring agency's small business specialist (SBS)
and the procuring agency's OSDBU or OSBP to identify bundled or
consolidated requirements, and promote set-asides and reserves. The
PCRs may make recommendations to break up the procurement so that small
businesses can compete as prime contractors or encourage small business
prime contractor participation on justified, bundled contracts through
Small Business Teaming Arrangements and through increased small
business subcontracting goals. In addition, with respect to the new
Jobs Act provision relating to multiple award contracts, PCRs may work
more closely with agencies that have not met their small business goals
in the prior year to identify small business opportunities on multiple
award contracts. However, the ultimate decision of whether to apply a
section 1331 Jobs Act tool (partial set-aside, reserve, or set-aside of
an order) to any given procurement action is a decision of the
contracting officer.
Proposed paragraph 125.2(c) addresses the procuring agency's
responsibilities. This includes structuring the acquisition to ensure
competition by small business concerns, avoiding unnecessary bundling
and consolidation, and conducting sufficient market research to help
determine the type of acquisition to be used. This paragraph also
addresses the need for and requirement that the procuring agency work
closely with SBA and its PCRs on acquisitions to promote the use of
small businesses.
Proposed paragraph 125.2(d) addresses contract consolidation and
bundling and adds new provisions set forth in the Jobs Act.
Specifically, the proposed regulation explains that an agency may not
conduct an acquisition that is a consolidation of contract requirements
with a total value of more than $2 million unless the SPE or CAO
justifies the consolidation and identifies the negative impact on small
businesses. The Jobs Act states that the agency can justify the action
if the benefits of the consolidated acquisition substantially exceed
the benefits of each possible alternative approach that would involve a
lesser degree of consolidation.
The Jobs Act does not define the terms ``substantially exceed'' or
``benefits''. The SBA has therefore proposed to use the definitions for
those terms currently set forth in the bundling regulations in part
125. The SBA does not believe that those terms should be defined
differently or inconsistently, but welcomes comments on this approach.
The SBA also sets forth the same requirements for bundling and
substantial bundling that are currently set forth in Sec. 125.2(d).
However, the SBA reorganized those sections and proposed updates to all
of the dollar values to be consistent with the FAR. Specifically, the
FAR Council has the responsibility of adjusting each acquisition-
related dollar threshold on October 1, of each year that is evenly
divisible by five. The FAR Council publishes a notice of the adjusted
dollar thresholds in the Federal Register. The adjusted dollar
thresholds must take effect on the date of publication. In this case,
the FAR Council adjusted the bundling thresholds on August 30, 2010 in
75 FR 53129. The proposed amendment seeks to ensure that the FAR and
SBA's regulations will be consistent.
In addition, the SBA has proposed regulations to address the Jobs
Act requirement that agencies post their rationale for any bundled
requirement. The SBA actually published a direct rule implementing this
Jobs Act requirement at 76 FR 63542 (Oct. 13, 2011), which was
effective November 28, 2011. According to the Jobs Act and implementing
rule, an agency must publish on its Web site a list and rationale for
each bundled requirement on which the agency solicited offers or issued
an award. With this proposed rule, however, SBA is encouraging agencies
to post the list and rationale prior to the time the agency solicits
offers, rather than wait until awards have been made.
The SBA believes that posting the bundling rationale and list prior
to or at the same time the agency announces the solicitation should be
easy for each agency to achieve, especially since the Act already
requires agencies to notify every affected small business of its intent
to bundle. In addition, we note that DoD is already posting such a
notice at least 30 days prior to issuance of a bundled solicitation.
Specifically, DFARS Sec. 205.205-70, ``Notification of bundling of DoD
contracts'' states that a contracting officer must publish in
FedBizOpps.gov a notification of the intent to bundle all DoD funded
acquisitions that involve bundling, including the measurably
substantial benefits that are expected to be derived as a result of the
bundling. The contracting officer must post the requirement at least 30
days prior to the release of the solicitation or 30 days before placing
an order. 48 CFR 205.205-70. The SBA welcomes comments on this issue,
and in particular comments on whether agencies should be required to
post the rationale prior to the release of the solicitation.
The SBA has also proposed amendments to Sec. 125.2(e), which
addresses application of SBA's programs to multiple award contracts,
and is one of the key provisions of the Jobs Act. SBA proposed to
define certain terms relating to this key provision--such as multiple
award contract, partial set-aside and reserve in Sec. 125.1, which was
discussed above. In Sec. 125.2, the SBA proposes regulations to
explain how and when such partial set-asides, reserves and set-asides
of orders can be used in an acquisition involving multiple award
contracts.
The SBA notes that on November 2, 2011, the FAR Council issued an
interim rule to address the basic authorities of this provision. See 76
FR 68032. Proposed Sec. 125.2(e) is intended to provide additional
guidance to help contracting officers as they take advantage of the
discretionary authorities in section 1331 to use a partial set-aside or
reserve for a multiple award contract or set-aside of orders against a
multiple award contract.
The proposed rule first addresses the contracting officer's
authority to use these Jobs Act provisions. The Jobs Act states that
agencies may, at their discretion, partially set-aside or reserve a
multiple award contract, and may set-aside orders issued against a
multiple award contract, for small businesses. Therefore, the
contracting officer is not required to partially set-aside or reserve a
multiple award contract, or set-aside an order against a full and
openly competed multiple award contract for small businesses; rather,
the contracting officer has the discretion to do so.
However, the Small Business Act, SBA's regulations, and the FAR
state that small businesses ``shall'' receive awards for acquisitions
valued above the micro-purchase threshold but below the simplified
acquisition threshold (SAT) when the ``rule of two'' is met. In
addition, the Act also states that small businesses ``shall receive any
award or contract or any part thereof, * * * as to which it is
determined by the Administration and the contracting procurement or
disposal agency (1) to be in the interest of maintaining or mobilizing
the Nation's full productive capacity, (2) to be in the interest of war
or national defense programs, (3) to be in the interest of assuring
that a fair proportion of the total purchases and contracts for
property and services for the Government in each industry category are
placed with small-business
[[Page 29143]]
concerns, or (4) to be in the interest of assuring that a fair
proportion of the total sales of Government property be made to small-
business concerns; * * *.'' 15 U.S.C. 644(a) (emphasis added).
To ensure that agencies comply with this and other provisions
relating to small businesses, the Act sets forth certain Governmentwide
statutory goals, the percentages of which are based on the aggregate of
all Federal procurement. Id. Sec. 644(g)(1). The Act also requires
that each Federal department and agency have an annual goal that
presents, for that agency, the maximum practicable opportunity for
small businesses. Id. This agency goal is separate from the
Governmentwide goal. With respect to the agency goal, the Small
Business Act explains that if an agency is not meeting its goals, it
must explain to SBA why it did not meet its goals, and offer strategies
to expand the award of contracts to small business concerns.
In consideration of the foregoing, this proposed rule explains that
if the ``rule of two'' is met, then the contracting officer must set-
aside the contract. If however, the ``rule of two'' is not met, then
the contracting officer has the discretion to: (1) Set-aside part or
parts of the multiple award contract for small business concerns,
including the subcategories of small business concerns; (2) reserve one
or more contract awards for small business concerns under full and open
multiple award procurements, including the subcategories of small
business concerns; or (3) set aside orders for small business concerns,
including the subcategories of small business concerns, under multiple
award contracts awarded that are full and openly competed where the
rule of two is met for a specific order.
When exercising his or her discretion to decide among these
options, there is no order of precedence--the contracting officer is
not required to consider partial set-asides first, and then reserves
and then the set-aside of orders. In other words, if an agency could do
a partial set-aside or set-aside orders under a full an open
competition, there is no preference for doing the former over the
latter. Rather, all three should be considered as part of acquisition
planning and, if more than one option is available (the circumstances
fit the definition of more than one tool), the agency should give
careful consideration to the option that works best for the agency.
Whether the agency ultimately uses any of the three authorities is left
to the agency's discretion, but the agency must keep in mind that it
will be held accountable for taking all reasonable steps to meet their
small business goals. In other words, when utilizing this discretion,
the procuring agency and contracting officer should consider the
statutory requirements and small business contracting goals that are
designed to help ensure that small businesses receive a fair proportion
of awards. All agencies, especially those that are not meeting their
small business contracting goals, are to consider strategies that can
expand opportunities for making contract awards to all categories of
small businesses.
We believe that awarding multiple award contracts to small
businesses is one strategy to improve the agency's ability to attain
its small business goals. Consequently, the SBA has proposed that if
the contracting officer decides not to partially set-aside or reserve a
multiple award contract, or include a clause in the contract that
commits the agency to set-aside or preserve the right to set-aside
orders against a multiple award contract that is full and openly
competed, then the contracting officer must explain the decision and
document it in the contract file. The procuring agency contracting
officer would need to document the contract file only if he/she decides
not use any of these Jobs Act authorities. Of course, once an agency
has exercised its discretion at the contract level to use one of the
Sec. 1331 tools, it must honor the commitment when placing orders. For
example, if an agency inserts a clause in the contract awarded pursuant
to full and open competition stating that it will set aside orders when
the rule of two is met, it must do so.
SBA considered whether documentation requirement would create a
chilling effect and prevent contracting officers from using these new
Jobs Act authorities, which are discretionary. The SBA believes, that
the requirement to document a decision to not utilize small businesses
is already in the FAR and therefore not a new requirement.
When conducting acquisition planning, the contracting officer must
consider small business utilization. In fact, FAR Sec. 7.103 states
that agencies shall ensure that acquisition planners structure their
requirements to facilitate competition by and among small business
concerns. Likewise, FAR Sec. 7.105(b)(1) requires not only that the
acquisition plan indicate the prospective sources of supplies or
services that can meet the need, but must include consideration of
small business and address the extent and results of the market
research. Further, the acquisition plan must explain how the proposed
action benefits the Government, including when ``[o]rdering through an
indefinite delivery contract facilitates access to small disadvantaged
business concerns, 8(a) contractors, women-owned small business
concerns, HUBZone small business concerns, veteran-owned small business
concerns, or service-disabled veteran-owned small business concerns.''
FAR Sec. 7.105(b)(5)(B)(ii).
Finally, agencies must document their decision to not proceed with
a set-aside pursuant to FAR Sec. 19.501(c). FAR Sec. 19.501(c) states
that: ``The contracting officer shall perform market research and
document why a small business set-aside is inappropriate when an
acquisition is not set aside for small business, unless an award is
anticipated to a small business under the 8(a), HUBZone, service-
disabled veteran-owned, or WOSB programs.''
Thus, the SBA believes that this proposed rule requires no new FAR
market research, acquisition planning or documentation requirements.
Rather, it reinforces requirements that are already in the FAR, which
is that contracting officers must give meaningful consideration to the
utilization of small businesses, and serve the purpose of increasing
opportunities for small businesses.
The SBA requests comments on this proposed implementation of
section 1331 of the Jobs Act and whether there are more effective
regulatory alternatives that might be considered. Specifically, the SBA
requests comments on whether the contracting officer's documentation
for deciding not to partially set-aside, reserve contracts or commit to
setting aside or preserving the right to set aside orders on a multiple
award contract should be approved at a higher level and/or posted
online concurrent with the issuance of the solicitation. The SBA notes
that under the Jobs Act, the Senior Procurement Executive or Chief
Acquisition Officer must approve certain actions related to
consolidation. Further, agencies are required to post online their
bundling justifications.
In addition, the SBA requests comments on what the documentation in
the file should demonstrate. The SBA believes that for example, the
documentation could explain that the agency has met its small business
goals for the prior year or that it is currently meeting some or all of
its goals, and then explain the results of the market research. The
documentation, like any other market research documentation, could
explain the acquisition history for the requirement and whether there
is
[[Page 29144]]
sufficient competition at the contract or order level for a partial
set-aside, reserve, or set-aside of an order against a full and openly
competed multiple award contract.
Since the Sec. 1331 authority is discretionary, an agency has the
discretion to forego using these tools even if the rule of two could be
met; but would still need to explain how its planned action is
consistent with the best interest of the agency (e.g., agency has a
history of successfully awarding significant amounts of work to small
businesses for the stated requirements under multiple award contracts
without set-asides, and has received substantial value from being able
to select from among small and other than small businesses as needs
arise; agency can get better overall value by using the fair
opportunity process without restriction for the stated requirements and
has developed a strategy with the help of its OSDBU or OSBP that
involves use of order set asides whenever the rule of two is met on a
number of multiple award contracts for other requirements).
In addition to the above, the SBA's proposed rule sets forth the
mechanics of how a contracting officer would use one of these Jobs Act
authorities (reserve, partial set-aside, set-aside of orders). The
proposed definitions for these terms were discussed prior in the
preamble. This part of the proposed rule explains that if the ``rule of
two'' can be met at the contract level, the agency must set-aside the
multiple award contract for small businesses (including a specific
category of small businesses). Section 1331 does not change the
requirements to set aside acquisitions at the contract level if the
``rule of two'' is satisfied.
This section of the proposed rule also explains that if the ``rule
of two'' is not met at the contract level, an agency has other options.
Pursuant to section 1331, it may partially set-aside or reserve the
requirement, or set-aside (or preserve the right to set-aside) orders
against a multiple award contract that was awarded pursuant to full and
open competition. These options, although discretionary, allow
procuring agencies to provide more prime contracting opportunities to
small businesses.
For example, an agency may have a requirement for services that
would cover different parts of the country. If market research
indicates that two or more small businesses can perform some of the
requirement (e.g., can perform for some of the states but not all), and
the solicitation can be separated into categories, the agency may
partially set-aside the requirement for small business concerns (or
8(a) BD Participants, HUBZone small business concerns, SDVO SBCs, WOSBs
or EDWOSBs, if the requirements for such a set-aside are met such as
the dollar value thresholds). In other words, the agency could do a
partial set-aside and set-aside part of the requirement for the
services for one or more states for small businesses (by setting this
forth in separate categories) and the rest of the requirement for
services for the remaining states for all other business concerns
(which can include the small businesses on the partial set-aside).
In the alternative, if the requirement cannot be broken into
smaller, discrete components or categories and market research
indicates that one small business can perform the entire requirement or
two or more small businesses can perform part of the requirement, it
may reserve one or more awards for small business (or 8(a) BD
Participants, HUBZone small business concerns, SDVO SBCs, WOSBs or
EDWOSBs).
Finally, irrespective of whether an agency could do a partial
contract set-aside or contract reserve, the contracting officer may
issue the solicitation using full and open competition and state that
it intends to set-aside orders, or preserve the right to set-aside
orders, if the ``rule of two'' is met.
For example, the agency may specifically state in the contract that
if the ``rule of two'' is met, it is preserving the right to set-aside
orders for small businesses (or any subcategory of small business). If
it preserves this right and then opts not to set-aside an order when
the ``rule of two'' is met, it must provide a written explanation for
its actions in the contract file--namely how its action is consistent
with the best interest of the agency.
In sum, an agency must first determine if it can set-aside the
requirement. If it cannot, it must consider whether it should partially
set-aside or reserve the multiple award contract for small businesses
or set aside or preserve the right to set aside orders against multiple
award contracts that were awarded in full and open competition. If the
agency decides not to take any one of these actions when it otherwise
could, it must explain its decision and document the decision in the
contract file.
We note that when setting aside orders against the GSA Schedules,
certain regulations in FAR Part 8.4 must be followed. For example, the
FAR states that agencies must survey at least three schedule
contractors through the GSA Advantage!, or request quotations from at
least three schedule contractors for acquisitions valued below the
simplified acquisition threshold. The SBA does not believe that this
requirement conflicts with the set-aside ``rule of two'' requirement;
rather, the two can be reconciled. The agency would first apply the
``rule of two'' to determine whether a set-aside is appropriate;
however, the agency can request quotes from more than two small
businesses. The same is true for acquisitions above the simplified
acquisition threshold, where the FAR requires the ordering activity
contracting officer to post a request for quotes (RFQ) on e-Buy or
provide the RFQ to as many schedule contractors as practicable,
consistent with market research appropriate to the circumstances.
Agencies would not be required to document the circumstances for
restricting consideration to less than three small business schedule
contractors based on one of the reasons at FAR Sec. 8.405.
The SBA's proposed rule also addresses multiple award contracts and
partial set-asides or reserves for 8(a) BD Program Participants. If the
contracting officer partially set-aside or reserved awards for a
multiple award contract solely for the 8(a) Program (i.e., there was an
offer and acceptance to the 8(a) Program), then orders could be issued
on a sole source basis using 8(a) Program authority, if the requisite
dollar thresholds are met. The SBA understands that there is at least
one Governmentwide contract that has been set-aside for the 8(a) BD
Program that permits 8(a) sole source awards on the order level and it
has served as a useful tool for contracting officers. In order to
continue to provide such flexibility to contracting officers, the SBA
is proposing to permit this with the proposed rule.
In this rule, the SBA has also proposed that agencies consider the
use of ``on and off ramp'' provisions when using set-asides, partial
set-asides or reserves for multiple award contracts. These provisions,
which are relatively new to contracting, are used by some agencies as a
means of ensuring that there are a sufficient number of small business
contract awardees for a multiple award contract that had been set-
aside. Agencies use ``on ramp'' provisions to award new contracts to
small businesses under a multiple award contract where some of the
current awardees are no longer small as a result of a size
recertification. Agencies use ``off ramp'' provisions to remove or
terminate a contractor that has recertified its status as other-than-
small and therefore is no longer eligible to receive new task orders as
a small business.
[[Page 29145]]
The SBA welcomes comments on these approaches. Further, the SBA
requests comments on the use of 8(a) sole source awards on orders
issued against an 8(a) set-aside, partially set-aside or reserved
multiple award contracts. In addition, the SBA welcomes comments on the
use of ``on ramp/off ramp'' procedures.
The SBA notes that consistent with the interim FAR rule, SBA
strongly encourages contracting officers to modify, on a bilateral
basis, existing multiple award contracts in accordance with FAR
1.108(d)(3) to address the new FAR provisions on multiple award
contracts, if the remaining period of performance extends at least six
months after the effective date of that rule, and the amount of work or
number of orders expected under the remaining performance period is
substantial. There are many valuable opportunities under existing
multiple award contracts to help small businesses through order set-
asides. These opportunities should not be lost. To this end, GSA's
Federal Acquisition Service, which is responsible for managing the MAS
Program, is in the process of modifying their existing contract
vehicles to include all appropriate set-aside clauses.
The SBA has also proposed amendments to Sec. 125.5 concerning its
COC program to address multiple award contracts and permit COCs on such
contracts, including ``reserves,'' and orders issued against multiple
award contracts. SBA acknowledges that contracting officers should be
making responsibility determinations at the contract level for multiple
award contracts. However, if a contracting officer makes a
responsibility determination at the order level that affects a small
business apparent successful offeror, then the contracting officer must
refer the matter to SBA for a COC.
In addition, the SBA has proposed amendments to the limitations on
subcontracting set forth in Sec. 125.6 to explain that the period of
performance for each order issued against a multiple award contract
will be used to determine compliance with the limitations on
subcontracting requirements. The SBA has proposed amendments to the
8(a) BD (13 CFR 124.510), HUBZone (13 CFR 126.601, 126.700), and SDVO
Program (13 CFR 125.15) regulations to state the same.
The SBA notes that it considered two options with respect to
application of the limitations on subcontracting for multiple award
contracts: (1) On an order by order basis; or (2) in the aggregate at
any point in time over the course of the contract. The SBA believed
that requiring the limitations on subcontracting to apply on an order
by order basis for a multiple award contract (if the contract is a set-
aside, partial set-aside or reserve, or if the order was set-aside) is
the best approach to allow contracting officers to monitor such
compliance.
We understand that allowing a small business to meet this
requirement in the aggregate at certain points in time provides greater
flexibility to both the small business and procuring activity,
especially with respect to multiple award contracts where the small
business prime contractor may utilize different subcontractors for
different task orders. However, we believe that it is too difficult to
monitor compliance and that in fact, agencies are not monitoring such
compliance. In fact, we believe it would be extremely difficult to
monitor compliance on a multi-agency multiple award contract where
contracting officers from different agencies are awarding task orders
against the same contract. We note that GSA has informed SBA that it
monitors compliance through designated FAC-C contracting officer
representatives. SBA specifically requests comments on this issue.
We note that for 8(a) contracts, the SBA has retained a provision
that permits the SBA to waive this requirement and allow an 8(a) BD
Participant to meet the subcontracting limitations for the combined
total of all orders issued to date at the end of any six-month period
where he or she makes a written determination that larger amounts of
subcontracting are essential during certain stages of performance,
provided that there are written assurances from both the 8(a) BD
Participant and the procuring activity that the contract will
ultimately comply with the requirements of this section. The SBA has
retained this ``waiver'' in the proposed rule because it affords
additional business development opportunities for 8(a) BD Participants,
but welcomes comments on whether the ``waiver'' should remain solely
for 8(a) contracts, or whether the requirements should be the same for
all programs.
In addition, and with respect to the limitations on subcontracting,
SBA has proposed that a contracting officer must document a small
business concern's performance of work requirements as part of the
small business's performance evaluation. This means that if the small
business meets the applicable limitation on subcontracting, its efforts
must be documented. This also means that if a small business fails to
meet the applicable limitations on subcontracting for the program, the
contracting officer must document this failure. Contracting officers
must use this information, which will be available to all contracting
officers on the Past Performance Information Retrieval System (PPIRS),
when evaluating compliance on future contract awards. The FAR requires
agencies to post contractor evaluations in the PPIRS database, which
now serves as the single, authorized application to retrieve contractor
performance information.
We note that if a small business fails to meet the subcontracting
limitations requirement set forth in the contract, the contracting
officer may terminate the contract for default pursuant to FAR Sec.
49.401. Specifically, the FAR permits the contracting officer to
completely or partially terminate a contract because of the
contractor's actual or anticipated failure to perform its contractual
obligations--in this case, the failure to meet the limitations on
subcontracting. If the small business can establish or the contracting
officer determines that the failure to perform is excusable (e.g.,
arose out of causes beyond the control and without the fault or
negligence of the contractor), then no termination for default would be
required.
C. Amendments to Other Parts Addressing SBA's Procurement Programs--
Parts 124, 125, 126 and 127
The SBA has also proposed amendments to the various parts of its
regulations that cover specific procurement programs: Part 124 (8(a) BD
Program); part 125 (SDVO SBC Program); part 126 (HUBZone Program); and
part 127 (WOSB Program). The proposed amendments to these parts conform
to the general proposed amendments in part 125 concerning multiple
award contracts. For example, the SBA amended each of these parts to
include multiple award contracts as types of contracts available for
set-asides, partial set-asides and reserves under these programs. The
SBA also amended each of these parts to address status protests and
appeals relating to multiple award contracts or orders issued against
multiple award contracts, and the limitations on subcontracting and
nonmanufacturer rule requirements.
With respect to the WOSB Program, we note that a contracting
officer may restrict competition to EDWOSBs if the contract is in an
industry that SBA has designated as underrepresented and the
contracting officer has a reasonable expectation based on market
research that two or more EDWOSBs will submit offers, the anticipated
award price (including options) does not exceed $6.5 million for a
contract assigned a NAICS
[[Page 29146]]
code for manufacturing or $4 million for a contract assigned any other
NAICS code, and the contract may be awarded at a fair and reasonable
price. The contracting officer may restrict competition for WOSBs in an
industry that SBA has designated as substantially underrepresented if
the contracting officer has a reasonable expectation based on market
research that two or more WOSBs will submit offers, the anticipated
award price (including options) does not exceed $6.5 million for a
contract assigned a NAICS code for manufacturing or $4 million for a
contract assigned any other NAICS code, and the contract may be awarded
at a fair and reasonable price.
Because the Jobs Act specifically permits set-asides, partial set-
asides and reserves of multiple award contracts, as well as set-asides
of orders against multiple award contracts that were themselves awarded
through full and open competition, the SBA has proposed amending the
WOSB Program regulations to address application of the contracting
thresholds for that program with respect to multiple award contracts.
The SBA's proposed regulations explain that the thresholds for the WOSB
Program ($6.5 million for manufacturing and $4 million for everything
else) will apply to each order issued against the multiple award
contract, rather than the estimated contract value for the multiple
award contract and rather than the total value of all orders issued
against the multiple award contract. If SBA were to apply the
thresholds to the value of the multiple award contract, then it would
be difficult to set-aside, partially set-aside or reserve a multiple
award contract under the WOSB Program because the estimated dollar
value of the acquisition will almost always exceed the $4 and $6.5
million thresholds (since the estimated dollar value of such an
acquisition would be the total value of several different contracts).
The SBA welcomes comments on this proposal.
In addition, the SBA has proposed regulations to the SDVO SBC
Program, HUBZone Program and WOSB Program to address the situation
where an awardee under one of these programs is later decertified or
deemed ineligible for the program. The SBA has proposed that a concern
that represents itself as eligible for the program or is certified into
the program and receives a contract award keeps its status throughout
the life of the contract, unless the contract exceeds five years, there
is a contract novation, or there has been a merger or acquisition. In
those instances, the concern will have to recertify its status.
Essentially, the SBA has proposed applying the current size re-
certification rule to the status of a small business for each of its
programs. The SBA welcomes comments on this proposal.
IV. Request for Comments
The Jobs Act has set forth the necessary tools to ensure that small
businesses receive their fair share of Federal awards. It opens the
door for small businesses by providing them access to multiple award
contracts and orders issued against multiple award contracts. It also
sets forth limitations on contract consolidation and provides for
greater bundling enforcement.
As such, the SBA requests comments on each proposed amendment to
the rule. We have noted above specific issues on which the agency would
like to receive comments. However, SBA seeks comments on all aspects of
this proposed rule.
Compliance With Executive Orders 12866, 12988, 13132, 13563, the
Paperwork Reduction Act (44 U.S.C., Chapter 35) and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
Executive Order 12866
OMB has determined that this rule is a ``significant'' regulatory
action under Executive Order 12866. The Regulatory Impact Analysis is
set forth below.
Regulatory Impact Analysis
1. Necessity of Regulation
This regulatory action implements the Small Business Jobs Act of
2010, Public Law 111-240. Specifically, it implements the following
sections of the Jobs Act: section 1311 (definition of multiple award
contract); section 1312 (publication on Web site a list and rationale
for bundled contracts); section 1313 (consolidation of contracts
definitions, policy, limitations on use, determination on necessary and
justified); and section 1331 (reservation of multiple award contracts
and orders against multiple award contracts for small businesses).
Those sections of the Jobs Act address small business set-asides and
reserves of multiple award contracts and orders issued pursuant to such
contracts, as well as bundling and contract consolidation.
The SBA's current regulations address bundling with respect to
multiple award contracts as well as set-asides of its various programs,
in general. However, the regulations do not provide the specific
guidance needed by the contracting community, which is set forth in
this proposed rule. The SBA believes it is necessary and beneficial to
address these recent amendments to the Small Business Act in its
regulations to ensure consistency and clarity on these issues as they
relate to small businesses. This is especially true since these
provisions of the Jobs Act are creating new procurement mechanisms for
contracting officers to use to award small businesses contracts and
orders issued against contracts.
2. Alternative Approaches to Proposed Rule
The SBA considered numerous alternatives when drafting this
regulation. The SBA considered an alternative approach with respect to
the definition of multiple award contract. The Jobs Act sets forth a
definition of that term. However, the DFARS also set forth a more
specific definition of multiple award contracts. After reviewing
legislative history and other reports relating to this issue, the SBA
believes that the DFARS definition is a reasonable interpretation of
the definition set forth in the Jobs Act as well as a more specific
definition of the term because it specifically addresses multiple award
contracts issued by the GSA as part of the MAS Program. Consequently,
the SBA based its definition of multiple award contract on the DFARS
definition, although it changed the wording slightly.
In addition, the SBA considered various approaches with respect to
application of its programs to multiple award contracts. As noted in
the discussion above, the proposed rule states that agencies may
partially set-aside or reserve awards of multiple award contracts (and
set-aside orders issued against multiple award contracts) for small
businesses even if the agency did not meet its prior fiscal year's
small business goals or is currently not meeting its goals. The SBA
explored other options when drafting this rule (e.g., should the
contracting officer be required to partially set-aside a multiple award
contract if the agency is failing to currently meet its goals).
The SBA also considered several alternatives as it relates to
partial set-asides against multiple award contracts. The FAR currently
addresses partial set-asides for small businesses, but the procedures
seem out-of-date and complex. The SBA believes that the best
alternative is to propose a change in the current method of conducting
a partial set-aside.
Other examples of alternatives considered are discussed in the
preamble above (e.g., how to determine a small business is meeting the
subcontracting limitations requirement).
[[Page 29147]]
3. What are the potential benefits and costs of this regulatory action?
The potential benefits of this rule are to increase small business
participation in Federal prime contracts by limiting a procuring
agency's use of bundled and consolidated contracts, ensuring small
businesses have opportunities with respect to justified bundled and
consolidated contracts, and ensuring that small businesses have greater
access to multiple award contracts, including orders issued against
such contracts. Currently, there is inadequate guidance for agencies
regarding application of the SBA's programs to multiple award contracts
and orders issued against such contracts. As a result, we believe that
small businesses have been denied many opportunities to submit offers
on and potentially receive awards on these contracts or the orders.
For example, Congress established an annual goal that 23 percent of
the dollar value of prime contracts awarded by the Federal government
must be awarded to small business. In fiscal year (FY) 2010, small
businesses received 22.65 percent of federal dollars; in FY 2009, small
businesses received 21.89 percent of federal dollars; and in FY 2008,
small businesses received 21.50 percent of federal dollars. Although it
is getting close, the Federal government is still not meeting this
statutory goal. One benefit of this rule is to provide needed
mechanisms and guidance to assist agencies and the Federal government
in meeting this goal.
In addition, the Federal Procurement Data System shows that there
were over 137,000 actions for small businesses on the Federal Supply
Schedule in FY 2009, which amounted to over $5,000,000,000 in
obligations to small businesses. Of that amount, over $700,000,000 was
obligated as part of a BPA. There were 470 actions for small businesses
on a GSA Governmentwide Acquisition Contract in FY 2009, which amounted
to over $200,000,000 in obligations to small businesses. That means
there were almost 138,000 actions against a GSA multiple award contract
for small businesses amounting to over $5,200,000,000 in dollars
obligated in FY 2009.
The data also shows that there were over 1500 actions where there
was a set-aside for small business (or a specific category of small
business), which amounted to over $180,000,000 in obligations to small
businesses. The data also shows that there were over 1400 actions
against a BPA where there was a set-aside for small business (or a
specific category of small business), which amounted to over
$43,000,000 in obligations to small businesses awarded that year.
In comparison, there were over 364,000 actions against a GSA
Multiple Award Schedule contract awarded to other-than-small businesses
amounting to over $7,000,000,000 in dollars obligated in FY 2009. Of
that amount, over $2,000,000,000 was obligated as part of a BPA.
According to this data, small businesses do receive orders from
agencies using the GSA Schedule. However, some of these awards may have
been made to businesses that represented themselves as small for a
specific NAICS code assigned to one of several SINs, which are assigned
to a specific GSA Schedule Contract. An agency may have awarded an
order with a different or no NAICS code and still have taken credit for
an award to a small business. Further, agencies may have set-aside the
orders against the GSA Schedule Contract and not required any
limitations on subcontracting which could have permitted a large
business to perform most or all of the work.
Regardless, we do not believe that this rule would impact the
agencies, who would continue to use the GSA Schedule and make awards to
small businesses using one standard set of criteria when making such
awards. However, we have heard from many small businesses with a GSA
Schedule Contract that they are not utilized by agencies. This proposed
rule aims to help increase opportunities for small businesses. The
rule's intent is that more small businesses can have the chance to
compete and succeed on more multiple award contract orders. Therefore,
this rule could impact small businesses that are underutilized on the
Schedule by providing more of them with more opportunities.
In addition, we note that the Congressional Budget Office believed
that agencies would continue to encourage the use of small businesses
to procure goods and services and that doing so would not significantly
increase procurement costs. See S. Rep. 111-343 at 12 (publicly
available at http://thomas.loc.gov/cgi-bin/cpquery/R?cp111:FLD010:@1(sr343)).
However, we do note that once implemented as final, it is likely
that changes would need to be made to the Interagency Acquisition
Environment (IAE). For example, modifications may need to be made to
the Government's contract award database, the Federal Procurement Data
System-NG (FPDS-NG). We understand that this process will take some
time and the Government will incur a cost for these changes to the
system.
With respect to bundled contracts, data from FY 2009 shows that
there were 36 bundled contracts with a value of over $3,448,000,000 and
63 consolidated contracts with a value of over $7,645,000,000. This
regulation is intended to reduce the number of bundled and consolidated
contracts, since they exclude small business participation at the prime
contract level. SBA anticipates that this will have a beneficial impact
for small businesses as well as the agencies. For example, although
many agencies believe that combining numerous requirements into one
contract would lessen the administrative burden for the agency, the
fact is that it could increase the burden. For example, if an agency
awards 10 contracts in response to a single solicitation, then it could
receive 10 responses every time it solicits a quote for an order. In
the end, it may have been less time-consuming overall to merely have
broken up the requirement into smaller pieces and issued fixed price
contracts for parts of the requirement to small businesses.
Executive Order 13563
This executive order directs agencies to, among other things: (a)
Afford the public a meaningful opportunity to comment through the
Internet on proposed regulations, with a comment period that should
generally consist of not less than 60 days; (b) provide for an ``open
exchange'' of information among government officials, experts,
stakeholders, and the public; and (c) seek the views of those who are
likely to be affected by the rulemaking, even before issuing a notice
of proposed rulemaking. As far as practicable or relevant, SBA
considered these requirements in developing this proposed rule, as
discussed below.
1. Did the agency use the best available techniques to quantify
anticipated present and future costs when responding to E.O. 12866
(e.g., identifying changing future compliance costs that might result
from technological innovation or anticipated behavioral changes)?
Yes, the agency utilized the most recent data available on the
Federal Procurement Data System (FYs 2010 and 2009 data).
[[Page 29148]]
2. Public participation: Did the agency: (a) Afford the public a
meaningful opportunity to comment through the Internet on any proposed
regulation, with a comment period that should generally consist of not
less than 60 days; (b) provide for an ``open exchange'' of information
among government officials, experts, stakeholders, and the public; (c)
provide timely online access to the rulemaking docket on
Regulations.gov; and (d) seek the views of those who are likely to be
affected by rulemaking, even before issuing a notice of proposed
rulemaking?
The Jobs Act imposes a specific statutory time by which the SBA
must issue a final regulation. The SBA and OFPP worked with DoD, GSA
and NASA to implement these provisions relating to multiple award
contracts in an interim final rule in the FAR. The FAR interim final
rule provides some, but all the guidance needed by procuring officials
on this issue. Therefore, to provide this needed guidance quickly, the
SBA intends to issue this rule with a 60-day comment period suggested
by the executive order. As indicated above in the ADDRESSES section of
this rule, the public is provided with the link to the online
rulemaking Web site and is encouraged to use this medium to submit
comments and view the comments of others.
In addition, we note that SBA has taken other steps to encourage
public participation in its rulemakings. Specifically, SBA has
conducted a ``listening tour'' to discuss the issues presented in the
Jobs Act with interested members of the public. The SBA toured 13
cities, transcribed the input from the public and requested and
received written comments (comments could be submitted to SBA employees
or to www.regulations.gov). See 76 FR 12395 (March 7, 2011); 76 FR
16703 (March 25, 2011); 76 FR 26948 (May 10, 2011). Further, we note
that as the sole agency that is charged with representing the interests
of small businesses, SBA receives calls every day from small business
owners and procurement officials discussing the very issues set forth
in the Jobs Act. SBA gave appropriate consideration to the various
suggestions, recommendations and relevant information received from
these sources when drafting this rule.
The Jobs Act required SBA to consult with other agencies, such as
GSA, when drafting the regulations, and SBA has done so. The SBA met
with several procuring agencies to discuss the effects of the Jobs Act
on each agency, in particular the GSA Schedule. Specifically, the SBA
met with agency Offices of Small Business Programs, Chief Acquisition
Officers, and Senior Procurement Executives. The SBA also gathered
input and ideas from various agencies on their procurement practices,
which were used when drafting these rules.
3. Flexibility: Did the agency identify and consider regulatory
approaches that reduce burdens and maintain flexibility and freedom of
choice for the public?
Yes, the agency considered several approaches, as discussed in the
preamble. We believe the proposed rule provides flexibility to
procuring agencies with respect to application of the SBA's programs to
multiple award contracts.
Executive Order 12988
This action meets applicable standards set forth in Sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminates ambiguity, and reduce burden. As discussed above
in Section IV of the preamble, the action does not have retroactive or
preemptive effect.
Executive Order 13132
This rule does not have federalism implications as defined in the
Executive Order. It will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132.
Paperwork Reduction Act (PRA), 44 U.S.C., Ch. 35
For purposes of the Paperwork Reduction Act, 44 U.S.C. Chapter 35,
SBA has determined that this proposed rule will not impose any new
reporting or recordkeeping requirements. Small business must already
represent their status at the time of submission of initial offer. This
rule only seeks to clarify when such businesses represent their status
for multiple award contracts and orders issued against multiple award
contracts.
In addition, in accordance with FAR Sec. Sec. 4.1202, 52.204-8,
52.219-1 and 13 CFR part 121, concerns must submit paper or electronic
representations or certifications in connection with prime contracts
and subcontracts. The Jobs Act requires that each offeror or applicant
for a Federal contract, subcontract, or grant shall contain a
certification concerning the small business size and status of a
business concern seeking the Federal contract, subcontract or grant.
Regulatory Flexibility Act, 5 U.S.C., 601-612
SBA has determined that this proposed rule may have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601, et seq.
Accordingly, SBA has prepared an Initial Regulatory Flexibility
Analysis (IRFA) addressing the impact of this Rule. The IRFA examines
the objectives and legal basis for this proposed rule; the kind and
number of small entities that may be affected; the projected
recordkeeping, reporting, and other requirements; whether there are any
Federal rules that may duplicate, overlap, or conflict with this
proposed rule; and whether there are any significant alternatives to
this proposed rule.
1. What are the reasons for, and objectives of, this proposed rule?
This regulatory action implements several sections of the Small
Business Jobs Act of 2010, Public Law 111-240. These sections of the
Jobs Act address small business set-asides and reserves of multiple
award contracts and orders issued pursuant to such contracts, as well
as bundling and contract consolidation.
The objective of the rule is to implement these statutory changes
by further defining terms and expanding on the concepts set forth in
the Jobs Act.
2. What is the legal basis for this proposed rule?
Small Business Jobs Act of 2010, Public Law 111-240.
3. What is SBA's description and estimate of the number of small
entities to which the rule will apply?
This rule addresses the application of all of SBA's small business
programs on multiple award contracts and addresses the limitations on
bundled and consolidated contracts. As of February 2011, there were
over 348,000 small business registered in the Central Contractor
Registration (CCR) with a Dynamic Small Business Search Supplemental
(DSBS) page. According to the FAR Sec. 4.11, prospective vendors must
be registered in CCR prior to the award of a contract; basic agreement,
basic ordering agreement, or blanket purchase agreement. Therefore, CCR
and DSBS are the primary databases used by Federal contracting officers
when conducting market research and it shows the small businesses that
will be affected by this rule, since those are the small businesses
that conduct or would
[[Page 29149]]
like to conduct business with the Federal Government.
The SBA notes that not all of these small businesses have received
multiple award contracts in the past and therefore, the number of
affected small businesses could be less. However, the SBA believes that
this rule will open the door to many more Federal procurement
opportunities to small businesses, including opportunities for orders
against the GSA Schedule. Therefore, the SBA believes that all small
businesses could be impacted by this rule.
4. What are the projected reporting, recordkeeping, Paperwork Reduction
Act and Other Compliance Requirements?
The SBA does not believe that there are any new recordkeeping
requirements. The proposed rule does provide that businesses will need
to report their size status at the time of contract award for a
multiple award contract, similar to how it is done now. However, the
business will need to represent its status for a single or multiple
NAICS codes in order to be deemed a small business for the orders
issued against the multiple award contract and each order will contain
a NAICS code.
In addition, the SBA has proposed a new compliance requirement with
respect to the limitations on subcontracting. Under the limitations on
subcontracting, a small business must perform a certain percentage of
the work itself and it limited as to how much work it can subcontract.
This is generally easy to monitor for single award contracts, but not
so easy with a multiple award contract where many task or delivery
orders will be issued, sometimes by different agencies. As such, the
SBA has proposed that small business comply with the limitations on
subcontracting for each order, rather than the total multiple award
contract.
5. What relevant federal rules may duplicate, overlap, or conflict with
this rule?
This proposed rule may conflict with current FAR and General
Services Administration regulations. As a result, those regulations
will need to be amended once this rule is issued as final. The SBA
consulted with both prior to issuing this proposed rule. However, as
noted in the discussion in the preamble, SBA attempted to draft the
regulations to avoid unnecessary conflicts. For example, the FAR and
GSA define the term ``teaming'' to mean something in particular. Rather
than define the term ``teaming'' to conflict with those rules, SBA
defined the term ``Small Business Teaming Arrangement.''
6. What significant alternatives did SBA consider that accomplish the
stated objectives and minimize any significant economic impact on small
entities?
One of the major parts of this rule is size status for multiple
award contracts and orders issued against multiple award contracts,
including the GSA Schedule. The agency first considered that a business
concern represent its size status at the time of submission of initial
offer and on each and every order issued against a multiple award
contract. The SBA proposed, however, that the small business represent
its status at the time of submission of initial offer for the multiple
award contract and that representation would generally be good for up
to five years, including for all orders issued against that multiple
award contract with the same or higher size standard. This is less of a
burden on small businesses, yet ensures that an agency's goals truly
reflect awards to small businesses.
The other alternatives are discussed in the preamble as well as the
Regulatory Impact Analysis.
List of Subjects
13 CFR Part 121
Government procurement, Government property, Grant programs--
business, Individuals with disabilities, Loan programs--business, Small
businesses.
13 CFR Part 124
Administrative practice and procedure, Government procurement,
Minority businesses, Reporting and recordkeeping requirements, Small
business, Technical assistance.
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Technical assistance.
13 CFR Part 126
Administrative practice and procedure, Government procurement,
Penalties, Reporting and recordkeeping requirements, Small business.
13 CFR Part 127
Government procurement, Reporting and recordkeeping requirements,
Small businesses.
Accordingly, for the reasons stated in the preamble, SBA proposes
to amend 13 CFR parts 121, 124, 125, 126, and 127 as follows:
PART 121--SMALL BUSINESS SIZE REGULATIONS
1. The authority citation for 13 CFR part 121 continues to read as
follows:
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), 637(a), 644,
662(5), and 694a; and Public Law 105-135, sec. 401 et seq., 111
Stat. 2592.
2. Amend Sec. 121.103 by adding new paragraph (b)(8) to read as
follows:
Sec. 121.103 How does SBA determine affiliation?
* * * * *
(a) * * *
(b) * * *
(8) In the case of a solicitation of offers for a bundled contract
with a reserve (as defined in Sec. 125.1), a small business concern
prime contractor may enter into a Small Business Teaming Arrangement
with one or more other small business concerns and submit an offer as a
small business for a Federal procurement without regard to affiliation
so long as each team member is small under the size standard
corresponding to the NAICS code assigned to the contract and there is a
written, signed teaming or joint venture agreement amongst the small
business concerns. See Sec. 125.1 for the definition of Small Business
Teaming Arrangement. With respect to Small Business Teaming
Arrangements that are joint ventures, see 121.103(h) for specific
requirements and limitations.
* * * * *
3. Amend Sec. 121.402 by:
a. Revising paragraphs (a) and (b);
b. Redesignating paragraphs (c), (d) and (e) as (d), (e), and (f),
respectively; and
c. Adding a new paragraph (c) to read as follows:
Sec. 121.402 What size standards are applicable to Federal Government
Contracting Programs?
(a) A concern must not exceed the size standard for the NAICS code
specified in the solicitation. The contracting officer must specify the
size standard in effect on the date the solicitation is issued. If SBA
amends the size standard and it becomes effective before the date
initial offers (including price) are due, the contracting officer may
amend the solicitation and use the new size standard.
(b) The procuring agency contracting officer, or authorized
representative, designates the proper NAICS code and corresponding size
standard in a solicitation, selecting the NAICS code which best
describes the principal purpose of the product or service being
acquired. Every solicitation, including a request for quotes, must
contain a NAICS code.
[[Page 29150]]
(i) Primary consideration is given to the industry descriptions in
the NAICS United States Manual, the product or service description in
the solicitation and any attachments to it, the relative value and
importance of the components of the procurement making up the end item
being procured, and the function of the goods or services being
purchased.
(ii) A procurement is usually classified according to the component
which accounts for the greatest percentage of contract value.
Acquisitions for supplies must be classified under the appropriate
manufacturing or supply NAICS code, not under a Wholesale Trade or
Retail Trade NAICS code. A concern that submits an offer or quote for a
contract, order or subcontract where the NAICS code assigned to the
contract, order or subcontract is one for supplies, and furnishes a
product it did not itself manufacture or produce, is categorized as a
nonmanufacturer and deemed small if it has 500 or fewer employees and
meets the requirements of Sec. 121.406(b).
(c) Multiple Award Contracts (see definition at Sec. 125.1).
(i) For Multiple Award Contracts, the contracting officer must:
(A) Assign the solicitation a single NAICS code and corresponding
size standard which best describes the principal purpose of the
acquisition as set forth in paragraph (b) above, only if the NAICS code
will also best describe the principal purpose of each order to be
placed under the Multiple Award Contract. If a service NAICS code has
been assigned to the Multiple Award Contract, then a service NAICS code
must be assigned to the solicitation for the order, including an order
for services that also requires some supplies; or
(B) Divide the solicitation into discrete categories (Contract Line
Item Numbers (CLINs), Special Item Numbers (SINs), Sectors, Functional
Areas (FAs), or the equivalent), and assign each discrete category the
single NAICS code and size standard that best describes the principal
purpose of the good or services to be acquired under that category
(CLIN, SIN, Sector, FA or equivalent)as set forth in paragraph (b)
above. A concern must meet the applicable size standard for
eachcategory (CLIN, SIN, Sector, FA or equivalent) for which it seeks
an award as a small business concern.
(ii)(A) The contracting officer must assign a single NAICS code for
each order issued against a Multiple Award Contract. When placing an
order under a multiple award contract with multiple NAICS codes, the
contracting officer must assign the NAICS code and corresponding size
standard that best describes the principle purpose of each order. In
cases like the GSA Schedule, where an agency can issue an order against
multiple SINs with different NAICS codes, the contracting officer must
select the single NAICS code that best represents the acquisition.
(B) With respect to an order issued against a multiple award
contract, an agency will receive small business credit for goaling only
if the business concern awarded the order has represented its status as
small for the underlying multiple award contract for the same NAICS
code as that for the order or if the contracting officer requires the
business to represent its status in response to that particular order
solicitation.
* * * * *
4. Amend Sec. 121.404 by:
a. Revising the heading;
b. Revising paragraph (a);
c. Revising paragraph (b) by removing ``date of certification by
SBA'' and adding in its place ``date the program office requests a
formal size determination in connection with a concern that is
otherwise eligible for program certification.''
d. Revising paragraph (f);
e. Revising the first sentence in paragraph (g), introductory text
and adding a new second sentence;
f. Revising paragraph (g)(2) by redesignating it as paragraph
(g)(2)(i) and adding the following new paragraph (g)(2)(ii);
g. Revising the first sentence in paragraph (g)(3);
h. Revising the second sentence in paragraph (g)(3)(iv);
i.Removing paragraph (g)(3)(vi);
j. Redesignating paragraph (g)(4) as (g)(5); and
k. Adding a new paragraph (g)(4), to read as follows:
Sec. 121.404 When is the size status of a business concern
determined?
(a) SBA determines the size status of a concern, including its
affiliates, as of the date the concern submits a written self-
certification that it is small to the procuring activity as part of its
initial offer (or other formal response to a solicitation), which
includes price.
(1) With respect to Multiple Award Contracts and orders issued
against the Multiple Award Contract:
(i) SBA will determine size at the time of initial offer (or other
formal response to a solicitation), which includes price, for the
Multiple Award Contract based upon the size standard set forth in the
solicitation for the Multiple Award Contract if a single NAICS codes is
assigned as set forth in Sec. 121.402(c)(i)(A). If a business is small
at the time of offer for the Multiple Award Contract, it is small for
each order issued against the contract, unless a contracting officer
requests a new size certification in connection with a specific order.
(ii) SBA will determine size at the time of initial offer (or other
formal response to a solicitation), which includes price, for the
Multiple Award Contract based upon the size standard set forth for each
discrete category (e.g., CLIN, SIN, Sector, FA or equivalent) for which
a business concern submits an offer and represents it is small for a
Multiple Award Contract as set forth in Sec. 121.402(c)(i)(B). If the
business concern submits an offer for the entire Multiple Award
Contract, SBA will determine whether it meets the size standard for
each discrete category (CLIN, SIN, Sector, FA or equivalent). If a
business is small at the time of offer for a discrete category on the
Multiple Award Contract, it is small for each order issued against that
category with the same NAICS code and size standard, unless a
contracting officer requests a new size certification in connection
with a specific order.
(iii) SBA will determine size at the time of initial offer (or
other formal response to a solicitation), which includes price, for an
order issued against a Multiple Award Contract if the contracting
officer requires the business concern to recertify its status at the
time of initial offer for an order.
(2) With respect to ``Agreements'' such as Blanket Purchase
Agreements (BPAs) (except for BPA's issued against a GSA Schedule
Contract), Basic Agreements, Basic Ordering Agreements, or any other
Agreement that a contracting officer sets aside or reserves awards to
any type of small business, a concern must qualify as small at the time
of its initial offer (or other formal response to a solicitation),
which includes price, for the Agreement. Because an Agreement is not a
contract, the concern must also qualify as small for each order issued
pursuant to the Agreement in order to be considered small for the order
and for an agency to receive small business goaling credit for the
order.
* * * * *
(f) For purposes of architect-engineering or two-step sealed
bidding procurements, a concern must qualify as small as of the date
that it certifies that it is small as part of its initial bid or
proposal (which may not include price).
(g) A concern that represents itself as a small business and
qualifies as a small
[[Page 29151]]
business at the time of initial offer (or other formal response to a
solicitation), which includes price, is considered a small business
throughout the life of that contract. This means that if a business
concern is small at the time of initial offer for a Multiple Award
Contract (see 121.1042(c) for designation of NAICS codes on a Multiple
Award Contract), then it will be considered small for each order issued
against the contract with the same NAICS code and size standard, unless
a contracting officer requests a new size certification in connection
with a specific order. * * *
* * * * *
(2)(i) * * *
(ii) Recertification is required:
(A) when a concern acquires or is acquired by another concern;
(B) from both the acquired concern and the acquiring concern if
each has been awarded a contract as a small business; and
(C) from a joint venture when the acquired concern, acquiring
concern, or merged concern is a participant in a joint venture that has
been awarded a contract or order as a small business.
* * * * *
(3) For the purposes of contracts (including Multiple Award
Contracts) with durations of more than five years (including options),
a contracting officer must request that a business concern recertify
its small business size status no more than 120 days prior to the end
of the fifth year of the contract, and no more than 120 days prior to
exercising any option thereafter. * * *
* * * * *
(iv) * * * The NAICS code and size standard assigned to an order
must correspond to a NAICS code and size standard assigned to the
underlying long-term contract and must be assigned in accordance with
Sec. 121.402(b) & (c).
(4) The requirements in paragraphs (1), (2), and (3) of this
section apply to Multiple Award Contracts. However, if the Multiple
Award Contract was set-aside for small businesses, was partially set-
aside for small businesses, or reserved for small business, then in the
case of a contract novation or merger or acquisition where no novation
is required and the resulting contractor is now otherthansmall, the
agency cannot exercise the next option and cannot count any new orders
issued pursuant to the contract, including options on current orders,
from that point forward, towards its small business goals. This
includes set-asides, partial set-asides, and reserves for 8(a) BD
Participants, HUBZone SBCs, SDVO SBCs, and WOSB/EDWOSBs.
* * * * *
5. Amend Sec. 121.406 by revising paragraph (a) to read as
follows:
Sec. 121.406 How does a small business concern qualify to provide
manufactured products or other supply items under a small business set-
aside, service-disabled veteran-owned small business set-aside, WOSB or
EDWOSB set-aside, or 8(a) contract?
(a) General. In order to qualify as a small business concern for a
small business set-aside, service-disabled veteran-owned small business
set-aside, WOSB or EDWOSB set-aside, or 8(a) contract, apartial set-
aside, reserve, or set-aside of orders against a multiple award
contract to provide manufactured products or other supply items, an
offeror must either: * * *
* * * * *
Sec. 121.407 [Removed and Reserved]
6. Remove and reserve Sec. 121.407.
7. Amend Sec. 121.1001 by:
a. Revising paragraph (a)(1);
Sec. 121.1001 Who may initiate a size protest or request a formal
size determination?
(a) Size Status Protests. (1) For SBA's Small Business Set-Aside
Program, including the Property Sales Program, or any instance in which
a procurement or order has been restricted to or reserved for small
business or a particular group of small business (including a partial
set-aside), the following entities may file a size protest in
connection with a particular procurement, sale or order: * * *
* * * * *
8. Amend Sec. 121.1004 by revising paragraphs (a)(1), (a)(2) and
(a)(3) to read as follows:
Sec. 121.1004 What time limits apply to size protests?
(a) Protests by entities other than contracting officers or SBA--
(1) Sealed bids or sales (including protests on partial set-asides and
reserves of Multiple Award Contracts and set-asides of orders against
Multiple Award Contracts). A protest must be received by the
contracting officer prior to the close of business on the 5th day,
exclusive of Saturdays, Sundays, and legal holidays, after bid or
proposal opening.
(2) Negotiated procurement (including protests on partial set-
asides and reserves of Multiple Award Contracts and set-asides of
orders against Multiple Award Contracts). A protest must be received by
the contracting officer prior to the close of business on the 5th day,
exclusive of Saturdays, Sundays, and legal holidays, after the
contracting officer has notified the protestor of the identity of the
prospective awardee.
(3) Long-Term Contracts. For contracts with durations greater than
five years (including options), including all existing long-term
contracts, Multi-agency contracts (MACs), Government Wide Acquisition
Contracts and Multiple Award Contracts: * * *
* * * * *
9. Amend Sec. 121.1103 by revising paragraph (a) to read as
follows:
Sec. 121.1103 What are the procedures for appealing a NAICS code or
size standard designation?
(a)(1) Any interested party adversely affected by a NAICS code
designation may appeal the designation to OHA. An interested party
would include a business concern seeking to change the NAICS code
designation in order to be considered a small business for the
challenged procurement, regardless of whether the procurement is
reserved for small businesses or unrestricted. The only exception is
that, for a sole source contract reserved under SBA's 8(a) Business
Development program (see part 124 of this chapter), only SBA's
Associate Administrator for Business Development may appeal the NAICS
code designation.
(2) A NAICS code appeal may include an appeal involving the
applicable size standard, such as where more than one size standard
corresponds to the selected NAICS code, or a question relating to the
size standard in effect at the time the solicitation was issued or
amended.
* * * * *
PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
10. The authority citation for 13 CFR part 124 is amended to read
as follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and
Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L.
101-574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.
11. Amend Sec. 124.501 by adding a sentence after the first
sentence in paragraph (a) to read as follows:
Sec. 124.501 What general provisions apply to the award of 8(a)
contracts?
(a) * * * This includes set-asides, partial set-asides and reserves
of Multiple Award Contracts and set-asides of orders issued against
Multiple Award Contracts. * * *
* * * * *
12. Amend Sec. 124.503 by:
[[Page 29152]]
a. Revising heading in paragraph (h);
b. Revising paragraphs (h)(1)(i), (h)(1)(ii), and (h)(1)(iv);
c. Revising the heading and first sentence in paragraph (h)(2); and
d. Adding new paragraph (h)(3) to read as follows:
Sec. 124.503 How does SBA accept a procurement for award through the
8(a) BD program?
* * * * *
(h) Task or Delivery Order Contracts, including Multiple Award
Contracts--(1) Contracts set-aside for exclusive competition among 8(a)
Participants. (i) A task or delivery order contract, Multiple Award
Contract, or order issued against a Multiple Award Contract that is
set-aside exclusively for 8(a) Program Participants, partially set-
aside for 8(a) Program Participants or reserved solely for 8(a) Program
Participants must follow the established 8(a) competitive procedures,
including an offering to and acceptance into the 8(a) program, SBA
eligibility verification of the apparent successful offerors prior to
contract award, application of the performance of work requirements set
forth in Sec. 124.510, and the nonmanufacturer rule, if applicable,
(see Sec. 121.406(b)).
(ii) An agency is not required to offer or receive acceptance of
individual orders into the 8(a) BD program if the task or delivery
order contract or Multiple Award Contract was set-aside exclusively for
8(a) Program Participants, partially set-aside for 8(a) Program
Participants or reserved solely for 8(a) Program Participants. * * *
(iv) An agency may issue a sole source award against a Multiple
Award Contract that has been set-aside exclusively for 8(a) Program
Participants, partially set-aside for 8(a) Program Participants or
reserved solely for 8(a) Program Participants if the required dollar
thresholds for sole source awards are met.
(2) Allowing orders issued to 8(a) Participants under Multiple
Award Contracts that were not set-aside for exclusive competition among
eligible 8(a) Participants to be considered 8(a) awards. In order for
an order issued to an 8(a) Participant and placed against a Multiple
Award Contract to be considered an 8(a) award, where the Multiple Award
contract was not initially set-aside, partially set-aside or reserved
for exclusive competition among 8(a) Participants, the following
conditions must be met: * * *
* * * * *
(3) Reserves. A procuring activity must offer and SBA must accept a
requirement that is reserved for 8(a) concerns (e.g., an acquisition
where the contracting officer states an intention to make one or more
awards to only 8(a) concerns under full and open competition). However,
a contracting officer does not have to offer the requirement to SBA
where the acquisition has been reserved for small businesses, even if
the contracting officer states an intention to make one or more awards
to several types of small business including 8(a) Participants since
that is not an 8(a) contract award.
* * * * *
13. Amend Sec. 124.504 by:
a. Revising paragraph (a) to read as follows; and
b. Revising paragraph (c)(3) by removing ``reserved for'' and
replacing it with ``in''.
Sec. 124.504 What circumstances limit SBA's ability to accept a
procurement for award as an 8(a) contract?
* * * * *
(a) Prior intent to award as a small business set-aside, or use the
HUBZone, Service Disabled Veteran-Owned Small Business, or Women-Owned
Small Business programs. The procuring activity issued a solicitation
for or otherwise expressed publicly a clear intent to award the
contract as a small business set-aside, or to use the HUBZone, Service
Disabled Veteran-Owned Small Business, or Women-Owned Small Business
programs prior to offering the requirement to SBA for award as an 8(a)
contract. The AA/BD may permit the acceptance of the requirement,
however, under extraordinary circumstances.
* * * * *
14. Amend Sec. 124.505 by revising the heading to read as follows:
``Sec. 124.505 When will SBA appeal the terms or conditions of a
particular 8(a) contract or a procuring activity decision not to use
the 8(a) BD program?''.
15. Amend Sec. 124.510 by revising paragraph (c) to read as
follows:
Sec. 124.510 What percentage of work must a Participant perform on an
8(a) contract?
* * * * *
(c) Indefinite delivery and indefinite quantity contracts. (1) In
order to ensure that the required percentage of costs on an indefinite
delivery or indefinite quantity 8(a) award is performed by the
Participant, the Participant must demonstrate that it has performed the
required percentage for each order. This includes Multiple Award
Contracts that were set-aside, partially set-aside or reserved solely
for 8(a) BD Participants as well as orders issued against Multiple
Award Contracts that were set-aside solely for 8(a) BD Participants.
For a service or supply contract, this means that the Participant must
perform 50 percent of the applicable costs for each task or delivery
order with its own employees or the cost of manufacturing the supplies
or products, whichever is applicable.
(2) The applicable SBA District Director may waive the provisions
in paragraph (c)(1) of this section requiring a Participant to meet the
applicable performance of work requirement for each task or delivery
order. Instead, the District Director may permit the Participant to
meet the applicable performance of work for the combined total of all
orders issued to date at the end of any six-month period where he or
she makes a written determination that larger amounts of subcontracting
are essential during certain stages of performance. However, the 8(a)
Participant and procuring activity's contracting officer must provide
written assurances that the contract will ultimately comply with the
requirements of this section. The procuring activity's contracting
officer does not have authority to waive the provisions in paragraph
(c)(1) of this section requiring a Participant to meet the applicable
performance of work requirement for each task or delivery order, even
if the agency has a Partnership Agreement with SBA.
Example. Two task orders are issued under an 8(a) indefinite
quantity service contract during the first six months of the
contract. The contract requires $100,000 in personnel costs to be
incurred on the first task order, and 90% of those costs ($90,000)
are incurred for performance by the Participant's own work force.
The second task order issued during the first six months also
requires $100,000 in personnel costs to be incurred. Where the
relevant SBA District Director has waived the requirements of
paragraph (c)(1), the 8(a) Participant would have to incur only 10
percent of the personnel costs on the second task order ($10,000)
because it would still have performed 50% of the total personnel
costs ($200,000) at the end of the six-month period ($100,000).
(3) Where the Participant does not ultimately comply with the
performance of work requirements by the end of the contract, SBA will
not grant future waivers for the Participant. Further, the contracting
officer must document an 8(a) Participant's performance of work
requirements as part of its performance evaluation in accordance with
the procedures set forth in FAR 42.1502. The contracting officer must
also evaluate compliance for future contract awards in accordance with
the procedures set forth in FAR 9.104-6.
[[Page 29153]]
PART 125--GOVERNMENT CONTRACTING PROGRAMS
16. The authority citation for 13 CFR part 125 is amended to read
as follows:
Authority: 15 U.S.C. 632(p), (q); 634(b)(6), 637, 644, 657f,
and 657q.
17. Revise Sec. 125.1 to read as follows:
Sec. 125.1 What definitions are important to SBA's Government
Contracting Programs?
(a) Chief Acquisition Officer means the employee of a Federal
agency designated as such pursuant to section 16(a) of the Office of
Federal Procurement Policy Act (41 U.S.C. 414(a)).
(b) Commercial off-the-shelf item has the same definition as set
forth in 41 U.S.C. 101 (as renumbered) and Federal Acquisition
Regulation (FAR) Sec. 2.101.
(c) Consolidation of contract requirements, consolidated contract
or consolidated requirement means a solicitation for a single contract
or a Multiple Award Contract to satisfy two or more requirements of the
Federal agency for goods or services that have been provided to or
performed for the Federal agency under two or more separate contracts
each of which was lower in cost than the total cost of the contract for
which the offers are solicited, the total cost of which exceeds $2
million (including options).
(d) Contract unless otherwise noted, has the same definition as set
forth in FAR Sec. 2.101 and includes orders issued against Multiple
Award Contracts and orders competed under agreements where the
execution of the order is the contract (e.g., a Blanket Purchase
Agreement (BPA), a Basic Agreement (BA), or Basic Ordering Agreement
(BOA)).
(e) Contract bundling, bundled requirement, bundled contract, or
bundling means the consolidation of two or more procurement
requirements for goods or services previously provided or performed
under separate smaller contracts into a solicitation of offers for a
single contract or a Multiple Award Contract that is likely to be
unsuitable for award to a small business concern (but may be suitable
for award to a small business with a Small Business Teaming
Arrangement) due to:
(1) The diversity, size, or specialized nature of the elements of
the performance specified;
(2) The aggregate dollar value of the anticipated award;
(3) The geographical dispersion of the contract performance sites;
or
(4) Any combination of the factors described in the above
paragraphs (1), (2), and (3) of this section.
(f) Cost of the contract means all allowable direct and indirect
costs allocable to the contract, excluding profit or fees.
(g) Cost of contract performance incurred for personnel means
direct labor costs and any overhead which has only direct labor as its
base, plus the concern's General and Administrative rate multiplied by
the labor cost.
(h) Cost of manufacturing means costs incurred by the business
concern in the production of the end item being acquired, including the
costs associated with crop production. These are costs associated with
producing the item being acquired, including the direct costs of
fabrication, assembly, or other production activities, and indirect
costs which are allocable and allowable. The cost of materials, as well
as the profit or fee from the contract, are excluded.
(i) Cost of materials means costs of the items purchased, handling
and associated shipping costs for the purchased items (which includes
raw materials), commercial off-the-shelf items (and similar common
supply items or commercial items that require additional manufacturing,
modification or integration to become end items), special tooling,
special testing equipment, and construction equipment purchased for and
required to perform on the contract. In the case of a supply contract,
include the acquisition of services or products from outside sources
following normal commercial practices within the industry.
(j) General Services Administration (GSA) Schedule Contract means a
Multiple Award Contract issued by GSA and includes the Federal Supply
Schedules and other Multiple Award Schedules.
(k) Multiple Award Contracts means contracts that are:
(1) A multiple award schedule contract issued by GSA (e.g., GSA
Schedule Contract) or agencies granted Multiple Award Schedule contract
authority by GSA (e.g., Department of Veterans Affairs) as described in
FAR part 38 and subpart 8.4;
(2) A multiple award task-order or delivery-order contract issued
in accordance with FAR subpart 16.5, including Governmentwide
acquisition contracts; and
(3) Any other indefinite-delivery, indefinite-quantity contract
entered into with two or more sources pursuant to the same
solicitation.
(l) Office of Small and Disadvantaged Business Utilization (OSDBU)
or the Office of Small Business Programs (OSBP) means the office in
each Federal agency having procurement powers that is responsible for
ensuring that small businesses receive a fair proportion of Federal
contracts in that agency. The office is managed by a Director, who is
responsible and reports directly to the head of the agency or deputy to
the agency (except that for DoD, they report to the Secretary or the
Secretary's designee).
(m) Personnel means individuals who are ``employees'' under Sec.
121.106 of this chapter except for purposes of the HUBZone program,
where the definition of ``employee'' is found in Sec. 126.103 of this
chapter.
(n) Partial set-aside (or partially set-aside) means, for a
Multiple Award Contract, a contracting vehicle that can be used: When
market research indicates that a total set-aside is not appropriate;
the procurement can be broken up into smaller discrete portions or
discrete categories such as by Contract Line Items, Special Item
Numbers, Sectors or Functional Areas or other equivalent; and two or
more small business concerns, 8(a) BD Participants, HUBZone SBCs, SDVO
SBCs, WOSBs or EDWOSBs are expected to submit an offer on the set-aside
part or parts of the requirement at a fair market price. A contracting
officer has the discretion, but is not required, to set-aside the
discrete portions or categories for different small businesses
participating in SBA's small business programs (e.g., CLIN 0001, 8(a)
set-aside; CLIN 0002, HUBZone set-aside; CLIN 0003, SDVO SBC set-aside;
CLIN 0004, WOSB set-aside; CLIN 0005 EDWOSB set-aside; CLIN 0006, small
business set-aside).
(o) Reserve means, for a Multiple Award Contract:
(1) An acquisition conducted using full and open competition where
the contracting officer's market research and recent past experience
evidence that--
(i) At least two small businesses, 8(a) BD Participants, HUBZone
SBCs, SDVO SBCs, WOSBs or EDWOSBs could perform one part of the
requirement, but the contracting officer was unable to divide the
requirement into smaller discrete portions or discrete categories by
utilizing individual Contract Line Items (CLINs), Special Item Numbers
(SINs), Functional Areas (FAs), or other equivalent; or
(ii) At least one small business, 8(a) BD Participant, HUBZone SBC,
SDVO SBC, WOSB or EDWOSB can perform the entire requirement, but there
is not a reasonable expectation of receiving at least two offers from
small business concerns, 8(a) BD Participants, HUBZone SBCs, SDVO SBCs,
WOSBs or EDWOSBs at a fair market price for all the work contemplated
throughout the term of the contract; and
(2) The contracting officer makes--
[[Page 29154]]
(i) Two or more contract awards to any one type of small business
concern (e.g., small business, 8(a), HUBZone, SDVO SBC, WOSB or EDWOSB)
and competes any orders solely amongst the specified types of small
business concerns if the rule of two or any alternative set-aside
requirements provided in the small business program have been met;
(ii) Several awards to several different types of small businesses
(e.g., one to 8(a), one to HUBZone, one to SDVO SBC, one to WOSB or
EDWOSB) and competes any orders solely amongst all of the small
business concerns if the rule of two has been met; or
(iii) One contract award to any one type of small business concern
(e.g., small business, 8(a), HUBZone, SDVO SBC, WOSB or EDWOSB) and
subsequently issues orders directly to that concern.
(3) A bundled contract where the contracting officer's market
research and recent past experience evidence that one or more Small
Business Teaming Arrangement (but not any individual small business
concerns) may submit an offer or receive a contract award and the
contracting officer states an intention to make at least one award to a
Small Business Teaming Arrangement.
(p) Rule of Two refers to the requirements set forth in Sec. Sec.
124.506, 125.2(f), 125.19(c), 126.607(c) and 127.503 of this chapter
that there is a reasonable expectation that the contracting officer
will obtain offers from at least two small businesses and award will be
made at fair market price.
(q) Senior Procurement Executive means the employee of a Federal
agency designated as such pursuant to section 16(c) of the Office of
Federal Procurement Policy Act (41 U.S.C. 414(c)).
(r) Separate contract means a contract or order (including those
placed against a GSA Schedule Contract or an indefinite delivery/
indefinite quantity contract) that has previously been performed by any
business, including an other-than-small business or small business
concern.
(s) Separate smaller contract means a contract that has previously
been performed by one or more small business concerns or was suitable
for award to one or more small business concerns.
(t) Single contract means any contract or order (including those
placed against a GSA Schedule Contract or an indefinite delivery/
indefinite quantity contract) resulting in one or more awardee.
(u) Small Business Teaming Arrangement means an arrangement where:
(1) Two or more small business concerns have formed a joint venture
to act as a potential prime contractor (for the definition of and
exceptions to affiliation for joint ventures, see Sec. 121.103); or
(2) A potential small business prime contractor agrees with one or
more other small business concerns to have them act as its
subcontractors under a specified Government contract. A Small Business
Teaming Arrangement between a prime and its small business
subcontractor(s) must exist through a written agreement between the
parties that is specifically referred to as a ``Small Business Teaming
Arrangement'' or ``Small Business Teaming Agreement;'' and sets forth
the different responsibilities, roles and percentages of work as it
relates to the acquisition.
(3) A small business teaming arrangement can include two business
concerns in a mentor/prot[eacute]g[eacute] relationship so long as both
the mentor and prot[eacute]g[eacute] are small or the
prot[eacute]g[eacute] is small and the concerns have received an
exception to affiliation pursuant to Sec. 121.103(h)(3)(ii) or (iii)
of this chapter.
(4) The agreement must be provided to the contracting officer as
part of the proposal.
(v) Subcontract or subcontracting means that portion of the
contract performed by a business concern, other than the business
concern awarded the contract, under a second contract, purchase order,
or agreement for any parts, supplies, components, or subassemblies
which are not available commercial off-the-shelf items, and which are
manufactured in accordance with drawings, specifications, or designs
furnished by the contractor, or by the government as a portion of the
solicitation. Raw castings, forgings, and moldings are considered as
materials, not as subcontracting costs. Where the prime contractor has
been directed by the Government as part of the contract to use any
specific source for parts, supplies, or components subassemblies, the
costs associated with those purchases will be considered as part of the
cost of materials, not subcontracting costs.
(w) Substantial bundling means any bundling that meets the
following dollar amounts (if the acquisition strategy contemplates
Multiple Award Contracts or multiple award orders issued against a GSA
Schedule Contract or a task or delivery order contract awarded by
another agency, these thresholds apply to the cumulative estimated
value of the Multiple Award Contracts or orders, including options):
(1) $8.0 million or more for the Department of Defense;
(2) $6.0 million or more for the National Aeronautics and Space
Administration, the General Services Administration, and the Department
of Energy; and
(3) $2.5 million or more for all other agencies.
18. Amend Sec. 125.2 by:
a. Revising the section heading;
b. Revising paragraphs (a), (b), (c), (d) and (e) to read as
follows:
Sec. 125.2 What are SBA's and the procuring agency's responsibilities
when providing contracting assistance to small businesses?
(a) General. The objective of the SBA's contracting programs is to
assist small business concerns, including 8(a) BD Participants, HUBZone
small business concerns, Service Disabled Veteran-Owned Small Business
Concerns, Women-Owned Small Businesses and Economically Disadvantaged
Women-Owned Small Businesses, in obtaining a fair share of Federal
Government prime contracts, subcontracts, orders, and property sales.
Therefore, these regulations apply to all types of Federal Government
contracts, including Multiple Award Contracts, and contracts for
architectural and engineering services, research, development, test and
evaluation. Small business concerns must receive any award (including
orders, and orders placed against Multiple Award Contracts) or
contract, part of any such award or contract, and any contract for the
sale of Government property, regardless of the place of performance,
which SBA and the procuring or disposal agency determine to be in the
interest of:
(1) Maintaining or mobilizing the Nation's full productive
capacity;
(2) War or national defense programs;
(3) Assuring that a fair proportion of the total purchases and
contracts for property, services and construction for the Government in
each industry category are placed with small business concerns; or
(4) Assuring that a fair proportion of the total sales of
Government property is made to small business concerns.
(b) SBA's responsibilities in the acquisition planning process--(1)
SBA Procurement Center Representative (PCR) Responsibilities--(i) PCR
Review.
(A) SBA has PCRs who are generally located at Federal agencies and
buying activities that have major contracting programs. At the SBA's
discretion, PCRs will review all acquisitions that are
[[Page 29155]]
issued on a sole source basis or not set-aside or reserved for small
businesses above or below the Simplified Acquisition Threshold, to
determine whether a set-aside or sole source award to a small business
under one of SBA's programs is appropriate and to identify alternative
strategies to maximize the participation of small businesses in the
procurement. This review includes acquisitions that are Multiple Award
Contracts where the agency has failed to set-aside all or part of the
acquisition or reserve the acquisition for small businesses. It also
includes acquisitions where the agency has failed to set-aside orders
placed against Multiple Award Contracts for small business concerns.
(B) PCRs will work with the cognizant Small Business Specialist
(SBS) and agency OSDBU or OSBP as early in the acquisition process as
practicable to identify proposed solicitations that involve bundling,
and with the agency acquisition officials to revise the acquisition
strategies for such proposed solicitations, where appropriate, to
increase the probability of participation by small businesses,
including small business contract teams and Small Business Teaming
Arrangements, as prime contractors.
(C) In conjunction with their duties to promote the set-aside of
procurements for small business, PCRs may identify small businesses
that are capable of performing particular requirements.
(D) PCRs will also ensure that any Federal agency decision made
concerning the consolidation of contract requirements considers the use
of small businesses and ways to provide small businesses with maximum
opportunities to participate as prime contractors and subcontractors in
the acquisition or sale of real property.
(E) PCRs will review whether for bundled and consolidated contracts
that are recompeted, the amount of savings and benefits was achieved
under the prior bundling or consolidation of contract requirements,
that such savings and benefits will continue to be realized if the
contract remains bundled or consolidated, or such savings and benefits
would be greater if the procurement requirements were divided into
separate solicitations suitable for award to small business concerns.
(ii) PCR Recommendations in General. The PCR must recommend to the
procurement activity alternative procurement methods that would
increase small business prime contract participation if a PCR believes
that a proposed procurement: includes in its statement of work goods or
services currently being performed by a small business and is in a
quantity or estimated dollar value the magnitude of which renders small
business prime contract participation unlikely; will render small
business prime contract participation unlikely (e.g., ensure
geographical preferences are justified); is for construction and seeks
to package or consolidate discrete construction projects; or if a PCR
does not believe a bundled or consolidated requirement is necessary and
justified. Such alternatives may include:
(A) Breaking up the procurement into smaller discrete procurements,
especially construction acquisitions that can be procured as separate
projects;
(B) Breaking out one or more discrete components, for which a small
business set-aside may be appropriate;
(C) Reserving one or more awards for small businesses when issuing
Multiple Award Contracts;
(D) Using a partial set-aside;
(E) Stating in the solicitation for a Multiple Award Contract that
the orders will be set-aside for small businesses; and
(F) Where the bundled or consolidated requirement is necessary and
justified, the PCR will work with the procuring activity to tailor a
strategy that preserves small business prime contract participation to
the maximum extent practicable.
(iii) PCR Recommendations for Small Business Teaming and
Subcontracting. The PCR will work to ensure that small business
participation is maximized through Small Business Teaming Arrangements
and subcontracting opportunities. This may include:
(A) Recommending that the solicitation and resultant contract
specifically state the small business subcontracting goals, which are
expected of the contractor awardee;
(B) Recommending that the small business subcontracting goals be
based on total contract dollars instead of or in addition to
subcontract dollars;
(C) Reviewing an agency's oversight of its subcontracting program,
including its overall and individual assessment of a contractor's
compliance with its small business subcontracting plans. The PCR will
furnish a copy of the information to the SBA Commercial Market
Representative (CMR) servicing the contractor;
(D) Recommending that a separate evaluation factor with significant
weight is established for the extent to which offerors attained their
subcontracting goals on previous contracts;
(E) Recommending that a separate evaluation factor with significant
weight is established for evaluating the offerors' proposed approach to
small business utilization, the extent to which offerors propose small
business utilization, and the extent to which offerors attain their
subcontracting goals on previous contracts;
(F) For bundled and consolidated requirements, requiring that a
separate evaluation factor with significant weight is established for
evaluating the offerors' proposed approach to small business
utilization, the extent to which offerors propose small business
utilization, and the extent to which offerors attain their
subcontracting goals on previous contracts;
(G) For bundled or consolidated requirements, recommending the
solicitation state that the agency must evaluate offers from teams of
small businesses the same as other offers, with due consideration to
the capabilities and past performance of all proposed subcontractors.
It may also include recommending that the agency reserve at least one
award to a small business prime contractor with a Small Business
Teaming Arrangement;
(H) For Multiple Award Contracts and multiple award requirements
above the substantial bundling threshold, recommending or requiring
that the solicitation state that the agency will solicit offers from
small business concerns and small business concerns with Small Business
Teaming Arrangements; and
(I) For consolidated contracts, ensuring that agencies have
provided small business concerns with appropriate opportunities to
participate as prime contractors and subcontractors and making
recommendations on such opportunities as appropriate.
(iv) Appeals of PCR and BPCR Recommendations. In cases where there
is disagreement between a PCR and the contracting officer over the
suitability of a particular acquisition for a small business set-aside,
partial set-aside or reserve, whether or not the acquisition is a
bundled, substantially bundled or consolidated requirement, the PCR may
initiate an appeal to the head of the contracting activity. If the head
of the contracting activity agrees with the contracting officer, SBA
may appeal the matter to the Secretary of the Department or head of the
agency. The time limits for such appeals are set forth in FAR Sec.
19.505 (48 CFR 19.505).
(2) SBA BPCR Responsibilities. (i) Breakout PCRs (BPCRs) are
assigned to major contracting centers. A major contracting center is a
center that, as determined by SBA, purchases substantial dollar amounts
of other than commercial items, and which has the potential to achieve
significant savings as a result of the assignment of a BPCR. (ii) BPCRs
advocate full and open
[[Page 29156]]
competition in the Federal contracting process and recommend the
breakout for competition of items and requirements which previously
have not been competed. They may appeal the failure by the buying
activity to act favorably on a recommendation in accord with the appeal
procedures in paragraph (b)(1)(v) of this section. BPCRs also review
restrictions and obstacles to competition and make recommendations for
improvement. Other authorized functions of a BPCR are set forth in 48
CFR 19.403(c) (FAR Sec. 19.403(c)) and Section 15(l) of the Small
Business Act (15 U.S.C. 644(l)).
(c) Procuring Agency Responsibilities--(1) Requirement to Foster
Small Business Participation. The Small Business Act requires each
Federal agency to foster the participation of small business concerns
as prime contractors and subcontractors in the contracting
opportunities of the Government regardless of the place of performance
of the contract. In addition, Federal agencies must ensure that all
bundled and consolidated contracts contain the required analysis and
justification and provide small business concerns with appropriate
opportunities to participate as prime contractors and subcontractors.
To comply with these requirements, agency acquisition planners must:
(i) Structure procurement requirements to facilitate competition by
and among small business concerns, including small business concerns
owned and controlled by service-disabled veteran-owned small business
concerns, qualified HUBZone small business concerns, small business
concerns owned and controlled by socially and economically
disadvantaged individuals, and small business concerns owned and
controlled by women;
(ii) Avoid unnecessary and unjustified bundling of contracts or
consolidation of contract requirements that inhibits or precludes small
business participation in procurements as prime contractors;
(iii) Follow the limitations on use of consolidated contracts;
(iv) With respect to any work to be performed the amount of which
would exceed the maximum amount of any contract for which a surety may
be guaranteed against loss under 15 U.S.C. 694b, the contracting
procurement agency must, to the extent practicable, place contracts so
as to allow more than one small business concern to perform such work;
(v) Ensure that prior to placing an order against another agency's
Multiple Award Contract, a determination that use of another agency's
contract vehicle is the best procurement approach and promotes small
business participation; and
(vi) Provide SBA the necessary information relating to the
acquisition under review. This includes providing PCRs (to the extent
of their security clearance) copies of all documents relating to the
acquisition under review, including, but not limited to, the
performance work statement/statement of work, technical data, market
research, hard copies or their electronic equivalents of Department of
Defense (DoD) Form 2579 or equivalent, etc. The DoD Form 2579 or
equivalent must be sent electronically to the PCR (or if a PCR is not
assigned to the procuring activity, to the SBA Office of Government
Contracting Area Office serving the area in which the buying activity
is located).
(2) Requirement for market research. Each agency must conduct
market research to determine the type and extent of small business
participation in the acquisition. In addition, each agency must conduct
market research and any required analysis and justifications before
proceeding with an acquisition strategy that could lead to a bundled,
substantially bundled, or consolidated contract. The purpose of the
market research and analysis is to determine whether the bundling or
consolidation of the requirements is necessary and justified and all
statutory requirements for such a strategy have been met. Agencies
should be as broad as possible in their search for qualified small
businesses, using key words as well as NAICS codes in their examination
of the Dynamic Small Business Search Engine that is available in CCR,
and must not place unnecessary and unjustified restrictions when
conducting market research (e.g., requiring that small businesses prove
they can provide the best scientific and technological sources) when
determining whether to set-aside, partially set-aside, reserve or sole
source a requirement to small businesses. During the market research
phase, the acquisition team must consult with the applicable PCR (or if
a PCR is not assigned to the procuring activity, the SBA Office of
Government Contracting Area Office serving the area in which the buying
activity is located) and the activity's Small Business Specialist.
(3) Proposed Acquisition Strategy. A procuring activity must
provide to the applicable PCR (or to the SBA Office of Government
Contracting Area Office serving the area in which the buying activity
is located if a PCR is not assigned to the procuring activity) at least
30 days prior to a solicitation's issuance:
(i) A copy of a proposed acquisition strategy (e.g.,DoD Form 2579,
or equivalent) whenever a proposed acquisition strategy:
(A) Includes in its description goods or services currently being
performed by a small business and the magnitude of the quantity or
estimated dollar value of the proposed procurement would render small
business prime contract participation unlikely;
(B) Seeks to package or consolidate discrete construction projects;
(C) Is a bundled or substantially bundled requirement; or
(D) Is a consolidation of contract requirements.
(ii) A written statement explaining why, if the proposed
acquisition strategy involves a bundled or consolidated requirement,
the procuring activity believes that the bundled or consolidated
requirement is necessary and justified, the analysis required by
paragraph (d)(2)(i) of this section, the acquisition plan, any bundling
information required under paragraph (d)(3) of this section, and any
other relevant information. The PCR and agency OSDBU or OSBP, as
applicable, must then work together to develop alternative acquisition
strategies identified in paragraph (b)(1) of this section to enhance
small business participation.
(iii) All required clearances for the bundled, substantially
bundled, or consolidated requirement.
(iv) A written statement explaining why, if the description of the
requirement includes goods or services currently being performed by a
small business and the magnitude of the quantity or estimated dollar
value of the proposed procurement would render small business prime
contract participation unlikely, or if a proposed procurement for
construction seeks to package or consolidate discrete construction
projects:
(A) The proposed acquisition cannot be divided into reasonably
small lots to permit offers on quantities less than the total
requirement;
(B) Delivery schedules cannot be established on a basis that will
encourage small business participation;
(C) The proposed acquisition cannot be offered so as to make small
business participation likely; or
(D) Construction cannot be procured as separate discrete projects.
(4) Procuring Agency Small Business Specialist (SBS)
Responsibilities. (i) As early in the acquisition planning process as
practicable, but no later than 30 days before the issuance of a
[[Page 29157]]
solicitation, or prior to placing an order without a solicitation, the
procuring activity must coordinate with the procuring activity's SBS
when the acquisition strategy contemplates an acquisition meeting the
dollar amounts set forth for substantial bundling. If the acquisition
strategy contemplates Multiple Award Contracts or orders under the GSA
Multiple Award Schedule Program or a task or delivery order contract
awarded by another agency, these thresholds apply to the cumulative
estimated value of the Multiple Award Contracts or orders, including
options. The procuring activity is not required to coordinate with its
SBS if the contract or order is entirely set-aside for small business
concerns, or small businesses under one of SBA's small business
programs, as authorized under the Small Business Act.
(ii) The SBS must notify the agency OSDBU or OSBP if the agency's
acquisition strategy or plan includes bundled or consolidated
requirements that the agency has not identified as bundled, or includes
unnecessary or unjustified bundling of requirements. If the strategy
involves substantial bundling, the SBS must assist in identifying
alternative strategies that would reduce or minimize the scope of the
bundling.
(iii) The SBS must coordinate on all required determinations and
findings for bundling and/or consolidation, and acquisition planning
and strategy documentation.
(5) OSDBU and OSBP Oversight Functions. The Agency OSDBU or OSBP
must:
(i) Conduct annual reviews to assess the:
(A) Extent to which small businesses are receiving their fair share
of Federal procurements, including contract opportunities under
programs administered under the Small Business Act;
(B) Adequacy of the bundling or consolidation documentation and
justification; and
(C) Adequacy of actions taken to mitigate the effects of necessary
and justified contract bundling or consolidation on small businesses
(e.g., review agency oversight of prime contractor subcontracting plan
compliance under the subcontracting program).
(ii) Provide a copy of the assessment under paragraph (c)(5)(i) of
this section to the agency head and SBA Administrator.
(iii) Identify proposed solicitations that involve significant
bundling of contract requirements, and work with the agency acquisition
officials and the SBA to revise the procurement strategies for such
proposed solicitations to increase the probability of participation by
small businesses as prime contractors;
(iv) Facilitate small business participation as subcontractors and
suppliers, if a solicitation for a substantially bundled contract is to
be issued;
(v) Assist small business concerns to obtain payments, required
late payment interest penalties, or information regarding payments due
to such concerns from an executive agency or a contractor, in
conformity with chapter 39 of Title 31 or any other protection for
contractors or subcontractors (including suppliers) that is included in
the FAR or any individual agency supplement to such Governmentwide
regulation;
(vi) Cooperate, and consult on a regular basis, with the SBA with
respect to carrying out these functions and duties;
(vii) Make recommendations to contracting officers as to whether a
particular contract requirement should be awarded to any type of small
business. The failure of the contracting officer to accept any such
recommendations must be documented and included within the appropriate
contract file; and
(viii) Coordinate on any acquisition planning and strategy
documentation, including bundling and consolidation determinations at
the agency level.
(6) Communication on Achieving Goals. All Senior Procurement
Executives, senior program managers, Directors of OSDBU or Directors of
OSBP must communicate to their subordinates the importance of achieving
small business goals and ensuring that a fair proportion of awards are
made to small businesses.
(d) Contract Consolidation and Bundling--(1) Limitation on the Use
of Consolidated Contracts. (i) An agency may not conduct an acquisition
that is a consolidation of contract requirements unless the Senior
Procurement Executive or Chief Acquisition Officer for the Federal
agency, before carrying out the acquisition strategy:
(A) Conducts market research;
(B) Identifies any alternative contracting approaches that would
involve a lesser degree of consolidation of contract requirements;
(C) Makes a written determination, which is coordinated with the
agency's OSDBU/OSBP, that the consolidation of contract requirements is
necessary and justified;
(D) Identifies any negative impact by the acquisition strategy on
contracting with small business concerns; and
(E) Certifies to the head of the Federal agency that steps will be
taken to include small business concerns in the acquisition strategy.
(ii) A Senior Procurement Executive or Chief Acquisition Officer
may determine that an acquisition strategy involving a consolidation of
contract requirements is necessary and justified.
(A) A consolidation of contract requirements may be necessary and
justified if the benefits of the acquisition strategy substantially
exceed the benefits of each of the possible alternative contracting
approaches identified under paragraph (d)(1)(i)(B).
(B) The benefits may include cost savings and/or price reduction,
quality improvements that will save time or improve or enhance
performance or efficiency, reduction in acquisition cycle times, better
terms and conditions, and any other benefits that individually, in
combination, or in the aggregate would lead to: benefits equivalent to
10 percent of the contract or order value (including options) where the
contract or order value is $94 million or less; or benefits equivalent
to 5 percent of the contract or order value (including options) or $9.4
million, whichever is greater, where the contract or order value
exceeds $94 million.
(C) Savings in administrative or personnel costs alone do not
constitute a sufficient justification for a consolidation of contract
requirements in a procurement unless the expected total amount of the
cost savings, as determined by the Senior Procurement Executive or
Chief Acquisition Officer, is expected to be substantial in relation to
the total cost of the procurement. To be substantial, such
administrative or personnel cost savings must be at least 10 percent of
the contract value (including options).
(iii) DoD and each military department must comply with this
section until the SBA determines that DoD and each military department
are in compliance with its Governmentwide and agency specific
contracting goals. If SBA determines that DoD and the military
departments are in compliance with such goals, then consolidated
contracts must be conducted in accordance with 10 U.S.C. 2382.
(iv) Each agency must ensure that any decision made concerning the
consolidation of contract requirements considers the use of small
businesses and ways to provide small businesses with opportunities to
participate as prime contractors and subcontractors in the acquisition.
[[Page 29158]]
(v) If the consolidated requirement is also considered a bundled
requirement, then the contracting officer must instead follow the
provisions regarding bundling set forth in paragraphs (d)(2)-(7) or
(d)(3) of this section, whichever is applicable.
(2) Limitation on the Use of Contract Bundling. (i) When the
procuring activity intends to proceed with an acquisition involving
bundled or substantially bundled procurement requirements, it must
document the acquisition strategy to include a determination that the
bundling is necessary and justified, when compared to the benefits that
could be derived from meeting the agency's requirements through
separate smaller contracts.
(ii) A bundled requirement is necessary and justified if, as
compared to the benefits that it would derive from contracting to meet
those requirements if not bundled, it would derive measurably
substantial benefits. The procuring activity must quantify the
identified benefits and explain how their impact would be measurably
substantial. The benefits may include cost savings and/or price
reduction, quality improvements that will save time or improve or
enhance performance or efficiency, reduction in acquisition cycle
times, better terms and conditions, and any other benefits that
individually, in combination, or in the aggregate would lead to:
(A) Benefits equivalent to 10 percent of the contract or order
value (including options) where the contract or order value is $94
million or less; or
(B) Benefits equivalent to 5 percent of the contract or order value
(including options) or $9.4 million, whichever is greater, where the
contract or order value exceeds $94 million.
(iii) Notwithstanding paragraph (d)(2)(ii) of this section, the
Senior Procurement Executives or the Under Secretary of Defense for
Acquisition and Technology (for other Defense Agencies) in the
Department of Defense and the Deputy Secretary or equivalent in
civilian agencies may, on a non-delegable basis, determine that a
bundled requirement is necessary and justified when:
(A) There are benefits that do not meet the thresholds set forth in
paragraph (d)(2)(ii) of this section but, in the aggregate, are
critical to the agency's mission success; and
(B) Procurement strategy provides for maximum practicable
participation by small business.
(iv) The reduction of administrative or personnel costs alone must
not be a justification for bundling of contract requirements unless the
administrative or personnel cost savings are expected to be
substantial, in relation to the dollar value of the procurement to be
bundled (including options). To be substantial, such administrative or
personnel cost savings must be at least 10 percent of the contract
value (including options).
(v) In assessing whether cost savings and/or a price reduction
would be achieved through bundling, the procuring activity and SBA must
compare the price that has been charged by small businesses for the
work that they have performed and, where available, the price that
could have been or could be charged by small businesses for the work
not previously performed by small business.
(vi) The substantial benefit analysis set forth in paragraph
(d)(2)(ii) of this section is still required where a requirement is
subject to a Cost Comparison Analysis under OMB Circular A-76.
(3) Limitations on the Use of Substantial Bundling. Where a
proposed procurement strategy involves a Substantial Bundling of
contract requirements, the procuring agency must, in the documentation
of that strategy, include a determination that the anticipated benefits
of the proposed bundled contract justify its use, and must include, at
a minimum:
(i) The analysis for bundled requirements set forth in paragraph
(d)(2)(i) of this section;
(ii) An assessment of the specific impediments to participation by
small business concerns as prime contractors that will result from the
substantial bundling;
(iii) Actions designed to maximize small business participation as
prime contractors, including provisions that encourage small business
teaming for the substantially bundled requirement;
(iv) Actions designed to maximize small business participation as
subcontractors (including suppliers) at any tier under the contract or
contracts that may be awarded to meet the requirements; and
(v) The identification of the alternative strategies that would
reduce or minimize the scope of the bundling, and the rationale for not
choosing those alternatives (i.e., consider the strategies under
paragraphs (b)(1)(ii) of this section).
(4) Significant Subcontracting Opportunities in Justified
Consolidated, Bundled and Substantially Bundled Requirements. (i) Where
a justified consolidated, bundled or substantially bundled requirement
offers a significant opportunity for subcontracting, the procuring
agency must designate the following factors as significant factors in
evaluating offers:
(A) A factor that is based on the rate of participation provided
under the subcontracting plan for small business in the performance of
the contract; and
(B) For the evaluation of past performance of an offeror, a factor
that is based on the extent to which the offeror attained applicable
goals for small business participation in the performance of contracts.
(ii) Where the offeror for such a contract qualifies as a small
business concern, the procuring agency must give to the offeror the
highest score possible for the evaluation factors identified above.
(5) Notification to Current Small Business Contractors of Intent to
Bundle. The procuring activity must notify each small business which is
performing a contract that it intends to bundle that requirement with
one or more other requirements at least 30 days prior to the issuance
of the solicitation for the bundled or substantially bundled
requirement. The procuring activity, at that time, should also provide
to the small business the name, phone number and address of the
applicable SBA PCR (or if a PCR is not assigned to the procuring
activity, the SBA Office of Government Contracting Area Office serving
the area in which the buying activity is located). This notification
must be documented in the contract file.
(6) Notification to Public of Rationale for Bundled Requirement.
The head of a Federal agency must publish on the agency's Web site a
list and rationale for any bundled requirement for which the agency
solicited offers or issued an award. The notification must be made
within 30 days of the agency's data certification regarding the
validity and verification of data entered in that Federal Procurement
Data Base to the Office of Federal Procurement Policy. However, to
foster transparency in Federal procurement, the agency is encouraged to
provide such notification before issuance of the solicitation.
(7) Notification to SBA of Recompeted Bundled or Consolidated
Requirement. For each bundled or consolidated contract that is to be
recompeted (even if additional requirements have been added or deleted)
the procuring agency must notify SBA's PCR as soon as possible but no
later than 30 days prior to issuance of the solicitation of:
(i) The amount of savings and benefits achieved under the prior
bundling or consolidation of contract requirements,
(ii) Whether such savings and benefits will continue to be realized
if the contract remains bundled or consolidated, and
[[Page 29159]]
(iii) Whether such savings and benefits would be greater if the
procurement requirements were divided into separate solicitations
suitable for award to small business concerns.
(e) Multiple Award Contracts--(1) General. (i) The contracting
officer must set-aside a Multiple Award Contract if the requirements
for a set-aside are met. This includes set-asides for small businesses,
8(a) Participants, HUBZone SBCs, SDVO SBCs, WOSBs or EDWOSBs.
(ii) The contracting officer in his or her discretion may partially
set-aside or reserve a Multiple Award Contract, or set-aside, or
preserve the right to set aside, orders against a Multiple Award
Contract that was not itself set aside for small business. The ultimate
decision of whether to use any of the above-mentioned tools in any
given procurement action is a decision of the contracting agency.
(iii) The procuring contracting officer must document the contract
file and explain why the procuring agency did not partially set-aside
or reserve a Multiple Award Contract, or set-aside orders issued
against a Multiple Award Contract, when these authorities could have
been used.
(2) Set-aside of Multiple Award Contracts. (i) The contracting
officer must follow the procedures for a set-aside set forth in
paragraph (f) of this section.
(ii) The contracting officer must assign a NAICS code to the
solicitation for the Multiple Award Contract and each order pursuant to
Sec. 121.402(c) of this chapter. See Sec. 121.404 for further
determination on size status for the Multiple Award Contract and each
order issued against that contract.
(iii) When drafting the solicitation for the contract, agencies
should consider an on-ramp provision that permits the agency to refresh
the awards by adding more small business contractors. Agencies should
also consider the need to transition off existing contractors that no
longer qualify as small for the size standard corresponding to the
NAICS code assigned to the contract (e.g., termination for
convenience). However, agencies must transition off existing
contractors that were required to, but unable to, recertify their small
business status pursuant to Sec. 121.104(g) of this chapter.
(iv) A business must comply with the applicable limitations on
subcontracting provisions (see Sec. 125.6) and the nonmanufacturer
rule, if applicable, (see Sec. 121.406(b)) in the performance of the
contract and each order.
(3) Partial Set-asides of Multiple Award Contracts. (i) If the
contracting officer decides to partially set-aside a Multiple Award
Contract, the contracting officer must follow the procedures for a set-
aside set forth in paragraph (f) of this section for the part or parts
of the contract that have been set-aside.
(ii) The contracting officer must assign a NAICS code to the
solicitation for the Multiple Award Contract and each order issued
against the Multiple Award Contract pursuant to Sec. 121.402(c) of
this chapter. See Sec. 121.404 for further determination on size
status for the Multiple Award Contract and each order issued against
that contract.
(iii) A contracting officer must state in the solicitation that the
small business will not compete against other-than-small businesses for
any order issued against that part or parts of the Multiple Award
Contract that are set-aside.
(iv) A contracting officer must state in the solicitation that the
small business will be permitted to compete against other-than-small
businesses for an order issued against the portion of the Multiple
Award Contract that has not been partially set-aside if the small
business submits an offer for the non-set-aside portion. The business
concern will not have to comply with the limitations on subcontracting
provision (see Sec. 125.6) and the nonmanufacturer rule for any order
issued against the Multiple Award Contract if the order is competed and
awarded under the portion of the contract that is not set-aside.
(v) When drafting the solicitation for the contract, agencies
should consider an on-ramp provision that permits the agency to refresh
these awards by adding more small business contractors to that portion
of the contract that was set-aside. Agencies should also consider the
need to transition off existing contractors that no longer qualify as
small for the size standard corresponding to the NAICS code assigned to
the contract (e.g., termination for convenience). However, for that
portion of the contract that was set-aside, agencies must transition
off existing contractors that were required to but unable to recertify
their small business status pursuant to Sec. 121.104(g) of this
chapter.
(vi) A small business (or 8(a) Participant, HUBZone SBC, SDVO SBC
or WOSB/EDWOSB) is not required to submit an offer on the part of the
solicitation that is not set-aside. However, a small business may, if
it chooses, submit an offer on the part or parts of the solicitation
that have been set-aside and/or on the parts that have not been set-
aside.
(vii) A small business must comply with the applicable limitations
on subcontracting provisions (see Sec. 125.6) and the nonmanufacturer
rule, if applicable, (see Sec. 121.406(b)) in the performance of the
contract and each order that is set-aside against the contract.
(4) Reserves of Multiple Award Contracts Awarded in Full and Open
Competition. (i) If the contracting officer decides to reserve a
multiple award contract established through full and open competition,
the contracting officer must assign a NAICS code to the solicitation
for the Multiple Award Contract and each order issued against the
Multiple Award Contract pursuant to Sec. 121.402(c) of this chapter.
See Sec. 121.404 for further determination on size status for the
Multiple Award Contract and each order issued against that contract.
(ii) A contracting officer must state in the solicitation that if
there are two or more contract awards to any one type of small business
concern (e.g., small business, 8(a), HUBZone, SDVO SBC, WOSB or
EDWOSB), the agency will compete any orders solely amongst the
specified types of small business concerns if the rule of two or an
alternative set-aside requirement provided in the small business
program have been met.
(iii) A contracting officer must state in the solicitation that if
there are several awards to several different types of small businesses
(e.g., one to 8(a), one to HUBZone, one to SDVO SBC, one to WOSB or
EDWOSB), the agency will compete any orders solely amongst all of the
small business concerns if the rule of two has been met.
(iv) A contracting officer must state in the solicitation that if
there is only one contract award to any one type of small business
concern (e.g., small business, 8(a), HUBZone, SDVO SBC, WOSB or
EDWOSB), the agency may issue orders directly to that concern for work
that it can perform.
(v) Small businesses are permitted to compete against other-than-
small businesses for an order issued against the Multiple Award
Contract if the small business has been awarded a contract for those
supplies or services.
(v) A business must comply with the applicable limitations on
subcontracting provisions (see Sec. 125.6) and the nonmanufacturer
rule, if applicable, for any order issued against the Multiple Award
Contract if the order is competed and awarded under the set-aside
portion of the contract (see Sec. 121.406(b)). However, a business
need not comply with the limitations on subcontracting provisions (see
Sec. 125.6) and the
[[Page 29160]]
nonmanufacturer rule for any order issued against the Multiple Award
Contract if the order is competed amongst small and other-than-small
business concerns.
(5) Reserve of Multiple Award Contracts that are Bundled. (i) If
the contracting officer decides to reserve a multiple award contract
established through full and open competition that is a bundled
contract, the contracting officer must assign a NAICS code to the
solicitation for the Multiple Award Contract and each order issued
against the Multiple Award Contract pursuant to Sec. 121.402(c) of
this chapter. See Sec. 121.404 for further determination on size
status for the Multiple Award Contract and each order issued against
that contract.
(ii) The Small Business Teaming Arrangement must comply with the
applicable limitations on subcontracting provisions (see Sec. 125.6)
and the nonmanufacturer rule, if applicable, (see Sec. 121.406(b)) on
all orders issued against the Multiple Award Contract, although the
cooperative efforts of the team members will be considered in
determining whether the subcontracting limitations requirement is met
(see Sec. 125.6(j)).
(iii) Team members of the Small Business Teaming Arrangement will
not be affiliated (see Sec. 121.103(b)(8)).
(6) Set-aside of orders against Multiple Award Contracts that have
not been Set-Aside, Partially Set-Aside or Reserved for Small
Businesses. (i) Notwithstanding the fair opportunity requirements set
forth in 10 U.S.C. 2304c and 41 U.S.C. 253j, the contracting officer
has the authority to set-aside orders against Multiple Award Contracts
that were competed on a full and open basis.
(ii) The contracting officer may state in the solicitation and
resulting contract for the Multiple Award Contract that:
(A) Based on the results of market research, orders issued against
the Multiple Award Contract will be set-aside for small businesses or
any subcategory of small businesses whenever the rule of two or any
alternative set-aside requirements provided in the small business
program have been met; or
(B) The agency is preserving the right to consider set-asides using
the rule of two or any alternative set-aside requirements provided in
the small business program, on an order-by-order basis.
(iii) After conducting market research, the contracting officer
shall first consider whether there is a reasonable expectation that
offers will be obtained from at least two 8(a) BD, HUBZone, SDVO or
WOSB small business concerns under the respective programs, before
setting aside the requirement as a small business set-aside. There is
no order of precedence among the 8(a) BD, HUBZone, SDVO SBC or WOSB
programs.
(iv) The contracting officer must assign a NAICS code to the
solicitation for each order issued against the Multiple Award Contract
pursuant to Sec. 121.402(c) of this chapter. See Sec. 121.404 for
further determination on size status for each order issued against that
contract.
(v) A business must comply with applicable limitations on
subcontracting provisions (see Sec. 125.6) and the nonmanufacturer
rule, if applicable, (see Sec. 121.406(b)) in the performance of each
order that is set-aside against the contract.
(7) Tiered evaluation of offers, or cascading. An agency cannot
create a tiered evaluation of offers or ``cascade'' unless it has
specific statutory authority to do so. This is a procedure used in
negotiated acquisitions when the contracting officer establishes a
tiered or cascading order of precedence for evaluating offers that is
specified in the solicitation, which states that if no award can be
made at the first tier, it will evaluate offers at the next lower tier,
until award can be made. For example, an agency is not permitted to
state an intention to award one contract to an 8(a) BD Participant and
one to a HUBZone SBC, but only if no awards are made to 8(a) BD
Participants, unless the agency has specific statutory authority to do
so.
19. Amend Sec. 125.3 by:
a. Revising the section heading; and
b. Adding a new paragraph (h) to read as follows:
Sec. 125.3 What types of subcontracting assistance are available to
small businesses?
* * * * *
(h) Subcontracting consideration in bundled and consolidated
contracts. (1) For bundled requirements, the agency must evaluate
offers from teams of small businesses the same as other offers, with
due consideration to the capabilities of all proposed subcontractors.
(2) For substantial bundling, the agency must design actions to
maximize small business participation as subcontractors (including
suppliers) at any tier under the contract or contracts that may be
awarded to meet the requirements.
(3) For significant subcontracting opportunities in consolidated
contracts, bundled and substantially bundled requirements see Sec.
125.2(d)(4).
20. Amend Sec. 125.4 by revising the heading to read as follows:
Sec. 125.4 What is the Government property sales assistance program?
* * * * *
21. Amend Sec. 125.5 by:
a. Revising the heading;
b. Revising paragraphs (a)(1) and (a)(2);
c. Revising paragraph (b)(1)(i), (b)(1)(ii), and (b)(1)(iii);
d. Revising paragraph (b)(1)(v)(A) by removing ``SIC'' and
replacing it with ``NAICS'';
e. Revising paragraph (b)(1)(v)(C) by adding ``or reserve'' after
``In the case of a set-aside'';
f. Revising the first sentence in paragraph (c)(1);
g. Revising paragraph (h);
h. Revising the first sentence in paragraph (i)(2);
i. Revising paragraph (l)(1)(iii); and
j. Revising paragraph (m) by inserting the following at the end of
the paragraph.
Sec. 125.5 What is the Certificate of Competency Program?
(a) General. (1) The Certificate of Competency (COC) Program is
authorized under section 8(b)(7) of the Small Business Act. A COC is a
written instrument issued by SBA to a Government contracting officer,
certifying that one or more named small business concerns possess the
responsibility to perform a specific Government procurement (or sale)
contract, which includes Multiple Award Contracts and orders placed
against Multiple Award Contracts, where responsibility type issues are
used to determine award or establish the competitive range. The COC
Program is applicable to all Government procurement actions, including
Multiple Award Contracts and orders placed against Multiple Award
Contracts where the contracting officer has used any issues of capacity
or credit (responsibility) to determine suitability for an award. With
respect to Multiple Award Contracts, contracting officers should
determine responsibility at the time of award of the contract. However,
if a contracting officer makes any of the responsibility determinations
set forth in paragraph (2) below for an order issued against a Multiple
Award Contract, the contracting officer must refer the matter to SBA
for a COC. The COC procedures apply to all Federal procurements,
regardless of the location of performance or the location of the
procuring activity.
(2) A contracting officer must refer a small business concern to
SBA for a
[[Page 29161]]
possible COC, even if the next apparent successful offeror is also a
small business, when the contracting officer:
(i) Denies an apparent successful small business offeror award of a
contract or order on responsibility grounds;
(ii) Refuses to consider a business concern for award of a contract
or order after evaluating the concern's offer on a pass/fail (or go/no
go) basis under a responsibility-related evaluation factor (such as
experience or past performance); or
(iii) Refuses to consider a business concern for award of a
contract or order because it failed to meet a definitive responsibility
criterion contained in the solicitation.
(3) * * *
* * * * *
(b) COC Eligibility. (1) The offeror seeking a COC has the burden
of proof to demonstrate its eligibility for COC review.
(i) To be eligible for a COC, an offeror must qualify as a small
business under the applicable size standard in accordance with part 121
of this chapter.
(ii) To be eligible for a COC, an offeror must have agreed to
comply with applicable limitations on subcontracting (see Sec. 125.6).
Whether an offeror has agreed to comply with the limitations on
subcontracting is a matter of technical acceptability or
responsiveness. Whether an offeror will be able to comply with the
limitations on subcontracting is a matter of responsibility.
(iii) A non-manufacturer making an offer on a contract for supplies
that is set-aside or reserved for small business (where the small
business will be competing against other small businesses for orders)
must furnish end items that have been manufactured in the United States
by a small business. A waiver of this requirement may be requested
under Sec. Sec. 121.1301 through 121.1305 of this chapter for either
the type of product being procured or the specific contract at issue.*
* *
* * * * *
(c) Referral of nonresponsibility determination to SBA. (1) The
contracting officer must refer the matter in writing to the SBA
Government Contracting Area Office (Area Office) serving the area in
which the headquarters of the offeror is located. * * *
* * * * *
(h) Notification of intent to issue on a contract or order with a
value between $100,000 and $25 million. Where the Director determines
that a COC is warranted, he or she will notify the contracting officer
(or the procurement official with the authority to accept SBA's
decision) of the intent to issue a COC, and of the reasons for that
decision, prior to issuing the COC. At the time of notification, the
contracting officer or the procurement official with the authority to
accept SBA's decision has the following options: * * *
(i) * * *
(2) SBA Headquarters will furnish written notice to the Director,
OSDBU or OSBP of the procuring agency, with a copy to the contracting
officer, that the case file has been received and that an appeal
decision may be requested by an authorized official. * * *
* * * * *
(l) * * *
(1) * * *
* * * * *
(iii) The COC has been issued for more than 60 days (in which case
SBA may investigate the business concern's current circumstances and
the reason why the contract has not been issued).
* * * * *
(m) * * * Where SBA issues a COC with respect to a business concern
that was not going to be considered for award for the reasons contained
in (a)(2)(ii) or (a)(2)(iii) of this section, award need not be made to
that offeror where the contracting officer considers the offeror for
award, but does not issue the award to that offeror for reasons
unrelated to the SBA's responsibility determination.
22. Amend Sec. 125.6 by:
a. Revising the heading;
b. Revising paragraph (a);
c. Removing current paragraph (e);
d. Redesignating paragraphs (f), (g), (h), and (i) as (e), (f),
(g), and (h) respectively;
e. Revising newly designated paragraph (f);
f. Adding a new paragraph (i); and
g. Adding a new paragraph (j) to read as follows:
Sec. 125.6 What are the prime contractor performance requirements
(limitations on subcontracting)?
(a) In order to be awarded a full or partial small business set-
aside contract, an 8(a) contract, a WOSB or EDWOSB contract pursuant to
part 127 of this chapter, or a small business reserve, a small business
concern must agree that:
* * * * *
(f) The period of time used to determine compliance will be the
period of performance which the evaluating agency uses to evaluate the
offer. If the evaluating agency fails to state in its solicitation the
period of performance it will use to evaluate the offer, it will use
the base contract period (excluding options) to determine compliance.
In indefinite delivery or indefinite quantity contracts, the agency
will use the maximum authorized in the base contract period (excluding
options) to determine compliance. In Multiple Award Contracts, the
agency will use the period of performance for each order issued against
the Multiple Award Contract to determine compliance unless the order is
competed amongst small and other-than-small businesses (in which case
the subcontracting limitations will not apply).
* * * * *
(i) Where an offeror is exempt from affiliation under Sec.
121.103(b)(8) of this chapter and qualifies as a small business concern
for a reserve of a bundled contract, the performance of work
requirements set forth in this section apply to the cooperative effort
of the small business team members of the Small Business Teaming
Arrangement, not its individual members.
(j) The contracting officer must document a small business
concern's performance of work requirements as part of the small
business' performance evaluation in accordance with the procedures set
forth in FAR 42.1502. The contracting officer must also evaluate
compliance for future contract awards in accordance with the procedures
set forth in FAR 9.104-6.
23. Amend Sec. 125.8 by revising paragraph (b) to read as follows:
Sec. 125.8 What definitions are important in the Service-Disabled
Veteran-Owned (SDVO) Small Business Concern (SBC) Program?
(a) * * *
(b) Interested Party means the contracting activity's contracting
officer, the SBA, any concern that submits an offer for a specific SDVO
contract (including Multiple Award Contracts), or any concern that
submitted an offer in a full and open competition and its opportunity
for award will be affected by a reserve of an award given to a SDVO
SBC.
* * * * *
24. Revise Sec. 125.14 it to read as follows:
Sec. 125.14 What are SDVO contracts?
SDVO contracts, including Multiple Award Contracts (see Sec.
125.1), are those awarded to an SDVO SBC through any of the following
procurement methods:
(a) Sole source awards to an SDVO SBC;
[[Page 29162]]
(b) Set-aside awards, including partial set-asides, based on
competition restricted to SDVO SBCs;
(c) Awards based on a reserve for SDVO SBCs in a solicitation for a
Multiple Award Contract (see Sec. 125.1); or
(d) Orders set-aside for SDVO SBCs against a Multiple Award
Contract, which had been awarded in full and open competition.
25. Amend Sec. 125.15 by adding new paragraphs (d) and (e) to read
as follows:
Sec. 125.15 What requirements must an SDVO SBC meet to submit an
offer on a contract?
* * * * *
(d) Multiple Award Contracts. (1) Partial set-asides.The SDVO SBC
must comply with the applicable limitations on subcontracting
provisions (see Sec. 125.6) and the nonmanufacturer rule, if
applicable (see Sec. 121.406(b)), in the performance of a contract
partially set-aside for SDVO SBCs.
(2) Set-aside of orders. The SDVO SBC must comply with the
applicable limitations on subcontracting provisions (see Sec. 125.6)
and the nonmanufacturer rule, if applicable, (see Sec. 121.406(b)) in
the performance of each individual order that has been set-aside for
SDVO SBCs.
(3) Reserves.The SDVO SBC must comply with the applicable
limitations on subcontracting provisions (see Sec. 125.6) and the
nonmanufacturer rule, if applicable, (see Sec. 121.406(b)) in the
performance of the contract that is reserved for one or more SDVO SBCs.
However, the SDVO SBC will not have to comply with the limitations on
subcontracting provisions (see Sec. 125.6) and the nonmanufacturer
rule for any order issued against the Multiple Award Contract if the
order is competed amongst SDVO SBCs and other-than-small business
concerns.
(e) Recertification. (1) A concern that represents itself and
qualifies as an SDVO SBC at the time of initial offer (or other formal
response to a solicitation), which includes price, including a Multiple
Award Contract, is considered an SDVO SBC throughout the life of that
contract. This means that if an SDVO SBC is qualified at the time of
initial offer for a Multiple Award Contract, then it will be considered
an SDVO SBC for each order issued against the contract, unless a
contracting officer requests a new SDVO SBC certification in connection
with a specific order. Where a concern later fails to qualify as an
SDVO SBC, the procuring agency may exercise options and still count the
award as an award to an SDVO SBC. The following exceptions apply:
(i) Where an SDVO contract is novated to another business concern,
the concern that will continue performance on the contract must certify
its status as an SDVO SBC to the procuring agency, or inform the
procuring agency that it does not qualify as an SDVO SBC, within 30
days of the novation approval. If the concern is not an SDVO SBC, the
agency can no longer count the options or orders issued pursuant to the
contract, from that point forward, towards its SDVO goals.
(ii) Where a concern that is performing an SDVO SBC contract
acquires, is acquired by, or merges with another concernand contract
novation is not required, the concern must, within 30 days of the
transaction becoming final, recertify its SDVO SBC status to the
procuring agency, or inform the procuring agency that it no longer
qualifies as an SDVO SBC. If the contractor is not an SDVO SBC, the
agency can no longer count the options or orders issued pursuant to the
contract, from that point forward, towards its SDVO goals. The agency
and the contractor must immediately revise all applicable Federal
contract databases to reflect the new status.
(iii) There has been an SDVO SBC status protest on the solicitation
or contract. See 125.27(e) for the effect of the status determination
on the contract award.
(2) For the purposes of contracts (including Multiple Award
Contracts) with durations of more than five years (including options),
a contracting officer must request that a business concern recertify
its SDVO SBC status no more than 120 days prior to the end of the fifth
year of the contract, and no more than 120 days prior to exercising any
option.
(3) A business concern that did not certify itself as an SDVO SBC,
either initially or prior to an option being exercised, may recertify
itself as an SDVO SBC for a subsequent option period if it meets the
eligibility requirements.
(4) Re-certification does not change the terms and conditions of
the contract. The limitations on subcontracting, nonmanufacturer and
subcontracting plan requirements in effect at the time of contract
award remain in effect throughout the life of the contract.
(5) Where the contracting officer explicitly requires concerns to
recertify their status in response to a solicitation for an order, SBA
will determine eligibility as of the date the concern submits its self-
representation as part of its response to the solicitation for the
order.
(6) A concern's status may be determined at the time of a response
to a solicitation for an Agreement and each order issued pursuant to
the Agreement.
26. Amend Sec. 125.22 by revising the heading to read as follows:
``Sec. 125.22 May SBA appeal a contracting officer's decision not to
make a procurement available for award as an SDVO contract?''.
27. Amend Sec. 125.24 by revising paragraph (b) to read as
follows:
Sec. 125.24 Who may protest the status of an SDVO SBC?
* * * * *
(b) For all other procurements, including Multiple Award Contracts
(see Sec. 125.1), any interested party may protest the apparent
successful offeror's SDVO SBC status.
PART 126--HUBZONE PROGRAM
28. The authority citation for part 126 is amended to read as
follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.
29. Amend Sec. 126.103 by revising the definition of the term
``Interested party'' to read as follows:
Sec. 126.103 What definitions are important in the HUBZone program?
* * * * *
Interested party means any concern that submits an offer for a
specific HUBZone sole source or set-aside contract (including Multiple
Award Contracts), any concern that submitted an offer in full and open
competition and its opportunity for award will be affected by a price
evaluation preference given a qualified HUBZone SBC, any concern that
submitted an offer in a full and open competition and its opportunity
for award will be affected by a reserve of an award given to a
qualified HUBZone SBC, the contracting activity's contracting officer,
or SBA.
* * * * *
30. Revise Sec. 126.600 to read as follows:
Sec. 126.600 What are HUBZone contracts?
HUBZone contracts, including Multiple Award Contracts (see 125.1),
are those awarded to a qualified HUBZone SBC through any of the
following procurement methods:
(a) Sole source awards to qualified HUBZone SBCs;
(b) Set-aside awards, including partial set-asides, based on
competition restricted to qualified HUBZone SBCs;
(c) Awards to qualified HUBZone SBCs through full and open
competition after a price evaluation preference in favor of qualified
HUBZone SBCs;
[[Page 29163]]
(d) Awards based on a reserve for HUBZone SBCs in a solicitation
for a Multiple Award Contract (see Sec. 125.1); or
(e) Orders set-aside for HUBZone SBCs against a Multiple Award
Contract, which had been awarded in full and open competition.
31. Amend Sec. 126.601 by adding new paragraphs (g) and (h) to
read as follows:
Sec. 126.601 What additional requirements must a qualified HUBZone
SBC meet to bid on a contract?
* * * * *
(g) Multiple Award Contracts--(1) Partial set-asides.The qualified
HUBZone SBC must comply with the applicable limitations on
subcontracting provisions (see Sec. 126.700) and the nonmanufacturer
rule, if applicable, in the performance of a contract partially set-
aside for HUBZone SBCs.
(2) Set-aside of orders. The qualified HUBZone SBC must comply with
the applicable limitations on subcontracting provisions (see Sec.
126.700) and the nonmanufacturer rule, if applicable, in the
performance of each individual order that has been set-aside for
HUBZone SBCs.
(3) Reserves. The qualified HUBZone SBC must comply with the
applicable limitations on subcontracting provisions (see Sec. 126.700)
and the nonmanufacturer rule, if applicable, in the performance of the
contract that is reserved for one or more HUBZone SBCs. However, the
qualified HUBZone SBC will not have to comply with the limitations on
subcontracting provisions (see Sec. 126.700) and the nonmanufacturer
rule for any order issued against the Multiple Award Contract if the
order is competed amongst qualified HUBZone SBCs and other-than-small
business concerns.
(h) Recertification of Status for an Award. (1) A concern that is a
qualified HUBZone SBC at the time of initial offer and contract
award,including a Multiple Award Contract, is considered a HUBZone SBC
throughout the life of that contract. This means that if a HUBZone SBC
is certified at the time of initial offer and contract award for a
Multiple Award Contract, then it will be considered a HUBZone SBC for
each order issued against the contract, unless a contracting officer
requests a new HUBZone SBC certification in connection with a specific
order. Where a concern later is decertified, the procuring agency may
exercise options and still count the award as an award to a HUBZone
SBC. The following exceptions apply:
(i) Where a HUBZone contract (or a contract awarded through full
and open competition based on the HUBZone price evaluation preference)
is novated to another business concern, the concern that will continue
performance on the contract must certify its status as a HUBZone SBC to
the procuring agency, or inform the procuring agency that it does not
qualify as a HUBZone SBC,within 30 days of the novation approval. If
the concern cannot certify that it qualifies as a HUBZone SBC, the
agency can no longer count the options or orders issued pursuant to the
contract, from that point forward, towards its HUBZone goals.
(ii) Where a concern that is performing a HUBZone contract
acquires, is acquired by, or merges with another concern and contract
novation is not required, the concern must, within 30 days of the
transaction becoming final, recertify its HUBZone SBC status to the
procuring agency, or inform the procuring agency that it has been
decertified or no longer qualifies as a HUBZone SBC. If the
contractoris unable to recertify its status as a HUBZone SBC, the
agency can no longer count the options or orders issued pursuant to the
contract, from that point forward, towards its HUBZone goals. The
agency and the contractor must immediately revise all applicable
Federal contract databases to reflect the new status.
(iii) There has been a HUBZone status protest on the solicitation
or contract. See 126.803(d) for the effect of the status determination
on the contract award.
(2) For the purposes of contracts (including Multiple Award
Contracts) with durations of more than five years (including options) a
contracting officer must request that a business concern recertify its
HUBZone SBC status no more than 120 days prior to the end of the fifth
year of the contract, and no more than 120 days prior to exercising any
option.
(3) A business concern that did not certify itself as a HUBZone
SBC, either initially or prior to an option being exercised, may
recertify itself as a HUBZone SBC for a subsequent option period if it
meets the eligibility requirements.
(4) Re-certification does not change the terms and conditions of
the contract. The limitations on subcontracting, non-manufacturer and
subcontracting plan requirements in effect at the time of contract
award remain in effect throughout the life of the contract.
(5) Where the contracting officer explicitly requires concerns to
recertify their status in response to a solicitation for an order, SBA
will determine eligibility as of the date the concern submits its self-
representation as part of its response to the solicitation for the
order and at the time of award.
(6) A concern's status may be determined at the time of submission
of its initial response to a solicitation for and award of an
Agreementand each order issued pursuant to the Agreement.
32. Revise Sec. 126.602 to read as follows:
Sec. 126.602 Must a qualified HUBZone SBC maintain the employee
residency percentage during contract performance?
(a) Qualified HUBZone SBCs eligible for the program pursuant to
Sec. 126.200(b) must meet the HUBZone residency requirement at all
times while certified in the program. However, the qualified HUBZone
SBC may ``attempt to maintain'' (See Sec. 126.103) the required
percentage of employees who reside in a HUBZone during the performance
of any HUBZone contract awarded to the concern on the basis of its
HUBZone status, except as set forth in paragraph (d).
(b) For indefinite delivery/indefinite quantity contracts,
including Multiple Award Contracts, the qualified HUBZone SBC must
attempt to maintain the residency requirement during the performance of
each order issued against that contract.
(c) A qualified HUBZone SBC eligible for the program pursuant to
Sec. 126.200(a) must have at least 35% of its employees engaged in
performing a HUBZone contract residing within any Indian reservation
governed by one or more of the concern's Indian Tribal Government
owners, or residing within any HUBZone adjoining any such Indian
reservation. To monitor compliance, SBA will conduct program
examinations, pursuant to Sec. Sec. 126.400 through 126.403, where
appropriate.
(d) Every time a qualified HUBZone SBC submits and offer and is
awarded a HUBZone contract, it must meet all of the HUBZone Program's
eligibility requirements, including the employee residency requirement
at the time it submits its initial offer and up until and at the time
of award. This means that if a HUBZone SBC is performing on a HUBZone
contract and submits an offer for another HUBZone contract, it can no
longer attempt to maintain the HUBZone residency requirement; rather,
it must meet the requirement at the time it submits its initial offer
and up until and at the time of award.
33. Amend Sec. 126.610 by revising the heading to read as follows:
Sec. 126.610 May SBA appeal a contracting officer's decision not to
make a procurement available for award as a HUBZone contract?''
34. Amend Sec. 126.613 by:
[[Page 29164]]
a. Adding a new sentence at the end of paragraph (a)(1); and
b. Adding an Example 4 in paragraph (b).
Sec. 126.613 How does a price evaluation preference affect the bid of
a qualified HUBZone SBC in full and open competition?
(a) * * *
(1) * * * This does not apply if the HUBZone SBC will receive the
contract as part of a reserve for HUBZone SBCs.
* * * * *
(b) * * *
Example 4: In a full and open competition, a qualified HUBZone
SBC submits an offer of $98 and a large business submits an offer of
$93. The contracting officer has stated in the solicitation that one
contract will be reserved for a HUBZone SBC. The contracting officer
would not apply the price evaluation preference when determining
which HUBZone SBC would receive the contract reserved for HUBZone
SBCs, but would apply the price evaluation preference when
determining the awardees for the non-reserved portion.
* * * * *
Sec. 126.614 [Removed and Reserved]
35. Remove and reserve Sec. 126.614.
36. Amend Sec. 126.800 by revising paragraph (b) as follows:
Sec. 126.800 Who may protest the status of a qualified HUBZone SBC?
* * * * *
(b) For all other procurements, including Multiple Award Contracts
(see 125.1), SBA, the CO, or any other interested party may protest the
apparent successful offeror's qualified HUBZone SBC status.
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT ASSISTANCE
PROGRAM
37. The authority for 13 CFR part 127 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 637(m), and 644.
38. Revise Sec. 127.101 to read as follows:
Sec. 127.101 What type of assistance is available under this part?
This part authorizes contracting officers to restrict competition
to eligible Economically Disadvantaged Women-Owned Small Businesses
(EDWOSBs) for certain Federal contracts or orders in industries in
which the Small Business Administration (SBA) determines that WOSBs are
underrepresented in Federal procurement. It also authorizes contracting
officers to restrict competition to eligible WOSBs for certain Federal
contracts or orders in industries in which SBA determines that WOSBs
are substantially underrepresented in Federal procurement and has
waived the economically disadvantaged requirement.
39. Amend Sec. 127.102 by revising the following definitions to
read as follows:
Sec. 127.102 What are the definitions of the terms used in this part?
* * * * *
EDWOSB requirement means a Federal requirement for services or
supplies for which a contracting officer has restricted competition to
eligible EDWOSBs, including Multiple Award Contracts, partial set-
asides, reserves, and orders set-aside for EDWOSBs issued against a
Multiple Award Contract. * * *
Interested party means any concern that submits an offer for a
specific EDWOSB or WOSB requirement (including Multiple Award
Contracts), any concern that submitted an offer in a full and open
competition and its opportunity for award will be affected by a reserve
of an award given a WOSB or EDWOSB, the contracting activity's
contracting officer, or SBA. * * *
WOSB requirement means a Federal requirement for services or
supplies for which a contracting officer has restricted competition to
eligible WOSBs, including Multiple Award Contracts, partial set-asides,
reserves, and orders set-aside for WOSBs issued against a Multiple
Award Contract.
40. Amend Sec. 127.300 by revising paragraph (a) to read as
follows:
Sec. 127.300 How is a concern certified as an EDWOSB or WOSB?
(a) General. At the time a concern submits an offer on a specific
contract (including a Multiple Award Contract) or order reserved for
competition among EDWOSBs or WOSBs under this Part, it must be
registered in the Central Contractor Registration (CCR), have a current
representation posted on the Online Representations and Certifications
Application (ORCA) that it qualifies as an EDWOSB or WOSB and have
provided the required documents to the WOSB Program Repository, or if
the repository is unavailable, be prepared to submit the documents to
the contracting officer if selected as the apparent successful offeror.
* * * * *
41. Amend Sec. 127.400 by revising the first sentence of paragraph
(a) to read as follows:
Sec. 127.400 What is an eligibility examination?
(a) Purpose of examination. Eligibility examinations are
investigations that verify the accuracy of any certification made or
information provided as part of the certification process (including
third-party certifications) or in connection with an EDWOSB or WOSB
requirement. * * *
* * * * *
42. Amend Sec. 127.401 by revising paragraph (a) to read as
follows:
Sec. 127.401 What is the difference between an eligibility
examination and an EDWOSB or WOSB status protest pursuant to subpart F
of this part?
(a) Eligibility examination. An eligibility examination is the
formal process through which SBA verifies and monitors the accuracy of
any certification made or information provided as part of the
certification process or in connection with an EDWOSB or WOSB
requirement. * * *
* * * * *
43. Amend Sec. 127.503 by:
a. Revising paragraphs (a)(2), (a)(3), (b)(2), and (b)(3); and
b. Adding a new paragraph (f) to read as follows:
Sec. 127.503 When is a contracting officer authorized to restrict
competition under this part?
(a) * * *
(1) * * *
(2)(i) The anticipated award price (including options) of the
contract does not exceed $6,500,000 in the case of a contract assigned
a NAICS code for manufacturing, or $4,000,000 in the case of all other
contracts; or
(ii) For Multiple Award Contracts, the anticipated award price
(including options) of each order issued against the Multiple Award
Contract does not exceed $6,500,000 in the case of an order assigned a
NAICS code for manufacturing, or $4,000,000 in the case of all other
orders; and
(3) Award may be made at a fair and reasonable price.
(b) WOSB requirements. * * *
(1) * * *
(2) The anticipated award price (including options) of the contract
will not exceed $6,500,000 in the case of a contract or order assigned
an NAICS code for manufacturing, or $4,000,000 in the case of all other
contracts; or
(ii) For Multiple Award Contracts, the anticipated award price
(including options) of each order issued against a Multiple Award
Contract does not exceed $6,500,000 in the case of an order assigned a
NAICS code for manufacturing, or $4,000,000 in the case of all other
orders; and
[[Page 29165]]
(3) Award may be made at a fair and reasonable price.
* * * * *
(f) Recertification. (1) A concern that represents itself and
qualifies as a WOSB or EDWOSB at the time of initial offer (or other
formal response to a solicitation), which includes price, including a
Multiple Award Contract, is considered a WOSB or EDWOSB throughout the
life of that contract. This means that if a WOSB/EDWOSB is qualified at
the time of initial offer for a Multiple Award Contract, then it will
be considered an WOSB/EDWOSB for each order issued against the
contract, unless a contracting officer requests a new WOSB or EDWOSB
certification in connection with a specific order. Where a concern
later fails to qualify as a WOSB/EDWOSB, the procuring agency may
exercise options and still count the award as an award to a WOSB/
EDWOSB. The following exceptions apply:
(i) Where a WOSB/EDWOSB contract is novated to another business
concern, the concern that will continue performance on the contract
must certify its status as a WOSB/EDWOSB to the procuring agency, or
inform the procuring agency that it does not qualify as a WOSB/
EDWOSB,within 30 days of the novation approval. If the concern cannot
certify its status as a WOSB/EDWOSB, the agency may no longer be able
to count the options or orders issued pursuant to the contract, from
that point forward, towards its women-owned small business goals.
(ii) Where a concern that is performing a WOSB/EDWOSB contract
acquires, is acquired by, or merges with another concern and contract
novation is not required, the concern must, within 30 days of the
transaction becoming final, recertify its WOSB/EDWOSB status to the
procuring agency, or inform the procuring agency that it no longer
qualifies as a WOSB/EDWOSB.If the contractor is not a WOSB/EDWOSB, the
agency may no longer be able to count the options or orders issued
pursuant to the contract, from that point forward, towards its women-
owned small business goals. The agency and the contractor must
immediately revise all applicable Federal contract databases to reflect
the new status if necessary.
(iii) There has been a WOSB or EDWOSB status protest on the
solicitation or contract. See127.604(f) for the effect of the status
determination on the contract award.
(2) For the purposes of contracts (including Multiple Award
Contracts) with durations of more than five years (including options),
a contracting officer must request that a business concern recertify
its WOSB/EDWOSB status no more than 120 days prior to the end of the
fifth year of the contract, and no more than 120 days prior to
exercising any option.
(3) A business concern that did not certify itself as a WOSB/
EDWOSB, either initially or prior to an option being exercised, may
recertify itself as a WOSB/EDWOSB for a subsequent option period if it
meets the eligibility requirements.
(4) Re-certification does not change the terms and conditions of
the contract. The limitations on subcontracting, nonmanufacturer and
subcontracting plan requirements in effect at the time of contract
award remain in effect throughout the life of the contract.
(5) Where the contracting officer explicitly requires concerns to
recertify their status in response to a solicitation for an order, SBA
will determine eligibility as of the date the concern submits its self-
representation as part of its response to the solicitation for the
order.
(6) A concern's status may be determined at the time of a response
to a solicitation for an Agreement and each order issued pursuant to
the Agreement.
44. Amend Sec. 127.506 by:
a. Adding the word, ``order'' at the end of paragraph (a); and
b. Removing the word ``contract'' and adding the words ``contract
or order'' in paragraphs (c)(2), (c)(4), (c)(5) and (d).
Sec. 127.506 May a joint venture submit an offer on an EDWOSB or WOSB
requirement?
A joint venture may submit an offer on an EDWOSB or WOSB
requirement if the joint venture meets all of the following
requirements:
(a) Except as provided in Sec. 121.103(h)(3) of this chapter, the
combined annual receipts or employees of the concerns entering into the
joint venture must meet the applicable size standard corresponding to
the NAICS code assigned to the contract or order;
* * * * *
45. Amend Sec. 127.508 by revising the heading to read as follows:
Sec. 127.508 May SBA appeal a contracting officer's decision not to
make a requirement available for award as a WOSB Program contract?
46. Amend Sec. 127.600 by revising the first sentence of paragraph
(a) to read as follows:
Sec. 127.600 Who may protest the status of a concern as an EDWOSB or
WOSB?
An interested party may protest the EDWOSB or WOSB status of an
apparent successful offeror on an EDWOSB or WOSB requirement or
contract. * * *
Dated: May 4, 2012.
Karen Gordon Mills,
Administrator.
[FR Doc. 2012-11317 Filed 5-15-12; 8:45 am]
BILLING CODE 8025-01-P