“Educating the Government Contracting Community”

SBA Proposes Rules to Increase Small Business Participation in Multiple Award Contracts

On 16 May 2012, the U.S. Small Business Administration (SBA) announced its plans to amend SBA regulations to increase small business participation in multiple award contracts and to avoid agency acquisitions that consolidate or bundle contracts at a detriment to the small business contracting community.

The proposed rules would allow agencies: (1) to set aside part or parts of a multiple award contract to a small business when two or more small businesses are expected to submit an offer on the set-aside part or parts at a fair market price; (2) to reserve contract awards for small business under a multiple award contract when market research shows that either at least two small businesses could perform a part of the contract or at least one small business could perform all of the contract; or (3) to set-aside orders under a multiple award contract when two or more small businesses are expected to submit an offer on the set-aside part or parts at a fair market price for the order.

Although the proposed rules preserve the discretion of the agency in deciding whether to use a set-aside, partial set-aside or a reserve, the proposed rules does impose strict documentation and reporting obligations on the agency in the exercise of its discretion. Under the proposed rules, a contracting officer would be required to document its rationale in the contract file when the contracting officer decided not to pursue a set aside, partial set-aside or reserve, in connection with a multiple award contract when such an opportunity was available to the agency either at the contract or order level. Furthermore, agency acquisitions under multiple ward contracts or orders that are not set-aside or reserved for small businesses may be reviewed by SBA’s procurement center representatives.

Finally, the proposed rules place additional limitations on the consolidation of contract by federal agencies. The proposed rule prohibits an agency from consolidating contracts unless a senior procurement executive or chief acquisition officer (1) justifies the consolidation (i.e. the benefits of the consolidation substantially exceeds the benefits of the other alternatives); and (2) documents the negative impact on small businesses. Comments to these proposed rules must be submitted to the SBA on or before 16 July 2012.


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