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SMALL BUSINESSES AND MULTIPLE AWARD CONTRACTS

May 2014

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Jobs Act - OverviewFAR Interim Final RuleSBA RulePartial Set AsideReservesOrder Set AsideLimitations on Subcontracting/NonmanufacturerDocumentation, Targets, Ramps8(a)NAICS CodesSizeRecertification - ChangesBundling and Consolidation

Topics for Discussion

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Defined Multiple Award Contract (JA §1311)• multiple award IDIQ contract entered into under 41 USC 253h-

253k• any other multiple award IDIQ contract

Required guidance that addresses (JA § 1331):• set aside of part or parts of a multiple award contract for small

business; • notwithstanding fair opportunity requirements, set aside of

orders placed against multiple award contracts for small businesses; and

• reserve of one or more contract award(s) for small businesses under full and open competition multiple award procurements.

Jobs Act - OverviewPub. Law 111-240

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Subpart 19.5 - agencies may: • set aside part or parts of a multiple-award contract for SBCs, including set-asides

for small business concerns under the 8(a), HUBZone, SDVOSB and the WOSB Programs;

• set-aside orders placed against multiple-award contracts for SBCs, including small businesses in the 8(a), HUBZone, SDVOSB, and WOSB Programs; and

• reserve one or more contract awards for SBCs, including small businesses in the 8(a), HUBZone, SDVOSB, and WOSB Programs, under full and open multiple-award procurements.

Subpart 8.4 – agencies may set-aside orders and BPAs under the GSA Schedule;

Subpart 16.5 - agencies may set-aside orders for SBCs in connection with multiple award contracts and no justification for this exception to fair opportunity required

Added 52.219-13 which states that the CO will give notice of which orders, if any, are to be set aside under a multiple award contract

FAR Interim Final Rule(76 FR 68032, Nov. 2, 2011 )

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SBA issued a Proposed Rule on May 16, 2012 to• implement JA provisions on Multiple Award

Contracts and Bundling/Consolidation• reorganize part 125 and clarify other SBA

regulations

SBA issued Final Rule on October 2, 2013, effective December 31, 2013

SBA Rule

Proposed rule

77 FR 29130

Final rule

78 FR 61114

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CO sets-aside a portion or portions of an acquisition for small businesses:• Market research shows a total set aside is not appropriate - “rule of 2” can’t be met for entire contract;• Requirement is severable into smaller, discrete portions or discrete categories (CLIN, SIN, Sector, FA,

etc.); and• “Rule of two” will be met on set-aside part or parts of the acquisition

This is different than how partial set asides are currently done in the FAR Partial set aside for one or more of the various types of small business programs 

The specific program eligibility requirements would apply to the set-aside portion. For example, for CLIN 3, the 8(a) program requirements would apply to that CLIN (e.g. offer and acceptance at contract level). If CLIN set aside for WOSBs or EDWOSBs, then must be eligible NAICS code.

 

Partial Set Aside

EXAMPLE:CLIN 1: NAICS Code 541611, set-aside for HUBZone small businesses. Only those Contractors awarded contracts under CLIN 1 would be eligible to receive a task order solicitation under this CLIN. CLIN 2: NAICS Code 541330, set-aside for Service-Disabled Veteran-Owned small businesses. Only those Contractors awarded contracts under CLIN 2 would be eligible to receive a task order solicitation under this CLIN. CLIN 3: NAICS Code 541712, set-aside for 8(a) Participants under the 8(a) Program. Only those Contractors awarded contracts under CLIN 3 would be eligible to receive a task order solicitation under this CLIN.

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Partial Set AsideOffer Submission

For Contract Order CompetitionThe small business offeror: ◦ must submit one offer that

addresses each part of the solicitation for which it wants to compete (partial set aside, non set aside)

◦ may choose to 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.

The small business awardee: o may compete for an order issued

against that part or parts that are set-aside and for which they submitted an offer and received an award

o may compete for an order against the portion that has not been partially set-aside if the small business submitted an offer and received a contract award for the non-set aside portion

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Agencies have been “reserving” awards for small businesses for many years - Congress provided specific authority and some framework for this.

A CO may reserve one or more contract awards for small business concerns in a full and openly competed multiple award contract when—

◦ the requirement is general in nature and cannot be broken into discrete categories at contract award but will be clearly defined when an order is placed; and

at least two small business concerns will be able to perform part of the requirement and will submit an offer at a fair market price; or

  at least one of the small business concerns can perform the entire requirement and will submit an

offer at a fair market price; or 

on a bundled contract, one or more small business concerns with a Small Business Teaming Arrangement will submit an offer at a fair market price.

Reserves

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Offer Submission for Contract:◦ must submit one offer that addresses each part of the solicitation for which it wants to compete

(reserve, non reserve); and ◦ may choose to submit an offer on the part or parts of the solicitation that have been reserved

and/or on the parts that have not been reserved.  Order Competition

◦ If there are two or more reserved contracts awarded under one or more of SBA’s small business programs, the agency may set-aside orders for those small business concerns pursuant to those programs.

◦ If there are two or more contracts awarded under subpart 19.5 to different types of small businesses identified in 19.003(a), the agency may set-aside the orders for all small business awardees that received an award under the reserve.

If there is only one contract award to a small business concern, the agency may issue orders directly to that concern for work that it can perform.

 

Reserves

EXAMPLE: reserve for WOSB, then set aside orders for WOSB; reserve for HUBZone, then set aside orders for HUBZone

EXAMPLE: reserve one award for 8(a), one for SDVOSB, one for SBCs, then set aside orders for small businesses – this would be considered a small business reserve

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Partial Set Aside/Reserve

Partial Set Aside Reserve

• a multiple award CONTRACT is unsuitable in its ENTIRETY for a small business set aside

• BUT it is determined that SOME requirements of that multiple award contract can be broken down into clearly defined requirements (segments, line items,…etc.) - suitable for a small business set aside AT THE CONTRACT Level 

• those items are identified as a “partial set aside” in the solicitation and small businesses can submit proposals to be awarded a set aside contract    

• small businesses can submit proposals for the unrestricted portion of that contract, the partial set aside portion or both.   

• a partial small business set aside has the set aside requirements (orders to be competed) in place at time of contract award

• a multiple award CONTRACT is unsuitable in its ENTIRETY for a small business set aside

• used when contract requirements are NOT clearly defined, AND cannot be broken down individually at the contract level for order competition 

• HOWEVER, CO has determined that the possibility exists to set-aside some orders once defined requirements are determined 

• the contract is competed on an unrestricted basis (Large and Small businesses submit offers for the multiple award contract), the contracting officer notifies all potential offerors in the solicitation of the intent to do a “reserve” of some of the contract awards for small businesses 

• awards are made to both large and small businesses and once a requirement (order) is identified that is suitable for small businesses, that “order” competition may be “set-aside” for small business participation  

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Order Set AsidesDiscretion to set aside orders against F&O

competed multiple award contracts

Applies to GSA Schedule Contracts

Insert 52.219-13 in RFP and contract stating that agency “preserves” right to set-aside orders

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  Market Research Acquisition Strategy Award/OrdersPartial Set Aside “rule of two” will not

be met for the entire contract

contract can be broken into smaller, discrete portions

one or more awards made to SBCs, 8(a), HUBZone, SDVOSB, WOSB or EDWOSB; orders competed amongst only SBCs awarded the partial set aside; SBCs may be able to compete against other-than-small businesses for the non-set aside portion if they also submitted an offer and received a contract on that portion

Reserve 1 at least two SBCs could perform part of contract, not all

contract cannot be broken into smaller, discrete portions because requirements are not specific

two or more awards made to one or more types of SBCs (e.g., small business reserve, 8(a) reserve, HUBZone reserve, SDVOSB reserve, WOSB or EDWOSB reserve); orders competed amongst specified type of SBCs (e.g., SBCs, 8(a), HUBZones, SDVOSBs, WOSBs or EDWOSBs); SBCs may be able to compete against other-than-small businesses for the unreserved portion if they also submitted an offer and received a contract on that portion

Reserve 2 at least two SBCs could perform part of contract, not all

contract cannot be broken into smaller, discrete portions because requirements are not specific

two or more awards made to several different types of SBCs under a small business reserve (e.g., one to 8(a), one to HUBZone, one to SDVOSB, one to WOSB or EDWOSB); orders competed amongst all SBCs awarded on the reserve and small business rules apply, not specific program rules; SBCs may be able to compete against other-than-small businesses for the unreserved portion if they also submitted an offer and received a contract on that portion

Reserve 3 at least one SBC can perform all of the contract

contract cannot be broken into smaller, discrete portions because requirements are not specific

one award made to a SBC (e.g., one small business, one 8(a), one HUBZone, one SDVOSB, or one WOSB or EDWOSB); orders can be issued directly to the SBC awardee on the reserve; SBCs may be able to compete against other-than-small businesses for the unreserved portion if they also submitted an offer and received a contract on that portion

Reserve 4 no SBC can perform because it is a justified bundle

contract cannot be broken into smaller, discrete portions because requirements are not specific

award made to a Small Business Teaming Arrangement on a bundled contract; orders competed against all awardees

Set-aside of orders “rule of two” will be met for the requirement for orders

goods/services can be acquired using an already established F&O multiple award contract

order competed amongst specified type of small business (e.g., SBCs, 8(a), HUBZone, SDVOSB, WOSB or EDWOSB)

Comparing Partial Set Asides, Reserves and Order Set Asides

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LOS and NMR apply• Full or partial set aside, reserve or set aside of orders

Compliance Period• Full or partial set aside: base term and each subsequent option period

HOWEVER, CO may require concern to perform the LOS or NMR for each order

• Reserve or order set aside under F&O: term of orderExceptions to NMR• Order is set aside against F&O contract and value is ≤$25,000,

offeror does not have to provide product of SB but product must be manufactured or produced in US and offeror must meet size requirements

Limitations on Subcontracting/Nonmanufacturer Rule

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Although partial set aside, reserves and set aside of orders on F&O contract are discretionary, CO must document why he/she did not use these authorities

CO may set targets in contract with a reserve that estimate $ value or % of total contract to be awarded to small businesses

CO may use on ramps and off ramps to ensure sufficient SBs on contract• Discretion of CO to move a business from one portion of

contract to another (e.g., move from set aside to non set aside)

Documentation, Targets, Ramps

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Offer and acceptance at contract level• Except for orders set aside or issued sole source against

a F&O competed contract May sole source an order to an 8(a) against a multiple

award contract that has been set aside, partially set aside or reserved for 8(a) IF • the $ thresholds are met on the order• offer and acceptance to 8(a) program on order

Offer and acceptance not required on reserve contract where orders will be competed amongst all SBC awardees

8(a)

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Every solicitation, contract and order must contain at least one NAICS code and corresponding size standard.

Solicitations and contracts that will result in multiple awards of contracts may contain +1 NAICS code and size standard:• acquisition requires more than one item and allows offers to be submitted on any or all of the items

• GSA Schedule Contract with multiple SINs and multiple NAICS codes

NAICS Codes - Contracts

EXAMPLE:CLIN 1: NAICS Code 541611. Only those Contractors awarded contracts under CLIN 1 would be eligible to receive a task order solicitation under this CLIN.

CLIN 2: NAICS Code 541330. Only those Contractors awarded contracts under CLIN 2 would be eligible to receive a task order solicitation under this CLIN.

CLIN 3: NAICS Code 541712. Only those Contractors awarded contracts under CLIN 3 would be eligible to receive a task order solicitation under this CLIN.

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CO must assign a single NAICS code and corresponding size standard for each order issued under a multiple award contract

If single award contract, or multiple award contract with one NAICS and size standard, then all orders will have that NAICS and size standard.

If Multiple Award Contract with multiple NAICS codes, the CO must select the NAICS code and corresponding size standard from the contract that best describes the principle purpose of each order.

If order is issued against the GSA Schedule with multiple SINs, CO must select the single NAICS code within the SIN that best represents the acquisition for the order.

 

NAICS Codes - Orders

Contract with one NAICS

NAICS 561110Office Administrative Services

Order:NAICS 561110

Contact with multiple NAICS

NAICS 541511Customer Computer ProgrammingNAICS 541430Graphic Design Services

Order:541430

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Determining size for a contract• Date the concern submits its initial offer (or other formal response to a solicitation),

which includes price • If multiple award contract • date the concern submits its offer for each discrete category (e.g., CLIN, SIN, Sector,

FA or equivalent) for which it represents it is small • date the concern submits its offer for entire contract (and will determine whether they

meet the size standard for every discrete category (CLIN, SIN, Sector, FA or equivalent))  

Determining size for an order• Date the concern submits its offer for the contract (see above)• If business was small for the underlying contract for the same NAICS code and size

standard as that assigned to the order, it is small for the order • If business was small for a discrete category on the underlying contract, it is small

for each order issued against that category with the same NAICS code and corresponding size standard

• Or date of recertification if requested or required by CO for the order

Size

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Recert required from • both the acquired and acquiring business• JV when one or more parties to JV has been acquired, merged

or is acquiring business If set aside, partial set aside or reserve of a multiple award

contract and business recertifies as other than small, new orders are not considered awards to SBs

Size recert rule now applies to HUBZone, SDVOSB and WOSB programs for status purposes

Recertification – Changes

Example:SDVOSB at time of offer for contract, then SDVOSB for life of contract and orders, unless recertification (novation, merger, acquisition, +5 years (and then options) or at contracting officer’s discretion for orders).

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  Bundling ConsolidationDefinition Combining two or more requirements for goods or services

previously provided or could have been performed under separate smaller contracts into a solicitation for a single or multiple award contract that is likely to be unsuitable for award to a small business

Combining two or more requirements for goods or services that have been provided to or performed for the agency under two or more separate contracts each of which was lower in cost than the total cost of the combined requirement; or Combining two or more construction projects to be performed at two or more discrete sites.

Unsuitability Reasons

Award cannot be made to a SBC due to:diversity, size or specialized nature of the performance; aggregate dollar value of the award; geographical dispersion of the contract performance sites; any combination of above

Award can still be made to SBC

Prior performance requirements

One or more small businesses performed or could have performed the smaller contracts that were combined into the larger requirement

One or more small or large businesses performed the smaller contracts that were combined into the larger requirement

Estimated contract amount, including options

Bundling: Any dollar valueSubstantial bundling (DoD): $8 MSubstantial bundling (GSA, NASA, DOE): $6 MSubstantial bundling (all other): $2.5 M

$2 M Any value for construction contract

Justification Requirements

-the benefits of strategy substantially exceed benefits of each alternative contracting approach-benefits include cost savings and/or price reduction, quality improvements to save time or enhance performance, reduction in acquisition cycles, better terms and conditions -other benefits that equal 10% of contract or order value if contract or order is $94M or less; or 5% of contract or order value or $9.4M, whichever is greater, if contact or order exceeds $94M-substantial savings in administrative or personnel costs occur when cost savings is at least 10% of contract value-there are separate justification requirements for substantial bundling

-the benefits of strategy substantially exceed benefits of each alternative contracting approach (see bundling for definition of benefits)-must conduct market research, identify alternative contracting approaches, make a determination that consolidation is necessary and justified, identifies any negative impact on SBs, and ensures steps taken to include SBs in acquisition strategy

Justification Approval

SPE or Under Secretary of Defense for Acquisition and Technology and Deputy Secretary in civilian agencies may determine a bundle is necessary and justified when it doesn’t meet the justification requirements if:-in the aggregate, the benefits are critical to the mission’s success-the strategy provides maximum practicable participation by SBs

SPE or CAO

Notification -Provide notification 30 days prior to issuing RFP to each SBC which is performing on a contract that it intends to bundle-Provide the SBs the name, phone number of the SBA PCR-Publish on agency website the rationale for bundling-Notify SBA of re-competition 

Notify SBA of re-competition

Follow-up Evaluate savings and benefits achieved for contracts that are re-competed

Evaluate savings and benefits achieved for contracts that are re-competed

Bundling v. Consolidation

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Questions?

Thank you!