Contract bundling

One of the hotter issues in federal procurement policy during the past few years involves the conflict between the need to consolidate certain government requirements into larger acquisitions for efficiency (and other reasons) and the need to provide small businesses and other potential offerors with the maximum practicable opportunity to compete for those requirements.

The Office of Federal Procurement Policy (OFPP) recently issued a paper calling for more scrutiny of procurement consolidations, or "bundling," that may adversely affect competition from small businesses. While interesting, the paper is more meaningful in the context of relevant legal precedents.

Since 1984, the General Accounting Office has interpreted the Competition in Contracting Act (CICA) as allowing agencies to consolidate separate requirements whenever there is a reasonable basis for doing so, unless the consolidation would significantly restrict the number of offerors likely to compete.

In addition, GAO has long held that agencies are prohibited in most cases by the Small Business Act from consolidating a requirement previously set aside exclusively for small-business participation into any new procurement that is not so set aside. Moreover, in 1997, Congress amended the Small Business Act to prohibit agencies from consolidating or bundling contract requirements in situations that could preclude small businesses from participating as prime contractors, except when justified by likely cost savings, quality improvements or other enumerated benefits.

GAO has rigorously enforced the amendment. In one case, GAO ruled that an agency had properly justified the consolidation of information technology support services previously provided by a small, socially disadvantaged business into a new, comprehensive seat management procurement based on the technical benefits likely to be had with the new approach. However, in other cases, GAO has sustained protests against allegedly unjustified bundling under the amendment.

Several GAO cases have dealt with the consolidation of specific requirements previously satisfied by small businesses into much larger indefinite quantity contracts on which small businesses might be unable to compete. In these cases, the predominant factors in predicting the outcome seem to be the number of contracts that will be awarded and the agency's willingness to set aside one or more of those contracts exclusively for small-business participation.

OFPP's new guidance recommends, among other things, the adoption of new requirements for high-level agency reviews of larger acquisitions to ensure that there is no unnecessary and unjustified contract bundling and that bundling efforts are reviewed for task and delivery orders issued under multiple-award contracts.

Whether these new reviews would be beneficial is likely to be the subject of considerable debate before any of the new recommendations are implemented.

Peckinpaugh is corporate counsel for DynCorp in Reston, Va. This column represents his personal views.

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