A 'who's who' in small-biz rule

Officials propose changes to make contracting set-aside decisions easier

A question of preferences

A proposed rule would help contracting officers sort through the sometimes confusing tangle of set-aside programs for small businesses.

Among other provisions, the rule would stipulate that:

  • There is no set order of precedence among 8(a), Historically Underutilized Business Zone and service-disabled veteran-owned small-business programs.

  • Contracting officers must consider directing any small-business set-aside or sole-source contract worth more than $100,000 to an 8(a), HUBZone or veteran-owned small business. However, if the acquisition meets the HUBZone criteria, the contracting officer must award the contract to a HUBZone business.

  • Contracting officers must set aside acquisitions valued at $3,000 to $100,000 for small businesses or any category of disadvantaged small business if the contracting officer determines that two or more such companies could compete for the contract.

  • Contracting officers should consider their agency’s progress in reaching federal small-business goals when deciding which program to use when awarding a contract.

— Matthew Weigelt

Contracting officers often get tangled in the weeds as they try to figure out which small-business set-aside programs should apply to a given solicitation. A proposed rule might clear some of that confusion, but it could also leave contracting officers with less flexibility to make contracting decisions.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council published the proposed rule March 10. It would amend the Federal Acquisition Regulation (FAR) to mirror revisions the Small Business Administration made in 2005 to its small-business regulations. The comment period on the proposed changes ends May 9.

The proposed changes are meant to help contracting officials understand their responsibilities under the government’s small-business set-aside programs. Like the SBA’s 2005 revisions, the proposed FAR changes attempt to clarify contracting requirements.

In 2005, SBA revised its regulations regarding disadvantaged small businesses, but officials didn’t change the FAR. Differences between the SBA rules and the FAR created uncertainty in the acquisition community about whether it should give preference to some socioeconomic contracting programs instead of others when creating set-asides, said Arthur Collins, the Small Business Administration’s assistant administrator for government contracting. Collins is also chairman of the Chief Acquisition Officers Council’s Small Business Contracting Working Group. “Both sets of regulations were written to be explicit and emphatically clear,” he said.

The list of socioeconomic contracting programs is extensive and includes programs for small businesses, 8(a) small businesses, Historically Underutilized Business Zone and service-disabled veteran-owned small-businesses.

“It has been a topic of discussion in the federal contracting community that needed to be resolved,” Collins said. The proposed changes to the FAR would clarify the relationships among the programs, making it easier for contracting officers to make their decisions on set-asides.

Michael Smith, director of the Homeland Security Department’s Enterprise Solutions Office, said the proposed guidelines would minimize room for interpretation during a time when Congress and inspectors general are stepping up their oversight of contracting activities. “We’re going back to the ’80s,” another time when agencies felt that procurements were watched closely, he said.

Scott Denniston, director at the Veterans Affairs Department’s Office of Small and Disadvantaged Business Utilization, said there is no doubt that agencies have experienced increased oversight. “I think contracting officers really need the guidance,” he said.

The 2005 revisions require that contracting officers consider disadvantaged small-business programs before creating a set-aside for which any small business could qualify. SBA’s revised regulations state that although no single small-business program is more important than another, an agency’s acquisition official is allowed to consider the agency’s small-business goals when determining which program to use in awarding a contract, Collins said.

Paul Denett, administrator of the Office of Federal Procurement Policy, agreed that confusion was a problem among contracting officials who want to know they have the discretion to choose among small-business contracting programs based on their agency’s needs.

“It was not clear to them which small-business program, if any, had priority,” Denett said.

However, that confusion hasn’t been universal. DHS, which received a high score from SBA on its latest Business Procurement Score Card, has used its small-business goals in making set-aside decisions, Smith said. In fiscal 2006, DHS met its overall small-business goal and reached its benchmarks for all but one disadvantaged smal -business program — one that targets service-disabled veteran-owned small businesses.

In March 2007, DHS acted quickly to correct that situation by releasing a synopsis for a departmentwide indefinite-delivery, indefinite-quantity contract called Program Management, Administrative, Clerical and Technical Services (PACTS). DHS announced it was a set-aside contract for service-disabled veteran-owned small businesses.

In March, DHS released the draft request for proposals for the contract.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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