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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


November 2013
Vol. XIV, No. 11
[pdf version]

CONTENTS


SBA Issues Rules for Setting Aside Task Order Contracts, Contract Consolidation, and Bundling
Nonmanufacturer Waiver for Bearings Partly Rescinded
DOD Keeps Issuing Changes Despite Shutdown
NASA Proposes Proposal Adequacy Checklist



SBA Issues Rules for Setting Aside Task Order Contracts,
Contract Consolidation, and Bundling

The Small Business Administration (SBA) has issued rules that amend its regulations to address two important aspects of the Small Business Jobs Act of 2010 (Public Law 111-240), which was enacted to increase consideration of small businesses and boost their opportunities in the federal marketplace: (1) the application of the SBA’s small business programs to multiple award contracts; and (2) limitations on contract consolidation and bundling.

Prior to enactment of Public Law 111-240, a contracting officer was required to “provide each awardee a fair opportunity to be considered for each order exceeding $3,000...” before placing an order under a multiple award contract (MAC) (unless one of several exceptions applied): Multiple Award Schedules contracts managed by the General Services Administration (GSA) (also called “Federal Supply Schedules”); government-wide acquisition contracts (GWACs); multi-agency contracts; and agency-specific indefinite-delivery indefinite-quantity (IDIQ) contracts. This requirement to give all awardees, large and small, a “fair opportunity” to compete prevented the use of set-asides for small businesses.

Section 1331 of Public Law 111-240, Reservation of Prime Contract Awards for Small Businesses, amended Section 15 of the Small Business Act (Title 15 of the United States Code, Section 664 [15 USC 644]) to:

  1. "set aside part or parts of a multiple award contract for small business concerns...;"

  2. "notwithstanding the fair opportunity requirements…set aside orders placed against multiple award contracts for small business concerns...;" and

  3. "reserve 1 or more contract awards for small business concerns under full and open multiple award procurements...”

Section 1331 required the administrator of the Office of Federal Procurement Policy (OFPP) and the SBA administrator, in consultation with the GSA administrator, to amend the Federal Acquisition Regulation (FAR) to implement this change (for more on Public Law 110-240, see the October 2010 Federal Contracts Perspective article “Parity Among Small Business Programs Mandated by Statute”).

Federal Acquisition Circular (FAC) 2005-54 included an interim rule that made clear that set-asides may be used in the placement of orders under MACs regardless of the requirement to provide each contract holder a fair opportunity to be considered, and also made clear that set-asides may be used in the placement of orders and blanket purchase agreements under Multiple Award Schedule contracts. (For more on FAC 2005-54, see the December 2011 Federal Contracts Perspective article “FAC 2005-54 Permits Small Business Set-Asides For Multiple-Award Contracts.”)

Subsequently, the SBA issued a proposed rule to provide more specific guidance to ensure both that meaningful consideration of set-asides is given with regard to the award of MACs and task and delivery orders placed against them, and that these are used in a consistent manner across agencies (see the June 2012 Federal Contracts Perspective article “SBA Proposes Changes on Use of MACs”). SBA received over 120 comments on the proposed rule. The following are the significant changes made by the final rule (along with changes to the proposed rule):



Nonmanufacturer Waiver for Bearings Partly Rescinded

The SBA is partially rescinding the class waiver of the nonmanufacturer rule for aerospace ball and roller bearings under North American Industry Classification System (NAICS) code 332991, Ball and Roller Bearing Manufacturing, Product Service Code (PSC) 3110, Bearings, Antifriction, Unmounted, and replacing it with a class waiver for 305 aerospace ball and roller bearings. A list of the specific 305 aerospace ball and roller bearings can be accessed at http://www.sba.gov/sites/default/files/files/NMR_WAIVED_3110_BEARING_LIST.pdf. This partial rescission is based on public comments and an analysis of data submitted to SBA by several small business manufacturers of aerospace ball and roller bearings that have done business with the federal government within the previous two years.

In 2001, SBA granted a class waiver for aerospace ball and roller bearings, consisting of, but not limited to, annular ball bearings, cylindrical ball bearings, linear ball bearings, linear roller bearings, needle roller bearings, ball or roller bearing races, roller bearings, tapered roller bearings and thrust roller bearings, identified within NAICS code 332991 under PSC 3110 (see the May 2001 Federal Contracts Perspective article “SBA Waives Nonmanufacturer Rule for Bearings”). Subsequently, a small business manufacturer of roller bearings notified SBA that it had lost several aerospace ball and roller bearing contracts based on the existence of the class waiver and brought to SBA’s attention that several small business manufacturers of roller bearing had submitted proposals for bearings contracts or received bearings contracts from the federal government within the previous 24 months.

In April 2013, SBA published a notice stating that it was considering a complete rescission of the class waiver of the aerospace ball and roller bearings nonmanufacturer rule (see the May 2013 Federal Contracts Perspective article “SBA Proposes Rescinding Nonmanufacturer Rule Waiver”). Fourteen comments were received from ten respondents. Some supported total rescission of the nonmanufacturer rule waiver, others opposed it. The Defense Logistics Agency (DLA) recommended a partial rescission of the class waiver based on the possible damage to the small business dealer base that might result from a complete rescission of the class waiver. DLA provided a list of bearings for which there was no known small business manufacturers in existence. SBA considered the comments and data presented by all of the commenters, including DLA. After conducting independent market analysis, and analyzing the data submitted by DLA and small bearing manufacturers, SBA decided to partially rescind the aerospace ball and roller bearing class waiver and replace it with a waiver for 305 specifically identified aerospace ball and roller bearings.

EDITOR’S NOTE: Public Law 100-656, enacted November 15, 1988, requires those with federal contracts that are set-aside for small businesses or awarded through the 8(a) program to provide the product of a small business manufacturer or processor if the recipient is not the actual manufacturer or processor (see paragraph (f) of FAR 19.102, Size Standards). This is called the “nonmanufacturer rule.” However, SBA may waive this requirement if there are no small business manufacturers or processors.

The SBA regulation on the nonmanufacturer rule is in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; part 121, Small Business Size Standards; under paragraph (b) of 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 [women-owned small business] or EDWOSB [economically disadvantaged women-owned small business] set-aside, or 8(a) contract? The SBA regulation on the waiver of the nonmanufacturer rule is 13 CFR 121.1202, When Will a Waiver of the Nonmanufacturer Rule Be Granted for a Class of Products? A complete list of products for which the nonmanufacturer rule has been waived is available at http://www.sba.gov/sites/default/files/class_waiver.pdf.



DOD Keeps Issuing Changes Despite Shutdown

Despite the federal government “shutdown,” most employees of the Department of Defense (DOD) were deemed “essential” and came to work. Apparently, among those DOD employees who were “essential” were the Defense Federal Acquisition Regulation Supplement (DFARS) administrators because they issued four final DFARS rules, one interim rule, one proposed rule, three DFARS class deviations, and a memorandum on an acquisition matter.



NASA Proposes Proposal Adequacy Checklist

The National Aeronautics and Space Administration (NASA) is proposing to add NASA FAR Supplement (NFS) 1852.215-85, Proposal Adequacy Checklist, which contracting officers would be required to include in solicitations that require the submission of certified cost or pricing data (see FAR 15.403, Obtaining Certified Cost or Pricing Data) to facilitate submission of a thorough, accurate, and complete proposal. This proposed rule supports the NASA Assistant Administrator for Procurement’s “Reducing Transaction Costs in NASA Procurements” initiative by increasing uniformity across NASA and minimizing local variations in this area which will decrease proposal preparation costs.

The Proposal Adequacy Checklist includes 34 pieces of information that the offeror must address. Each of the 34 provides a reference to the FAR provision that requires the information, a description of the information, and a place for the offeror to provide the page number in the proposal where that information is included or to provide an explanation of why the information is not included. For example, item 5 references “FAR 15.408 [Solicitation Provisions and Contract Clauses], Table 15-2 [Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data are Required], Section I [General Instructions] Paragraph B” [“In submitting your proposal, you must include an index, appropriately referenced, of all the certified cost or pricing data and information accompanying or identified in the proposal”]; identifies the required information (“Is an Index of all certified cost or pricing data and information accompanying or identified in the proposal provided and appropriately referenced?”); and then provides space for the offeror to identify the proposal page where the index is or explain why there is no index.

EDITOR’S NOTE: The proposed NASA Proposal Adequacy Checklist is very similar to the Proposal Adequacy Checklist recently implemented by DOD. For more on the DOD's Proposal Adequacy Checklist, see the April 2013 Federal Contracts Perspective article “DOD Implements Proposal Adequacy Checklist, Two Trade Agreements.”



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