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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: July 26, 2000

FROM: Barry McVay, CPCM

SUBJECT: Small Business Administration; Contract Bundling

SOURCE: Federal Register, July 26, 2000, Vol. 65, No. 144, page 45831

AGENCIES: Small Business Administration (SBA)

ACTION: Final Rule

SYNOPSIS: SBA is finalizing its regulations on contract bundling which implement the requirements of the Small Business Reauthorization Act of 1997 (Public Law 105-135), Sections 411 through 417.

EDITOR'S NOTE: The SBA's regulations affected by this final rule are in Title 13 of the Code of Federal Regulations, Business and Credit Administration; Chapter 1, Small Business Administration; Part 125, Government Contracting Programs; Section 125.2, Prime Contracting Assistance.

EFFECTIVE DATE: Submit comments on or before August 14, 2000.

FOR FURTHER INFORMATION CONTACT: Anthony Robinson, Office of Government Contracting, 202-205-6465.

SUPPLEMENTAL INFORMATION: On December 2, 1997, President Clinton signed into law the Small Business Reauthorization Act of 1997. Title IV, Competitiveness Program and Procurement Opportunities, Subtitle B, Small Business Procurement Opportunities Program, consisting of Sections 411 through 417, addressed the practice of "contract bundling," which is the practice of combining several small contracts into a single large "bundled" contract that is less expensive to administer. However, many of these "bundled" contracts are too large for small businesses to perform as prime contractors, so Section 411 of Public Law 105-135 requires agencies to "avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors."

On January 13, 1999, SBA published a proposed rule to implement the contract bundling provisions of Public Law 105-135 by revising Section 125.2 of SBA's regulations. Subsequently, SBA issued an interim rule on October 25, 1999, which made a few changes to Section 125.2, and requested comments. (EDITOR'S NOTE: Federal Acquisition Circular (FAC) 97-15 amended the Federal Acquisition Regulation (FAR) to conform to SBA's interim rule. See the January 2000 Federal Contracts Perspective article "FAC 97-15 Addresses Foreign Acquisition, Contract Bundling, Award Fee Determinations.") SBA received 19 comments in response to the interim rule: three from government agencies, four from trade associations, ten from small businesses, and two from members of Congress. As a result of these comments, two significant changes (and several minor editorial changes) have been made to Section 125.2 as the rule is finalized:

EDITOR'S NOTE: Today, FAC 97-19 was published, and it made conforming changes to FAR 7.107, Additional Requirements for Acquisitions Involving Bundling. See today's FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 97-19, Miscellaneous Amendments."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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