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FEDERAL CONTRACTS PERSPECTIVE

Federal Acquisition Developments, Guidance, and Opinions


Febuary 2020
Vol. XXI, No. 3
[pdf version]

CONTENTS


Policy Issued for Set-Asides of Orders for Small Businesses Under Multiple-Award Contracts
Changes Proposed to Assets Sureties Must Pledge
Three Deviations Issued by DOD
SBA Proposes Removing Four SDVO SBC Regulations



Policy Issued for Set-Asides of Orders for
Small Businesses Under Multiple-Award Contracts

Federal Acquisition Circular (FAC) 2020-05 is amending the Federal Acquisition Regulation (FAR) to implement regulatory changes made by the Small Business Administration (SBA) that provide governmentwide policy regarding the use of small business partial set-asides, reserves, and set-asides of orders for small business concerns under multiple-award contracts (MACs). SBA’s regulatory changes implement the statutory requirements in the Small Business Jobs Act of 2010 (Public Law 111-240), Section 1331, Reservation of Prime Contract Awards for Small Businesses, which provides that small business 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. (EDITOR’S NOTE: MACs include 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.)

Section 1331 of the Small Business Jobs Act of 2010 (see the October 2010 Federal Contracts Perspective article “Parity Among Small Business Programs Mandated by Statute”) provided authority for three acquisition techniques to facilitate contracting with small businesses on MACs: (1) setting aside part or parts of the requirement for small businesses; (2) reserving one or more contract awards for small business concerns under full and open multiple-award procurements; and (3) setting aside orders placed against MACs, “notwithstanding the fair opportunity requirements” (see paragraph (b)(1) of FAR 16.505, Ordering [under indefinite-delivery contracts], which states “the contracting officer must provide each awardee a fair opportunity to be considered for each order exceeding $3,500 issued under multiple delivery-order contracts or multiple task-order contracts...”).

FAC 2005-54 included an interim rule that provided federal agencies with guidance they could use to implement Section 1331 while SBA completed the drafting and coordination of a rule that would provide specific guidance. The interim rule made the following changes to the FAR:

For more on the FAC 2005-54 interim rule, see the December 2011 Federal Contracts Perspective article “FAC 2005-54 Permits Small Business Set-Asides For Multiple-Award Contracts.”

In 2013, SBA issued its final regulations implementing Section 1331. The following were the significant changes made to SBA’s regulations in Title 13 of the Code of Federal Regulations (CFR), Business Credit and Assistance, Part 121, Small Business Size Regulations; Part 124, 8(a) Business Development/Small Disadvantaged Business Status Determinations; Part 125, Government Contracting Programs; Part 126, HUBZone Program; and Part 127, Women-Owned Small Business Federal Contract Program:

For more on the SBA’s revised regulations, see the November 2013 Federal Contracts Perspective article “SBA Issues Rules for Setting Aside Task Order Contracts, Contract Consolidation, and Bundling.”

To conform the FAR with the SBA’s final regulations, a proposed rule was issued in 2016 and comments were requested (see the January 2017 Federal Contracts Perspective article “Multiple-Award Contract Set-Asides to be Revised”). The rule proposed to make the following changes:

Fourteen respondents submitted comments on the proposed rule, and in response this rule finalizes the FAC 2005-54 interim rule and the FAR proposed rule with many changes. The following are the significant changes made in this final rule to the interim rule and proposed rule:



Changes Proposed to Assets Sureties Must Pledge

To implement the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Public Law 114-92), Section 874, Surety Bond Requirements and Amount of Guarantee, a rule is proposed that would amend FAR part 28, Bonds and Insurance, FAR 52.228-11, Individual Surety – Pledges of Assets, and add FAR 52.228-XX, Individual Surety – Pledge of Assets (Bid Guarantee), to change the kinds of assets that individual sureties must pledge as security for their individual surety bonds, and require the Department of the Treasury to review those assets to ensure they meet established eligibility requirements.

Section 874 added to Title 31 of the U.S. Code (USC), Money and Finances, new Section 3910 (31 USC 3910), Individual Sureties, which provides that when federal law permits acceptance of a surety bond from a surety that is not a corporate surety, the individual surety must pledge assets that are “eligible obligations”; eligible obligations are public debt obligations of the United States government. The requirements of 31 USC 3910 are intended to strengthen the assets pledged by individual sureties, thus mitigating risk to the government.

To implement Section 874, the following revisions to the FAR are proposed:

Comments on this proposed rule must be submitted no later than April 13, 2020, identified as “FAR Case 2017-003,” by either of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail: General Services Administration, Regulatory-Secretariat Division (MVCB), ATTN: Lois Mandell, 1800 F Street NW, 2nd floor, Washington, DC 20405.



Three Deviations Issued by DOD

The Department of Defense (DOD) eased up on the Defense FAR Supplement (DFARS) in February. DOD didn’t issue any final rules amending the DFARS, interim rules, or proposed rules, only issuing three deviations!



SBA Proposes Removing Four SDVO SBC Regulations

The Small Business Administration (SBA) is proposing to remove from the Code of Federal Regulations (CFR) four regulations in the Service-Disabled Veteran-Owned (SDVO) Small Business Concern (SBC) Program that are no longer necessary because they are unnecessary or redundant.

The SBA’s regulations governing the SDVO SBC program are in Title 13 of the Code of Federal Regulations (CFR), part 125, Government Contracting Programs (13 CFR part 125). These regulations allow agencies to set aside contracts for SDVO SBCs. In addition, federal agencies may award sole source contracts to SDVO SBCs provided the award is made at a fair and reasonable price and the anticipated total value of the contract, including any options, is below $4 million ($6.5 million for manufacturing contracts).

The following four SDVO SBC regulations are proposed for removal, along with the reasons for their proposed removals:

Comments on this proposed rule must be submitted no later than April 60, 2020, identified as “RIN: 3245-AH14,” by any of the following methods: (1) the Federal eRulemaking Portal: http://www.regulations.gov; or (2) mail or hand delivery/courier to : Brenda Fernandez, Office of Policy, Planning and Liaison, Office of Government Contracting and Business Development, U.S. Small Business Administration, 409 Third Street SW, Washington, DC 20416.





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