As required by the Small Business Jobs Act of 2010, on June 3, 2015, the FAR Council introduced a proposed change to the FAR contract bundling requirements. 80 Fed. Reg. 31,561-01. The proposed rule aims to improve small business participation in federal contracting by clarifying existing FAR regulations that discourage agency utilization of contracting bundling. The proposed rule would require increased reporting, parses the definitions of "bundling" and "consolidating" of contracts, and requires agencies to publicly justify their decisions to bundle requirements or consolidate contract vehicles. This definitional distinction between bundling of requirements and consolidation of contracts is intended to discourage agencies from combining unrelated requirements or contracts into a single award.
Under the proposed rule, agencies that bundle contracts or requirements in excess of $2 million will face greater notification and reporting requirements. If an agency wants to bundle two existing contracts, it must first notify small businesses at least 30 days beforehand of its intent to bundle its contracts. Agencies will also be required to provide public notice of the agency's bundling policy and a list of and rationale for any bundled requirements for which the agency solicited offers or issued an award. If adopted, the proposal's enhanced notification requirements may afford small business contractors an opportunity to protest an agency's improperly bundled contracts.
The proposed rule creates a separate definition of the term "consolidated," which means a single contract, multipleaward contract, task or delivery order, or multiple-site construction project which satisfies two or more requirements of the federal agency for supplies or services that have historically been provided to the agency under two or more contracts. Moreover, when an agency's "consolidated" contract or order is in excess of $2 million, it must be directly authorized by the agency's chief acquisition officer ("CAO").
When an agency utilizes consolidation, the notification requirements are even more stringent than those imposed on bundling. The agency CAO will be required to provide a written justification for each consolidation, demonstrating that the benefits of a consolidated acquisition substantially exceed the benefits of an alternative approach, and to justify how the contract award would impact small business concerns. If the proposed rule is adopted without material revision, the agency will be required to post a notice of each justification to FedBizOpps (www.fbo.gov).
Importantly, the proposed rule will also extend bundling restrictions to cover contracts for commercial items and commercial off-the-shelf items, and will put agencies on notice that small businesses are to play an active role in the acquisition planning process by requiring small business to be a discipline that is represented on the acquisition planning team.
The rule, if implemented, will naturally lead to one or more protests challenging agency actions leading up to bundling and consolidation decisions as those agencies are held accountable for the manner in which they interpret and implement the limitations embodied in the proposed rule, providing contractors new opportunities or the potential to increase their footprint in federal procurements. Whereas the new rule is intended to protect small businesses, protests challenging agency actions in connection with the proposed rule (once finalized) will most likely be initiated before the Government Accountability Office or the Court of Federal Claims and not the Small Business Administration.
As the rule imposes significant agency notification and compliance requirements, small business contractors will hopefully see a noticeable increase in procurement opportunities, assuming the proposed rule is adopted.
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