SBA and FAR rule updates

Updates and Opinions on Timely Topics Impacting the Government Contracting Industry from GovCon Expert Ken Dodds

FAR 8(a) Final Rule

Effective November 6, 2023, the Federal Acquisition Regulation (FAR) will be amended to implement a Small Business Administration (SBA) final rule pertaining to the 8(a) program. Basic Ordering Agreements (BOAs) and Blanket Purchase Agreements (BPAs) are not contracts, so SBA is requiring offer and acceptance of each order under the BOA/BPA, SBA will not accept a sole source order if the cumulative value of the orders under the BOA/BPA exceed the competitive threshold, and SBA will not accept new orders if the 8(a) concern has left the 8(a) program or is no longer small. The rule clarifies that a concern must be in the 8(a) program at the time of an 8(a) sole source award. The rule clarifies that the SBA Administrator may appeal a contracting officer’s decision that a requirement is “new” and therefore not subject to the rule that once a requirement is in the 8(a) program it must remain in the 8(a) program unless SBA releases it. The rule further provides that when a contracting officer determines that a requirement previously procured through the 8(a) program is “new,” the contracting officer must provide written notice to the SBA District Office and the relevant Procurement Center Representative (PCR). The rule also provides that if an agency intends to procure the follow-on to an 8(a) contract as an 8(a) order under an existing multiple award contract, the contracting officer must provide written notice to the SBA District Office, PCR and incumbent 8(a) concern. Finally, with respect to mandatory sources, the contracting officer “should” provide written notice to the head of the 8(a) program of his or her intent to use a mandatory source for a follow-on to an 8(a) requirement.[1] ?????????

FAR Proposed Rules to Require Size and Status Recertification on Orders and Protest of Such Orders

On September 29, 2023, the FAR Council issued a proposed rule to implement SBA’s final rule, effective November 16, 2020,[2] which requires size and status recertification on orders set aside for small or other socioeconomic categories where the size or status was not relevant for the underlying contract.[3] On October 3, 2023, the FAR Council issued a proposed rule to implement several SBA final rules[4] concerning size and status protests in connection with orders under multiple award contracts.[5] SBA is already following its regulations when issuing size protest and appeal decisions.[6]

Credit for Lower Tier Subcontracting SBA Final Rule

Effective November 13, 2023, SBA’s rules will provide large business prime contractors that have individual small business subcontracting plans with the discretion to claim credit for subcontracts with small businesses at tiers below the first tier.[7] SBA’s rule implements a 2019 amendment of the Small Business Act[8] which essential reversed portions of a 2016 SBA final rule[9] implementing a 2013 amendment of the Small Business Act.[10] SBA’s new final rule prohibits procuring agencies from setting separate small business subcontracting goals at the first tier and at lower tiers and makes clear that large business prime contractors may choose whether to report their small business subcontracting plan goal achievement utilizing lower tier subcontractors. What is unknown is whether procuring agencies will allow prime contractors to follow SBA’s final rule prior to implementation in the FAR.[11]

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[1] 88 FR 69523.

[2] 85 FR 66146.

[3] 88 FR 67189.

[4] 78 FR 61113, 85 FR 66146, 87 FR 73400.

[5] 88 FR 68067.

[6] See Size Appeal of Avenge, Incorporated, SBA No. SIZ-6178 (2022); Size Appeal of Potomac River Enterprise Solutions, LLC, SBA No. SIZ-6138 (2022).

[7] 88 FR 70339.

[8] Section 870 of Pub. Law No. 116-92.

[9] 81 FR 94246.

[10] Section 1614 of Pub. Law No. 113-66.

[11] RIN 9000-AO57, Credit for Lower-Tier Subcontracting.