SBA Proposes Changes to 8(a) Contract Procurement Process

Last week, SBA proposed big changes for some of its small business regulations, particularly those in the 8(a) Program. This blog post is Part 2 in our coverage of the proposed amendments (see Part 1 here) and will cover SBA’s potential changes to the procurement process for 8(a) contracts.

First, SBA proposed removing the mandate that agencies offer work for SBA’s acceptance into the 8(a) program before competing it as an 8(a) set-aside. Currently, 13 C.F.R. § 124.504(b) requires an agency to gain formal SBA approval to issue a solicitation as an (8)(a) set-aside before it does so. If the agency solicits a contract as an 8(a) set-aside before approval, SBA may accept the contract as part of the 8(a) program retroactively, “but only if the procuring activity agrees to resolicit the requirement using appropriate competitive 8(a) procedures.”

Unsurprisingly, SBA has determined that this process “could seriously adversely affect an agency’s procurement strategy by unduly delaying the award of a contract.” Thus, SBA plans to change its rules to allow SBA to accept a requirement as 8(a) “regardless of when the offering occurred” if the “procuring agency clearly identified a requirement as a competitive 8(a) procurement and the public fully understood it to be restricted only to eligible 8(a) Participants.”

Next, SBA intends to provide a number of new definitions, or clarify existing ones. In particular, SBA’s proposed rule includes a new definition of “follow-on requirement or contract.” Under the rule, “determination of whether a particular procurement is a follow-on” includes three considerations:

  1. Whether the scope has changed significantly, requiring meaningfully different types of work or different capabilities;
  2. Whether the magnitude or value of the requirement has changed by at least 25 percent; and
  3. Whether the end user of the requirement has changed.

If a procurement meets at least one of these, SBA explains, “it may be considered a new requirement,” but if it meets none, “it is considered a follow-on requirement.” SBA cautioned, however, that that the 25% rule “cannot be applied rigidly in all cases[.]”

In addition, SBA seeks comments on whether it should incorporate its “long-standing policy” on bridge contracts. Usage of bridge contracts is not well defined (as we’ve discussed here), but SBA states that “[w]hether to consider the bridge contract is determined on a case-by-case basis given the facts of the procurement at issue.” Depending on the comments it receives, SBA may amend its proposed rules to cover bridge contracts.

Further, SBA seeks to clarify its rules about releasing follow-on procurements from the 8(a) program. Citing several GAO protests, SBA explained that “[s]ome agencies have attempted to remove a follow-on procurement from the 8(a) program and reprocure the requirement” through non-8(a) multiple award contracts (MACs) or Government-wide Acquisition Contracts (GWACs). While in some cases these agencies indicated that they intended to issue competitive 8(a) orders off these contracts, this was not enough for SBA.

SBA is concerned that agencies are attempting to remove requirements from 8(a) contracts from the program without its permission. If, for example, an 8(a) requirement is moved to an 8(a) order under a non-8(a) MAC or GWAC, the follow-on to such an order would not have to be set-aside for 8(a) businesses. As such, the “rule clarifies that the request for and granting of a release of a follow-on procurement from the 8(a) BD program is required when the procurement will be moved out of the 8(a) BD program as an independent contract into a MAC or GWAC.”

In addition, SBA proposed amending its rules to provide that “SBA must agree to release any follow-on requirement where a procuring agency seeks to reprocure that requirement through a limited contracting vehicle which is not available to all 8(a) BD Program Participants.” In other words, where an initial requirement was an SBA-approved 8(a) requirement, any follow-on 8(a) sole-source contract or requirement transferred to a MAC or GWAC will need SBA’s okay before the agency issues a solicitation.

If you want your voice heard with respect to these proposed rules, submit public comments online or in hard copy through January 17, 2020. If you have any question about the proposed rule changes and how they may impact your business, give Koprince Law a call.