SBA Insists That Small Business Rule Of Two Applies To Some FSS Orders

Earlier this year, we wrote about an interesting issue brewing in federal contracting: whether the logic behind the Supreme Court’s June 2016 decision in Kingdomware Technologies means that the Small Business Act’s rule of two is mandatory for acquisitions under Federal Supply Schedules. In other words, does the Small Business Act require agencies to set aside orders under the FSS when two or more small business are likely to submit competitive offers?

The SBA believes that the rule of two (see FAR 19.502-2) is mandatory for such orders. GAO has disagreed, saying instead that the Small Business Jobs Act of 2010 and the exclusion of FSS contracts from the application of FAR Part 19 (see FAR 8.405-5(a)(1)(i)) make the small business rule of two discretionary for these orders.

This conflict—GAO believing the Small Business Act’s rule of two is discretionary for orders placed under multiple-award contracts; SBA believing it is mandatory—has existed for several years. But now the SBA is using the Supreme Court’s recent decision to bolster its case: according to a recent SBA internal memorandum, Kingdomware requires the small business rule of two to be given mandatory effect, at least with respect to orders valued between $3,500 and $150,000.

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Set-Aside Decision Need Not Consider Compliance with Limitation on Subcontracting

Before deciding whether to set-aside a solicitation for small businesses under FAR 19.502-2, should the contracting officer first determine whether those small business will be able to provide the needed services while, at the same time, complying with the limitation on subcontracting?

No, according to a recent GAO bid protest decision. Instead, an agency’s determination whether a small business will comply with the limitation on subcontracting should be made as part of its award decision (following the evaluation of proposals), not during its initial set-aside determination.

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GSA CTA: Each Party Must Hold FSS Contract

Each party to a GSA Schedule Contractor Teaming Arrangement must hold the Federal Supply Schedule contract in question.

As demonstrated by a recent GAO bid protest decision, if one of the parties to the GSA CTA doesn’t hold the relevant FSS contract, the CTA may be found ineligible for award of an order under that contract.

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GAO: Agency’s Order Exceeded BPA Scope

An agency’s attempt to order under a Federal Supply Schedule blanket purchase agreement was improper because the order exceeded the scope of the underlying BPA.

In a recent bid protest decision, GAO held that the agency had erred by attempting to issue a sole-source delivery order for cloud-based email service when the underlying BPA did not envision cloud services.

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Victory! SDVOSBs Win In Kingdomware Supreme Court Decision

SDVOSBs and VOSBs are big winners today, as the Supreme Court unanimously ruled that the VA’s “rule of two” is mandatory, and applies to all VA procurements–including GSA Schedule orders.

The Supreme Court’s decision in Kingdomware Technologies, Inc. v. United States, No. 14-916 (2016) means that the VA will be required to truly put “Veterans First” in all of its procurement actions–which is what Kingdomware, and many veterans’ advocates, have fought for all along.

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GAO: Out-Of-Scope Delivery Order Modification Was Improper

An agency may not procure new services under an existing GSA Schedule delivery order if the new services exceed scope of the original delivery order.

In a recent decision, Onix Networking Corp., B-411841 (Nov. 9, 2015), the GAO sustained a protest where the agency acquired a new type of software by modifying an existing delivery order for software license extensions because the acquisition exceeded the scope of the initial delivery order. According to the GAO, the out-of-scope modification amounted to an improper sole source contract.

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GSA Schedule: Contractor Offers Non-Schedule Items, Gets Order Anyway

When an agency orders goods or services using the GSA Schedule, the ordered items generally must be on the awardee’s Schedule contract as of the date of the order–but need not be on the Schedule contract at an earlier date.

In a recent bid protest decision, the GAO held that an agency had properly awarded a GSA Schedule order even though the awardee did not have the ordered services on its Schedule contract at the time of its offer, because the awardee’s GSA Schedule contract was modified to include those services by the date of the order.

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