It’s no secret that the 8(a) federal government contracting world has been in a bit of an upheaval this summer. When the Eastern District of Tennessee published its decision for the Ultima Services Corporation case, small business federal contractors everywhere began scrambling to keep up to date on how various agencies would react. We here at SmallGovCon have been keeping up to date on the developments as they happen. This time, we have more information on how the Ultima Services Corporation case will affect procurements with the Department of Defense, thanks to a new class deviation effective August 24, 2023.
As of August 17, the SBA is no longer presuming that any individually owned 8(a) applicants or participants are socially disadvantaged (this does not affect entity owned firms). The class deviation—which replaces FAR 52.219-18 and DFARS 252.219-7010—requires 8(a) participants, including the 8(a) partner in a joint venture, to either receive an affirmative response of SBA’s acceptance of the participant’s social disadvantage or to provide a copy of the concern’s SBA qualification letter, prior to the DoD making an 8(a) award.
So, what situations does this apply to?
- Competitive and sole-source 8(a) contracts;
- 8(a) sole-source orders placed against new or existing 8(a) set-aside multiple-award contracts (including GWACS and FSS contracts);
- 8(a) orders placed against new or existing non-8(a) set-aside multiple-award contracts (including GWACS and FSS contracts);
- 8(a) orders under BPAs; and
- Out of scope modifications and unpriced options under existing 8(a) contracts.
I find this last one particularly interesting because it is a great reminder that out-of-scope modifications should be approved prior to the out-of-scope work being performed, in accordance with FAR Part 43. This appears even more important now because this deviation reads in such a way that suggests a contractor that performs out-of-scope work on an 8(a) contract, but cannot meet the social disadvantage requirement, may be out of luck on recouping any of those costs.
What situations does this not apply to?
- Existing 8(a) contracts (though it will apply to options and orders as mentioned above);
- In-scope modifications;
- Exercising priced options;
- Competitive 8(a) orders against existing 8(a) set-aside multiple-award contracts, GWACS, and FSS contracts; and
- Entity owned firms owned by “Indian [T]ribes, Alaska Native Corporations, Native Hawaiian Organizations, or Community Development Corporations.
Though, it should be noted that the above situations will still require verification of eligibility if otherwise required, such as 8(a) contracts that, inclusive of options, exceed five years per FAR 19.812(d). Admittedly, it seems a bit strange that 8(a) sole-source orders on existing 8(a) GWACs and FSS contracts will require the additional verification, but competitive 8(a) orders on existing 8(a) GWACs and FSS contracts will not. But, hey, I don’t make the rules. I just follow them.
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