One of the perks of being certified in any of the SBA’s small business socioeconomic contracting programs is the fact that there is potential for a sole source award. What is a sole source award? Well, it’s a non-competitive award used when there is no expectation that two or more offerors will submit proposals, or using a dollar cap in the 8(a) program. (In this post we’re not talking about other exceptions to competition, such as only one responsible source). We most frequently see them used for contracts made to participants in the 8(a) Small Business Development Program, but the other programs (WOSB, SDVOSB, and HUBZone) have the ability to make sole source awards as well. So, let’s take a look and see what the FAR and SBA rules have to say about sole source awards in each of these programs.
8(a) Sole Source Awards
Since the majority of sole source awards are made to 8(a) Program participants, let’s start there. While the 8(a) Program is generally the most difficult SBA socioeconomic program to get into, the standard for giving sole source awards to 8(a) companies is the least restrictive of all the categories. As you will see below, it is easier for contracting officers to give sole source awards to 8(a) Program participants. In fact, the 8(a) regulation in question is written as though sole source awards are the rule, not the exception.
13 C.F.R. § 124.506 states that a solicitation must be competed among 8(a) Program participants if there is a reasonable expectation that at least two eligible 8(a) Program participants will submit offers at a fair market price, the anticipated award price will exceed $7 million for manufacturing NAICS and $4.5 million or less for non-manufacturing NAICS, and the work has not been accepted by SBA as a sole source 8(a) procurement on behalf of a tribally-owned or ANC-owned concern.
By looking at the situations in which an 8(a) Program set aside must be competed, we can then determine when a sole source award is permitted. Contracting officers may give 8(a) work to an 8(a) Program participant on a sole source basis if they determine that the 8(a) business is responsible, will do the work at a fair market price, and the estimated cost is $7 million or less for manufacturing NAICS and $4.5 million or less for all others. If the contract is likely to have a greater value, the contracting officer can still give a sole source award if they have no reasonable expectations that two participants will bid and the award can be made at a fair price.
WOSB Sole Source Awards
WOSB sole source awards are used far less frequently than 8(a) sole source awards. Contracting officers are required to consider sole source awards to WOSBs (or EDWOSBs) before competing a solicitation as a small business set-aside if:
- The NAICS code assigned to the solicitation is one in which SBA has determined WOSB concerns are underrepresented in federal procurements;
- There is no reasonable expectation that two or more WOSB/EDWOSB concerns will make offers;
- The acquisition’s price will not exceed the $7 million/$4.5 million threshold mentioned before;
- The WOSB/EDWOSB is a responsible contractor; and
- Award can be made at a fair and reasonable price.
Notice how FAR 19.1506 states that they must merely consider doing a WOSB/EDWOSB set aside, and that it is not a requirement. Additionally, the WOSB/EDWOSB must be certified pursuant to 13 C.F.R. § 127.300.
This rule does not apply to acquisitions currently being performed under the 8(a) Program, orders under indefinite-delivery contracts, or orders from the Federal Supply Schedules.
SDVOSB Sole Source Awards
Under FAR § 19.1406, SDVOSB/VOSB sole source awards are similar to WOSB sole source awards in that the contracting officer should consider, but is not required to use, a sole source award when they do not have a reasonable expectation that offers will be received from two or more eligible SDVOSB/VOSBs, the price of the contract does not exceed $7 million/$4 million, the SDVOSB/VOSB is responsible, and the award can be made at a fair and reasonable price.
However, the Department of Veteran Affairs has slightly different rules. VAAR 819.7008 states that contracting officers can award SDVOSB sole source awards for VA contracts when:
- The anticipated award price of the contract (including options) will not exceed $5 million;
- The requirement is synopsized and the required justification pursuant to FAR 6.302-5(c)(2)(ii) is posted in accordance with FAR part 5;
- The SDVOSB has been determined to be a responsible contractor with respect to performance; and
- In the estimation of the contracting officer contract award can be made at a fair and reasonable price that offers best value to the Government.
As with 8(a) and WOSB, the SDVOSB/VOSB must be certified as an eligible SDVOSB/VOSB . Additionally, SDVOSB/VOSB sole source awards are subject to the same exclusions described in the WOSB section (acquisitions currently being performed under the 8(a) Program, orders under indefinite-delivery contracts, or orders of the Federal Supply Schedules).
HUBZone Sole Source Awards
Just like WOSB/EDWOSB and SDVOSB/VOSB sole source awards, FAR 19.1306 states that a contracting officer shall consider a HUBZone sole source award prior to soliciting work as a small business set aside if they have no reasonable expectation of receiving two or more competitive offers from HUBZone concerns, the price will not exceed the $4.5 million/$7 million threshold, the awarded concern is responsible, and award can be made at a fair and reasonable price. Once more, the rule only requires the contracting officer to consider a HUBZone sole source award. There is no requirement that there must be a sole source award.
Again, this rule does not apply to acquisitions currently being performed under the 8(a) Program, orders under indefinite-delivery contracts, or orders of the Federal Supply Schedules.
The Takeaway
So, what is the main difference between 8(a) sole source awards and other socioeconomic set aside sole source awards? It’s the requirement that the contracting officer must have no “reasonable expectation that offers will be received from two or more” concerns for a sole source WOSB/EDWOSB, SDVOSB/VOSB or HUBZone procurement. That’s not a hard barrier to surpass and the presumption thereafter is that the contract will be competed.
The 8(a) program does not have similar language. In fact, that language is only found where a procurement is above the $4.5 million line that takes sole sourcing off the board for the other socioeconomic set aside programs. In short, the 8(a) program presumes sole sourcing will be used frequently, while the other programs presume that competition will be the rule.
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