GAO: Work Must Remain Set Aside for 8(a) Participants Because Not a “New Requirement”

In a recent decision, Eminent IT, LLC, B-418570 (June 23, 2020), GAO held that the Department of State improperly removed a requirement from the SBA’s 8(a) program where the solicitation did not create a “new requirement.”  

Before we delve into this holding, and what it means for 8(a) contractors, let’s take a look at how government acquisitions get set aside for 8(a) participants in the first place–and what it takes to remove the 8(a) designation.

First, an agency must “offer” a procurement to the SBA for award through the 8(a) program. To do so, the contracting officer must submit a letter detailing the intent to offer a procurement as an 8(a) contract. It must also contain a number of specific details about the anticipated work. For more details, check out 13 CFR 124.502.

After that, the SBA must decide whether it should accept the procurement into the 8(a) program. This process can get a little more complicated, but for the purposes of this background, it’s not necessary to dig into it in-depth (but you can read more here). What’s more important is what happens if a procurement is accepted for award through the 8(a) program.

When the SBA accepts a procurement into the 8(a) program, a concept known as the “once 8(a), always 8(a) rule” kicks in. Both FAR 19.815 and 13 C.F.R. § 124.504(d) required that when a procurement is accepted by the SBA then awarded as an 8(a) contract, its follow-on or renewal acquisition must remain in the 8(a) program unless the SBA agrees to release it for non-8(a) competition. One exception: if the follow-on work qualifies as a “new requirement,” it does not require the SBA’s release.

We’ve discussed a little bit about how to determine whether something is a “new requirement” or not here. But, in short, SBA’s regulations state that something is a “new requirement” where it is modified or expanded such that it requires a “price adjustment of at least 25 percent” or “require[s] significant additional or different types of capabilities or work.”

Here, the State Department attempted to rely on the “new requirement” exception to solicit “the maintenance, operation, and management of PeopleSoft v9.x or later in a production environment using Scaled Agile Framework (SAFe), for competition among small businesses.” (For those of us not hip to the IT lingo, this work falls under the broad and ever growing umbrella category of IT services.) GAO, however, determined that the work was not a new requirement and, therefore, did not meet the exception.

GAO reached this conclusion because back in 2015, the State Department had awarded a task order for very similar “People-soft related” services to an 8(a) business under GSA’s 8(a) STARS II GWAC. The SBA weighed in to assist GAO’s decision making, explaining that “the primary and vital requirements of the two solicitations are ‘nearly identical’” and any pricing changes were due to services “ancillary to the primary and vital requirements under the contract [. . .], or general inflation of labor rates[.]” GAO agreed with the SBA’s analysis and sustained the protest.

This case provides an important reminder for 8(a) participants: if you know that work was previously 8(a), but the government is now seeking the same services outside of the 8(a) program, it may be worth looking into! If you have questions about 8(a) set-aside procurements, email us or give us a call at 785-200-8919.