Reverse auctions would be prohibited for many small business procurements under a provision of the National Defense Authorization Act of 2015, which has been passed by the House of Representatives.

Under the bill, reverse auctions would be disallowed when the government seeks to award a “covered contract,” so long as the contract is suitable for small businesses or is set-aside under one of many small business preference programs.

The House-passed bill defines a “covered contract” to include a contract “for services, including design and construction services” and a contract “for goods, in which the technical qualifications of the offeror constitute part of the basis of the award.”  This broad definition applies to a great many government contracts.

If a contract is “covered,” the bill prohibits the use of reverse auctions if the contract “is suitable for award to a small business concern,” or if the contract is awarded as an 8(a), WOSB, HUBZone, or SDVOSB set-aside—including VOSB and SDVOSB set-asides under the VA’s separate set-aside authority.   And even for “covered contracts” awarded on an unrestricted basis, the bill states that the agency cannot award a covered contract using a reverse auction “if only one offer is received or if offerors do not have the ability to submit revised bids throughout the course of the auction.”

The House-passed NDAA would greatly curtail the use of reverse auctions in small business contracting—perhaps almost eliminating reverse auctions as a procurement method.  The Senate is currently considering its own version of the 2015 NDAA, which does not appear to contain similar restrictions.  I will keep you posted.