SBA Finalizes Rule Allowing Set-Asides Under Small Business MACs

The SBA has published a final rule that would allow for quite the change to small business set-aside multiple award contracts (MACs) and orders issued under them. This final rule amends the SBA’s regulations to authorize task and delivery orders issued under a small business set-aside MAC, to be set-aside for HUBZone businesses, 8(a) businesses, SDVOSBs, or WOSBs. While agencies had set aside orders under MACs before, SBA has now clarified its regulations to allow socioeconomic set-asides of orders under small business set-aside MACs.

On November 29th, the SBA published a Final Rule updating its regulations and discussing comments submitted regarding these updates. Among changes to subcontracting plans and limitations on subcontracting, the SBA made changes to its regulations dictating how task and delivery orders may be set aside under multiple award contracts set-aside for small business.

Back in 2013 the SBA first brought up the prospect that individual orders under a small business MAC could be set-aside for certain small business socioeconomic programs (HUBZone, WOSB etc.). However, SBA noted at the time that the small business programs had major differences in their limitations on subcontracting, and non-manufacturer rule requirements. This made it difficult for agencies to determine what rules would apply to each set-aside order. In 2016 the SBA fixed these discrepancies and agencies also started pursuing the strategy of allowing order set-asides under set-aside MACs. Therefore the SBA determined it was the proper time to revisit the concept that orders under a MAC can be restricted to specific small business programs.

Through this final rule, the SBA is updating 13 C.F.R. § 125.2(e)(6) to remove the words “full and open”. Agencies, with SBA’s blessings, can set aside orders under socioeconomic categories under a small business set-aside MAC. In SBA’s words, this will “allow agencies to set aside orders for a socioeconomic small business program (8(a), HUBZone, SDVO, WOSB) under a MAC that was awarded under a total small business set-aside.”

The SBA states that it received twenty-two comments regarding the allowance of socioeconomic set-asides under a small business MAC. Of those twenty-two, twelve comments supported the change and ten opposed it.

The main concerns of the comments opposed to this change are: (1) it seems unfair to the original small business awardees of a MAC to allow socioeconomic set-asides under those contracts where it was not originally contemplated; (2) allowing these order set-asides will reduce the number of offerors for the orders that are set-aside; and (3) small businesses would be discouraged from bidding on these MACs because they have no assurances that future orders would be set-aside for their specific small business program.

The SBA addressed the concerns by stating that the final rule will not affect any already awarded MACs unless socioeconomic set-asides were already contemplated in their respective solicitations. Additionally, the SBA asserted that going forward, small business will know at the time of offer what kind of set-asides, if any, may be available under the MAC at the time of award and future orders. It appears SBA is referring to the requirement that contracting officers insert FAR 52.219–13, Notice of Set–Aside of Orders, in solicitations and contracts to notify offerors if an order or orders are to be set aside for small business concerns.

So, it appears that currently awarded MACs will likely not be impacted by this final rule. However, any MACs awarded going forward could be impacted. Contractors should closely review future multiple award solicitations to determine whether socioeconomic set-asides for orders are a possibility and plan their bidding accordingly. This additional authority from SBA may encourage more agencies to restrict orders for 8(a), HUBZone, SDVO, WOSB businesses.

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