SBA’s recently proposed rule seeks to officially broaden the reach of its “Rule of Two”–a government contracting requirement fundamental to supporting our nation’s small business infrastructure, policies, and goals. I emphasize “officially” because, even though this is technically a proposed change to SBA’s rules, it is really more of a “regulatory implementation” of judicial law than anything (don’t worry, we will go into more detail on this point later). Specially, SBA’s proposed rule would require the Rule of Two’s application to task orders and delivery orders under most standard multiple award contracts (MAC). This Part I blog will briefly explain what the Rule of Two is and detail SBA’s proposed update to it. But keep your eyes out for the soon-to-follow Part II blog on this topic. There, we will dig in deeper to the relevant history of (including the court case linked above), the sources and policies behind, and the potential implications for SBA’s proposed Rule of Two update.
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GAO: Small Business Rule of Two Must be based on Accurate Market Research
The small business rule of two requires agencies to restrict procurements for small businesses when there is a “a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of fair market prices, quality, and delivery.” FAR 19.502-2. Agencies often use market research to assess whether the small business rule of two is met. But what happens when an agency amends its solicitation terms after conducting market research? Can the new terms render the agency’s market research, and therefore its set-aside decision, unreasonable? In a recent decision, GAO concluded that yes, market research may be insufficient to establish a set-aside if an agency amends the solicitation’s terms.
Continue readingWhy File: A Rule of Two Protest
The Rule of Two is the federal contracting rule requiring agencies to set aside a solicitation for competition only between small businesses when there are at least two small businesses that could do the work for a fair price. But that rule does have some exceptions. These exceptions can make it difficult to know the situations that would justify filing a Rule of Two protest. Read on to find out.
Continue readingOMB Issues Command to Increase Small Business Participation on MACs
The White House has issued a memorandum that calls for specific procedures for Increasing Small Business Participation on Multiple-Award Contracts. To that end, OMB has recommended steps such as increasing small business order set-asides and maximizing small business set-asides across multiple types of contracts. Perhaps most importantly, OMB has directed federal agencies to apply the small business Rule of Two for all orders, which should has the potential of leading to an increase in small business set-asides. Below, we dive into these new recommendations.
Continue readingReminder: If Pricing is Too High, VA Rule of Two Might Not Apply
The VA Rule of Two, while a powerful motivator for setting procurements aside for service-disabled veteran-owned small businesses, does have its limits.
One of those exceptions was discussed in a recent ruling from the United States Court of Appeals for the Federal Circuit. The court confirmed that the VA may convert a service-disabled veteran-owned small business set-aside solicitation to a small business set-aside if the SDVOSB bids it receives are too high in price.
Continue readingGAO: Small Business Rule of Two Doesn’t Require Set-Aside for Task Order
Generally, the small business Rule of Two requires an agency to set aside contracts for small business, assuming that there are at least two small businesses with competitive prices who will bid on the contract. But does the small business Rule of Two apply to orders under a multiple award contract? In a recent decision, GAO affirmed the answer is no–application of the small business Rule of Two for orders under a multiple-award contract is discretionary.
Continue readingCOFC Says Agency Must Consider Rule of Two Before Using Multiple-Award IDIQ Contract Vehicle
The United States Court of Federal Claims (COFC) has ruled that an agency has to conduct a small business Rule of Two analysis before it can use an existing multiple-award indefinite delivery indefinite quantity (MAIDIQ) contract vehicle to procure services. This is a landmark decision, given that GSA Schedule contracts are exempt from the Rule of Two.
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