Small Business Implications under the Revolutionary FAR Overhaul and GSA Proposals – Part I

As the Federal Acquisition Regulations revisions continue, small businesses face new challenges and opportunities in the contracting landscape.

The General Services Administration's (GSA) proposed legislative amendments and increased scrutiny of Small Business Administration (SBA) programs add to the uncertainty surrounding future contracting opportunities. This article is the first of a two-part series examining proposed amendments and reviews with direct impact to small businesses and focuses on the proposed legislative amendments supporting the Revolutionary Far Overhaul (RFO). The second part will address SBA reviews and potential changes facing socio-economic programs.

 

The GSA legislative agenda transmitted to Congress by OMB includes 11 proposals informing federal contracting policies and procedures related to the ongoing RFO.  Here, I identify seven with direct impact on small businesses. The first two cover informal procurement methods for small federal government purchases.

Streamlining Compliance and Competition Procedural Requirements seeks to increase the contract value under the Simplified Acquisition Threshold (SAT) in phases from $250,000 to $10M over five years, and the maximum for Special Simplified Procedures from $5M to $50 during the same period. This also applies to task orders issued under Multiple-Award Indefinite Delivery Indefinite Quantity (IDIQ) contracts. The prohibition remains against procurement officials dividing contracts exceeding the threshold into smaller pieces to use the simplified process.

As part of the planned FAR 13 revision, contracts and task orders valued between those thresholds will no longer be set aside for small businesses, allowing firms currently excluded from competition to submit offers and potentially dominate the market in those areas. Such a broader competitive field will reduce the number of opportunities for small firms and potentially drive some out of the federal market altogether.

Common Sense Procedures for Small Purchases would increase the Micro-Purchase Threshold (MPT) in phases from $10,000 to $100,000 over 5 years, simplifying smaller purchases of domestic products and construction materials under the Buy American Act (BAA). GSA proposes creating additional Multiple-Award Schedules for sources offering the “best value domestic end products or domestic construction materials certified under the BAA and permits procurement officials to make direct awards to those vendors up to the threshold limits. Additionally, it establishes a permanent requirement for purchases more than $10,000 to comply with the BAA.

Impact Summary:

• Increased contracting opportunities for small domestic contractors due to added restrictions on foreign competitors
• Fewer micro-purchases awarded to the smallest suppliers
• Availability for larger contracts under Simplified Acquisition Procedures
• Required proof that a minimum of 65% of resources are made in America.

 

Promoting Small Business Innovation would add statutory authority under the Small Business Act Section 9 for assisted acquisition, award and administrative services to agencies without their own Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs. If approved, this would allow agencies not required to have their own programs to request and receive assistance from agencies with established programs. It also applies to Phase III funding agreements under both programs.

 

Impact Summary:

• Increased opportunities for small innovative firms
• Enhanced support for small technology innovators and startup firms
• Simplified policy directives reducing administrative burdens

Permanent Authority to Enable Entrepreneurs and Agency Missions would amend section 880 of the FY 17 National Defense Authorization Act (NDAA) making previous pilot programs for Commercial Solutions Opening (CSO) permanent for the Department of Defense (DoD), the Department of Homeland Security (DHS) and GSA, and increases the DHS and GSA contract limits to $100M in alignment with the DoD level. This authorizes the agencies to award contracts for innovative commercial products and services outside FAR procedures, saving time and money and improving opportunities for non-traditional and start-up firms to enter the federal contracting arena.

Impact Summary:

• Expanded eligibility to bid on contracts up to $100M under CSO rules previously limited under the smaller thresholds
• Streamlined acquisition processes and potential for sole source and direct awards for unique and innovative commercial products and services
• Enhanced new and growth opportunities for non-traditional and start-up firms to enter the federal contracting market without the burdensome FAR procedures.

NASA Commercial Solutions Openings Authority and Authority for Other Transaction Prototype and Follow-on Production Contracts is a proposal based upon the success of the DHS, GSA and DoD pilot CSO programs. It allows the space agency to make awards outside the formal competitive procurement process to fulfill mission requirements, yet retain the option to use Other Transaction Agreements (OTA) or formal procurement process under FAR regulations. Furthermore, it would grant NASA authorization to award follow-on production or service contracts resulting from prototype projects (i.e., SBIRs, OTAs) without conducting competitive procurements.

Impact Summary:

• Streamlined acquisition processes under alternative procurement and award programs
• Increased opportunities for direct-award and sole-source follow-on contracts for firms with established contracts and successful prototype projects
• Seamless transition from R&D to development, deployment and technology transfer phases
• Enhanced incentives for small innovative firms to enter the federal market.

 

Improvements to Task and Delivery Order Contract Procedures would amend Section 3306(c) of title 41, United States Code and restore FY NDAA Section 876 to its original intent to focus on technical capabilities rather than price at the task order level under multiple-award contracts. This removes limitations imposed by the U.S. Court of Federal Claims (COFC) decision on the GSA Polaris government-wide acquisition contract protest. The COFC determined that GSA interpreted Section 876 too broadly when applying it to firm-fixed price and cost-reimbursement task order competitions under the GWAC. Further, the court ruled that Section 876 was limited to time-and-materials and labor-hour contracts. According to the proposed amendment, “the COFC decision has essentially made the Section 876 authority unusable, as time-and-materials and labor-hours contract types are not the Government’s preferred contract types for services.“ The decision also created a difference between the way defense and civilian agencies evaluated these types of contract awards. The revision allows the inclusion of construction contracts under the section.

Making the inclusion of cost/price evaluation factors an option rather than a requirement levels the playing field for small businesses by emphasizing quality, technical and performance criteria. However, it could also attract larger firms to compete for opportunities that previously offered advantages for small businesses.

Task and Delivery Order Protest Threshold Parity increases the threshold for protests associated with civilian task and delivery orders awarded under multiple award contracts from $10M to $35M, aligning it with DoD. This prevents vendors from filing protests on task orders under $35M unless the order “increases the scope, period or maximum value of the contract under which the order was issued.”  Small businesses will be at a disadvantage in challenging awards, since many of their task order awards are below that threshold.

Impact Summary:

• Leveled competition field for small businesses with emphasis on quality and technical requirements versus price.
• Increased attraction for larger businesses to compete for contracts that previously provided an advantage to smaller firms.
• Decreased ability to challenge government awards for task orders below $35M
• Reduced small business participation in multiple-award contract procurements.

 

These GSA proposals remain under Congressional consideration but are evidence of the government’s initiative to reform acquisition processes beyond those mandated by the current Administration. While not codified, these actions will significantly change the small business contracting landscape. Small businesses must ensure they have a thorough understanding of all policy and procedure revisions at the federal and agency levels to take advantage of the opportunities they afford. Proactively seeking new opportunities available under increased thresholds or resulting from increased restrictions can help balance challenges from other regulatory changes. Consistent communication with procurement officials will be a critical factor for firms navigating this evolving market.

Be sure to see Part II of the series next week as I delve into potential challenges for small business programs.