The Department of Defense (DOD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) Release a Proposed Rule for Comment on Further “Clarification” of the Justification for 8(a) Sole Source Awards for 8(a) Participants Owned by Tribes, Alaska Native Corporations (ANCs), and Native Hawaiian Organizations (NHOs)
DOD, GSA, and NASA are proposing to “clarify” the guidance for awarding sole source 8(a) contracts above $22 million (up from $20 million due to inflation). That link is found here: https://www.gpo.gov/fdsys/pkg/FR-2016-11-15/pdf/2016-27245.pdf. To justify this action, the agencies cite an [old/outdated] 2012 GAO report, which can be found here: http://www.gao.gov/products/GAO-13-118. The citation of the 2012 GAO report within the Proposed Rule seems to completely ignore the 2016 GAO report, which can be found here: http://www.gao.gov/products/GAO-16-557. Many of the “clarifications” sought seemed to be additional requirements only one of which was mentioned in passing in the 2016 GAO report. Indeed, the 2016 GAO report was so abysmal for sole source 8(a) contracts over $22 million that many of the perceived problems, from the GAO’s point of view, seemingly ceased to exist because the contracting officers discontinued use of the 8(a) sole source vehicle for these contracts citing “increased scrutiny due to [unproven] allegations of fraud.”
My analysis of the 2016 GAO Report can be found here: https://outlooklaw.com/legal-list/dod-small-business-contracting-use-sole-source-8a-contracts-20-million-continues-decline-gao-16-557/. That analysis, which cites various GAO and other Government sources, compares the non-competitive awards given to non-8(a) firms to those given to 8(a) firms and the drastic decrease in the DODs award of sole source 8(a) contracts.
Taking that into account, the DOD being the largest procurer, now proposes “clarifications” that seem to add to the burden for 8(a) Participants owned by Tribes, ANCs, and NHOs to be able to receive an 8(a) sole source award by amending, deleting, or adding new requirements to the Federal Acquisition Regulations (FAR). In reality, this clarification seems to add to the confusion of what contracting officers can and cannot do as many of the recommendations have been in play for quite some time, while others offer new and added procedures for contracting officers to follow.
In a nutshell, here are the salient points of the proposed rule and some brief thoughts on it:
- Clarify that a Competition in Contracting Act Justification (cited as what the contracting officers used in the 2012 GAO report) cannot substitute for the Justification and Approval Memorandum (J&A) required for 8(a) sole source awards above $22 million.
- What is missing is figures from its previous reports that document how much money is spent on noncompetitive awards that are not through the 8(a) Program that overwhelm the money and need for oversight in the 8(a) Program.
- For instance, in March of 2014, the GAO estimated that in 2013 alone, the Federal Government obligated over $459 billion to procure goods and services, of which approximately $164 billion or roughly 36 percent, was noncompetitive. “Noncompetitive Contracting” at 1. http://www.gao.gov/products/GAO-14- 304. In contrast, between April 1, 2012, and June 19, 2014, five noncompetitive contracts worth over $20 million were awarded to all Native American owned 8(a) firms. “DOD Sole-Source Contracts” at 3. http://www.gao.gov/assets/670/665640.pdf.
- Provide additional information on Action Contracting Officers Should Take to Comply with the Justification when the Contract Value Rises Above or Falls Below the $22 million Between SBA’s Acceptance of the Contract for Negotiation under the 8(a) Program and Contract Award.
- If at offering, the contract exceeds $22 million, the contracting officer, rather than stating that a J&A has been done to the SBA, must now send the approved J&As to the SBA prior to award. This seems to be a burden shift to the SBA and more unnecessary paperwork slowing down the process.
- If the estimated value at the time of submission of the offering letter (to the SBA) is less than or equal to $22 million, but the contract value at time of award exceeds $22 million, send the approved J&A to SBA prior to award. This seems to be a burden shift to the SBA and more unnecessary paperwork slowing down the process. New Requirements.
- Amending FAR Section 19.808 Sole Source [Part 19 is the Small Business Section of the FAR], that the SBA cannot accept a contract for sole source over $22 million unless it has the approved sole source J&A in hand with the offer letter. New Requirement.
- Amends/replaces FAR Section 19.804-3 for Offering and Accepting 8(a) sole source awards over $22 million to reflect the new requirements on the contracting officers to comply with when awarding these contracts. New Section-Replacement.
- Amending FAR Section 6.303-2(d)(2) [Part 6 is the Competition Requirements of the FAR] to include the specific section that allows the removal of the contract from competitive procedures. New Section.
- Amending FAR Section 5.406 [Part 5 is the Publicizing of Contract Action of the FAR] to require that sole source 8(a) justifications for awards exceeding $22 million to are made public 14 days after contract award.
- This contrasts with the reasonable time and/or 30-day publication required by other sole sourced or directly awarded contracts.
This is a quick and dirty analysis with more to follow. These changes seem to be unneeded and may very well add more reasons as to why contracting officers will not award 8(a) sole source contracts to 8(a) Participants owned by Tribes, ANCs, and NHOs. If you have any questions, please contact the author. If you would like to submit comments to the agencies, the first link above should have that information for you.
©Outlook Law, LLC