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Set-Asides on GSA based contract

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Hello,

We are a IT reseller of COTS products (Dell HP Cisco etc.) We do not manufacturer anything. We were informed by a customer that they could no longer do a small buisness set-aside on a BPA we are one of 6 holders on because you can't do a set-aside a GSA based contract. This doesnt really make sense as why would any reseller have a GSA contract? How would a small buisness ever win a "full and open" competition? Am I missing something ?

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We were informed by a customer that they could no longer do a small buisness set-aside on a BPA we are one of 6 holders on because you can't do a set-aside a GSA based contract.

I don't fully understand your inquiry, but as to the comment above, see FAR 8.405-5(a):

8.405-5 Small business.

(a) Although the preference programs of part 19 are not

mandatory in this subpart, in accordance with section 1331 of

Public Law 111-240 (15 U.S.C. 644( r)—

(1) Ordering activity contracting officers may, at their

discretion—

(i) Set aside orders for any of the small business concerns

identified in 19.000(a)(3); and

(ii) Set aside BPAs for any of the small business concerns

identified in 19.000(a)(3).

In short, set asides are permissible on a GSA based contract.

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Anyone else find it funny that it was done when it wasn't supposed to be done and now that it can be done, sdvr has been told it's not allowed?

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I guess I didn't know the rules for GSA schedule contracts. I didn't know that set-asides were prohibited. I knew that they weren't required, but I thought it was okay to do them if you wanted to. Where did FAR say they were prohibited?

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Difference between “consider” and now “set-aside”. Here is the FAR before and after the amendment reference provided by formerfed.

8.405-5 Small business.

(a) Although the mandatory preference programs of Part 19 do not apply, orders placed against schedule contracts may be credited toward the ordering activity’s small business goals. For purposes of reporting an order placed with a small business schedule contractor, an ordering agency may only take credit if the awardee meets a size standard that corresponds to the work performed. Ordering activities should rely on the small business representations made by schedule contractors at the contract level.

( B) Ordering activities may consider socio-economic status when identifying contractor(s) for consideration or competition for award of an order or BPA. At a minimum, ordering activities should consider, if available, at least one small business, veteran-owned small business, service disabled veteran-owned small business, HUBZone small business, women-owned small business, or small disadvantaged business schedule contractor(s). GSA Advantage! and Schedules e-Library at http://www.gsa.gov/fss contain information on the small business representations of Schedule contractors.

© For orders exceeding the micro-purchase threshold, ordering activities should give preference to the items of small business concerns when two or more items at the same delivered price will satisfy the requirement.

8.405-5 Small business.

(a) Although the preference programs of part 19 are not mandatory in this subpart, in accordance with section 1331 of Public Law 111-240 (15 U.S.C. 644®)—

(1) Ordering activity contracting officers may, at their discretion—

(i) Set aside orders for any of the small business concerns identified in 19.000(a)(3); and

(ii) Set aside BPAs for any of the small business concerns identified in 19.000(a)(3).

(2) When setting aside orders and BPAs—

(i) Follow the ordering procedures for Federal Supply Schedules at 8.405-1, 8.405-2, and 8.405-3; and

(ii) The specific small business program eligibility requirements identified in part 19 apply.

(B) Orders placed against schedule contracts may be credited toward the ordering activity’s small business goals. For purposes of reporting an order placed with a small business schedule contractor, an ordering agency may only take credit if the awardee meets a size standard that corresponds to the work performed. Ordering activities should rely on the small business representations made by schedule contractors at the contract level.

© Ordering activities may consider socio-economic status when identifying contractor(s) for consideration or competition for award of an order or BPA. At a minimum, ordering activities should consider, if available, at least one small business, veteran-owned small business, service disabled veteran-owned small business, HUBZone small business, women-owned small business, or small disadvantaged business schedule contractor(s). GSA Advantage! and Schedules e-Library at http://www.gsa.gov/fas contain information on the small business representations of Schedule contractors.

(d) For orders exceeding the micro-purchase threshold, ordering activities should give preference to the items of small business concerns when two or more items at the same delivered price will satisfy the requirement.

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Note that this joint OFPP/SBA/DOC memo doesn't mention set-asides. It talks about using socio-economic status as an evaluation factor (Attachment 4) to increase small business participation with GSA Schedules.

http://www.whitehouse.gov/sites/default/files/omb/procurement/memo/increasing-small-business-participation-in-federal-contracting.pdf

I believe the rational is along the lines that Schedule contracts and associated ordering use full and open competition procedures. Set-asides run counter to this. Plus the FAR used to say that 8.4 is exempt from FAR 19 procedures.

All this leads to lots of confusion and the GSA web site used to say set-asides aren't permitted.

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The idea that set asides were "prohibited" was a matter of conflict between SBA and GSA. Learn more by Googling "FitNet Protest" and read to your heart's content.

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Which FitNet protest? There are several of them. Got a B number?

Sorry the the large print. I merely copied this from the GAO website.

B-309911, FitNet Purchasing Alliance, November 2, 2007

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B- 309911 - The protest brought to light the disagreement between SBA and GSA on SB set asides. GAO determined protester was not interested party so did not decide on the merits of SB issue. Following website addresses provide one link to the many regarding the case that you find on Google that gives an overview. I have also provided links Google brings up that provide links to copies of the legal briefs delivered to GAO by SBA and GSA for the original protest that state the opposite views. Of course the blogs have their opinion too.

http://www.fpaportal.org/FPA/PressDocs/Bureau_of_Natl_Affrs_Reports_on_GOA_Protest.pdf

http://knol.google.com/k/dave-clemens/ordering-activities-cannot-set-aside/2cjimgxd6k9ue/1#

http://ohmygov.com/blogs/general_news/archive/2011/12/14/how-regulations-are-limiting-access-to-contracts-op_2D00_ed.aspx

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From what I heard, SBA, GSA and OMB all decided SBA's opposition to FitNet wasn't solid. That's why I mentioned the Sept 1, 2011 memo which SBA signed didn't say anything about set-asides

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The FitNet decision cited above, B-309911, does not say that set-asides were prohibited. I still haven't seen any regulation that said set-asides were prohibited. Where is it?

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My posts may have been confusing. I was attempting to help folks sort out the matter for themselves on exactly the point being made by Vern that the FAR did not prohibit set asides.

GSA did have the position that you could not ("cannot")set aside under FSS - http://interact.gsa.gov/blog/small-business-and-gsa

The conflict between GSA and SBA existed long before FitNet - http://www.ogc.doc.gov/ogc/contracts/cld/rd/other/sba4477.txt

Many agencies followed GSA's lead - https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=31&cgiQuestionID=111448

Also consider this quote from Page 68032 Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 for the new interim rule. Thankfully the conflict and the confusion that surrounded it is finally solved!

"I. Background

Over the past 15 years, Federal agencies have increasingly used multiple award contracts—including the Federal Supply Schedules managed by GSA, governmentwide acquisition contracts, multi-agency contracts, and agency-specific indefinite-delivery, indefinite-quantity (IDIQ) contracts—to acquire a wide range of products and services. This trend has created challenges for agencies seeking to provide maximum opportunity for small businesses. Although set-asides are one of the most effective tools agencies have at their disposal to help small businesses participate in Government contracting opportunities, the FAR is silent on how to apply set-asides at the task-or-delivery order level. In September 2010, the Interagency Task Force on Small Business Contracting, created by the President in April of that year, issued a report recommending that the rules on setasides, including for multiple-award contracts, be clarified, and that legislation be developed where it is determined that statutory changes are warranted. The Task Force noted that set-asides accounted for approximately half of all small business contract awards in FY 2009, yet ‘‘there has been no attempt to create a comprehensive policy for orders placed under either general task- and delivery-order contracts or schedule contracts that rationalizes and appropriately balances the need for efficiency with the need to maximize opportunities for small businesses.’’ For a copy of the report, go to http://www.sba.gov/sites/default/files/contracting_task_force_report_0.pdf.

The same month as the Task Force report was issued, the President signed the Jobs Act (Pub. L. 111–240) into law to protect the interests of small businesses and expand their opportunities in the Federal

marketplace. Section 1331 of the Jobs Act amends section 15 of the Small Business Act (Pub. L. 85–536) to add a new subsection ® stating, in pertinent part, that:

The Administrator, Office of Federal Procurement Policy (OFPP) and the Administrator, U.S. Small Business Administration (SBA), in consultation with the Administrator of the General Services, shall, by regulation, establish guidance under which Federal agencies may, at their discretion—

(1) Set aside part or parts of a multiple-award contract for small business concerns, including the subcategories of small business concerns identified in subsection (g)(2)of the Small Business Act;

(2) Notwithstanding the fair opportunity requirements under section 2304c(B) of Title 10, United States Code, and section 303J(B) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253j(B)) (subsequently recodified as 41 U.S.C. 4106), set aside orders placed against multiple-award contracts for small business concerns, including the subcategories of small business concerns identified in subsection (g)(2)of the Small Business Act; and

(3) Reserve one or more contract awards for small business concerns under full and open multiple-award procurements, including the subcategories of small business concerns identified in subsection (g)(2) of the Small Business Act.

SBA and OFPP, which are vested under section 1331 with the authority to issue regulations, in consultation with the Administrator of GSA, have requested that DoD, GSA, and NASA publish this interim rule in order to provide agencies with guidance that they can use in taking advantage of this important tool, while SBA completes the drafting and coordination of a proposed rule that will set forth more specific guidance. This interim rule amends—

• FAR subpart 8.4 to make clear that order set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedules;..."

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Vern - To your question.

There was no regulation prohibiting a set aside prior to the current FAR wording that makes it clear that "set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedules." but many believe such blogs were the authority, prior to the current FAR, as evidenced by posts of formerfed and in part woops85.

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Well, so neither of us has seen a regulation that prohibited set-asides under GSA contracts. I don't think anybody else has, either. The fact that FAR did not say that you could did not mean that you could not.

It may have been that a set-aside could be considered a breach of contract, but if that were the case a change in the regulations would not prevent such a breach on contracts awarded prior to the regulation's effective date.

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Vern - I think it was in a GSA PIN or other Acq letter that GSA COs are bound by. Not where I can reach the GSA intranet at the moment but will look tonight and if I can find, then will post. I know the guidance here was not to do set-asides but to do "preference" with socio-economic status as an evaluation factor. Generally other than small businesses were Acceptable, small businesses were Good, and 8(a), HUBZone and SDVOSBs were Excellent. Some COs used this factor as the most important and others used it as a tie-breaker. But will post the old guidance

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Before the recent change, I believe the language of 8.404(a) had been widely interpreted as "If Part 19 does not apply, then we can't set anything aside".

Before the rewrite of 8.405-5, Agencies have always been able to give "evaluation preference" to socioeconomic categories, but now that the rewrite has occurred, they have the ability to actually set things aside.

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I suspect that you're right about the interpretation. But absent some authoritative prohibition binding on the COs of other agencies, that interpretation was wrong.

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Possibly a bit off topic, but this discussion leads me to one of my pet peeves. I really find it sloppy when contracting officers (and I am one myself) tell someone that something is "illegal" when what they mean is that a particular action is against policy or ill advised for business reasons. I think we as contracting officers have a responsibility to be very precise about the language we use when we say something can't be done. Is it illegal? Cite the statute if so. Is is prohibited by a regulation? Again, cite the regulation. If it's against policy, cite the policy. There are times when something is not illegal, not against regulation and not even against policy, but a contracting officer has discretion not to do it. In those cases we have a responsibility to make it plain that we as contracting officers have made a determination not to take the action (and it always helps to give the reasoning for our decision so as not to be accused of acting capriciously.)

But, I have to say, I can understand why a contracting officer making an award against a GSA schedule contract before the recent changes were made to FAR 8.405-5, would have said that an order award couldn't be "set aside" for small business. They did not say that set asides were "not required" or "discretionary" but actually stated that orders could not be set aside. I don't recall at this point whether they stated that FAR prohibited such a thing or whether it was simply that the GSA schedule contract ordering process did not provide for the possibility of set asides. I can see how even if it was an ordering procedure and not a regulation that "prohibited" such set asides, that could be characterized as being a "prohibition." Not prohibited by law, not prohibited by regulation, but prohibited due to the ordering processes applicable to GSA schedule contracts.

On the third hand, if the contracting officer really meant that set asides are not mandated and s/he had made a reasoned decision to therefore not give special consideration to or set aside this requirement for small businesses, that is what he or she should have said. Not that set asides were prohibited. Saying it was prohibited is a "it is out of my hands" response rather than "I had discretion and I exercised my discretion in the way that I determined to be appropriate" response.

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Hear! Hear! for Pennybeth. She is my hero (heroine? -- I'm no longer sure what the protocol is).

GSA has worked overtime to let people do pretty much whatever they wanted to do under a schedule contract as long as GSA got its user fee. "BPAs" against a schedule (essentially a mandated sole source arrangement)? No problem. Bargain for lower rates than stipulated in the so-called "contract"? No problem. Options on orders for the extension of the orders? No problem. Want to include something in an order that is not in the schedule? No problem as long as its "incidental". So for anyone to say that set-asides were "prohibited" strikes me as weird in the absence of an explicit prohibition. Ordering from a schedule has been like a game of TEGWAR -- The Exciting Game Without Any Rules. GSA has let people do pretty much whatever they darned well wanted to do with a schedule contract until pulled up short by Congress or the GAO. The result is that FAR Subpart 8.4 is now about twice as long as it once was because it has had to be amended multiple times to implement Congressionally imposed restraints.

I'll believe set-asides were prohibited when I see it in a regulation or another authoritative pronouncement applicable to all agencies.

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Prior to the change, GSA did set-aside an entire schedule (TAPS) and certain special item numbers on schedules for small business. I believe the belief that set-asides were not allowable on schedule orders was from the ordering procedures at 8.405:

Request for Quotation procedures
. The ordering activity must provide the Request for Quotation (RFQ), which includes the statement of work and evaluation criteria (
e.g.,
experience and past performance), to schedule contractors that offer services that will meet the agency’s needs. The RFQ may be posted to GSA’s electronic RFQ system, e-Buy (see
(d)). [8.405-2c]

and

Evaluation
. The ordering activity shall evaluate all responses received using the evaluation criteria provided to the schedule contractors. The ordering activity is responsible for considering the level of effort and the mix of labor proposed to perform a specific task being ordered, and for determining that the total price is reasonable. Place the order with the schedule contractor that represents the best value (see
(d) and
). After award, ordering activities should provide timely notification to unsuccessful offerors. If an unsuccessful offeror requests information on an award that was based on factors other than price alone, a brief explanation of the basis for the award decision shall be provided.

So where a potential offeror discovered an RFQ it wanted to bid, it could (1) request and receive the RFQ from the government and (2) have its response evaluated. Because of this, GSA had suggested ordering agencies could use socioeconomic status as an eval factor.

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First I hope the original poster sdvr understands that there is currently and never has been a regulatory prohibition against setting aside a Federal Supply Schedule order for small business.

Second to jibdca to be blunt GSA did set aside certain schedules for only small business participation the issue of setting aside individual orders under Federal Supply Schedule was nothing more than a good old fight between two agencies (1) GSA who had no statutory authority in issuing any authority regarding interpretation of the Small Business Act, never did gain traction in having FAR Part 8 say explicitly that they were prohibited and was good at ignoring GAO decisions that set asides could be done under IDIQ’s, and (2) The SBA who has the authority to administer the Small Business Act and stated set asides could be done but who was also ignored by GSA. All supported by Vern’s posts about showing him a regulation that did state the prohibition and apparently my posts made in vain to show folks that there was no regulation and that simply GSA and SBA disagreed.

And before anybody jumps me that Federal Supply Schedule contracts are not and never were IDIQ’s I offer the following –"

This is from GSA here - http://www.gsa.gov/portal/content/104874

WHAT IS A GWAC?

A Governmentwide Acquisition Contract (GWAC) is a pre-competed, multiple-award, indefinite delivery, indefinite quantity (IDIQ) contract that agencies can use to buy total IT solutions.

From the VA who by authority of GSA handled some FSS contracts – VA FSS contracts are indefinite delivery/indefinite quantity (IDIQ) (for full definition of IDIQ contracts see the FSS Acronyms & Definitions web page) contracts awarded to responsible companies that offer commercial medical services or supplies at fair and reasonable prices and established terms and conditions. Eligible ordering activities can place orders directly with Schedule contractors for delivery worldwide.”

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I was of the same understanding as jlbca.

You could announce an action was set aside, but you couldn't deny a vendor an RFQ, and you were required to evaluate all quotes, even if the vendor fell outside of the "set-aside". So, what's was the point of announcing a set-aside?

C Culham- were you disputing jlbca's postion? If so, I wasn't following it.

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