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Set-Asides on GSA based contract

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August - Yes I was disputing that part of the post by jibca regarding setaside of individual FSS orders and attempted to add context to the point made by Vern, that I agree with, that there was no regulation that prevented a setaside.

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Agree with jlbdca, that the regs didn't prohibit setaside but made it effectively impossible. So agencies used an evaluation preference to actually limit consideration to only small bidders.

But here is something more interesting. Does the new reg close one of the biggest subcontracting loopholes in the game?

Before the new reg, on a GSA schedule buy, contractors could win work based on their small business status, and not have to comply with the limitations on subcontracting clause. Part 19 did not apply. Sp the small business that won one of these "preference" contests could subcontract as much of the award as they wanted! And they did.

So does the language in bold prevent this from happening or not, what is anyone's opinion?

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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The prescription for the Limitation on Subcontracting clause currently states (FAR 19.508(e)):

The contracting officer shall insert the clause at 52.219-14, Limitations on Subcontracting, in solicitations and contracts for supplies, services, and construction, if any portion of the requirement is to be set aside or reserved for small business and the contract amount is expected to exceed $150,000. This includes multiple-award contracts when orders may be set aside for small business concerns, as described in 8.405-5 and 16.505( b )(2)(i)(F).

So, this closes the loop for future contracts. As for existing contracts, if the clause isn't in the contract, then the limitation on subcontracting doesn't apply. I don't read the language that you bolded as referring to the limitation on subcontracting clause, because I don't view a contract clause as a "program eligibility requirement."

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"I don't read the language that you bolded as referring to the limitation on subcontracting clause, because I don't view a contract clause as a "program eligibility requirement."

Totally agree.

Is the loop really closed?

Setasides are still not mandatory. Can't ordering agencies still make socioeconomic status an evaluation criterion, even though that language in

8.405-5(B) has been taken out, and count a GSA order to a small business as a small business award, while that small business subcontracts 99% of the thing back to a large business?

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First, to the matter of subcontracting Contract100 is partially right but remember certain full schedules were in fact set aside for small business, TAP FSS 736n is one example, and as such I think you would find that the subcontracting limitations does apply as clause 52.219-14 is in the parent FSS contract and therefore applicable to orders placed under it.

To the discussion that FAR 52.219-14 as a program eligibility requirement I offer the following reference in support of Don’s comment.

13 CFR 125.6 Prime Contractor Performance Requirements, paragraph (f) through (i) –

“(f) Compliance will be considered an element of responsibility and not a component of size eligibility.

(g) The period of time used to determine compliance will be the period of performance which the evaluating agency uses to evaluate the proposal or bid. If the evaluating agency fails to articulate in its solicitation the period of performance it will use to evaluate the proposal or bid, the base contract period, excluding options, will be used to determine compliance. In indefinite quantity contracts, performance over the guaranteed minimum will be used to determine compliance unless the evaluating agency articulates a different period of performance which it will use to evaluate the proposal or bid in its solicitation.

(h) Work to be performed by subsidiaries or other affiliates of a concern is not counted as being performed by the concern for purposes of determining whether the concern will perform the required percentage of work.

(i) Where an offeror is exempt from affiliation under §121.103(h)(3) of this chapter and qualifies as a small business concern, the performance of work requirements set forth in this section apply to the cooperative effort of the joint venture, not its individual members.”

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The prescription for the Limitation on Subcontracting clause currently states (FAR 19.508(e)):

So, this closes the loop for future contracts. As for existing contracts, if the clause isn't in the contract, then the limitation on subcontracting doesn't apply.

The clause should be in the contract if set aside and over $150k. As for existing contracts, if you place an order against an IDIQ, the fact that the clause isn't in an existing basic contract doesn't mean it won't apply and is not an excuse not to use/enforce in the task/delivery order as shown in the clause. In addition, the clause says that for supplies if it is procured from a nonmanufacturer then it does not apply. So not sure any loop is fully closed, See 52.219.14 below:

Limitations on Subcontracting (Nov 2011)

(a) This clause does not apply to the unrestricted portion of a partial set-aside.

(B) Applicability. This clause applies only to--

(1) Contracts that have been set aside or reserved for small business concerns or 8(a) concerns;

(2) Part or parts of a multiple-award contract that have been set aside for small business concerns or 8(a) concerns; and

(3) Orders set aside for small business or 8(a) concerns under multiple-award contracts as described in 8.405-5 and 16.505(B)(2)(i)(F).

© By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for --

(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

(2) Supplies (other than procurement from a nonmanufacturer of such supplies).The concern shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials.

(3) General construction. The concern will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees.

(4) Construction by special trade contractors. The concern will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees.

(End of Clause)

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The clause should be in the contract if set aside and over $150k. As for existing contracts, if you place an order against an IDIQ, the fact that the clause isn't in an existing basic contract doesn't mean it won't apply and is not an excuse not to use/enforce in the task/delivery order as shown in the clause.

How so? What would compel the contractor to comply? A clause that is not in their contract?

In addition, the clause says that for supplies if it is procured from a nonmanufacturer then it does not apply. So not sure any loop is fully closed, See 52.219.14 below

A nonmanufacturer would still have to comply with FAR 52.219-6(d).

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bilateral modification to the IDIQ or basic contract. or when you do a set aside on GSA, you have to inform the offerors that the delivery order will be subject to 52.219-6 as it is a total small business set aside, as well as 52.219-14. You'd also add agency specific payment clauses in a task order to a GSA contract that probably aren't included in the basic contract. As long as these clauses/provisions are provided as information when you request the quote, it's pretty simple to get the contractor to comply. I guess the question your raising is can there be different clauses in an order than what is in the basic contract. nothing prohibits it that i know of. Clauses from the basic flow down to the task order, but nothing says supplemental provisions and clauses can't be added to a task order that isn't in the basic contract.

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hutch_05,

First you said that the clause doesn't have to be in the basic contract for it to apply to task orders. When I asked how this could be, you said by modifying the basic contract to incorporate the clause. If that makes sense to you, then that makes one of us.

As far as adding clauses to an order, you would still have to get the contractor to agree to their inclusion.

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Can I modify the GSA Schedule (basic contract) to include the clause if I do not work for GSA? no. If the IDIQ was setup by my agency and I am the owner of the IDIQ (basic contract) then yes I would modify the basic to incorporate the clause by negotiations.

So in the event of the GSA Schedule, when I solicit offers through GSA Ebuy, I would inform offerors that the requirement is set aside in accordance with 52.219-6 and that 52.219-14 will also be a clause in the resultant delivery order (contract). The contractor by accepting the delivery order, is also accepting all the terms and conditions which includes any supplemental clauses or provisions in my delivery order that is not included in the basic contract.

hoping I make sense to more than one now.

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So what does it mean to "setaside" an order on a GSA schedule, given that the boldface language below has not been changed?

8.405-2 Ordering procedures for services requiring a statement of work.

(a) General. Ordering activities shall use the procedures in this subsection when ordering services priced at hourly rates as established by the schedule contracts. The applicable services will be identified in the Federal Supply Schedule publications and the contractor’s pricelists. For establishing BPAs and for orders under BPAs see 8.405-3.

(B) Statements of Work (SOWs). All Statements of Work shall include a description of work to be performed; location of work; period of performance; deliverable schedule; applicable performance standards; and any special requirements (e.g., security clearances, travel, special knowledge). To the maximum extent practicable, agency requirements shall be performance-based statements (see Subpart 37.6).

© 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 8.402(d)).

(1) Orders at, or below, the micro-purchase threshold. Ordering activities may place orders at, or below, the micro-purchase threshold with any Federal Supply Schedule contractor that can meet the agency’s needs. The ordering activity should attempt to distribute orders among contractors.

(2) For orders exceeding the micro-purchase threshold, but not exceeding the simplified acquisition threshold.

(i) The ordering activity shall develop a statement of work, in accordance with 8.405-2(B).

(ii) The ordering activity shall provide the RFQ (including the statement of work and evaluation criteria) to at least three schedule contractors that offer services that will meet the agency’s needs or document the circumstances for restricting consideration to fewer than three schedule contractors based on one of the reasons at 8.405-6(a).

(iii) The ordering activity shall specify the type of order (i.e., firm-fixed-price, labor-hour) for the services identified in the statement of work. The contracting officer should establish firm-fixed-prices, as appropriate.

(3) For proposed orders exceeding the simplified acquisition threshold. In addition to meeting the requirements of 8.405-2©(2)(i) and (iii), the following procedures apply:

(i) Each order shall be placed on a competitive basis in accordance with ©(3)(ii) and (iii) of this section, unless this requirement is waived on the basis of a justification that is prepared and approved in accordance with 8.405-6.

(ii) The ordering activity contracting officer shall provide an RFQ that includes a statement of work and the evaluation criteria.

(iii) The ordering activity contracting officer shall—

(A) Post the RFQ on e-Buy to afford all schedule contractors offering the required services under the appropriate multiple-award schedule(s) an opportunity to submit a quote; or

(B) Provide the RFQ to as many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that quotes will be received from at least three contractors that can fulfill the requirements. When fewer than three quotes are received from schedule contractors that can fulfill the requirements, the contracting officer shall prepare a written determination to explain that no additional contractors capable of fulfilling the requirements could be identified despite reasonable efforts to do so. The determination must clearly explain efforts made to obtain quotes from at least three schedule contractors.

© Ensure all quotes received are fairly considered and award is made in accordance with the evaluation criteria in the RFQ.

(4) The ordering activity shall provide the RFQ (including the statement of work and the evaluation criteria) to any schedule contractor who requests a copy of it.

(d) 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 8.404(d) and 8.405-4). 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.

(e) Use of time-and-materials and labor-hour orders for services. When placing a time-and-materials or labor-hour order for services, see 8.404(h).

(f) Minimum documentation. The ordering activity shall document—

(1) The schedule contracts considered, noting the contractor from which the service was purchased;

(2) A description of the service purchased;

(3) The amount paid;

(4) The evaluation methodology used in selecting the contractor to receive the order;

(5) The rationale for any tradeoffs in making the selection;

(6) The price reasonableness determination required by paragraph (d) of this subsection;

(7) The rationale for using other than—

(i) A firm-fixed price order; or

(ii) A performance-based order; and

(8) When an order exceeds the simplified acquisition threshold, evidence of compliance with the ordering procedures at 8.405-2©.

jlbdca, august, and I believe it means an order can't be setaside because the RFQ has to be given to any schedule contractor who asks for it, and that schedule contractor's offer has to be considered.

Where is any language consistent with part 19 on setasides, see bold face language below?

19.501 General.

(a) The purpose of small business set-asides is to award certain acquisitions exclusively to small business concerns. A “set-aside for small business” is the reserving of an acquisition exclusively for participation by small business concerns. A small business set-aside may be open to all small businesses. A small business set-aside of a single acquisition or a class of acquisitions may be total or partial.

19.502-4 Methods of conducting set-asides.

(a) Total small business set-asides may be conducted by using simplified acquisition procedures (see Part 13), sealed bids (see Part 14), or competitive proposals (see Part 15). Partial small business set-asides may be conducted using sealed bids (see Part 14), or competitive proposals (see Part 15).

(B) Except for offers on the non-set-aside portion of partial set-asides, offers received from concerns that do not qualify as small business concerns shall be considered nonresponsive and shall be rejected. However, before rejecting an offer otherwise eligible for award because of questions concerning the size representation, an SBA determination must be obtained (see Subpart 19.3).

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contractor100,

Your're making a basic interpretation mistake. Your interpretation renders FAR 8.405-5(a) meaningless. When an interpretation of one part of a regulation renders another part meaningless, that would be an indication that said interpretation is incorrect. You need to harmonize FAR 8.405-5(a) with FAR 8.405-2 when you're interpreting--you have to give meaning to everything. Although the passages from FAR 8.405-2 that you bolded would seem to require consideration of quotations from large businesses if an FSS order were set-aside for small business, such an interpretation ignores FAR 8.405-5(a).

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Okay, harmonize it. What does the language in 8.405-2, which was there long before the new language in 8.405-5(a), mean now.

Surely the new language in 8.405-5(a) does not delete the words that are still there in 8.405-2.

’...we must follow the canons of statutory interpretation which demand that a court give meaning to each word and phrase when explicating a statute, and read the component parts of a legislative enactment as a unified whole.

[ See United Technologies Corp. v. Browning-Ferris Indus., Inc., [1994] USCA1 432; 33 F.3d 96, 101 (1st Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1176, 130 L.Ed.2d 1128 (1995); United States v. Ven-Fuel, Inc., [1985] USCA11 14; 758 F.2d 741, 751-52 (1st Cir.1985); see also Greenwood Trust Co. v. Massachusetts, [1992] USCA1 399; 971 F.2d 818, 827 (1st Cir.1992)]

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As far as providing an RFQ to anyone who asks for it. No problem, they can see it. And you will consider any quote provided. You will consider a Large Business' quote submitted in a total small business set aside as non-responsive and reject it. Not sure why that language would lead you to believe you can't set aside when, as Don points out, 8.405-5 clearly states you can.

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I don't see a definition of "consider" anywhere, but that doesn't seem to fit the ordinary meaning of the word. I think rejecting it as nonresponsive makes the word "consider" meaningless.

Part 19 does not apply, so the procedures in part 19, including rejecting the offer as nonresponsive, are not applicable.

I think the language means a quote has to be "fairly considered... in accordance with the evaluation criteria in the RFQ."

If you are saying the quote can be downgraded because socioeconomic status is an evaluation criterion, fine.

But that was the old rule.

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While the validity of a GSA blog is viewed as questionable this site does provide information from the GSA MAS program which I believe could be generally viewed as an opinion of the agency on many of the questions raised in this thread regarding the new setaside allowance.

http://interact.gsa.gov/blog/set-aside-orders-small-business

Likewise this FAQ site may address the discussions in the thread as well...

http://www.gsa.gov/portal/content/113371

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pretty sure those links make this point already, but FAR 19 applies because 8.405-5 specifically states the part 19 eligibility requirements do in fact apply. So when you set aside for small business, the Large Business that submits an offer fails to meet the FAR 19 eligibility requirement of a small business and is considered non-responsive and rejected.

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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?

While I am slightly late to the argument (over a year), I am arguing none the less. I am not going to argue that a regulation existed which explicitly prohibited set-asides, rather, I argue from the standpoint that no authority existed allowing set-asides.

1. FAR 8.404 (a) says FAR 19 does not apply also ".....using the procedures in this subpart, are considered to be issued using full and open competition (see 6.102(d)(3))..."

2. FAR 6.102(d)(3) is NOT FAR 6.203.

3. FAR 6.203© prescribes FAR 19.5

Conclusion: It appears to me that while no regulation existed that prohibits set-asides, the only regulation that allows for Full and Open Competition After Exclusion of Sources with regard to set-asides rests in FAR 19. Since FAR 19 was explicitly NOT applicable to FSS orders (except for bundling considerations), then no authority existed to exclude sources by moving from FAR 6.102(d)(3) to FAR 6.203.

Vern, I really wish we could have argued this one in FAR Bootcamp class back in August 15-19 of 2011.

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Shikakenin,

FAR 8.405-5 states:

(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.

That seems pretty cut and dry to me, and in fact an agency may do a set-aside if they wish, however they are not mandatory.

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shikakenin:

You are waaay late on this one. The last post before yours of yesterday was 27 March 2012. The rules have changed. I don't have time to go back and review such an old discussion. I'm afraid it's dead.

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Shikakenin,

FAR 8.405-5 states:

(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.

That seems pretty cut and dry to me, and in fact an agency may do a set-aside if they wish, however they are not mandatory.

Desparado,

I was arguing with Vern in past tense. Of course set-asides are now allowed as of FAR case 2011-024 took effect November 2nd, 2011. well before Vern's comment as Vern was also arguing in past tense. He was saying that set-asides were never prohibited and therefore allowed (hence implying that set-asides could be done BEFORE the onset of the interim rule). Sorry for being so late with the argument, but my point was that before the interim rule, there was no authority for set-asides. I still think I am right from the standpoint of "WAS there authority to allow set-asides under FSS" NO. However, understand no one has time for dead arguments. Just thought I would get the last word in. Just like when I was in Vern's class. :D

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Desparado,

...However, understand no one has time for dead arguments. Just thought I would get the last word in. Just like when I was in Vern's class. :D

Shikakenin, from past experience that's the only time you will get the last word in with Vern. :D :D :D

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