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MDJohn

SDB set aside and not small business set aside

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Gov Agency issued an RFP for a program and anticipates awarding multiple indenfite quantity contracts. One of them will be an SDB set aside. Client was expecting the set aside to be an ordinary small business aside and not the more restrictive SDB set aside, under which client is not eligible.

Do the regs provide guidance/rules on when an agency can/should do an SDB set aside as opposed to a regular small buiness set aside? Is it simply a case of the agency doing a pre-solicitiation study, determining that the agency will receive at least 2 competitive bids from qualified SDBs, and that's enough? Vice versa, do the regs provide guidance/rules on when an agency can/should do a regular small buiness set aside as opposed to a more restrictive SDB set aside?

Much thanks.

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Very good Q. The RFP refers to "Small Disadvantaged Business." 13 CFR 124.1001 and 1002 define an SDB. An SDB appears to be, basically, the set of small businesses that are (1) owned by one or more socially and economically disadvantaged individuals (in accordance with 8(a) criteria), although not necessarily 8(a) or (2) tribes, ANCs, NHOs, and CDCs

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MDJohn,

Which of the following is happening?

1. All offerors are competing for the same requirement, the agency will make multiple awards, one such award will be reserved for an SDB; or

2. The agency has cut a piece of the requirement and limited competition for that piece to SDBs.

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To Don-

#2 - The agency has cut a piece of the requirement and limited competition for that piece to SDBs. The RFP states that "[t]his set aside will be exclusively for the implementation of the [XYZ] component."

Thanks

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I don't think it is legal to set aside (or reserve) anything for SDBs other than 8(a)s or HUBZone firms.

What is the RFP number?

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I agree with Vern. CICA requires the use of full and open competition, unless there is a statute that permits agencies to use other than full and open competition. Various statutes in Title 15 of the U.S.C. permit agencies to set aside acquisitions for various categories of small businesses. SDB is not one of those categories. Also, the SDB price adjustment provision has been declared unconstitutional and cannot be applied in full and open procurements.

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To Don-

#2 - The agency has cut a piece of the requirement and limited competition for that piece to SDBs. The RFP states that "[t]his set aside will be exclusively for the implementation of the [XYZ] component."

Thanks

Ok. So it's a partial SDB set-aside. I know of no legal basis for such a thing. Maybe it's an error.

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It's a USAID RFP for an IQC.

The USAID OSDBU website contains a description of SDBs. Link is below. Is USAID under a separate statute that permits it to use SDB set asides?

www.usaid.gov/business/small_business/

Thanks

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To help answer my own question, under AIDAR (USAID Acquisition Regulation) Part 706, it states:

"706.302-71 Small Disadvantaged Businesses.

(a) Authority.

(1) Citations: Sec. 579, Pub. L. 101-167 (Fiscal year (FY) 1990), Sec. 567, Pub. L. 101-513 (FY 1991), Sec. 567, Pub. L. 102-145 (FY 1992), Sec. 562, Pub. L. 102-391 (FY 1993), Sec. 558, Pub. L. 103-87 (FY 1994), and Sec. 555, Pub. L. 103-306 (FY 1995).

(2) Except to the extent otherwise determined by the Administrator, not less than ten percent of amounts made available through the appropriations cited in paragraph (a)(1) of this section for development assistance and for assistance for famine recovery and development in Africa shall be used only for activities of disadvantaged enterprises (as defined in 726.7002). In order to achieve this goal, USAID is authorized in the cited statutes to use other than full and open competition to award contracts to small business concerns owned and controlled by socially and economically disadvantaged individuals (small disadvantaged businesses as defined in 726.7002), historically black colleges and universities, colleges and universities having a student body of which more than 40 percent of the students are Hispanic Americans, and private voluntary organizations which are controlled by individuals who are socially and economically disadvantaged, as the terms are defined in 726.7002. "

Is it correct to read this section that if the acquisition is being made under the statutory authority of (a)(1) and is for "development assistance," then USAID can do a SDB set aside?

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You left out the next paragraph:

(B) Application. This authority may be used only if the Agency determines in accordance with 726.7004 that:

(1) The acquisition is to be funded from amounts referred to in paragraph (a) of this section;

(2) Award of the acquisition to an eligible organization is appropriate to meet the requirement in paragraph (a)(2) of this section; and

(3) After considering whether the acquisition can be made under the authority of section 8(a), award under section 8(a) is not practicable.

So it is clear that USAID can do SDB set-asides in limited circumstances, but we cannot tell if it is proper in your case or not. The authority applies only to certain appropriations.

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To help answer my own question, under AIDAR (USAID Acquisition Regulation) Part 706, it states:

"706.302-71 Small Disadvantaged Businesses.

(a) Authority.

(1) Citations: Sec. 579, Pub. L. 101-167 (Fiscal year (FY) 1990), Sec. 567, Pub. L. 101-513 (FY 1991), Sec. 567, Pub. L. 102-145 (FY 1992), Sec. 562, Pub. L. 102-391 (FY 1993), Sec. 558, Pub. L. 103-87 (FY 1994), and Sec. 555, Pub. L. 103-306 (FY 1995).

(2) Except to the extent otherwise determined by the Administrator, not less than ten percent of amounts made available through the appropriations cited in paragraph (a)(1) of this section for development assistance and for assistance for famine recovery and development in Africa shall be used only for activities of disadvantaged enterprises (as defined in 726.7002). In order to achieve this goal, USAID is authorized in the cited statutes to use other than full and open competition to award contracts to small business concerns owned and controlled by socially and economically disadvantaged individuals (small disadvantaged businesses as defined in 726.7002), historically black colleges and universities, colleges and universities having a student body of which more than 40 percent of the students are Hispanic Americans, and private voluntary organizations which are controlled by individuals who are socially and economically disadvantaged, as the terms are defined in 726.7002. "

Is it correct to read this section that if the acquisition is being made under the statutory authority of (a)(1) and is for "development assistance," then USAID can do a SDB set aside?

I'd be surprised if appropriations passed between FY90 and FY95 would still be available.

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I have not checked the other statutes cited in the regulation, but this is what the relevant part of Sec. 555 of P.L. 103-306 says

SEC. 555. (a) Except to the extent that the Administrator of the Agency for International Development determines otherwise, not less than 10 percent of the aggregate amount made available for the current fiscal year for the `Development Assistance Fund', `Population, Development Assistance', and the `Development Fund for Africa' shall be made available only for activities of United States organizations and individuals that are--



    • (1) business concerns owned and controlled by socially and economically disadvantaged individuals,



    • (2) historically black colleges and universities,



    • (3) colleges and universities having a student body in which more than 40 per centum of the students are Hispanic American, and



    • (4) private voluntary organizations which are controlled by individuals who are socially and economically disadvantaged.

Notwithstanding any other provision of law, in order to achieve the goals of this section, the Administrator--



    • (A) to the maximum extent practicable, shall utilize the authority of section 8(a) of the Small Business Act (15 U.S.C. 637(a));



    • (B) to the maximum extent practicable, shall enter into contracts with small business concerns owned and controlled by socially and economically disadvantaged individuals, and organizations contained in paragraphs (2) through (4) of subsection (a)--




      • (i) using less than full and open competitive procedures under such terms and conditions as the Administrator deems appropriate, and



    • (ii) using an administrative system for justifications and approvals that, in the Administrator's discretion, may best achieve the purpose of this section;

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However, the EDWOSB/WOSB set aside authority only applies to a limited number of NAICS codesthat have been specifically identified by the SBA.

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Please refer to FAR 19.502-4. The 2010 Small Business Jobs Act provided agencies the discretion to set aside all or part of multiple award contracts or reserve one or more awards for SB concerns or the categories of SB found in 19.000(a)3). The FAR implementation delegated that discretion to the COs. Long time coming but it finally provided specific authority to do what many agencies have been doing for years since FASA. As for setting aside for SB in general vice SDB, women-owned, SDVOSB, or HUBZone, I believe the CO has that discretion as well - I did not go back and read all of FAR Part 19 to confirm my memory, but I am sure if I am wrong, the correct answer can be found in reading Part 19.

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Please correct, I meant to say reserve one or more awards for SB or the categories of SB found in 19.000(a)(3) in full and open competitions... Need to be precise.

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That is correct and precise. 19.000(a)(3) lists 8(a) business development participants - so only those SDBs that are 8(a) participants...

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As I recall, SDB set asides were authorized by FASA. However, in 1995, the Supreme Court issued its Adarand decision, effectively limiting the scope of affirmative action programs in Federal contracting. As a result, the Clinton Administration lauched its "Mend it don't end it" campaign for affirmative action programs in government contracting. This culminated in an extensive overhaul of small business contracting. Part of that overhaul was to end the use of SDB set asides to comply with Adarand standards.

It is interesting to note that the last statutory reference in the AIDAR is from 1995, the year of the Adarand decision. So far as I can tell, no subsequent statutes have the same authority as described in the cited Acts. My conclusion is that the AIDAR authority may be subject to the same flaws that were discussed in Adarand and that led to the overhaul of affirmative action in government contracting. If that is the case, it is doubtful that the AIDAR can be a valid basis for an SDB set aside today.

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