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GSA Schedules and FAR 19.000(a)(3)

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I'm not comfortable with the wording at FAR 19.000(a)(3) and would appreciate some help. I've always been under the impression that I cannot make a directed 8(a) buy using GSA Schedules. However, looking at the current wording in FAR, I'm not as comfortable with my previous interpretation.

FAR 8.405-5, Small business, is clear to me. It indicates I'm allowed to set-aside orders for any of the small business concerns identified in 19.000(a)(3).

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

FAR 19.000(a)(3) goes on to state:

19.000 Scope of part.

(a) (3) Setting acquisitions aside for exclusive competitive participation by small business, 8(a) business development participants, HUBZone small business concerns, service-disabled veteran-owned small business concerns, and economically disadvantaged women-owned small business concerns and women-owned small business concerns eligible under the Women-Owned Small Business Program;

What I'm having difficulty with is:

(1) the placement of the word "competitive". Are they strictly speaking to competitive participation by small business, or competitive participation by 8(a) businesses, competitive HUBZones, etc.

(2) FAR 8.405-5 states I can set an order aside for any of the small business "concerns" listed in 19.000(a)(3). 8(a)'s are one of the various "concerns" listed.

I probably took a long time to get to my question. But, can you do a directed 8(a) through the GSA Schedules program? Any help appreciated.

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A set-aside is always competitive. Always.

A sole-source (or "directed") 8(a) award by task order under a schedule is permissible. See 19.804-6.

EDIT 05/22/2014 - I am now of the opinion that a sole-source or directed 8(a) order under Federal Supply Schedules is not permissible, based on the discussion on this page and looking anew at ( a ) FAR 8.405-5( a )( 1 )( i ) and the emphasis on competitive at FAR 19.000( a )( 3 ); and ( b ) FAR 8.405-6( a )( 1 )( i )( A ), ( B ), and ( C ). ji

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ji20874 - Your interpretation is counter to that of GSA. Please see the reference that I provided in my post. How do you reconcile your response with their position?

As to the FAR reference you provided I believe it is saying this. If the mulitple award, FSS, etc contract was set aside for 8(a) sole source then one would not have to do separate offer and acceptance for sole source for the orders placed under that 8(a) mulitple award, FSS, etc. (master) contract. It is not addressing an order placed against a individual mulitple award, FSS, etc. contract that has not be set aside for 8(a) sole source.

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I visited the link and did a search for 19.000 -- here is everything that came up:

1. Does the interim rule authorize set-asides for orders and BPAs under Schedule contracts?

Yes. The interim rule amends FAR Subpart 8.4 to make clear that set-asides may be used in connection with the placement of orders and the establishment of BPAs under Schedule contracts.

Back to Top

2. Under the interim rule, can an agency set aside Schedule orders and/or BPAs for any of the socioeconomic programs (e.g., service-disabled veteran-owned, women-owned, and HUBZone small business concerns)?

Yes. FAR 8.405-5(a)(1) expressly states that agencies may set aside orders and BPAs for any of the small business concerns identified in 19.000(a)(3).

I also did a search on 8(a) -- here is everything that came up.

15. Can agencies get 8(a) credit for orders placed with 8(a) Schedule-holders?

Currently, agencies have no goals for 8(a) small business concerns but they do have goals for small disadvantaged businesses. Since 8(a) firms are by definition small disadvantaged businesses, an order placed against an 8(a) Schedule-holder will be credited towards the ordering agency's small disadvantaged business goal.

I also found this:

14. Can you sole source to small business concerns under this authority?

Section 1331 of the Small Business Jobs Act and FAR 8.405-5(a)(1) only authorizes set-asides of orders under multiple award contracts, not sole source.

So I still think a set-aside is always competitive.

But you make a great point regarding 19.804-6( a ) -- I need to re-visit my understanding of that paragraph.

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GSA gave a Multiple Award Schedule webinar on February 6th, 2014. C. Culham's link was last updated by GSA September 19, 2013.

The instructor said FAR Part 19 definitions does apply to FSS orders. Rules within FAR 8.405 are applicable. FAR Part 19 "Rule of Two" doesn't apply to FSS orders. FAR Part 19 "Exceptions" are "Bundling" and "Size Standard Criteria."

According to the presentation charts:

FAR Part 19, generally "does not apply" to Schedule "orders". - See 8.404(a)

  • FAR 8.405-5 provides policy for Schedules set-asides.

19.502-4 Multiple-award contracts and small business set-asides.

  • Contracting officers may, at their discretion-
  • © Set aside orders placed under multiple-award contracts for any of the small business concerns identified in FAR 19.000(a)(3)....
  • For FSS orders, see FAR 8.405-5"

FAR Subpart 8.405-5 Small Business

  • 8.405-5(a) - Preference programs of Part 19 are not mandatory.
  • 8.405-5(a)(1) - Set-asides are discretionary for orders and BPAs for small business concerns identified in FAR 19.000(a)(3).
  • 8.405-5(a)(2) - Follow the ordering procedures at 8.405-1, 8.405-2, and 8.405-3, as applicable.
  • The specific small business program eligibility requirements identified in Part 19 apply

FAR 19.000(a)(3) reads "Setting acquisitions aside for exclusive competitive participation by small business, 8(a) business development participants, HUBZone small business concerns, service-disabled veteran-owned small business concerns, and economically disadvantaged women-owned small business concerns and women-owned small business concerns eligible under the Women-Owned Small Business Program"

This would mean you can have a competitive set-aside for FSS orders, but not a sole-source set-aside for FSS orders.

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Folks posts (ji and Weno) have helped clarify the original questions for me. I read “directed” as sole source but after reading responses and re-reading the original post here is how I see it.

Sole source set aside for 8(a)order under FSS – No.

Competitive FSS order for any small business – Yes.

Competitive for 8(a) only FSS order– Let SBA decide. Why? See below.

SBA will have to “accept” the competitive 8(a). Noting that many agencies have partnership agreements with SBA there may be some conflict that the offer/acceptance to SBA is required for a FSS competitive 8(a) order under the SAT. Noting the whole of the partnership agreement language that is usually used has not been revised with regard to the new allowance of competition of FSS schedule orders as SB set asides that may allow a competitive 8(a) only I would suggest that prior to doing a competitive 8(a) only order under a schedule that one visit with the appropriate SBA District Office. If SBA accepts it as an 8(a) competitive the rock on right or wrong is in their pocket.

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Carl,

Why can't an agency set aside an FSS order for competition among 8(a) participants outside of the 8(a) Program? Why do you think the procedures in FAR subpart 19.8 necessarily apply?

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In regard to Carl's post, here is an exerpt from the Oct. 2, 2013 Federal Register where the SBA finalized its rules on set-asides for orders issued against MACs, including Schedule contracts.

Another respondent asked SBA to clarify whether a particular program's requirements apply to these section 1331 authorities, such as set-asides of orders against the GSA Schedule and the requirement for an offer and acceptance in the 8(a) program. SBA had proposed that a task or delivery order contract, multiple award contract, or order issued against a multiple award contract that is set-aside exclusively for 8(a) Program Participants, partially set-aside for 8(a) Program Participants or reserved solely for one or more 8(a) Program Participants must follow the established 8(a) procedures, which would include an offering to and acceptance by SBA of a requirement into the 8(a) program. This is consistent with the FAR's implementation of the Jobs Act, which states at sections 8.405-5 and 16.505 (48 CFR 8.405-5 and 16.505) that the specific program eligibility requirements identified in part 19 (48 CFR part 19) apply to set-asides of orders (as well as reserves and partial set-asides). SBA has adopted this proposed rule as final.

From this it is pretty clear that acceptance of an order into the 8(a) program is required before an arder can be issued as an 8(a) set aside.

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Thanks for all the input. I still go back to the plain language at 8.405-5 which indicates that you are able to set-aside to any of the "concerns" listed at 19.000(a)(3). 8(a) vendors are concerns listed in 19.000(a)(3). To me, none of the other parts of FAR either directly support an affirmative or negative position with regards to doing a directed 8(a) set-aside. Nonetheless, I'm leery of proceeding down that path. I can just do directed buys outside of the Schedule but it is a bit quicker to just cut orders off Schedule and I can typically use my less-senior buyers to do that.

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Gns, What is a directed 8(a) buy? Does this mean sole-source?

FAR 8.405-5 does allow you to set aside orders for any of the small business concerns identified in FAR 19.000(a)(3). You read above some thought that a set-aside is necessarily competitive, and that a sole-source 8(a) order cannot be issued under a schedule.

If you go to the plain language of FAR 8.405-5, it will tell you in para. ( a )( 2 )( i ) that you have to follow the ordering procedures at FAR 8.405-1, -2, and -3. -1 requires surveying at least three schedules over the micro-purchase threshold and competition over the simplified acquisition threshold. -2 requires competition over the micropurchase threshold. -3 requires competition for everything (persumably, you won't use -3 under the micropurchase threshold).

In Res-Care, Inc. v. The United States, No. 12-251C (2012), the U.S. Court of Federal Claims said, "“[t]here must be a minimum of two potential bidders before a procurement can be set aside for small businesses. In the ordinary sense, then, small business set-asides are competitive.”

Do not let the FPDS-NG drop-down menu inform your defintion of set-aside.

So if "directed" 8(a) means sole-source, I don't think you can do a directed 8(a) order under a schedule.

Or, does "directed" 8(a) mean an approach where a governmetn agency contracts directly with an 8(a) firm under the authority of that agency's partnership agreement with the SBA, rather than the old two contracts approach of FAR 19.811-1( a ) and ( b ) or the tripartite approach of FAR 19.811-1( c )? As I understand, some partnership agreements don't mandate an offer-and-acceptance, and some do.

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Carl's post (#8) had the answer correctly nailed on the head in my opinion. When I worked for GSA in the Schedules program, we would consistently advise agencies that any 8(a) purchases (set-aside or sole-source) would need to be done through the SBA. However, when doing a competitive FSS procurement if they happened to award to an 8(a) concern, the agency would receive the appropriate SDB award credit.

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ji20874 - thanks. Yes, I was referring to sole source as directed. Sorry for posting and then taking a while to get back. The snow had me out of the office. I agree the ordering procedures at 8.405 does force one to reach out to more than one firm unless one can justify not doing so. Because a sole source 8(a) is not one of the circumstances listed at 8.405-6 I can agree that it is not permissable to do a sole source 8(a) via Schedule.

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Read closely RetreadFed's post where she cites the Federal Register posting on SBA's proposed rule to implement Section 1331 as follows:

"SBA had proposed that a multiple-award contract...or an order issued against a multiple-award contract that is set-aside exclusively for 8(a) Program participants, ... or reserved solely for one or more 8(a) program participants..." She ends her post with the statement that SBA adopted the proposed rule as the final rule. "...or reserved solely for one or more 8(a) program participants" certainly sounds like sole source task order awards were intended to be allowed.

I have not read in any authoritative source that the term "set aside" excludes sole source awards to eligible small business program participants in the 8(a), HUBZone, or SDVOSB categories. Yes, FAR says that if you have a reasonable expectation of receiving at least two (competition suggested) offers from small business concerns you must set the acquisition aside for small businesses. However, there is nothing to say if your market research finds three 8(a) concerns who could do the work and would submit offers that you cannot decide to sole-source to any one of the three. The fact that at least two exist means the acquisition must be set aside for small business and an award should be made to a small business, which an 8(a) business is. An 8(a) sole source is not the same as a sole source based on the competition exception "only one responsible source" can provide the services.

I acknowledge that there is preference for increased competition, especially in the 8(a) program, but the FAR has not eliminated sole-source 8(a) awards. And there are still the other two socioeconomic categories (HUBZone and SDVOSB) whose program rules allow sole-source awards and, in fact, require them to be considered before small business set-asides. The 2010 Small Business Jobs Act at Section 1331 intended to restore a lot of opportunities for small businesses that had been lost to the popular interpretations of FASA fair opportunity language: that the fair opportunity language on MA IDIQ contracts precluded small business set-asides. The proliferation of the use of MA IDIQs and that interpretation was working to dramatically reduce opportunities for small businesses. The Delex decision by GAO rejected the notion that set asides were not allowed and later the MORI decision by the COFC declared that protests based on failure to do an adequate rule-of-two analysis were not protests "in connection with" the issuance or proposed issuance of a task order. It found that the phrase "in connection with" had more sweeping meaning under the Administrative Dispute Resolution Act (ADRA) than under FASA.

In the case of an 8(a), yes the offer and acceptance provisions of the program will come into play and may complicate things.

Yes I agree the FAR language could have been clearer, and, like always COs will shy away based on the most popular interpretation of the language it may well take additional regulation to clarify the intent. I followed this SBA proposed rule closely and for a long time (it sat for almost a year after public comments were in before the final rule was published.)

This issue will likely be debated widely. I suggest that the poster raising the question consult the agency legal counsel and the agency's SBA rep before making a final decision. However the GSA response to the FAQs on the discretion to set aside as cited in earlier posts will likely control the decision for now. That response was simply that Section 1331 language allowed set asides but not sole source awards.

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Sorry RetreadFed....don't know where I got that idea...

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HCuffage,

The SBA rules allow contracting officers to reserve one award for any type of small business concern and subsequently issue sole source orders to that concern. See 13 CFR 125.2(e)(4)(i)(B)(3). That's what the passage that you posted is referring to. However, the solicitation must state that the Government reserves this right. From 13 CFR 125.2(e)(4)(v):

A contracting officer must state in the solicitation that if there is only one contract award to any one type of small business concern (e.g., small business, 8(a), HUBZone, SDVO SBC, WOSB or EDWOSB), the agency may issue orders directly to that concern for work that it can perform.
Do the solicitations for the Federal Supply Schedules state such a thing?
Regarding set-asides of orders, 13 CFR 125.2(e)(6)(ii) states:
The contracting officer may state in the solicitation and resulting contract for the Multiple Award Contract that:
(A) Based on the results of market research, orders issued against the Multiple Award Contract will be set-aside for small businesses or any subcategory of small businesses whenever the ‘‘rule of two’’ or any alternative set-aside requirements provided in the small business program have been met; or
(B) The agency is preserving the right to consider set-asides using the ‘‘rule of two’’ or any alternative set-aside requirements provided in the small business program, on an order-by-order basis.

The criteria for set-asides for small business (FAR 19.502-2), HUBZone (FAR 19.1305), SDVOSB (FAR 19.1405), WOSB/EDWOSB (FAR 19.1505) all require that, at least, the rule of two be satisfied.

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Don,

I am not familiar with what terms are in the GSA schedule contracts. That is why I stated that GSA's response to the similar question posted on their webpage under "FAQs" would likely control the decision.

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Don - Since GSA has multiple awards under every socioeconomic category for each of it's Multiple Award Schedule (MAS) solicitations, I do not believe that language is in any of them.

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As concluded in this discussion, directed 8(a) cannot be done under FSS. First, there is the "rule of three" (FAR 8.405-1, 2, and 3 require you to consider/get quote from 3).

Second, the SBA regulations explicitly sate an 8(a) order must be competed (this applies to any MAC that was not initially set-aside as 8(a)) (FSS are included in the MAC definition @ 13 CFR §125.1(k) )

13 CFR §124.503 (h)(2)

(2) Allowing orders issued to 8(a) Participants under Multiple Award Contracts that were not set-aside for exclusive competition among eligible 8(a) Participants to be considered 8(a) awards. In order for an order issued to an 8(a) Participant and placed against a Multiple Award Contract to be considered an 8(a) award, where the Multiple Award contract was not initially set-aside, partially set-aside or reserved for exclusive competition among 8(a) Participants, the following conditions must be met:

(i) The order must be offered to and accepted into the 8(a) BD program;

(ii) The order must be competed exclusively among 8(a) concerns;

(iii) The order must require the concern comply with applicable limitations on subcontracting provisions (see §125.6) and the nonmanufacturer rule, if applicable, (see §121.406(B)) in the performance of the individual order; and

(iv) SBA must verify that a concern is an eligible 8(a) concern prior to award of the order in accordance with §124.507

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