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KA20003

FAR 19.810(a)(2) - I can decide NOT to proceed with an 8(a) award?

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To keep this as brief as I can, I'm in a situation that quickly became messy when my customer's IGCE was vastly different (less) than the quote that came in from their selected 8(a).

It's more than the SAT, so I sent the offer letter to the SBA, and received their acceptance letter within 5 days. No contract award has been made, and the customer is balking at the cost.

My small business specialist is telling me that we are stuck with the 8(a) program because of the acceptance letter. But is that true? I was trying to research a little, and found the subject FAR clause, which seems to indicate that the CO is authorized to reject a specific 8(a) firm. Since it's the firm, I take that clause to mean that I can reject the particular 8(a)...but I can't see anything that requires me to justify it, or if there are prohibited reasons for rejecting an 8(a). (My hunch is that I would need to have another reason beyond price to reject the 8(a), right?)

Additionally, since no contract has been made, am I really stuck with the 8(a) program? What if the customer revises their requirement?

Has anyone had experience with this? Any thoughts are appreciated. Thanks!

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My small business specialist is telling me that we are stuck with the 8(a) program because of the acceptance letter. But is that true?

Is that your question? If so, notify the SBA and see how they respond. Then comply with FAR 19.810 as appropriate.

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To keep this as brief as I can, I'm in a situation that quickly became messy when my customer's IGCE was vastly different (less) than the quote that came in from their selected 8(a).

It's more than the SAT, so I sent the offer letter to the SBA, and received their acceptance letter within 5 days. No contract award has been made, and the customer is balking at the cost.

My small business specialist is telling me that we are stuck with the 8(a) program because of the acceptance letter. But is that true? I was trying to research a little, and found the subject FAR clause, which seems to indicate that the CO is authorized to reject a specific 8(a) firm. Since it's the firm, I take that clause to mean that I can reject the particular 8(a)...but I can't see anything that requires me to justify it, or if there are prohibited reasons for rejecting an 8(a). (My hunch is that I would need to have another reason beyond price to reject the 8(a), right?)

Additionally, since no contract has been made, am I really stuck with the 8(a) program? What if the customer revises their requirement?

Has anyone had experience with this? Any thoughts are appreciated. Thanks!

I have had experience with rejecting 8(a ) proposals for construction that we couldn't determine to be awardable at a fair market price (see 19.806 ( b )); with successfully requesting that SBA replace selected contractors; and with having at least one 8( a ) acquisition withdrawn from the program. I can't remember whether that one was due to the fact that a local contractor was fronting an 8 ( a ) firm, the price was too high or both. Both situations were evident in that one project.

However, your description is TOO brief to determine what you are trying to acquire or whether or not you have negotiated with the (assumed) sole source firm or what procedures you have used to estimate/determine (or if you have determined) the fair market price for the work, item(s) or service.

Yes - qualified - we were able to reject firms for construction projects no other reason than price - but, to my recollection, it was only after we throughly evaluated the proposals and negotiated with the firms per subpart 19.8.

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There is an expectation of the price being fair and reasonable. You might affirm your IGE since SBA might question that. But if the price is too high, SBA should allow you to withdraw the offer - but with use of some other small business program as indicated by your research.

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I suggest a read of 13 CFR 124. Note language on "fair market price" versus fair and reasonable. Likewise 13 CFR 124.504 should help on withdrawal from 8a.

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Ok, thanks for the CFR cites. I've reached out to our small business specialist and he insists that we are stuck with the 8(a) program, citing 13 CFR 124(d)(1). But per my reading, the regulation should apply to awards that have already been made, since the regulation says, "where a procurement IS AWARDED as an 8(a)..." I take that to mean that an actual award has been made.

The customer requires attorney services, and in the past has gotten them for around $50/hour. But the customer was using these as a temporary service, and per 5 CFR 300.504, they could not continue using the same temp firm or people unless we moved to a different strategy. I got the request about 10 days prior to when the services were needed, so I recommended that they choose an 8(a), as the quickest method of getting the attorneys in place.

I did attempt to get the 8(a) firm to come down in price, but they have been unwilling to reduce their price. It sounds like we might just need SBA to get involved with negotiations, and also work with the customer to build a case that the cost does not reflect fair market price.

The whole thing is just so odd to me because no award has been made yet, and based on my interactions with the small biz specialist, I'm not sure how well an attempt to withdraw the offer will go - but thanks for the examples and FAR cites. So very helpful.

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Go back to the FAR, and do what it says.

See FAR 19.806 ( a ). Negotiate the price lower to where it is fair and reasonable.

If that fails, see FAR 19.806( b ). If the contracting officer determines that the price of the proposed contract exceeds a fair market price, then the contract cannot be awarded.

In that case, see FAR 19.806( d ). The SBA can appeal the contracting officer determination under FAR 19.810( a )( 3 ).

The agency small business specialist is irrelevant in this matter. The contracting officer has to price the contract. If the contracting officer is unable to arrive at a fair market price, then the contracting officer needs to make a decision to reject that specific 8( a ) firm for award (see FAR 19.810( a )( 3 )). Then, the contracting officer needs to decide either to seek another 8( a ) possibility or to not make the particular acquisition available for award under the 8( a ) program (see FAR 19.810( a )( 1 )).

I have done this -- in one case, the SBA appealed to my agency head (the agency head supported me), and in another case, the SBA didn't appeal. In both cases, I as the contracting officer was in the driver's seat. The contracting officer needs to make decisions and move forward.

Don't withdraw the offer! Don't use those words! Use the words in the FAR! If the facts support it, make a decision that the proposed price exceeds a fair market price -- use those exact words! And then, if the facts support it, make a decision not to make this particular acquisition available for award under the 8( a ) program -- use those exact words! If you use those words, you tie yourself to the FAR and the process is clear. If you use inappropriate words, such as withdrawing and does not reflect and so forth, well, those are not the FAR words and you damage your own progress.

My answer is longer than Vern's, but his answer is exactly right. Ask for SBA assistance if you want it, and notify the SBA of your decision(s) and see how they respond. Then let the SBA comply with FAR 19.810 as appropriate. You can talk for days and weeks, or you can just do it.

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Thanks, ji. That was really clearly stated; I appreciate it. I think I am mixing up the small biz specialist with the SBA; and I should just leave the small biz specialist out of it and deal with the SBA person who accepted the offer letter.

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You've asked your small business specialist twice. Why? Did you read FAR? What did it say? So why are you still asking the SADBUS? Who's the"contract specialist"?

Did you read ji20874's post? The SADBUS might wield a lot of influence in your organization, but he or she cannot write the rules.

Make a decision and then, if necessary, fight it out before the Chief of the Contracting Office.

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A good GAO case to have on hand for 8(a) actions is United Enterprise & Associates, B-295742, 4 April 2005. It walks you through noncompetitive 8(a) acquisitions. Not sure if it applies to your situation or not, but good to file away for future reference.

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