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Hello, I am a Contract Specialist with the Navy. I have been an 1102 for a little over two years. Up and until this point, I have only worked on sole source actions. However, I will now be working on competitive actions. We are currently trying to nail down a way forward on the acquisition strategy for two of the actions that I have been assigned. When considering the companies that have expressed interest in this upcoming requirement what are some strategies to consider when determining whether to go forward with using a small-business set aside or with full and open competition? Should I wait to on our tech team to complete their capabilities determination of all of the responses to the RFI and then make my decision based on that? What are some things that I should consider when trying to decide with going with a small business set aside or full and open competition?

Thank You and I look forward to discussing this.

 

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Hello, thank you for responding. This requirement is above the SAT and currently we are discussing source selection. So, FAR subpart 15.3. Now out of the companies that have expressed interest and responded to the RFI. Some of the companies are large companies and some of them are considered small businesses. What I am trying to discern is what things should I consider in order to determine whether our strategy should be Full and Open or a Small-Business Set Aside.

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Don is right, since you said you are in the FAR 15.3 lane.  However, you would have discretion if you were in the 8.4 lane or 16.505 lane, which you aren’t.

FAR 19.502-2(b) talks about the Rule-of-Two, which applies to 15.3 but is inapplicable to 8.4 and 16.505.  The key to the Rule-of-Two is not that two or more small businesses express interest or are capable, but rather that there is a reasonable expectation of receiving (“obtaining”) proposals from two or more small businesses, and so forth.

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6 hours ago, Prosperity said:

When considering the companies that have expressed interest in this upcoming requirement what are some strategies to consider when determining whether to go forward with using a small-business set aside or with full and open competition? Should I wait to on our tech team to complete their capabilities determination of all of the responses to the RFI and then make my decision based on that? What are some things that I should consider when trying to decide with going with a small business set aside or full and open competition?

 

Just don’t be hasty and take premature actions.  Your technical team needs to complete review of company capabilities first.  

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Prosperity,

Here is the question:  Is there a reasonable expectation of obtaining offers from at least two small business concerns (but not two dealers offering the same manufacturer’s product) and making award at a fair market price?

Your answer (select one):  

- YES

- NO

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Thank You, everyone for responding to this question. I actually just discussed this with my technical team. Our strategy right now going forward is to go with a small business set-aside because we do expect more than two small business concerns to submit proposals and as Don mentioned we cannot go with Full and Open if that happens. However, just in case we do not get two or more proposals in from small businesses we will change our strategy to Full and Open. Again, thank you to everyone that responded to this and gave me things to think about.

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On ‎2‎/‎20‎/‎2020 at 5:47 PM, Constricting Officer said:

Do I dare bring up "tiered-evaluation" here if there is in fact a problem regarding the acquisition timeline?

The OP is with the Navy, so DFARS 215.203-70 would be relevant.  It permits tiered or cascading evaluation of offers where the contracting officer has conducted market research but nonetheless cannot determine "whether the criteria in FAR Part 19 are met for setting aside the acquisition" and documents as much.  Accord, DFARS 210.001(a)(i) (requiring market research "appropriate to the circumstances before issuing a solicitation with tiered evaluation of offers.")

See the 29 Jun 05 item in the Government Executive, "New acquisition strategy alarms industry," for the main criticism of tiered evaluation, namely, that it wastes B&P.

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2 hours ago, Jacques said:

The OP is with the Navy, so DFARS 215.203-70 would be relevant.  It permits tiered or cascading evaluation of offers where the contracting officer has conducted market research but nonetheless cannot determine "whether the criteria in FAR Part 19 are met for setting aside the acquisition" and documents as much.  Accord, DFARS 210.001(a)(i) (requiring market research "appropriate to the circumstances before issuing a solicitation with tiered evaluation of offers.")

See the 29 Jun 05 item in the Government Executive, "New acquisition strategy alarms industry," for the main criticism of tiered evaluation, namely, that it wastes B&P.

I understand the argument industry has against such acquisitions procedures, but the largest arguments are coming from large businesses who aren't to fond of small business preference in the first place. 

Appropriate MR findings for tiered evaluation or "cascading" generally are based on not being able to identify capable and interested contractors at the different socio-economic levels or a concern about fair and reasonable pricing being able to be achieved. 

It is definitely not a strategy that should be used often (good MR conducted), but on occasion is a good tool. 

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We've obviously taken the thread to a new place, but the OP is silent on whether a multiple award IDIQ is involved.  If so, folks should be mindful of 13 CFR 125.2(e)(7) and the proposed FAR 15.101-3 (FAR Case 2014-002), which would restrict the use of tiered evaluations in source selections of multiple award IDIQ contracts to those agencies with "specific statutory authority to do so."

EDIT:  Never mind.  The very statute that tried to LIMIT the use of tiered evaluations in DoD is likely the source of DoD's authority to use tiered evaluations in the case of a source selection for the basic contracts for a multiple award IDIQ vehicle.  See Pub. L. 109-163, NDAA'06, sec. 816.

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  • 3 weeks later...

You can't do a general small business set aside unless you first consider the 4 socio-economic programs in part 19, for example, a sole source to a HUBZone small business takes priority over general small business set aside.

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And there is a difference between the "mandatory" rule of two and the "discretionary" rule of two.

For supplies above the SAT, if the conditions at 19.502-2(b) are met, a set aside is mandatory (and you have to consider the 4 socioeconomic programs first), for services however, it's always discretionary above the SAT, but if you choose to discretionary do that, you have to also remember to consider the 4 socioeconomic programs first.

I may be wrong on this but this is what the FAR says in part 19, or maybe I'm just not interpreting it correctly.

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1. I think this is bold new doctrine that Sam101 espouses:  The Rule-of-Two is discretionary for open market acquisitions for services.  I will have to think on this for a while.

2. But here is old, well-established doctrine:  The Rule-of-Two is wholly inapplicable for orders against schedule contracts or multiple-award IDIQ contracts. 

 

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15 hours ago, Sam101 said:

For supplies above the SAT, if the conditions at 19.502-2(b) are met, a set aside is mandatory (and you have to consider the 4 socioeconomic programs first), for services however, it's always discretionary above the SAT

 

15 hours ago, ji20874 said:

1. I think this is bold new doctrine that Sam101 espouses:  The Rule-of-Two is discretionary for open market acquisitions for services.  I will have to think on this for a while.

My thoughts - Always discretionary whether supplies or services because best judgment applies at to what is reasonable.   Always a consideration whether supplies or services.   At least that is the way I read GAO decisions.

Stated by GAO here as related to supply -  https://www.gao.gov/products/b-406939.2#mt=e-report

"Agencies are generally required to set aside for small businesses procurements that exceed $150,000 if there is a reasonable expectation of receiving fair market price offers from at least two responsible small business concerns. FAR § 19.502‑2(b); e.g., Metasoft, LLC, B‑402800, July 23, 2010, 2010 CPD ¶ 170 at 2. An agency must undertake reasonable efforts to ascertain whether it is likely that it will receive offers from at least two responsible small businesses capable of performing the work in question. EMMES Corp., B-402245, B-402245.2, Feb. 17, 2010, 2010 CPD ¶ 53 at 5; Rochester Optical Mfg. Co., B-292247, B-292247.2, Aug. 6, 2003, 2003 CPD ¶ 138 at 4. No particular method of assessing the availability of capable small businesses is required; rather, the assessment must be based on sufficient facts so as to establish its reasonableness. See, e.g., EMMES Corp., supra, at 5."

Stated by GAO here as related to service -https://www.gao.gov/decisions/bidpro/402800.htm

"Under FAR sect. 19.502-2(b), a procurement with an anticipated dollar value of more than $100,000 must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price. That is, an acquisition must be set aside where there is a reasonable expectation that two or more acceptably priced offers will be received from small business concerns that are capable of performing the contract. ViroMed Laboratories, B-298931, Dec. 20, 2006, 2007 CPD para. 4 at 3. A partial set-aside must be made if a total set-aside is not appropriate, the requirement is severable into two or more economic production runs or reasonable lots, and one or more small business concerns are expected to have the technical competence and productive capacity to satisfy the set-aside portion at a reasonable price. FAR sect. 19.502-3(a). While the use of any particular method of assessing the availability of small businesses is not required, the agency must undertake reasonable efforts to locate responsible small business competitors. ViroMed Laboratories, supra, at 3-4. Because a decision whether to set aside a procurement (either totally or partially) is a matter of business judgment within the contracting officer's discretion, our review is limited to determining whether that official abused his or her discretion. Ceradyne, Inc., B‑402281, Feb. 17, 2010, 2010 CPD para. 70 at 4; Vox Optima, LLC, B‑400451, Nov. 12, 2008, 2008 CPD para. 212 at 5."

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8 minutes ago, C Culham said:

 

My thoughts - Always discretionary whether supplies or services because best judgment applies at to what is reasonable.   Always a consideration whether supplies or services.   At least that is the way I read GAO decisions.

Stated by GAO here as related to supply -  https://www.gao.gov/products/b-406939.2#mt=e-report

"Agencies are generally required to set aside for small businesses procurements that exceed $150,000 if there is a reasonable expectation of receiving fair market price offers from at least two responsible small business concerns. FAR § 19.502‑2(b); e.g., Metasoft, LLC, B‑402800, July 23, 2010, 2010 CPD ¶ 170 at 2. An agency must undertake reasonable efforts to ascertain whether it is likely that it will receive offers from at least two responsible small businesses capable of performing the work in question. EMMES Corp., B-402245, B-402245.2, Feb. 17, 2010, 2010 CPD ¶ 53 at 5; Rochester Optical Mfg. Co., B-292247, B-292247.2, Aug. 6, 2003, 2003 CPD ¶ 138 at 4. No particular method of assessing the availability of capable small businesses is required; rather, the assessment must be based on sufficient facts so as to establish its reasonableness. See, e.g., EMMES Corp., supra, at 5."

Stated by GAO here as related to service -https://www.gao.gov/decisions/bidpro/402800.htm

"Under FAR sect. 19.502-2(b), a procurement with an anticipated dollar value of more than $100,000 must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price. That is, an acquisition must be set aside where there is a reasonable expectation that two or more acceptably priced offers will be received from small business concerns that are capable of performing the contract. ViroMed Laboratories, B-298931, Dec. 20, 2006, 2007 CPD para. 4 at 3. A partial set-aside must be made if a total set-aside is not appropriate, the requirement is severable into two or more economic production runs or reasonable lots, and one or more small business concerns are expected to have the technical competence and productive capacity to satisfy the set-aside portion at a reasonable price. FAR sect. 19.502-3(a). While the use of any particular method of assessing the availability of small businesses is not required, the agency must undertake reasonable efforts to locate responsible small business competitors. ViroMed Laboratories, supra, at 3-4. Because a decision whether to set aside a procurement (either totally or partially) is a matter of business judgment within the contracting officer's discretion, our review is limited to determining whether that official abused his or her discretion. Ceradyne, Inc., B‑402281, Feb. 17, 2010, 2010 CPD para. 70 at 4; Vox Optima, LLC, B‑400451, Nov. 12, 2008, 2008 CPD para. 212 at 5."

I completely agree with C Culham... always discretionary! I just get a little confused when I read GAO cases when they seem to always say "Under FAR sect. 19.502-2(b), a procurement with an anticipated dollar value of more than $100,000 must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price."... and they fail to mention the fact that 19.502-2(b) is clearly talking about small businesses who are offering PRODUCTS made by small businesses.

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@Sam101 writes:

Quote

For supplies above the SAT, if the conditions at 19.502-2(b) are met, a set aside is mandatory (and you have to consider the 4 socioeconomic programs first), for services however, it's always discretionary above the SAT, but if you choose to discretionary do that, you have to also remember to consider the 4 socioeconomic programs first.

I may be wrong on this but this is what the FAR says in part 19, or maybe I'm just not interpreting it correctly.

To be blunt, you're not interpreting it correctly.

FAR 19.502-2(b)(1), in listing one of the two elements where there must be a reasonable expectation, reads, "Offers will be obtained from at least two responsible small business concerns offering the products of different small business concerns (see paragraph (c) of this section);" (emphasis added).  This parenthetical means you have to go to paragraph (c) to fully understand what was just said.  Paragraph (c) then makes clear that this requirement related to "products" does NOT apply to construction or services:  "For small business set-asides other than for construction or services...".  Therefore, for construction and services, the first of two elements at FAR 19.502-2(b) is met if there is a reasonable expectation that offers will be obtained from at least two responsible small business concerns.  Period.  Full stop.

For an example where the GAO sustained a protest that a contract for services should have been set aside, see Library Systems & Services/Internet Systems, Inc., B-244432, Oct. 16, 1991, 91-2 CPD ¶ 337; N&N Travel & Tours, Inc., et al., B-285164.2 et seq., Aug. 31, 2000, 2000 CPD ¶ 146.  In LBM, Inc., B-290682, Sept. 18, 2002, 2002 CPD ¶ 157, a decision related to an acquisition involving motor pool transportation services, the GAO focused on the language, "any acquisition over" the dollar threshold (previously $100K, now $150K).  (Unrelated aspects of LBM have been overcome by statute, but not this aspect.)

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Thanks Jacques, this is the exact answer I was looking for, the (see paragraph (c) of this section) makes it a lot more clear now... I knew that there had to be a reason why GAO keeps applying the rule of two to services.

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