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Greetings,

I wanted to get your opinion regarding my concern on a contract requirement that I will be putting out (RFP); however, the decision that my KO made on how to go about soliciting this requirement has led me to question their decision. I am an intern and have been in contracting for less than a year; hence my knowledge in contracting has yet to expand. A short summary about my requirement: (1) It will be set-aside 100% small business, (2) The requirement is over $100K, but below $5.5M, (3) Service type (firm-fixed-price requirements contract) ? Courier service to be exact, (4) It is a competitive acquisition, and (5) the incumbent contractor is a small business w/out any other consideration. Now the predicament I am in is that during my Market Research I found at least two HUBZone business that met my customer?s requirement, and they assured the government that they were going to put in a proposal. In addressing my market research findings to my KO, I had suggested we set-aside the new requirement for HUBZone. Now, I am aware of the HUBZone instruction in the FAR, title 15 USC, and other; and the GAO protest (MSC vs US), OMB?s and DOJ?s decision/debates -- knowing that at the moment no definitive decision on the set-aside priority under Executive Branch agencies has been made, along with the FAR verbiage (i.e. ?shall? vs. ?may?). I?ve arduously debated this with my KO. Ultimately, the decision was to set it aside for just small business ONLY w/out other consideration. I asked why, and the answer I got was? (1) ?we have to consider the incumbent?s interest in also putting forth a proposal, setting it aside just small business gives them this opportunity?; (2) reference to the OMB & DOJs memo instruction on set-aside priority to HUBZone ? ultimately the KO?s decision; (3) If we set-aside just HUBZone, chances are the incumbent will protest, and if we did small business I risk having a protest by the HUBZone Co.; and (4) Other. Now I already know the answer to most of this?. However, the ones I am pondering on are: the decision of just setting my RFP to small businesses without considering other socioeconomic program (i.e. HUBZone in this case). What are your thoughts on this? Can we get away with just setting the requirement to small business without acknowledging other potential set-aside factors, which could possibly meet my customer?s requirement? What rights does the incumbent have on protesting the new requirement which now restricts them from participating? I feel this is a catch-22 situation?

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I had a similar dilemma when I started contracting in 2006. My PCO did explain it a little differently, and our Legal office backed her up. The PCO is to ensure a requirement filled in a way that is in the "best interest of the government". To specifically exclude a currently performing qualified source would not take adavntage of his experience, equipment, or specialized tooling and processes (I am in a parts and equipment command). However, every time something came up that hadn't been procured in the last 5 years it began to be considered fair game even if we had a past producer, since the specialized tooling and experience was likely to be rusty (on both counts).

I share your frustration with utilizing the "shall" sources. I was very frustrated that my command never met their Service Disable Veteran or Veteran owned goals. The problem is Hub-Zone, 8(a), etc all come before veterans, so any progress towards a Veteran Owned goal was usually accidental, they won on a "Total Small business Set Asside".

Thomas

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The contracting officer might be working from his or her experience, and there is value to real experience. The mere fact that two HUBZone small businesses responded to market research with a promise to submit a proposal does not necessarily create an expectation of receiving reasonably-priced proposals from two or more responsible HUBZone small businesses. But if the acquisition goes forward as a regular small business set-aside, and two or more responsible HUBZone small businesses do indeed submit reasonably-priced proposals, then for the next acquisition in the near future one might conclude that such an expectation as required by FAR 19.1305 ( b ) might exist [or substitute another preference program if desired]. I would support the contracting officer's decision and wait and see what the results are, and apply the results in the next similar acquisition.

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Krazy KO,

The citation you provided above likely will not be helpful in a discussion with the contracting officer -- the parity language was proposed, but it did not pass the Congress. Language that was proposed but did not pass should not be relied on as authoritative.

ji

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ji20874,

You have no idea that it will be helpful or not. You're making an assumption that it will likely not be. I gave original poster an avenue of approach. She is relatively new to contracts, as she stated. Any information that would help him/her in their quest to learn more, as in this case what I provided would be helpful information, is good for the learner.

Please don't be so quick to "correct."

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I enjoyed the article. Oh the infamous Conference Committee! It allows politicians to take a public vote for a measure that is needed to pander to a constituency (in this case disabled veterans), then kill it quietly never to be brought up again. If you don't see the senators or congressmen who proposed it immediately bring it back as a new law or ammendment they really didn't want it anyway and were counting on the conference committee to kill it.

I didn't really see how that addressed the original issue, it only created parity between "HUBZone, 8(a), and Service Disabled". I didn't see from the article how (even if passed) it would trump a KO's decision to use a Total Small Business Set Asside (SBSA) to make it HUBZone, 8(a), etc. Having a couple of HUBZones bid, wouldn't work in my case, unless one of them was selected for award. If we selected any other small business type for award then all future requirements would be total SBSA again, not HUBZone.

http://sbc.senate.gov/public/index.cfm?p=P...9b-ea2a5b192a22

Have you guys read this? It may help your side of the debate with your KO.

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Has anyone considered reading the FAR? FAR 19.501( c ) clearly states a priority for HUBZone set-asides over small business set-asides:

For acquisitions exceeding the simplified acquisition threshold, the requirement to set aside an acquisition for HUBZone small business concerns (see 19.1305) takes priority over the requirement to set aside the acquisition for small business concerns.

The great debate going on has to do with priorities among 8(a), SDVOSB, and HUBZone. Nobody is arguing that HUBZone set-asides do not take priority over small business set-asides.

Lastly, contracting officers do not have the discretion to decide that doing a small business set-aside is in "the best interests of the Government" when the conditions for a HUBZone set-aside exist. The FAR Councils have already mandated that a HUBZone set-aside would be in the best interests of the Government in such a situation.

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Has anyone considered reading the FAR? FAR 19.501( c ) clearly states a priority for HUBZone set-asides over small business set-asides:

The great debate going on has to do with priorities among 8(a), SDVOSB, and HUBZone. Nobody is arguing that HUBZone set-asides do not take priority over small business set-asides.

Lastly, contracting officers do not have the discretion to decide that doing a small business set-aside is in "the best interests of the Government" when the conditions for a HUBZone set-aside exist. The FAR Councils have already mandated that a HUBZone set-aside would be in the best interests of the Government in such a situation.

I think I have hit on what the KO is probably using as justification for not setting aside the procurement, FAR 19.1306(a)(3) i.e. may set asside if, "the requirement is not currently being performed by a non-HUBZone small business concern;". While this applies only to "Sole Source" HUBZone set asides, there is a similar restriction at 19.1304(d) against changing to a HUBZone if it is currently being procured from an 8(a). There is also an allowance at FAR 19.1305(:mellow: that requires a "reasonable expectation" that "Award will be made at a fair market price" before setting aside for "competition restricted to HUBZone". These exceptions at FAR19.1304 - 19.1306 could provide some basis for bypassing the HUBZone Set-Aside if proper market research was done, and or you currently had a "Non-HUBZone small business concern" performing the work.

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I think I have hit on what the KO is probably using as justification for not setting aside the procurement, FAR 19.1306(a)(3) i.e. may set asside if, "the requirement is not currently being performed by a non-HUBZone small business concern;". While this applies only to "Sole Source" HUBZone set asides, there is a similar restriction at 19.1304(d) against changing to a HUBZone if it is currently being procured from an 8(a). There is also an allowance at FAR 19.1305(B) that requires a "reasonable expectation" that "Award will be made at a fair market price" before setting aside for "competition restricted to HUBZone". These exceptions at FAR19.1304 - 19.1306 could provide some basis for bypassing the HUBZone Set-Aside if proper market research was done, and or you currently had a "Non-HUBZone small business concern" performing the work.

First, a sole source and a set-aside are two different things. A sole source is noncompetitive and a set-aside is competitive. Accordingly, there is no such thing as a "Sole Source" HUBZone set-aside. The rules at FAR 19.1305 apply to set-asides--not sole sources. The rules at FAR 19.1306 apply to sole sources--not set-asides. If the conditions for both a small business set-aside and a HUBZone set-aside exist for an acquisition above the SAT, you must proceed with a HUBZone set-aside. Period. No "best interest of the Government" exception. No importing rules that only apply to HUBZone sole sources. No making up rules, either.

Now if the requirement is currently being fulfilled through the 8(a) Program, that's a different story. However, I don't see how that applies to ipod24's situation.

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First of I want to thank you all for providing such informative responses. Don, thank you for the FAR clarity. Though, hypothetically based on my situation, if I did set-aside my requirement HUBZone the likelihood that the incumbent contractor will protest is most probable (he has expressed this). The incumbent, as stated in my first post, is only a small business. Any contractor can protest, however, in his situation... what grounds does he have to protest, aside from being bitter and spiteful?

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First of I want to thank you all for providing such informative responses. Don, thank you for the FAR clarity. Though, hypothetically based on my situation, if I did set-aside my requirement HUBZone the likelihood that the incumbent contractor will protest is most probable (he has expressed this). The incumbent, as stated in my first post, is only a small business. Any contractor can protest, however, in his situation... what grounds does he have to protest, aside from being bitter and spiteful?

If 1) the value of the acquisition exceeds the SAT, 2) you have a reasonable expectation that offers will be received from two or more HUBZone small business concerns, and 3) you have a reasonable expectation that award will be made at a fair market price, then the incumbent SB contractor will have no basis to protest your office proceeding with a HUBZone set-aside, assuming that your market research documentation is adequate.

You may want to explain to the incumbent that you have no discretion in this regard. Show them that FAR 19.501( c ) has tied your hands. Don't try to be an advocate for the rule--you can even sympathize with him. I've had these discussions with angry small businesses and have been able to redirect their displeasure at the FAR.

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If 1) the value of the acquisition exceeds the SAT, 2) you have a reasonable expectation that offers will be received from two or more HUBZone small business concerns, and 3) you have a reasonable expectation that award will be made at a fair market price, then the incumbent SB contractor will have no basis to protest your office proceeding with a HUBZone set-aside, assuming that your market research documentation is adequate.

You may want to explain to the incumbent that you have no discretion in this regard. Show them that FAR 19.501( c ) has tied your hands. Don't try to be an advocate for the rule--you can even sympathize with him. I've had these discussions with angry small businesses and have been able to redirect their displeasure at the FAR.

I still think you are over simplifying the language by making this about FAR 19.1305 vs. 19.1306. I believe it is entirely correct to look at the two concurrently in establishing precedence. Following the precedence in 19.1305(a) makes the priority (1. HUBZone set-aside, 2. HUBZone Sole-Source, 3. Small Business Set Aside) but FAR 19.1306(a)(3) makes prior performance by a "non-HUBZone small business" a higher priority than #2 the "HUBZone Sole-Source". Therefore, prior performance is higher than #2, and #1 HUBZone set-aside is also higher than #2. I.e. read together ?prior non-HUBZone performance? could be at least equal to HUBZone set-aside.

I know, I know, "shall set aside". However, even that isn't absolute if you look at FAR19.1305© between micro and simplified it is "may" not "shall". I think as written the FAR has enough ambiguity that each contracting officer would have to determine whether they are equal or not while trying to decipher regulatory intent.

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And how many angels can dance on the head of a pin?

Until Congress, GAO, SBA, and all the people up in the nosebleed pay grades get their stuff together and decide among themselves what the actual rules should be, we mice will continue to debate without any hope of reaching a consensus.

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Good grief. I give up.

Good grief is right!

read together ?prior non-HUBZone performance? could be at least equal to HUBZone set-aside.

tr - This is langauge. You are making assumptions like this is a mathematical equation. The regulations simply say one cannot do a sole source HUBZone award when the work is currently performed by a non-HUBZone contractor. That's it. Don't read more into it than that.

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Has your agency's small business rep reviewed the requirement and provided a position to the CO? We often see market research results that simply demonstrate the number of potential offerors rather than illustrating the likely 'capability' of those offerors to provide a viable response that is likely to provide the anticipated value to the government. Other factors should be included in the market assessment - including those that reflect the objectives of the requirement - in making the final determination. I would consult with your small business rep - if the rationale stands up, then that individual can engage with the CO.

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Good grief is right!

tr - This is langauge. You are making assumptions like this is a mathematical equation. The regulations simply say one cannot do a sole source HUBZone award when the work is currently performed by a non-HUBZone contractor. That's it. Don't read more into it than that.

Language should convey the idea with a certain degree of precision. To lift a single point out of the FAR without reading the whole context of the various small programs and set-asides could lead to mistakes. Although a set-aside and a sole-source HUBZone are "different", they do deal with the same underlying SBA program. So dispite your dismissive statements to the contrary about language not being precise, I do think the PCO could have a valid case when reviewing the whole regulatory context.

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Has your agency's small business rep reviewed the requirement and provided a position to the CO? We often see market research results that simply demonstrate the number of potential offerors rather than illustrating the likely 'capability' of those offerors to provide a viable response that is likely to provide the anticipated value to the government. Other factors should be included in the market assessment - including those that reflect the objectives of the requirement - in making the final determination. I would consult with your small business rep - if the rationale stands up, then that individual can engage with the CO.

Yes, My agency small business rep has reviewed this procedure and actually approves/condones these "non-HUBZone" exceptions. This might be because we exceed the goal every year even with using this exception.

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Language should convey the idea with a certain degree of precision. To lift a single point out of the FAR without reading the whole context of the various small programs and set-asides could lead to mistakes. Although a set-aside and a sole-source HUBZone are "different", they do deal with the same underlying SBA program. So dispite your dismissive statements to the contrary about language not being precise, I do think the PCO could have a valid case when reviewing the whole regulatory context.

You're reading the regulations out of context. Take a look at the HUBZone authorizing legislation of 15 U.S.C. ? 657a

"(a) In general

There is established within the Administration a program to be carried out by the Administrator to provide for Federal contracting

assistance to qualified HUBZone small business concerns in accordance with this section.

(B) Eligible contracts

(1) Definitions

In this subsection -

(A) the term "contracting officer" has the meaning given that term in section 423(f)(5) of title 41; and

(B) the term "full and open competition" has the meaning given that term in section 403 of title 41.

(2) Authority of contracting officer

Notwithstanding any other provision of law -

(A) a contracting officer may award sole source contracts under this section to any qualified HUBZone small business

concern, if -

(i) the qualified HUBZone small business concern is determined to be a responsible contractor with respect to

performance of such contract opportunity, and the contracting officer does not have a reasonable expectation that 2 or more

qualified HUBZone small business concerns will submit offers for the contracting opportunity;

(ii) the anticipated award price of the contract (including options) will not exceed -

(I) $5,000,000, in the case of a contract opportunity assigned a standard industrial classification code for

manufacturing; or

(II) $3,000,000, in the case of all other contract opportunities; and

(iii) in the estimation of the contracting officer, the contract award can be made at a fair and reasonable price;

(B) a contract opportunity shall be awarded pursuant to this section on the basis of competition restricted to qualified

HUBZone small business concerns if the contracting officer has a reasonable expectation that not less than 2 qualified HUBZone

small business concerns will submit offers and that the award can be made at a fair market price; and ......"

It says the Contracting Officer may award a HUBZone contract on a sole source basis if there is no reasonable expectation that 2 or more HUBZone concerns will submit offers and the Contracting Officer shall award a contract on the basis of HUBZone if two or more HUBZone concerns are expecetd to submit offers.

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Guest Vern Edwards
Language should convey the idea with a certain degree of precision. To lift a single point out of the FAR without reading the whole context of the various small programs and set-asides could lead to mistakes. Although a set-aside and a sole-source HUBZone are "different", they do deal with the same underlying SBA program. So dispite your dismissive statements to the contrary about language not being precise, I do think the PCO could have a valid case when reviewing the whole regulatory context.

The language of FAR 19.1305 does convey the idea with precision. It is you who are making things murky by trying to apply an exception to the rules for HUBZone set-asides that clearly applies only to the rules for HUBZone sole source awards. You will find no doctrine of statutory or regulatory interpretation that will support your absurd interpretation of a rule that is crystal clear.

FAR 19.1305 is unequivocal:

(a) A participating agency contracting officer shall set aside acquisitions exceeding the simplified acquisition threshold for competition restricted to HUBZone small business concerns when the requirements of paragraph (B) of this section can be satisfied. The contracting officer shall consider HUBZone set-asides before considering HUBZone sole source awards (see 19.1306) or small business set-asides (see Subpart 19.5).

(B) To set aside an acquisition for competition restricted to HUBZone small business concerns, the contracting officer must have a reasonable expectation that?

(1) Offers will be received from two or more HUBZone small business concerns; and

(2) Award will be made at a fair market price.

We have been given one fact and we make one assumption:

Fact: Two HUBZone small businesses have said that they can and will compete for the job.

Assumption: Award will be made at a fair market price. (I can't imagine any CO saying otherwise.)

Supposing that the assertions of the HUBZone small businesses are reliable and that the assumption is true, then, on the basis of the plain language of the FAR, the procurement must be set-aside for HUBZone small business concerns. The exception for incumbent small businesses in FAR 19.1306(a)(3) is not relevant, since, by its express terms, it applies only to HUBZone sole source awards (reflecting a preference for a 19.502-2 competition to a sole source award). Your ultimate reasoning, such as it is, is not valid. First, you assert:

Although a set-aside and a sole-source HUBZone are "different", they do deal with the same underlying SBA program.

You then conclude:

I do think the PCO could have a valid case [for not making a HUBZone set-aside] when reviewing the whole regulatory context.

Non sequitur. Your conclusion does not follow from that assertion.

The fact that the incumbent is a small business is irrelevant. If the CO presses on with a set-aside under FAR 19.502-2 instead of 19.1305, he/she should prepare to lose a protest.

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No one yet has really addressed my point except to denegrate it.

Only the GAO has ruled for the strict application of HUBZone Set-Aside that you proposed, and the Justice Department has argued that it has the authority to countermand the GOA decision, see articles in next paragraph. The Court of Federal Claims apparently agrees with the GOA but the Senate attempted to clarify the equality of the various SBA program in FY10 Appropriations (but it got lost in Conference).

The OMB, Justice Department, and SBA all appear to agree with my position. http://www.govexec.com/dailyfed/0310/030810rb1.htm

http://www.govexec.com/story_page.cfm?file...09/071309e1.htm

Until the Senate gets their language thoough Conference Committee, it seems that there is a disagreement between the Court of Federal Claims and the Executive Branch.

My point is that 19.1305(a) lists the following heirarchy:

HUBZone Set-Aside

HUBZone Sole Source

Small Business Set Asides

Given FAR 19.1305(a) How could a Small Business EVER be higher priority than any HUBZone Sole Source?

However, FAR 19.1306(a)(3) offers an apparently contradictory Priority:

Prior Performing Small Business

HUBZone Sole Source

Note, Now a Small Business can be higher priority than a HUBZone Sole Source, the only thing that changed is prior performance. So, building this scenario by applying FAR 19.13 as a whole, the combined position could be:

Prior Performing Small Business

HUBZone Set Aside

HUBZone Sole Source

SBSA

or....

HUBZone Set Aside

Prior Performing Small business

HUB Zone Sole Source

SBSA

The SBA, OMB, Justice Department, some Senators, and I appear to agree with someting similar to the first Option.

The Court of Federal Claims, GAO, Vern, Don, etc appear to agree with the Second Option.

This really seems a case of which branch do we work for... Executive... Who passes the laws... Legislative... Who interprets them... Judicial... When they disagree then what???

This is much like 1984.... It appears that even Inner Party (elected officials) can't agree. This Outer Party member is guilty of the Thought Crime of not exercising Double Think. I guess I am a candidate for the the Ministry of Love so I can confess my crimes and "believe the truth" and beg the merciful punishment of Big Brother.

Maintaining a Sense of Humor,

Thomas

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Guest Vern Edwards

Well, throw away your sense of humor.

The GAO decision, the Court of Federal Claims decision, the Justice Department opinion, and the Senate bill have nothing to do with the issue at hand. Don Mansfield pointed that out in Post # 8 six days ago. Those documents address only the question of parity/priority among HUBZone, SDVOSB, and 8(a). They do not deal with FAR 19.1305 versus FAR 19.502-2 set-asides, which is what this thread has been about.

You have misread the GAO decision.

You have misread the Court of Claims decision.

You have misread the Justice Department opinion.

You have misread the Senate bill.

And you have misread the FAR.

Quite a tally. You should call it a day.

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