Jump to content
The Wifcon Forums and Blogs

Wynot

Removal of Acquisition from the 8(a) Program

Recommended Posts

If an agency offers an internal support contract (thinks custodial, elevator maintenance, admin suport, etc.) to the SBA as an 8(a) sole source, does the follow-on contract have to remain within the program? (EX. Base+ 4 years for elevator maintenance awarded via 8(a) program sole source expires. Is follow-on effort required to go through SBA 8(a), or can we solicit via GSA E-Buy, Full and Open, etc.)

I have search FAR and wide for any regulation that supports the popular (amongst the Contracting Proferssionals I work with) belief that "once in the 8(a) program, always in the 8(a) program". I have yet to find any regulatory guidance that supports this thought process. I did find the following:

FAR 19.804-4, Repetitive Acquisitions (appears to instruct agencies to resubmit the offering to SBA for any follow-on contracts that the agency wants to remain in the program).

http://www.sba.gov/idc/groups/public/docum..._searchable.pdf

The above link takes you to an SBA document. On page 115 of this document you'll find the following:

"25. Must a Procuring Activity Offer a Follow-On or Repetitive Requirement to SBA If It Wishes to Award the Successor Contract Under 8(a) BD?

A procuring activity must submit a new offering letter to SBA if it intends to award a follow-on or repetitive contract as an 8(a) award. This allows SBA to consider the appropriateness of the requirement for the program, whether it should be accepted for sole source or competitive award, eligibility of any nominated concern, and the effect of the award on equitable distribution of contract opportunities. The procuring activity should notify SBA if it does not plan to reoffer the requirement. See 13 CFR 124.503(f).

13 CFR 124.503(f) says the following:

(f) Repetitive acquisitions. A procuring activity contracting officer must submit a new offering letter to SBA where he or she intends to award a follow-on or repetitive contract as an 8(a) award. This enables SBA to determine:

(1) Whether the requirement should be a competitive 8(a) award;

(2) A nominated firm?s eligibility, whether or not it is the same firm that performed the previous contract;

(3) The affect that contract award would have on the equitable distribution of 8(a) contracts; and

(4) Whether the requirement should continue under the 8(a) BD program.

Finally, on the FAQ's for the HHS OSDBU (http://www.hhs.gov/osdbu/faqs/), the following, unsupported statement:

Q. How do I find 8(a) opportunities at HHS? (I thought that it was mandatory for Federal Agencies to set-aside opportunities for 8(a) contractors.)

A. The Small Business Act defines the 8(a) program as a procurement program. At its inception, it sought to develop small businesses that were socially and economically disadvantaged while providing the Federal Government a faster way to obtain goods and services. Unlike Small Business set-asides, there is no statutory requirement for Executive Departments to use the 8(a) program. Contracting Officers must determine if a specific requirement is conducive to the 8(a) program. It has been the practice of the Federal Government to maintain these requirements in the 8(a) program once that determination is made. Contracting Officers are also required to notify the SBA if they intend to ?remove? a requirement from the 8(a) program. The SBA has the sole authority over this decision.

This HHS FAQ is the only mention on a Government website I can find that even mentions this practice/philosophy. Can anyone else provide the regulation (or lack thereof)?

Share this post


Link to post
Share on other sites

Wynot,

I've always believed that the "once an 8(a) always an 8(a)" is an urban myth, but haven't ever found anything that specifically deals with that idea.

One GAO case that comes close is Ahntech, B-401092. In that case, the maintenance of a range was removed from the incumbent small business (Ahntech) and awarded to an 8(a). One of Ahntech's complaints was that "the Air Force previously expressed a clear intent to reserve the requirement for small businesses by virtue of its obtaining these services from a small business for the last 8 years." The GAO wrote "the SBA does not support AHNTECH's argument that 13 C.F.R. sect. 124.504(a), by its language, applies merely because a requirement has been historically set aside for small businesses." GAO didn't spend much time dismissing that basis for the protest.

I know Ahntech doesn't specifically answer your question, but I think the case can be fairly interpreted to mean that the so long as the circumstances are appropriate, requirements can be removed from a particular program.

I think its also interesting that in your quote from the SBA, it only says that 13 CFR 124.503(f) requires the SBA notified of an intent but doesn't say anything about SBA approval.

Share this post


Link to post
Share on other sites

Thanks for your input treiser. I reviewed the GAO decision you referenced and agree with your assessment. While not specific to the 8(a) issue, it does appear to permit the removal of a requirement from the historically utilized socioeconomic program.

Share this post


Link to post
Share on other sites
Guest carl r culham

"does the follow-on contract have to remain within the program?"

I suggest a closer read of the CFR before you jump to conclusions inclusive of your misinterpretation of the Ahntech case. See 13 CFR 124.504(e) as by read of you initial post this appears to be the appropriate reference.

With regard to Ahntech it is about issue of "adverse impact" and not SBA's right so do not be confused. The Protest is with regard to 13 CFR 124.504(a) and © and has nothing to do with 13 CFR 124.503(f) nor 13 CFR 124.504(e). By read of 13 CFR 124.503(f) you "must" submit a "new offering letter" and SBA retains the sole right to determine whether to retain or release the procurement from Program (13 CFR 504).

Share this post


Link to post
Share on other sites

The protest in Ahntech was based on two allegations. The first was that the AF had essentially advertised the work for small business as a result of the work having been awarded to small business for the last 8 years so the work had to remain with small business. The second is that no adverse impact determination was conducted.

My post is clear that Ahntech does not specifically answer the question of whether a requirement has to remain with an 8(a) and that Ahntech deals with small business concerns rather than 8(a) concerns. However, in the absence of any specific authority one way or the other, all that can be done is look at analogous situations and apply them to a current situation.

Also, I don't believe your reference to 13 CFR 124.503(f) answers the question. All that provision says is:

(f) Repetitive acquisitions. A procuring activity contracting officer must submit a new offering letter to SBA where he or she intends to award a follow-on or repetitive contract as an 8(a) award.

The question remains of what a CO is required to do if he/she does not intend to make the award to an 8(a).

Share this post


Link to post
Share on other sites
Guest carl r culham

treiser - Quite splitting hairs, the Ahntech decision has no bearing on the question. Suggest you re-read my post as well. Reference is 13 CFR 124.504 (a) and ©.

What does a CO required to do?

A CO "must" submit the request to SBA and then they must sit back and wait to see if SBA agrees to release or not purusant to 13 CFR 124.504.

Share this post


Link to post
Share on other sites
Guest carl r culham

And yes someday my fingers might just type the right letters in the right order. Need to do a better job of proof reading but the answer is still the same - It is SBA's decision as to whether to release or not.

Share this post


Link to post
Share on other sites

I don't think this proposed rule has become final, but it does provide insight into SBA's intentions (these are relevant excerpts):

[Federal Register: October 28, 2009 (Volume 74, Number 207)]

[Proposed Rules]

[Page 55693-55723]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr28oc09-32]

This rule also proposes to amend Sec. 124.504(e), regarding the

release of follow-on procurements from the 8(a) BD program. It has

always been SBA's policy, and implicit in the regulations, that once a

requirement is awarded as an 8(a) contract, any follow-on procurement

should generally also be awarded as an 8(a) contract. SBA's regulations

for both the HUBZone and service disabled veteran-owned small business

programs address the release of requirements from the 8(a) BD program

to those programs where no 8(a) firm can currently perform the

contract. The 8(a) BD regulations did not specifically address release

of requirements other than those where a firm is graduating from the

program and needs the follow-on contract to further its business

development. As such, the proposed rule would require that follow-on or

repetitive 8(a) procurements would generally remain in the 8(a) BD

program unless SBA agrees to release them for non-8(a) competition. If

a procuring agency would like to fulfill a follow-on or repetitive

acquisition outside of the 8(a) BD program, it must make a written

request to and receive the concurrence of the AA/BD to do so. Release

may be based on an agency's achievement of its SDB goal, but failure to

achieve its HUBZone or SDVO goal, where the requirement is not critical

to the business development of the 8(a) Participant that is currently

performing the requirement or another 8(a) BD Participant. The

requirement that a follow-on procurement must be released from the 8(a)

BD program in order for it to be fulfilled outside the 8(a) BD program

would not apply to orders offered to and accepted for the 8(a) BD

program pursuant to Sec. 124.503(h).

(d) Release for non-8(a) competition. (1) Except as set forth in

paragraph (d)(4) of this section, where a procurement is awarded as an

8(a) contract, its follow-on or renewable acquisition must remain in

the 8(a) BD program unless SBA agrees to release it for non-8(a)

competition. If a procuring agency would like to fulfill a follow-on or

renewable acquisition outside of the 8(a) BD program, it must make a

written request to and receive the concurrence of the AA/BD to do so.

In determining whether to release a requirement from the 8(a) BD

program, SBA will consider:

(i) Whether the agency has achieved its SDB goal;

(ii) Where the agency is in achieving its HUBZone, SDVO, WOSB, or

small business goal, as appropriate; and

(iii) Whether the requirement is critical to the business

development of the 8(a) Participant that is currently performing it.

(2) SBA may decline to accept the offer of a follow-on or renewable

8(a) acquisition in order to give a concern previously awarded the

contract that is leaving or has left the 8(a) BD program the

opportunity to compete for the requirement outside of the 8(a) BD

program.

(i) SBA will consider release under this paragraph (d)(2) only

where:

(A) The procurement awarded through the 8(a) BD program is being or

was performed by either a Participant whose program term will expire

prior to contract completion, or by a former Participant whose program

term expired within one year of the date of the offering letter;

(B) The concern requests in writing that SBA decline to accept the

offer prior to SBA's acceptance of the requirement for award as an 8(a)

contract; and

© The concern qualifies as a small business for the requirement

now offered to the 8(a) BD program.

(ii) In considering release under this paragraph (d)(2), SBA will

balance the importance of the requirement to the concern's business

development needs against the business development needs of other

Participants that are qualified to perform the requirement. This

determination will include consideration of whether rejection of the

requirement would seriously reduce the pool of similar types of

contracts available for award as 8(a) contracts. SBA will seek the

views of the procuring agency.

(3) SBA will release a requirement under this paragraph only where

the procuring activity agrees to procure the requirement as a small

business, HUBZone, service disabled veteran-owned small business, or

women-owned small business set-aside.

(4) The requirement that a follow-on procurement need must be

released from the 8(a) BD program in order for it to be fulfilled

outside the 8(a) BD program does not apply to orders offered to and

accepted for the 8(a) BD program pursuant to Sec. 124.503(h).

Share this post


Link to post
Share on other sites

Okay, I've read the applicable CFR's. However, since there is no regulatory guidance in the FAR, DFARS, etc., why are we beholden to SBA's assertion that;

"It has always been SBA's policy, and implicit in the regulations, that once a requirement is awarded as an 8(a) contract, any follow-on procurement should generally also be awarded as an 8(a) contract."

Could SBA really intervene if an organization decided to go another route with an acquisition?

Share this post


Link to post
Share on other sites

"Okay, I've read the applicable CFR's. However, since there is no regulatory guidance in the FAR, DFARS, etc., why are we beholden to SBA's assertion that;

"It has always been SBA's policy, and implicit in the regulations, that once a requirement is awarded as an 8(a) contract, any follow-on procurement should generally also be awarded as an 8(a) contract.""

One other issue to bear in mind is that many agencies have an MOU with SBA that permits the agency to conduct 8(a) acquisitions directly, rather than working through SBA. Such MOU's may require to keep a requirement in 8(a) unless SBA otherwise agrees.

Share this post


Link to post
Share on other sites

At GSA it comes from the GSAM - sub ( c) below

"519.803-70 Contracting officer evaluation of recommendations for 8(a) set-aside(s).

(a) If you disagree with a recommendation by the Associate Administrator for the Office of Small Business Utilization or the SBTA to set aside a procurement for award under the 8(a) program, discuss the matter with the official who made the recommendation.

(B) If you decide not to award the contract under the 8(a) program, forward a copy of the documentation required by FAR 19.202-1(e)(4) to the Office of Small Business Utilization (E) within 10 working days.

( c) Once a contracting activity acquires a product or service successfully on the basis of an 8(a) set-aside, the activity must acquire all future requirements for that product or service using 8(a) set-aside procedures. However, the availability of Federal Prison Industries, Inc. and Nonprofit Agencies Employing People Who Are Blind or Severely Disabled (JWOD) mandatory sources which may not have existed at the time of the original requirement are sufficient reason to discontinue setting aside a continuing requirement.If you determine that acquiring the product or service as an 8(a) set-aside is no longer in the Government?s best interest, use the procedures in FAR 19.506 to withdraw a repetitive set-aside. "

Share this post


Link to post
Share on other sites

Indeed, the agency Partnership Agreement with SBA includes a requirement to comply "with applicable regulations as cited in FAR 19, 42, 52, and 13 C.F.R. 124"

Share this post


Link to post
Share on other sites

Wynot,

there is a way to get around all these rules. In a case where that agency is not happy with the 8(a) firm's performance, and wants to get a contract out of the program, think creatively.

The SBA will try to get you to slide another 8(a) firm in there, rather than losing it out of the program altogether.

Here's what you do: Cancel the requirement. Determine that the Agency no longer needs those services.

At the same time, have another contracting office in the same Agency solicit for a different requirement, different name, different NAICS code, different location, different customer, but that will use the same workforce, doing essentially the same thing. Then, after award, during ramp-up or mobilization, cut a Mod so that the requirement exactly matches the old requirement, but updated as appropriate.

I've seen it done. Doesn't make it right, but it becomes fait accompli.

.

Share this post


Link to post
Share on other sites

The original question was: Once a procurement has been set aside for 8(a), must follow-ons to that procurement also be set-aside for 8(a)?

That question is being litigated at the U.S. Court of Federal Claims. See K-LAK Corp. v. U.S., No. 09-771C, Aug. 3, 2010 http://www.pubklaw.com/rd/courts/09-771.pdf. The USAF thinks the answer to the question is no. The SBA thinks the answer is yes. The USAF declined to exercise an option in an 8(a) contract and decided to procure the service through GSA FSS.

The SBA in December 2008 formally advised the Air Force that the requirement for credit reporting services could not be withdrawn from the 8(a) program based upon the information the Air Force had provided, on the grounds that the SBA may release a requirement from the 8(a) program ?only in very limited circumstances? and none of the information provided met the criteria of 13 C.F.R. ? 124.504(e).?
[sic.]

The current SBA regulation does not reflect SBA's "policy," nor is the policy implicit in those regulations. Hence, the proposed rule quoted by awhinton in Post #8.

[T]he proposed rule would require that follow-on or repetitive 8(a) procurements would generally remain in the 8(a) BD program unless SBA agrees to release them for non-8(a) competition. If a procuring agency would like to fulfill a follow-on or repetitive acquisition outside of the 8(a) BD program, it must make a written request to and receive the concurrence of the AA/BD to do so.

In my opinion, SBA is overreaching. It has no authority to require an agency to get its release of a procurement from a program in which agencies voluntarily participate. It is clearly trying to give an 8(a) firm grounds for protest if an agency decides not to set aside a follow-on.

Share this post


Link to post
Share on other sites

We just went through this. Only way we got our requirement out of 8(a) program was to put another one in. Existing requirement had grown so the estimated annual value was larger than size standard for applicable NAICS and SBA still didn't want to let it go.

Share this post


Link to post
Share on other sites

I have a question related to this post.

I read 13 CFR 124.504 and at the first paragaraph it states "SBA will not accept a procurement for award as an 8(a) contract if the circumstances identified in paragraphs (a) through (d) of this section exist."

My question is: Does each one of the circumstances in para (a) through (d) have to exist for SBA to not accept a procurement into the 8(a) program or can only one of the circumstances exist?

For example: If only the circumstances as addressed under para (a) are present must SBA NOT accept a procurement into the 8(a) program?

Share this post


Link to post
Share on other sites

Can anyone tell me if this case progressed to answer the question of whether SBA approval is required to remove a requirement from the 8(a) program? All I am finding is the motion to dismiss jurisdiction was denied.

I had always been under the impression that SBA approval was required to remove the "requirement" from the 8(a) program once offered to SBA but I had always considered the "requirement" to be the instant procurement at-hand (i.e., doing a particular service over a base year and 4 option years) but not into infinity.

Share this post


Link to post
Share on other sites
Can anyone tell me if this case progressed to answer the question of whether SBA approval is required to remove a requirement from the 8(a) program? All I am finding is the motion to dismiss jurisdiction was denied.

I had always been under the impression that SBA approval was required to remove the "requirement" from the 8(a) program once offered to SBA but I had always considered the "requirement" to be the instant procurement at-hand (i.e., doing a particular service over a base year and 4 option years) but not into infinity.

The question has been answered in SBA's revised 8(a) regulations.

Share this post


Link to post
Share on other sites
The question has been answered in SBA's revised 8(a) regulations.

We are working on a follow-on 8(a) competition. The incumbent 8(a) contractor became an object of interest of the Department of Justice. Some of the company's officers were indicted; one has pled guilty. Seizure of assets and / or debarment is a potential short term outcome. If this outcome occurs or if, for any reason, the contractor could not perform, my agency would be in a real bind. Given the likely dire consequences if the incumbent 8(a) contractor is unable to perform, I am dealing with SBA to obtain an OK to award an interim contract outside the 8a program while the follow on competition is conducted.

Below is the coverage in the SBA regulations of release of an 8(a) contract from the 8(a) program.

13 CFR ? 124.504

(d) Release for non-8(a) competition. (1) Except as set forth in (d)(4) of this section, where a procurement is awarded as an 8(a) contract, its follow-on or renewable acquisition must remain in the 8(a) BD program unless SBA agrees to release it for non-8(a) competition. If a procuring agency would like to fulfill a follow-on or renewable acquisition outside of the 8(a) BD program, it must make a written request to and receive the concurrence of the AA/BD to do so. In determining whether to release a requirement from the 8(a) BD program, SBA will consider:

(i) Whether the agency has achieved its SDB goal;

(ii) Where the agency is in achieving its HUBZone, SDVO, WOSB, or small business goal, as appropriate; and

(iii) Whether the requirement is critical to the business development of the 8(a) Participant that is currently performing it.

(2) SBA may decline to accept the offer of a follow-on or renewable 8(a) acquisition in order to give a concern previously awarded the contract that is leaving or has left the 8(a) BD program the opportunity to compete for the requirement outside of the 8(a) BD program.

(i) SBA will consider release under paragraph (2) only where:

(A) The procurement awarded through the 8(a) BD program is being or was performed by either a Participant whose program term will expire prior to contract completion, or by a former Participant whose program term expired within one year of the date of the offering letter;

(B) The concern requests in writing that SBA decline to accept the offer prior to SBA's acceptance of the requirement for award as an 8(a) contract; and

© The concern qualifies as a small business for the requirement now offered to the 8(a) BD program.

(ii) In considering release under paragraph (2), SBA will balance the importance of the requirement to the concern's business development needs against the business development needs of other Participants that are qualified to perform the requirement. This determination will include consideration of whether rejection of the requirement would seriously reduce the pool of similar types of contracts available for award as 8(a) contracts. SBA will also seek the views of the procuring agency.

(3) SBA will release a requirement under this paragraph only where the procuring activity agrees to procure the requirement as a small business, HUBZone, SDVO small business, or WOSB set-aside.

(4) The requirement that a follow-on procurement must be released from the 8(a) BD program in order for it to be fulfilled outside the 8(a) BD program does not apply to orders offered to and accepted for the 8(a) BD program pursuant to ?124.503(h).

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.

×