Fourth Quarter Preview: What is the SBA up to?
As we approach the fourth quarter of the fiscal year, we are coming upon the time of the year when the most simplified acquisitions and awards to small business concerns occur.
According to Guy Timberlake of the American Small Business Coalition, during fiscal year 2014 (FY14) “[Federal] agencies spent $11 billion of $19 billion from Q1 to Q3, [meaning] over $8 billion [was spent] from the start of July to the end of September.”
Of that $8 billion, $6 billion was obligated under purchase orders and definitive contracts. Furthermore, $5 billion of that $6 billion was awarded to small business concerns.
With numbers like these, I believe it is safe to assume that most of this was through simplified acquisitions – what Mr. Timberlake calls “low-hanging fruit” – as is the typical case during the last quarter of the fiscal year.
So, I wanted to take this opportunity to discuss some of the changes the Small Business Administration (SBA) made recently that may ease your contracting office’s small business set-asides and simplified acquisitions for Q4 of FY16.
After all, during this quarter – the busiest quarter of the fiscal year – we could all use some external assistance in easing the dollars out the door. Right?!
With that said, on May 31, 2016, the SBA passed a rather lengthy final rule stemming from the Small Business Government Contracting and National Defense Authorization Act of 2013 Amendments, including revisions to the following items:
- Procurement Center Representative Responsibilities
- Limitations on Subcontracting
- HUBZone Program
- Subcontracting Plans
- Affiliation
- Joint Ventures
- Calculation of Annual Receipts
- Recertification
- Small Business Innovation Research and Small Business Technology Transfer Programs
- Size Status Protests
- North American Industry Classification System Code (NAICS) Appeals
- Nonmanufacturer Rule
- Adverse Impact and Construction Requirements
- Certificate of Competency
Out of this long list of revisions, five of these may impact your small business set-asides and/or simplified acquisitions during the final quarter of the fiscal year:
- (1) limitations on subcontracting
- (2) joint ventures
- (3) size status protests
- (4) nonmanufacturer rule
- (5) certificate of competency
So let us discuss these:
First off, the SBA revised the Small Business Act language concerning the limitations on subcontracting to bring it more in-line with the Federal Acquisition Regulation (FAR). The revision provides the SBA’s statutory authority for exempting small business set-asides valued between $3,500 and $150,000 from the limitation on subcontracting.
The guidance at FAR 19.508(e) already contains this exemption, stating that “[t]he contracting officer shall insert the clause at 52.219-4, Limitations on Subcontracting, in solicitations, services, and construction, if any portion of the requirement is to be set aside or reserved for small business and the contract amount is expected to exceed $150,000.”
Therefore, there is no need to change the way you’ve been doing business. It’s just nice that the SBA has clarified this exemption on their end – so you’re covered either way.
Second, the SBA has broadened the exclusion from affiliation for small business joint ventures. Under the final rule, the SBA sets forth language allowing two or more small businesses to joint venture for any procurement without being considered “affiliated” with regard to the performance of that procurement requirement.
This allows two or more small business concerns, who are small under the applicable NAICS code for the procurement, to form a joint venture and compete for the requirement as a small entity. SBA did this to encourage more small business participation on larger contracts, as joint venturing is a tried-and-true way to increase the capacity of a small business concern for larger endeavors.
This also provides the opportunity for you to set-aside larger efforts for small business, provided there exists sufficient small business concerns to form a joint venture suitable to your needs.
Third, the SBA clarified who can initiate a size status protest under a procurement effort. The revised language basically states that “any offeror that the contracting officer has not eliminated from consideration for any procurement related reason, such as nonresponsiveness, technical unacceptability, or outside of the competitive range” has standing to file a size status protest.
Additionally, the SBA clarified that the nonmanufacturer rule does not apply to small business set-asides valued between $3,500 and $150,000 – making it easier for an agency to obtain small business competition for supply contracts. This alleviates the requirement for a contracting officer to request a waiver from the SBA when you cannot locate a small business that can manufacture 50% or more of the product .
This could save you days – possibly even weeks – during your small business set-aside acquisitions for supplies, which is a big deal this time of year!
Finally, the SBA created a process for the issuance of a Certificate of Competency (COC) for small business concerns that have been found by the contracting officer to be non-responsible due to financial capacity, for an indefinite-delivery indefinite-quantity (IDIQ) task order or contract.
The new process authorizes the SBA’s Area Director to consider a firm’s “maximum financial capacity” when determining whether to issue a COC. Additionally, when the COC is issued, it must be for a specific amount that “serves as the limit of the firm’s financial capacity for that [IDIQ] contract.”
All of these changes may provide some sort of relief for your small business set-asides and/or simplified acquisitions during the last quarter of the fiscal year.
For the full-text of the final rule issued by the SBA – click here.
