DATE: January 31, 2003

SUBJECT: Federal Acquisition Regulation (FAR) and Small Business Administration (SBA); Contract Bundling

SOURCE: Federal Register, January 31, 2003, Vol. 68, No. 21, pages 5133 and 5138

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), National Aeronautics and Space Administration (NASA), and Small Business Administration (SBA)

ACTION: Proposed Rules

SYNOPSIS: It is proposed that the FAR and SBA's regulations be amended to implement the recommendations of the Office of Federal Procurement Policy (OFPP) in its report "Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business."

EDITOR'S NOTE: "Bundling" is defined in FAR 2.101, Definitions, as "consolidating two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract that is likely to be unsuitable for award to a small business concern due to (1) the diversity, size, or specialized nature of the elements of the performance specified; (2) the aggregate dollar value of the anticipated award; (3) the geographical dispersion of the contract performance sites; or (4) any combination of the factors..."

For more on "Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business," see the October 30, 2002, FEDERAL CONTRACTS DISPATCH "Office of Federal Procurement Policy (OFPP); Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business."

DATES: Comments on the proposed FAR and SBA regulation changes are due April 1, 2003.

ADDRESSES: Submit written comments on FAR proposed rule to General Services Administration, FAR Secretariat (MVA), 1800 F Street, NW, Room 4035, Attn: Laurie Duarte, Washington, DC 20405. Submit e-mail comments to: farcase.2002-029@gsa.gov. Cite "FAR case 2002-029" when referring to this proposed rule.

Submit written comments on SBA's proposed rule to Linda G. Williams, Associate Administrator for Government Contracting, 409 Third Street, SW, Mail Code 6530, Washington, DC 20416; e-mail: dean.koppel@sba.gov; or facsimile (fax) to 202-205-6390.

FOR FURTHER INFORMATION CONTACT: For the FAR proposed rule: Rhonda Cundiff, Procurement Analyst, 202-501-0044. For the SBA proposed rule: Dean Koppel, Assistant Administrator, Office of Policy and Research, 202-401-8150, or by e-mail to dean.koppel@sba.gov.

SUPPLEMENTAL INFORMATION: On March 19, 2002, President Bush issued his "Small Business Agenda," and one of the items on the agenda was:

"Avoid unnecessary contract bundling. Small businesses bring innovation and lower costs to the government. When contracts are bundled together, small businesses are at a disadvantage if they are not capable of supplying all the contracts. Accordingly, the president has instructed the Director of the OMB [Office of Management and Budget] to prepare a federal government strategy for unbundling contracts whenever practicable."

On October 29, 2002, OFPP (part of OMB) submitted to the president the report "Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business." The report listed nine separate actions for unbundling contracts. The proposed FAR and SBA regulation changes address five of the nine actions:

  1. "The definition of contract bundling in the FAR [Federal Acquisition Regulation] and SBA regulations will be clarified to require contract bundling reviews by the agency OSDBU [Office of Small and Disadvantaged Business Utilization] for task and delivery orders under multiple award contract vehicles."

  2. "SBA regulations and the FAR will be modified to require contract bundling reviews of proposed acquisitions above agency-specific dollar thresholds. Individual agency review thresholds for acquisitions between $2 million and $7 million should be established based on an agency's volume of contracts and in consultation with the SBA and agency OSDBU."

  3. "SBA regulations and the FAR will be modified to require agencies to specifically identify alternative acquisition strategies that involve less bundling when an agency contemplates a bundled contract above a threshold between $2 million and $7 million. Where a bundled contract is used for an acquisition above the specified threshold, a written justification for using a bundled contract should identify these alternative strategies and the rationale for choosing a particular strategy over alternatives that could involve less bundling."

  4. "To encourage greater small business participation as subcontractors in bundled acquisitions, the FAR will be amended to require agencies to use contractor compliance with subcontracting plans as an evaluation factor for future contract awards. Agencies also will strengthen oversight of contractor efforts to comply with subcontracting plans by establishing procedures that designate personnel responsible for monitoring contractor compliance with subcontracting plans, delineate responsibilities of such personnel, and monitor their performance. These procedures will include specific requirements for agency monitoring of contractor efforts to comply with subcontracting plans for agency multiple award contracts (MACs), multi-agency contracts, governmentwide acquisition contracts (GWACs), and GSA's [General Services Administration's] multiple award schedule program contracts and orders under all of these types of contracts."

  5. "SBA bundling regulations encourage the formation of teams of small business contractors to compete for bundled contracts. However, small businesses face obstacles to forming these teams due to relatively limited time available to respond to agency procurement solicitations, time that could otherwise be used to prepare a proposal in response to the solicitation. Agencies will train and otherwise facilitate early development of teams of small business contractors to compete for upcoming procurements."

To implement these actions, the following are the proposed changes to the FAR and SBA regulations (the two sets of proposed changes are very similar):


SBA Regulations (Title 13 of the Code of Federal Regulations (CFR), Part 125, Government Contracting Programs, Subpart 125.2, Prime Contracting Assistance)

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2003 by Panoptic Enterprises. All Rights Reserved.

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