When federal agencies bundle or consolidate requirements, it can exclude small businesses from qualifying for the work. A new FAR rule effective October 31, 2016 (one of many that will impact small businesses) will address this.
According to the Federal Register, consolidation or consolidated requirement means “a solicitation for a single contract, a multiple-award contract, a task order, or a delivery order to satisfy:
i. Two or more requirements of the Federal agency for supplies or services that have been provided to or performed for the Federal agency under two or more separate contracts, each of which was lower in cost than the total cost of the contract for which offers are solicited; or
ii. Requirements of the Federal agency for construction projects to be performed at two or more discrete sites.”
Bundling, they explain, is “a subset of consolidation that combines two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a solicitation for a single contract, a multiple-award contract, or a task or delivery order that is likely to be unsuitable for award to a small business concern (even if it is suitable for award to a small business with a Small Business Teaming Arrangement) due to:
i. The diversity, size, or specialized nature of the elements of the performance specified;
ii. The aggregate dollar value of the anticipated award;
iii. The geographical dispersion of the contract performance sites; or
iv. Any combination of the factors described in paragraphs (i), (ii), and (iii) of this definition.”
The summary notes that, “There are currently approximately 307,846 small business registrants that can potentially benefit from the implementation of this rule. This rule does not impose any new reporting, recordkeeping or other compliance requirements.”
OK, that’s a lot of technical and legal mumbo-jumbo. The essence here is a few different things. First, in their definition of small business teaming arrangements, this provision recognizes the Mentor-Protégé JV, Contractor Teaming Arrangements (CTAs), and normal JV provisions for use in a contract bundling provision. This is important because often JVs and CTAs are considered “higher risk” in large contract actions, and this provision both defines the various potential arrangements and encourages them.
And secondly, this provides more detail and restrictions to the contract bundling and consolidation routine that so many agencies go through, and which serve as an anti-small business process because of the size of the resulting requirement. This provision explicitly recognizes the small business team types as being valid and therefore limits some of the anti-small business prejudice that becomes prevalent.
As small businesses, we’d like as little consolidation and bundling as we can get. Since this rule better defines how the government can do this, and limits who can do it and how, there will be less of it, and that’s a good thing.
Bill, thanks for the update. While this FAR Rule clarifies the consolidation and bundling issue for small business, there is still an open item which must be addressed. What is the net impact of consolidation and bundling on small businesses? While these procurement devices will “save” taxpayer dollars, what is the Economic & Social Cost to the US Economy for the non-winners among the 307,846 small business registrants. In effect, I am suggesting that while this new FAR Rule may be helpful, there is still the need for a Cost-Benefit Analysis to avoid the “Unintended Consequences” of FAR Rules that have not been fully vetted.
Thanks for the comment, Samuel.