FAR Council Implements Interim Rule Authorizing Agencies to Set Aside Task & Delivery Orders Under Multiple Award Contracts for Small Businesses

The FAR Council recently extended the deadline for submission of public comments for an interim rule which expressly authorizes agencies to utilize small business set-asides for various multiple award contracts. This interim rule reverses the rule (currently expressed in FAR 8.404(a)) that FAR Part 19 set-asides were not applicable for multiple award contracts. The FAR Council previously issued an interim rule on November 2, 2011, at 76 Fed. Reg. 68032, to amend the FAR to implement section 1331 of the Small Business Jobs Act of 2010 (Jobs Act). This section of the Jobs Act addresses small business set-asides for task and delivery orders under multiple-award contracts, partial set-asides under multiple-award contracts, and the reservation of one or more multiple-award contracts that are awarded using full and open competition. Until  the Small Business Administration (SBA) promulgates a rule implementing section 1331 with more detail, the interim FAR rule is designed to allow agencies to begin meeting their small business contracting goals by setting aside task and delivery orders placed against certain multiple-award contracts. Pursuant to this recent notice, published on January 12, 2012, at 77 Fed. Reg. 1889, the FAR Council extended the deadline for submission of comments to February 3, 2012.

Under the interim rule, federal agencies are encouraged to set aside task and delivery orders placed against certain multiple-award contracts for small businesses if (a) the remaining period of performance extends at least six months after the effective date; and (b) the amount of work or number of orders expected under the remaining performance period is substantial. The rule also permits agencies to reserve one or more multiple-award contracts awarded with full and open competition for small businesses.

Although set-asides are one of the most effective tools agencies have at their disposal to help small businesses participate in government contracting opportunities, the FAR previously was silent regarding how to apply set-asides at the task-or-delivery order level. The interim rule amends:

• FAR subpart 8.4 and FAR subpart 38.1 to make clear that set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedule contracts;

• FAR subpart 12.2 to acknowledge that discretionary set-asides may be used if placing an order under a multiple-award contract;

• FAR subpart 16.5 to acknowledge that set-asides may be used in connection with the placement of orders under multiple-award contracts, notwithstanding the requirement to provide each contract holder a fair opportunity to be considered;

• FAR part 19 to add a new section authorizing agencies to (1) use set-asides under multiple-award contracts, including set-asides for small businesses participating in the small business programs identified in FAR 19.000(a)(3); and (2) reserve one or more contract awards under multiple-award contracts for small businesses, including any of the socio-economic groups.

The interim rule also amends solicitation provisions and contract clauses, including FAR 52.219-6 to provide notice of total set-asides and partial set-asides under multiple-award contracts, and revises existing contract clauses to address limitations on subcontracting for small businesses under multiple-award contracts. The FAR Council expects agencies to take advantage of set-asides under multiple-award contracts by (1) identifying existing or prospective multiple-award contracts with small business contract holders where order set-asides may be appropriate, and (2) maximizing opportunities for small business by utilizing order set-asides under the Federal Supply Schedule Program.

CONTACTS

For further information regarding the topic discussed in this update, please contact one of the professionals below, or the attorney or public policy advisor with whom you regularly work.

Richard B. Oliver213.243.6169

Alison L. Doyle202.496.7604

Andrea Fontana213.243.6159

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