Bundling rules call for more contract reviews

A new procurement rule will subject more federal contracts to review as the government tries to crack down on the bundling of requirements. The rule could lead to unbundling so that small businesses have a better chance of winning work.

The rule, published Oct. 20 in the Federal Register by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council, implements recommendations in an October 2002 Office of Management and Budget report on contract bundling and increasing federal contracting opportunities for small businesses.

A final rule, also published Oct. 20 by the Small Business Administration, makes parallel changes to SBA regulations.

Bundling is the consolidation of two or more contracts for goods or services previously provided under separate, smaller contracts. Bundled contracts are unlikely to be won by small businesses, which often are not large enough to handle the requirements.

In response to several comments on the proposed contract bundling rule, SBA also published a proposed rule Oct. 20 that provides more-detailed guidance on assessing contractors' efforts to fulfill their subcontracting plans.

Large businesses awarded prime contracts worth more than $500,000, or $1 million for construction of a public facility, must devise subcontracting plans that use small businesses as much as possible.

The final rule on contract bundling revises the definition of bundling to include multiple-award contracts and task and delivery orders under such vehicles, such as a Federal Supply Schedule contract. 'Including schedule orders in the definition of bundling will close loopholes that currently allow those orders to escape effective review,' the councils wrote.

Other requirements of the final rule:

  • Proposed contracts of more than $2 million to $7 million'depending on the agency'must be reviewed by the agency for contract bundling.

  • A small-business specialist must be involved in acquisitions above the dollar thresholds unless the contract is entirely set aside for small businesses. The thresholds are $7 million or more for the Defense Department; $5 million or more for NASA, the Energy Department and General Services Administration; and $2 million or more for all other agencies.

  • The small-business specialist must help identify alternative strategies when an acquisition plan involves substantial bundling.

  • The small-business specialist must notify SBA's Office of Small and Disadvantaged Business Utilization when acquisition strategies include contract bundling that is unnecessary or unjustified.

  • The Office of Small and Disadvantaged Utilization must annually assess agency contract bundling requirements and the extent to which small businesses are receiving a fair share of federal procurements.

  • Agencies must identify incumbent contractors and contracts affected by bundling.

  • According to the proposed SBA rule on subcontracting plans, evidence of good-faith efforts to fulfill those plans includes:

  • Breaking out contract work items into units that small businesses can perform

  • Conducting market research to identify small-business subcontractors and suppliers

  • Soliciting small businesses as early in the acquisition process as possible

  • The proposed rule also allows contracting officials to use subcontracting plans as an evaluation factor when awarding work under Federal Supply Schedules, governmentwide acquisition contracts and multiagency contracts.

    Under the proposed rule, prime contractors will have to provide pre-award, written notification to unsuccessful small-business bidders on all subcontracts worth more than $100,000, for which a small business received preference.

    Comments on the proposed rule are due Dec. 19 via e-mail to [email protected] or at www.regulations.gov.


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