Take Note of This Law Regarding Small Business Offerors Under Multiple Award Contracts

October 14, 2016

The National Defense Authorization Act (“NDAA”) for Fiscal Year 2016, which went into effect on November 25, 2015, contains some requirements regarding multiple award contracts that you might not know about. The 2016 NDAA amended part of the Small Business Act, 15 U.S.C. § 644(q), which governs the award of contracts by the Federal Government. This statute, as amended, now requires that for any multiple award contract above the “substantial bundling threshold of the Federal agency,” the agency must take the following steps:

  • Include in the solicitation a provision soliciting bids from any responsible source, including responsible small business concerns and teams or joint ventures of small business concerns;
  • When evaluating a small business prime contractor that includes a proposed team of small business subcontractors, consider the past performance of each first tier subcontractor that is part of the team as the past performance of the small business prime contractor; and
  • When evaluating a joint venture of small business concerns, if the joint venture does not have sufficient capabilities or past performance, the agency shall consider the capabilities and past performance of each member of the joint venture as the capabilities and past performance of the joint venture.

This provision refers to the “substantial bundling threshold,” which, as defined by the Federal Acquisition Regulation (“FAR”) and the Small Business Administration’s regulations, is the amount above the amounts designated as “bundling,” or consolidating contract requirements, in a manner that is “substantial.” The “substantial bundling threshold” for the Department of Defense agencies is $8.0 million, for the National Aeronautics and Space Administration, the General Services Administration, and the Department of Energy is $6.0 million, and for all other agencies is $2.5 million. FAR 7.104(d)(2); 13 C.F.R. 125.1.

Accordingly, the result of the 2016 NDAA provision is that agencies must consider the past performance of a small business offeror’s subcontractors, and must consider the past performance of individual joint venture members of a joint venture between small businesses, if the procurement is a multiple award contract over the applicable substantial bundling threshold. If, on a multiple award contract over the applicable threshold, an agency fails to evaluate this sort of past performance, or if an agency prohibits small business offerors from relying on this type of past performance, the agency may have violated this law.

This law applies to all multiple award contracts over the applicable threshold, whether they are set-aside for small businesses or are competed on an unrestricted basis. If you are a small business teaming with other small businesses or in a joint venture with another small business, keep this provision in mind when competing for multiple award contracts to ensure that you receive the fair consideration agencies are obligated to give you.

About the Author: Julia Di Vito practices in the areas of government contracts, litigation, employment, and labor. She may be reached at jdivito@pilieromazza.com.

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