On October 15, the Federal Acquisition Regulatory Council (FAR Council), issued a proposed rule to clarify contracting officer and agency responsibilities when justifying sole source awards exceeding $22 million dollars made through the Small Business Administration’s 8(a) program.  The revisions directly address recommendations from a December 2012 Government Accountability Office (GAO) report titled, “Slow Start to Implementation of Justifications for 8(a) Sole-Source Contracts,” which, among other things, highlighted agency “confusion” about the existing justification requirements in the FAR.

The 8(a) sole source justification requirement for high value contracts is a statutory mandate, established by Section 811 of the FY 2010 National Defense Authorization Act, presumably to ensure that these high value awards are in the government’s best interest.  While the FAR Council published implementing regulations in April 2012, as noted in the 2012 GAO report, a number of agencies had difficulty complying with the new requirements, which differ from those governing other sole source justifications.

In subsequent GAO reports (published in September 2014 and in June 2016) reviewing the number of DoD issued 8(a) awards exceeding $20 million dollars, GAO identified a significant decline in high value sole source awards to 8(a) firms since implementation of the justification requirement in the Federal Acquisition Regulation (FAR).[1]  Some agency officials at least partly attributed these declines to the new regulations.  GAO also noted a corresponding increase in the number of competitively awarded high value 8(a) contracts.

Key aspects of the proposed rule are highlighted below:

  • The rule clarifies that agencies must use the 8(a) sole source justification specified in FAR 6.303-2 when it is applicable — they may not substitute another justification for other than full and open competition set forth at FAR 6.302, such as unusual and compelling urgency.
  • The rule adds a requirement for contracting officers to provide the appropriate Small Business Administration (SBA) District Office with a copy of the approved justification.  Previously, there was no explicit requirement in the FAR for agencies to share the justification with SBA for review.
  • Consistent with the current rule, agency approval must still come from the head of the procuring activity, or his designee, for any justification for a proposed award exceeding $13.5 million but less than $68 million (or for DoD, NASA, and the Coast Guard, less than $93 million).  The Senior Procurement Executive must approve any 8(a) sole source justifications in excess of this amount, and excepting the Department of Defense, may not delegate his authority to do so.
  • Finally, the preamble to the rule (but not the apparent revisions to the regulatory text) clarifies that an agency may not use 8(a) sole source authorities to justify out of scope modifications to existing contracts, which must be recompeted.

As this justification remains mandatory for large, sole source 8(a) awards, and must be posted publicly, where an agency does not follow the aforementioned requirements, 8(a) vendors may have valid grounds to protest the award decision.  However, non-8(a) vendors face potential challenges when protesting solely on the basis of an invalid or missing justification, absent other protest grounds.  As the justification may only explain why non-competitive sole source procedures are used when selecting among 8(a) firms, a non-8(a) vendor could have difficulty proving that it would otherwise be eligible for award.

The FAR Council will accept comments on these proposed revisions through January 17, 2017.

[1] The FAR Council issued a notice to revise the justification threshold upward from $20 million to $22 million dollars last year.  80 Fed. Reg. 38,293 (July 2, 2015).

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Jay Carey Jay Carey

Recognized by Chambers as one of the nation’s top bid protest lawyers and government contracts practitioners, Jay Carey represents clients in complex, high-stakes government procurements often worth billions of dollars. He is a vice-chair of the firm’s Government Contracts practice group and a…

Recognized by Chambers as one of the nation’s top bid protest lawyers and government contracts practitioners, Jay Carey represents clients in complex, high-stakes government procurements often worth billions of dollars. He is a vice-chair of the firm’s Government Contracts practice group and a co-chair of the Aerospace, Defense, and National Security industry group.

Jay has won bid protests collectively worth more than $100 billion, for clients across a range of industries — including aerospace & defense, energy, healthcare, biotechnology, cybersecurity, IT, and telecommunications. He litigates protests before the U.S. Government Accountability Office (GAO); the Court of Federal Claims (COFC); and state tribunals across the country. A list of his recent wins can be found under the “Representative Matters” tab.

In addition, Jay advises clients on compliance matters, conducts internal investigations, and defends against investigations by federal and state agencies. He also counsels clients on matters related to the formation of government contracts, including organizational conflicts of interest and the protection of intellectual property rights when entering into procurement contracts, grants, cooperative agreements, and “Other Transaction Authority” agreements with the government.

Jay serves as co-chair of the American Bar Association Public Contract Law Section’s Bid Protest Committee.

Read more about Jay CareyEmail
Show more Show less
Photo of Ryan Burnette Ryan Burnette

Ryan Burnette is a government contracts and technology-focused lawyer that advises defense and civilian contractors on federal contracting compliance and on civil and internal investigations that stem from these obligations. Ryan has particular experience with clients that hold defense and intelligence community contracts…

Ryan Burnette is a government contracts and technology-focused lawyer that advises defense and civilian contractors on federal contracting compliance and on civil and internal investigations that stem from these obligations. Ryan has particular experience with clients that hold defense and intelligence community contracts and subcontracts, and has recognized expertise in national security related matters, including those matters that relate to federal cybersecurity and supply chain security. Ryan also advises on FAR and DFARS compliance, public policy matters, agency disputes, and government cost accounting.  He speaks and writes regularly on government contracts and cybersecurity topics, drawing significantly on his prior experience in government to provide insight on the practical implications of regulations.

Ryan is especially experienced with:

  • Government cybersecurity standards, including the Federal Risk and Authorization Management Program (FedRAMP); Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012 and 252.204-7020; National Institute of Standards and Technology (NIST) publications, such as NIST SP 800-171; software and artificial intelligence security, attestations, and bill of materials requirements; and the Cybersecurity Maturity Model Certification (CMMC) program.
  • Supply chain requirements, including Section 889 of the FY19 National Defense Authorization Act; restrictions on covered semiconductors and printed circuit boards; Information and Communications Technology and Services (ICTS) restrictions; and matters relating to the Federal Acquisition Security Council (FASC).
  • Information handling, marking, and dissemination requirements, including those relating to Covered Defense Information (CDI) and Controlled Unclassified Information (CUI).
  • Federal Cost Accounting Standards and FAR Part 31 allocation and reimbursement requirements.

Prior to joining Covington, Ryan served in the Office of Federal Procurement Policy in the Executive Office of the President, where he developed and implemented government-wide contracting regulations and administrative actions affecting more than $400 billion dollars’ worth of goods and services each year. While in government, Ryan worked on several contracting-related Executive Orders, and worked with White House and agency officials on regulatory and policy matters affecting contractor disclosure and agency responsibility determinations, labor and employment issues, IT contracting, commercial item acquisitions, performance contracting, GSA Schedules and interagency acquisitions, competition requirements, and suspension and debarment, among others.

Additionally, in the wake of significant incidents affecting the program, Ryan was selected to serve on a core team that led reform of security processes affecting federal background investigations for cleared employees and contractors. These efforts resulted in the establishment of a new federal bureau to conduct and manage background investigations.

Read more about Ryan BurnetteEmail
Show more Show less