Does the CIO-SP4 solicitation create a new set aside category?

The solicitation for the $50 billion CIO-SP4 contract has a category reserved for middle-tier companies, but details are sparse and some worry that the agency is headed for trouble.

So far, the early reviews seem to be generally positive regarding the final solicitation for the Chief Information Officer – Solutions and Partners 4 vehicle.

But there is one area that has some folks scratching their heads as there appears to be a new set-aside category in the solicitation -- Emerging Large Business.

The solicitation describes the various small business categories recognized in the procurement being run by the National Institutes of Health's IT acquisition organization known as NITAAC, short for NIH Information Technology Acquisition and Assessment Center.

Most of those are familiar categories -- Small Business, Woman-owned, Veteran-owned, Service-disabled, HUBzone, 8(a), Indian Economic Enterprises, and Indian Small Business Economic Enterprises.

There also is Other than Small Business, a category for everyone not small.

Companies in each category will only compete against others in the same category when it comes to winning spots on the vehicle.

For example, a woman-owned business will only compete against another woman owned business. A HUBzone can only compete against another HUBzone, and so on.

Then there is this other category – Emerging Large Business. These are the middle-tier companies that have long felt the pressure to survive when they grow out of small business designations and face competition in the full-and-open world against the market's behemoths.

There has been talk from time to time of creating another set-aside category for these companies. It looks like the  responsible for the CIO-SP contracts is trying to do just that.

The CIO-SP4 solicitation defines an Emerging Large Business as a business with an average yearly revenue for the last five years of between $30 million and $500 million. Any business with an average of $500 million for the last five years will be considered an other than small business.

NOTE: In an earlier version of this post, I said the solicitation didn't define Emerging Large Business, but a reader alerted me to my mistake. Thank you, Melissa, who did not leave a last name.

The solicitation states that Emerging Large Business is only considered a category in the competition to get on the contract. When it comes time to compete for task orders, Emerging Large Businesses will be back competing with the big boys again.

So I’m not 100-percent sure what the point is.

One person I asked about that category predicted the new lane for the mid-sized companies will create legal issues for NITAAC. The Federal Acquisition Regulation doesn't define anything as an Emerging Large Business.

I know we’ll see protests along the way, so we’ll have to watch if this is something that gets challenged.

But overall, the response to the solicitation has been positive.

In their press release, NITAAC acting director Brian Goodger said that the solicitation for CIO-SP4 tries to incorporate “lessons learned” from CIO-SP3.

So that was my first question to them: What are the lessons learned? The answers seem to mostly favor industry.

Gone are separate unrestricted and small business contracts. Everyone will be on a single vehicle. This is a big plus for small businesses that will hopefully grow out of their SB status during the 10-year runway of CIO-SP4.

Small businesses that outgrew the designation have been shut out under CIO-SP3 Small Business. They could not bid on small business opportunities because they were no longer small.

Neither could they bid on the Unrestricted CIO-SP3 task orders because they didn’t hold a spot on that contract. Small businesses were very vocal about this shortcoming under CIO-SP3.

“Now everyone is under one roof,” a NITAAC spokeswoman said.

Two contracts also created an administrative burden. A single contract is inherently easier to manage, she said.

I’ve spoken with a few folks on the industry side and the single contract versus having two is definitely popular.

“A single contract has benefits for both the federal government and contractors,” one person told me.

CIO-SP4 is expected to be easier to use and its best-value pricing should be popular with agencies. The contract’s structure also should make it easier for agencies to meet various socio-economic goals.

With all primes on a single contract, small businesses now have a place to go when they are no longer small, this person said.

The Emerging Large Business category might be a head-scratcher for some folks, but overall the reaction to the final CIO-SP4 solicitation is positive. People seem to like the effort to streamline processes and create an easy transition for small businesses that grow out that category.

We’ll watch how things shake out over the next several months.