Proposed rules on contract bundling issued

The Federal Acquisition Regulation councils issued a proposed rule Jan. 31 to help small businesses by amending the regulation in an attempt to curtail contract bundling.

The proposed changes would implement Office of Management and Budget's recommendations for increasing federal contracting opportunities for small businesses by unbundling contracts where possible and mitigating the effects of bundling when it's necessary.

The Small Business Administration issued a companion rule to amend its regulations in order to implement the recommendations. The SBA said the proposed regulatory changes will affect approximately $3 billion in orders placed against Federal Supply Schedules and governmentwide acquisition contracts.

The proposed regulatory changes include:

*Requiring contract bundling reviews for task and delivery orders under multiple-award contract vehicles.

*Requiring agency contract bundling reviews of proposed acquisitions above agency-specific dollar thresholds, set between $2 million and $7 million.

*Requiring acquisitions above the dollar thresholds to be coordinated with a small-business specialist unless they are entirely set-aside for small businesses. The thresholds are $7 million or more for the Department of Defense; $5 million or more for NASA, Department of Energy and General Services Administration; and $2 million or more for all other agencies.

*Strengthening compliance with subcontracting plans where bundling is justified.

Comments on the proposed rules are due by April 1. Comments on the FAR rule should be sent to Comments on the SBA rule should be sent to

Bundling is the consolidation of two or more contracts for goods or services previously provided under separate smaller contracts. The bundled contract is unlikely to be won by a small business. According to OMB's October contract bundling report, for every 100 bundled contracts, 106 individual contracts are no longer available to small businesses, and that for every $100 awarded on a bundled contract, there is a $33 decrease to small businesses.

The regulatory changes would require agency Offices of Small and Disadvantaged Business Utilization to periodically review if small businesses are receiving their fair share of federal contract dollars. They would also require small business specialists to notify small business utilization offices when proposed acquisition strategies involve contract bundling that the agency has not identified as bundled or includes unnecessary or unjustified bundling.

Contracting officers also will be required to provide justification to the agency small business utilization offices when substantial bundling is involved.

The regulations also would require assessment of contractor compliance with small business subcontracting plans set out in contracts.

"Based on the findings of the General Accounting Office that agency oversight of large business compliance with subcontracting plans has been inconsistent, this proposed change contemplates a more systemic review of an agency's general oversight as well as its individual assessment of contractor subcontracting plan compliance to facilitate greater consistency in agency oversight in the future," the councils wrote.

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