FAR Council considers justifying sole-source awards

Congress demands a good reason for awarding a contract worth $20 million or more without hosting a competition for the work

The Federal Acquisition Regulatory Council will host meetings in October to discuss rule changes on justifying large sole-source contracts to small businesses, including Alaska Native Corporations.

Because lawmakers ultimately want sole-source contracts to be beneficial for the government, the fiscal 2010 National Defense Authorization Act passed by Congress last year said an agency must have good reasons for awarding a contract worth $20 million or more without hosting a competition for the work.

The law mandates that an agency describe the contract and why it’s circumventing the competitive process. Members of Congress said they want to know that a company is offering a reasonable price and stressed the need for justification that the sole-source award is worthwhile for the government.

In addition, the law states that an agency must make the justification public within two weeks.

Agencies can award the large contracts through the Small Business Administration’s 8(a) business development program. Regulations enable contract awards to be made to socially and economically disadvantaged small businesses, even businesses owned by Indian tribes and ANCs.

In the notice, FAR Council members said they believe talking with Indian and native Alaskan tribal leaders will be valuable as they debate how to institute the new law.

Acquisition rules that allow set-aside contracts for ANCs and similar unique set-asides are a point of contention in the contractor community, and even Congress has questioned their unique status.

Many contractors say ANCs get more than their share of contracts while the ANCs say the government is obligated to help them, especially economically.

The FAR council has not set specific dates for the meetings, which will be held in Washington, D.C.; Albuquerque, N.M.; and Fairbanks, Alaska.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Thu, Sep 2, 2010 Jaime Gracia Washington, DC

The ANC program has become the wild west of set aside programs. The 8a program was designed to help small, disadvantaged businesses. Although I do not doubt the Alaska native community has benefited, but the real benefactors have been the large businesses who get money funneled to them through ANCs, lobbyists, and ANC corporate executives who are overwhelmingly non Native Alaskans. I believe this program to be the epitome of waste, fraud, and abuse.

Wed, Sep 1, 2010 Matthew

Bob, SBA’s 8(a) business development program includes Alaska Native Corporations, and the program does not limit how large a set-aside contract can be for an ANC. Other types of small businesses, like those owned by service-disabled veterans, have restrictions. That upsets many small-business owners.

A few members of Congress are working to put the various types of small businesses on equal footing. The proposals would let contracting officers choose which category of small business to set aside a contract for. Right now, the courts have ruled that officers must first consider companies designated as being located in a historically underutilized business zone, or HUBZone. Matthew.

Wed, Sep 1, 2010 Sandy Midwest

It seems to me that giving work primarily to ANC's is akin to "sole sourcing". Why should they get the lion's share of work when there are plenty of other 8a,disadvantaged,women or disabled veteran owned businesses hungry for work. I'm actually not a fan of giving work to a company just because they're a small business or lowest bid. In my experience when Contracting has forced me to go small business to meet their quota, I was left with a company that said they were capable and turned out to be anything but capable. We are then left with little recourse because Contracting is so afraid of protests that it takes blatant negligence or endangering lives of company and government personnel to stop the company from doing more damage. Although there is a clause for "Termination for Convenience", Contracting seems adamant about not allowing it.

Wed, Sep 1, 2010

The attitude of "obligated to help" burns my cookies. Small business set asides only singe the edges of my cookies...if they are not abused by just using small and minority businesses as pass-throughs to get around the rules. In my mind, sole-source should be limited to the rare and unusual like moon rocks. Honest competition (maybe with a point system for small minority business to level the playing field) should be advantageous to everyone...especially the taxpayers that foot the bills.

Wed, Sep 1, 2010 Bob Utah

I thought sole-source awards to 8(a) companies was limited to $3.5M. Is this implying that 8(a) status may be justification for higher awards? Also, any mention of sole-source set-asides for Service Disabled Veteran Owned Small Businesses? I thought there was legislation pending that would put them on par with the 8(a) set-aside program.

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