I.  Background

Over the past 15 years, Federal agencies have increasingly used multiple award contracts--including the Federal Supply Schedules managed by GSA, governmentwide acquisition contracts, multi-agency contracts, and agency-specific indefinite-delivery, indefinite-quantity (IDIQ) contracts--to acquire a wide range of products and services. This trend has created challenges for agencies seeking to provide maximum opportunity for small businesses. Although set-asides are one of the most effective tools agencies have at their disposal to help small businesses participate in Government contracting opportunities, the FAR is silent on how to apply set-asides at the task-or-delivery order level.

In September 2010, the Interagency Task Force on Small Business Contracting, created by the President in April of that year, issued a report recommending that the rules on set-asides, including for multiple-award contracts, be clarified, and that legislation be developed where it is determined that statutory changes are warranted. The Task Force noted that set-asides accounted for approximately half of all small business contract awards in FY 2009, yet "there has been no attempt to create a comprehensive policy for orders placed under either general task- and delivery-order contracts or schedule contracts that rationalizes and appropriately balances the need for efficiency with the need to maximize opportunities for small businesses." For a copy of the report, go to http://www.sba.gov/sites/default/files/contracting_task_force_report_0.pdf.

The same month as the Task Force report was issued, the President signed the Jobs Act (Pub. L. 111-240) into law to protect the interests of small businesses and expand their opportunities in the Federal marketplace. Section 1331 of the Jobs Act amends section 15 of the Small Business Act (Pub. L. 85-536) to add a new subsection (r) stating, in pertinent part, that:

The Administrator, Office of Federal Procurement Policy (OFPP) and the Administrator, U.S. Small Business Administration (SBA), in consultation with the Administrator of the General Services, shall, by regulation, establish guidance under which Federal agencies may, at their discretion--

(1)  Set aside part or parts of a multiple-award contract for small business concerns, including the subcategories of small business concerns identified in subsection (g)(2) of the Small Business Act;

(2)  Notwithstanding the fair opportunity requirements under section 2304c(b) of Title 10, United States Code, and section 303J(b) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253j(b)) (subsequently recodified as 41 U.S.C. 4106), set aside orders placed against multiple-award contracts for small business concerns, including the subcategories of small business concerns identified in subsection (g)(2) of the Small Business Act; and

(3)  Reserve one or more contract awards for small business concerns under full and open multiple-award procurements, including the subcategories of small business concerns identified in subsection (g)(2) of the Small Business Act.

SBA and OFPP, which are vested under section 1331 with the authority to issue regulations, in consultation with the Administrator of GSA, have requested that DoD, GSA, and NASA publish this interim rule in order to provide agencies with guidance that they can use in taking advantage of this important tool, while SBA completes the drafting and coordination of a proposed rule that will set forth more specific guidance. This interim rule amends--

FAR subpart 8.4 to make clear that order set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedules;

FAR subpart 12.2 to acknowledge that discretionary set-asides may be used if placing an order under a multiple-award contract;

FAR subpart 16.5 to acknowledge that set-asides may be used in connection with the placement of orders under multiple-award contracts, notwithstanding the requirement to provide each contract holder a fair opportunity to be considered;

FAR part 19 to add a new section authorizing agencies to (1) use set-asides under multiple-award contracts--including set-asides for small businesses participating in the small business programs identified in FAR 19.000(a)(3); and (2) reserve one or more contract awards under multiple-award contracts for small businesses, including any of the socio-economic groups; and

FAR subpart 38.1 to add a reference to FAR 8.405-5 to make clear that order set-asides may be used in connection with the placement of orders and blanket purchase agreements under Federal Supply Schedules.

This interim rule also amends existing solicitation provisions and contract clauses, including FAR 52.219-6 to provide notice of total set-asides and partial set-asides under multiple-award contracts, and revises existing contract clauses to address limitations on subcontracting for small businesses under multiple award contracts.

DoD, GSA, and NASA expect agencies to take advantage of set-asides under multiple-award contracts by: (1) Identifying existing or prospective multiple-award contracts with small business contract holders where order set-asides may be appropriate, and (2) maximizing opportunities for small business by utilizing order set-asides under the Federal Supply Schedule Program.