A proposed rule issued by the Small Business Administration October 25th would apply the “Rule of Two” to multiple-award contract task and delivery orders, with some exceptions.  The proposed rule would cover virtually all multiple award IDIQ contracts, including GWAC’s, but would not impact GSA Multiple Award Schedule acquisitions.  Under the Rule of Two, unless an exception applies, an agency must set aside an award for small businesses in cases where there is a reasonable expectation of receiving offers from two or more small-business contract holders under the multiple-award contract that are competitive in terms of price, quality, and delivery. Documentation requirements apply where the agency decides not to move forward with a set-aside order.  The proposal is issued in accordance with the Biden Administration’s Better Contracting Initiative and had been expected for some time.  Companies of any size doing business via multiple award IDIQ’s, including the GSA Alliant and OASIS family of contracts, should most definitely take note of this proposed rule and submit comments on it by the December 24^th deadline.  While the Rule of Two currently applies to open market procurements up to the $250,000 Simplified Acquisition Threshold (SAT), there is no such cap in the proposed rule.  As such, task orders of any size would be subject to a potential small business set aside. The proposed rule further states, “when the number of small business contract holders on a multiple-award contract exceeding the substantial-bundling threshold is expected to be under 30 percent of all expected holders, the agency must document the acquisition plan with the rationale, including market research conducted, for not setting aside or reserving the contract for small business. The explanation should be reviewed by the agency’s small business specialist.  While agencies would also be able to not pursue a set-aside in cases where there are not at least two capable small businesses, they would be required to develop documentation of such a determination and provide to the agency small business specialist.  The proposed rule could have a substantial impact on the use of multiple award IDIQ’s in government.  Companies should closely read it here: https://www.federalregister.gov/documents/2024/10/25/2024-24716/small-business-contracting-increasing-small-business-participation-on-multiple-award-contracts and ensure that  both their views, and those of federal customers who rely on such vehicles, are made known.

Does the Department of Defense have military specifications (milspecs) for soap dispensers?  That’s essentially a claim made by Boeing in response to a DOD IG report showing that the Pentagon paid 80 times more than the commercial price for a soap dispenser for a C-17 aircraft.  It’s not just DOD, either.  Recent discussions with senior civilian agency acquisition officials also indicate that the acquisition workforce, overall, is having to be retrained on why there is a government preference for commercial items.  It’s enough to take you back to the 80’s when parachute pants and Members Only jackets were in fashion as the DOD IG raged against multi-thousand-dollar toilet seats.  Both government and industry seem to be departing from the commercial item preferences established in the mid-1990’s and identified as an acquisition approach that enabled faster procurements featuring current technology.  Buy off the shelf?  You can’t really do that when the government imposes multiple “government only” Read more

A proposed rule issued by the Small Business Administration October 25th would apply the “Rule of Two” to multiple-award contract task and delivery orders, with some exceptions.  The proposed rule would cover virtually all multiple award IDIQ contracts, including GWAC’s, but would not impact GSA Multiple Award Schedule acquisitions.  Under the Rule of Two, unless an exception applies, an agency must set aside an award for small businesses in cases where there is a reasonable expectation of receiving offers from two or more small-business contract holders under the multiple-award contract that are competitive in terms of price, quality, and delivery. Documentation requirements apply where the agency decides not to move forward with a set-aside order.  The proposal is issued in accordance with the Biden Read more

The Department of Justice announced two separate contract fraud cases last week, each involving multiple people.  Beyond the obvious repercussions and legal expenses involved, here are three additional takeaways that every contractor and contractor employee should take away from this experience.

1. Monitor Your Employees: One case involved a former employee defrauding its employer, and the government, out of $7 million.  The employee was a senior level BD person who was likely well-liked and well-respected because he brought business in the door.  It turns out, though, that he took a lot of that right out the back door, too, with the creation of two separate shell companies.  The employer was unaware of this until it was served with a DOJ fraud subpoena months after the employee left.  The company will now have to defend itself and seek to recover its lost proceeds.  It’s easy to look the other way when a successful employee is driving revenue.  This is not the first time, however, that a contractor has paid the price for failing to monitor its people.  Read more