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Take a Minute to Understand 8(a) Set-asides

Section 1331 of the Small Business Jobs Act of 2010 authorized discretionary use of set-asides against multiple award contracts (i.e. Multiple Award Schedules).  This includes setting-aside orders to 8(a) contractors. The provision did not authorize the use of sole-sourcing under the various small business programs.

Section 1331 was implemented in the FAR through Interim Rule 2011-024. According to the FAR language in Subpart 8.4, Contracting Officers still have to follow the ordering procedures in 8.405-1, 8.405-2, and 8.405-3 when setting aside orders or BPAs under the Schedules Program. In addition, Contracting Officers have to ensure their order/BPA meets the eligibility requirements of a particular small business program before setting aside the order/BPA under that program.

For 8(a) set-asides, this means that your requirement has to be over $6.5 million if it is for manufacturing, or over $4 million for all other requirements (see FAR 19.805-1(a)(2)). The FAR does not currently provide any guidance on how to set-aside Schedule orders and BPAs for 8(a); for example, there is no regulation on whether the “offer and acceptance” process with the SBA applies to set-aside Schedule orders. This necessary guidance is expected in a forthcoming SBA Proposed Rule (which will become a SBA Final Rule which will then be codified into the FAR through a FAR Final Rule). 

In the meantime, we recommend ordering agencies work closely with their Office of Small Business Utilization (OSBU), and the local SBA Procurement Center Representative (PCR) when setting-aside Schedule orders or BPAs. This should ensure that even in the absence of regulation and guidance, the procurement is done right.  An additional resource is your local GSA Customer Service Director (CSD) who can reach back to procurement staff within GSA for additional guidance and assistance.  Please see www.gsa.gov/csd for more information.

Another important point to consider involves the credit issue.  Should you decide to pursue an 8(a) set-aside, you will not receive 8(a) credit for that order.  You will instead be credited towards your (SDB) goals since 8(a)s are by definition SDBs.  For most agencies this lack of 8(a) credit may not be an issue because there are currently no governmentwide goals for the 8(a) socioeconomic category; however, every agency has SDB goals and these 8(a) orders will count towards those goals.  If you do have an agency, bureau or local 8(a) goal this may be of concern.  As stated above, we highly encourage you to work with your local OSBU/PCR staff during the planning phase of your acquisition.

For more information on small business set-asides within the GSA Schedules Program please see the FAQs at http://www.gsa.gov/portal/content/113371.

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