Set-Asides Under Multiple-Award Contracts

February 15, 2017
by Shelley Hall

On December 6, 2016, DoD, GSA, and NASA issued a proposed rule to revise the FAR to implement regulatory changes made by the Small Business Jobs Act (Jobs Act) on the use of small business partial set-asides, reserves, and orders placed under multiple-award contracts.

The Jobs Act was a landmark event aimed at reenergizing small business entrepreneurship. The focus of this Act provided authority for three acquisition techniques to facilitate contracting with small businesses on multiple-award contracts:

(1) Setting aside part or parts of the requirement for small businesses.

(2) Reserving one or more contract awards for small business concerns under full and open multiple-award procurements.

(3) Setting aside orders placed against multiple-award contracts.

Multiple-award contracts are considered to be very flexible, competitive in nature, and administratively efficient.  They are regularly used to contract for large quantities of supplies and services where the quantity and delivery requirements cannot be definitively determined at contract award. Prior to the Jobs Act the FAR was mostly silent on the use of acquisition strategies to promote small business participation in conjunction with multiple-award contracts.

This new proposed rule provides additional guidance on the use of partial set-asides, reserves, and set-asides of orders under multiple-award contracts. It also clarifies agencies’ and small business contractors’ responsibilities with respect to performance of work requirements (limitations on subcontracting and the nonmanufacturer rule). Compliance with the limitations on subcontracting and the nonmanufacturer rule is essential to assure that the small business contractor performs the appropriate percentage of requirements in contracts or orders that have been set aside, in total or in part, and is not acting as a pass-through.

Anything that further assists small businesses is a good idea, as long as the agencies are implementing the changes.

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