Friday, September 9, 2011

End to a Small Disadvantaged Business Preference

FAR 19.11 allows the Government to take 10 percent off the price of bids or offers submitted by "small disadvantaged businesses" (SDBs) in determining which bid or offer had the lowest price or represented the best value for the Government. This regulation was designed to help Agencies meet their small business targets. In Rothe v. Department of Defense, the U.S. Court of Appeals for the Federal Circuit struck down the DOD preference program, holding that Section 1207 was facially unconstitutional because Congress did not have sufficient evidence to conclude that there was racial discrimination in defense contracting when it
reauthorized the program in 2006. In 2009, a District Court enjoined all further application of this regulation.

Now the FAR councils are proposing to remove subpart 19.11 from the regulations as well as other related coverage. Under the proposed revision, Federal agencies will no longer be authorized to apply certain procurement mechanisms that had offered a benefit for SDB awards.

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