Thursday, June 9, 2016

DoD Usage of Sole-Source Procurements to 8(a) Firms Continues to Decline

The Small Business Administration's (SBA's) 8(a) program is the Federal Government's primary vehicle for developing small businesses. Tribal 8(a) firms, such as firms owned by Alaska Native Corporations, can with sole-source contracts for any dollar amount in the 8(a) program, while other 8(a) firms generally must compete for contracts valued above certain dollar thresholds.

Back in March 2011, the FAR (Federal Acquisition Regulation) was amended to include a new requirement for a written justification for sole-source 8(a) awards over $20 million, where previously no justification was required.

The Appropriations Act of 2015 contained a provision requiring GAO to assess the impact of the 8(a) justification at the Department of Defense. That GAO assessment report was recently issued. It addresses (i) trends among DoD sole-source and competitive 8(a) awards from fiscal years 2006 through 2015 and (ii) the factors to which DoD officials attribute these trends. GAO reviewed 14 sole-source contracts over $20 million, nine of which were followed by additional contracts for the same requirement.

GAO found that the number of sole-source contracts over $20 million at the Department of Defense has been steadily declining since 2011 when the new requirement for a written justification for these contracts went into effect. In contrast, the number of competitive 8(a) contracts over $20 million has increased in recent years.

Since September 2014, DoD has awarded only two sole-sourced 8(a) contracts, one for vehicle maintenance and repair and the other for engineering services. The contracting officer for the vehicle maintenance and repair contract told that GAO that these services would not be needed in the future. The contracting officer for the engineering services contract indicated that the last time for a sole-source award - in the future, awards for engineering services competition.

Contracting officers interviewed for this study overwhelmingly cited an agency-wide emphasis un using competition to obtain benefits, such as better pricing, as a reason for the decline in the use of sole-source 9(a) contracts over $20 million. Other factors included declining budgets and contract values falling under the $20 threshold that didn't require justification.

The GAO made no recommendations. You can read the full GAO report here.

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