Congress ordered changes to the 8(a) business development program when it comes to sole source contracts with Native American and Alaskan Native companies. So the Federal Acquisition Councils are holding a series of meetings on how to implement the mandated revisions.
“The purpose of these consultations and outreach is to encourage meaningful dialogue with tribal officials regarding the development of federal acquisition policy when implementing section 811 of the NDAA 2010,” the notice in the Federal Register states.
In the fiscal 2010 National Defense Authorization Act, Congress required a new FAR rule for agencies to justify sole-source contract awards to 8(a) businesses that exceed $20 million.
Under the rules of the 8(a) program, sole source contracts must be below $5.5 million for manufacturing contracts and $3.5 million for everything else, except for Native American and Alaskan Native firms. Those companies have no ceiling for sole source awards.
Agencies have taken advantage of this loophole by awarding contracts worth hundreds of millions of dollars without competition. Sen. Claire McCaskill (D-Mo.) has been a vocal critic of this provision in the law. She held a hearing in June 2009 on the topic.
A Small Business Administration inspector general audit told the committee that between 2000 to 2008 obligations to Alaskan Native Corporations (ANC) increased by 1,386 percent, and more than tripled in recent years, from $1.1 billion in 2004 to $3.9 billion in 2008.
Additionally, the SBA IG found between 2004 and 2008, the percentage of 8(a) obligations to ANC companies doubled, and these firms received approximately 26 percent of total 8(a) obligations, even though they constituted just two percent of companies performing these 8(a) contracts.
“These trends suggest that ANC-owned companies are receiving a disproportionate share of obligations to 8(a) firms,” the SBA IG states in testimony to the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight.
Given those trends, Congress included language in the 2010 DoD authorization bill requiring sole-source justification must include:
A description of the needs of the agency concerned for the matters covered by the contract.
A specification of the statutory provision providing the exception from the requirement to use competitive procedures in entering into the contract.
A determination that the use of a sole-source contract is in the best interest of the agency concerned.
A determination that the anticipated cost of the contract will be fair and reasonable.
The notice states that while justifications must be approved by an appropriate official, as specified in the statute, the bill does not require a justification and approval if the contract award is equal to or less than $20 million.
Additionally, agencies must make justifications public within 14 days after the contract award is made.
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