There will be several changes to the GSA’s Multiple Award Schedule program going into effect in the New Year.  Probably none are more significant than the introduction of new regulations affecting small businesses that hold GSA Schedule Contracts.  You can see the final regulations here.

Under FAR Part 8.4, the FAR has exempted the GSA’s Multiple Award Schedule Contract program from the SBA set-aside requirements of FAR Part 19.  In 2014, at least some of this will change.  While agencies have used small business set asides on Schedule Contract awards in the past, the new rules specify the context and procedures for these set-asides.  The new rules allow agencies to make partial set-asides based on individual CLINs or setting aside specific task orders for small businesses.  In order to make this procedure work, the GSA needed a more systematic way to assign the NAICS codes to each contract.  There is a new rule that a single NAICS code must be assigned for each task order issued under the Schedule contract.  While circumstances would still allow a large business to receive an award under the task order, the agency would get small business credit only if the awardee is small for that particular task order.

Probably the most significant change is the clarification as to when a contractor must certify its size status under a Schedule Contract.  The rules for certification in the past have been murky and there have been many rumors about contractors certifying at the time of award of the Schedule Contract and not having to certify until the end of the Schedule term as many as 10 years later.  Under the new rules, small businesses must certify their size status at the time they submit a proposal for award of the Schedule contract, but an agency will not receive small business credit for an individual task order unless the contractor is small at the time of the individual task order award.  The contracting officer has the discretion to require recertification for each individual task order.

For basic ordering agreements (BOAs) and blanket purchasing agreements (BPAs), which are not technically contracts, an offeror must certify its size status, but an agency will not receive small business credit unless the business is small for the relevant order.  The one exception is where the BOA or BPA orders are placed against an existing Schedule contract, and the agency can rely on the certification for the Schedule contract.

The new regulations now make it clear that the current SBA recertification requirements will apply to the Multiple Award Schedule program.  So, for any contract lasting more than five years, as many do, a contractor is required to recertify its size shortly before the beginning of the fifth year of the contract.  Moreover, any contractor acquired by another company or any contractor acquiring another company, must recertify its size status soon after the acquisition.  This recertification requirement also affects joint ventures if one of the members has acquired or been acquired by another company.  In that circumstance, the affected member must recertify and the joint venture itself must recertify.  In that circumstance, if the small business member of the joint venture is no longer small, the joint venture itself is no longer small.

While the GSA Schedule Program is designed for streamlined and efficient contracting without the need of a traditional RFP, the program has been criticized in the past for loopholes in its small business coverage.  This is ironic since the vast majority of Schedule holders are small businesses.  Now, we see that GSA has recognized that fact and is taking steps to increase small business awards and to provide clearer procedures for eliminating abuse of the system.  We will see how that effort works in 2014.

To learn more, contact MWL Partner Bill Welch.