On November 2, 2011 the Federal Acquisition Regulation (FAR) was amended to implement Section 1331 of the Small Business Jobs Act of 2010. Section 1331 directs the Office of Federal Procurement Policy and the Small Business Administration, in consultation with the General Services Administration (GSA), to develop regulatory guidance under which agencies may at their discretion: (1) set-aside parts of multiple award contracts for small businesses; (2) set aside task or delivery orders for small businesses under multiple-award contracts; and (3) reserve one or more multiple award contracts for small business in a procurement where the contracts are awarded using full and open competition.

Interestingly, the FAR implementation of Section 1331 has been expanded to include the Federal Supply Schedule contracts. With regard to setting aside task or delivery orders, Section 1331 only waives the fair opportunity requirements of 10 U.S.C. 2304c(b) and 41 U.S.C. 253j(b). These two statutes specifically relate to the Federal Acquisition Streamlining Act of 1994 multiple award contracting authority. Section 1331 does not refer to or actually include the Federal Supply Schedule program.

Perhaps there is a reason for the statutory omission. GSA already has a great small business story to tell! GSA’s FSS program is a dynamic marketplace for small businesses. The program has demonstrated that mirroring the commercial marketplace at the contract level while providing flexible, streamlined ordering procedures creates more opportunity for small businesses not less.

The FSS program is the leading governmentwide contracting program providing opportunity for small business programs. Each year approximately 30 to 35 percent of the total dollars obligated to FSS contracts go to small business concerns! That far exceeds the governmentwide small business contracting goal of 23 percent. The FSS program provides small businesses the opportunity to offer their commercial solutions, services and products in a manner consistent with their commercial practices. GSA’s electronic tools allow agencies to efficiently search for small business concerns on schedule. The flexible, streamlined ordering procedures allow agencies quick, efficient competitive access to small business FSS contractors. Moreover, small business and large businesses have the ability to team together in a manner consistent with the commercial marketplace.

In contrast, the restrictions inherent in the small business set-aside rules, if applied to FSS program, will likely impact small businesses’ ability to compete and increase risk. The FSS program includes thousands of contracts and millions of commercial solutions, services and products. Applying the small business set-aside requirements such as the limitation on subcontracting to FSS small business concerns will increase contract complexity and compliance costs while reducing agency flexibility in accessing small business concerns via the ordering process. The result will likely be a divided marketplace with fewer opportunities for small business FSS contractors.

The November 2 interim rule implements the statutory language of Section 1331 regarding discretionary set-asides. However, much is left to be determined and the public comments will be important. The Coalition will be submitting comments on the interim rule and will look forward to working with you to ensure the FSS program remains an efficient and effective governmentwide contracting program.