Overview
FAR 7.107 establishes the policies and procedures agencies must follow when combining requirements into consolidated or bundled contracts, focusing on ensuring such actions are "necessary and justified" due to their potential negative impact on small business participation. It sets specific dollar thresholds for oversight, mandates rigorous benefit analysis, and requires formal notifications to affected small businesses and the Small Business Administration (SBA).
Key Rules
- Consolidation Threshold: For requirements exceeding $2 million, the Senior Procurement Executive (SPE) or Chief Acquisition Officer (CAO) must provide a written determination that consolidation is necessary and justified after performing market research and identifying alternative strategies.
- "Substantial Benefit" Metrics: Financial benefits for consolidation or bundling are generally considered substantial if they meet specific thresholds:
- 10% of the total contract value (including options) if the value is $94 million or less.
- 5% of the total contract value or $9.4 million (whichever is greater) if the value exceeds $94 million.
- Administrative Savings Limitation: Reduction of administrative or personnel costs alone cannot justify consolidation or bundling unless those savings represent at least 10% of the estimated contract value.
- Substantial Bundling Thresholds: Enhanced documentation is required when bundling reaches specific agency-specific limits: $8 million for DoD; $6 million for NASA, GSA, and DOE; and $2.5 million for all other agencies.
- Mission Critical Exception: Even if financial thresholds are not met, bundling/consolidation may be approved by the SPE (DoD) or Deputy Secretary (Civilian) if the benefits are critical to mission success and the strategy maximizes small business participation.
- Mandatory Notifications:
- Agencies must notify affected small business incumbents at least 30 days before issuing a bundled solicitation.
- Consolidation and substantial bundling determinations must be posted to the Governmentwide Point of Entry (GPE) at least 7 days before the solicitation is publicized.
Practical Implications
- Increased Documentation Burden: Contracting officers must produce "measurably substantial" evidence—often involving complex cost-benefit analyses—to defend acquisition strategies that reduce the number of prime contracting opportunities for small businesses.
- Early Coordination Requirements: The mandatory 30-day notice to incumbents and coordination with the SBA/OSDBU means that consolidation and bundling decisions must be finalized much earlier in the acquisition planning cycle than standard procurements.
- Focus on Teaming: Because substantial bundling requires agencies to design actions that maximize small business participation, solicitations often include specific provisions (like FAR 52.207-6) that encourage small business teaming arrangements and joint ventures to mitigate the impact of the larger contract scope.