Overview
FAR Subpart 19.2 establishes the fundamental federal policy that small businesses—including various socioeconomic categories like veteran-owned, HUBZone, and women-owned—must be provided the "maximum practicable opportunity" to participate in government prime contracts and subcontracts. It mandates the creation of administrative offices, such as the Office of Small and Disadvantaged Business Utilization (OSDBU), to advocate for small businesses and oversee agency compliance with statutory small business goals.
Key Rules
- The Parity Rule (19.203): There is no inherent order of precedence among the 8(a), HUBZone, SDVOSB, or WOSB programs. Contracting Officers (COs) have the discretion to choose which program to use based on market research and agency goals.
- Set-Aside Priority (19.203): For acquisitions above the Simplified Acquisition Threshold (SAT), COs must consider socioeconomic programs (8(a), HUBZone, SDVOSB, WOSB) before considering a general small business set-aside.
- Bundling Restrictions: Agencies must avoid "bundling" or "consolidating" requirements into large contracts that preclude small business participation unless the action is necessary and justified.
- 30-Day Rule: The Small Business Specialist and SBA Procurement Center Representative (PCR) must be coordinated with at least 30 days prior to solicitation for bundled requirements or large-scale acquisitions.
- Equal Low Bids (19.202-3): In cases of identical low bids, preference is given first to small businesses in "labor surplus areas" and second to other small businesses.
- Fair Market Price: Acquisitions under small business programs must be awarded at a "fair market price" determined by guidelines in FAR 15.404-1(b).
Responsibilities
- Heads of Contracting Activities: Responsible for the overall implementation of small business programs and ensuring staff are trained and goals are met.
- OSDBU Director (or Director of Small Business Programs in DoD): Reports directly to the agency head; manages the agency's small business functions; reviews subcontracting plans; and makes recommendations on whether specific acquisitions should be set aside.
- Contracting Officers (COs): Must divide acquisitions into small lots to encourage participation, establish realistic delivery schedules, conduct market research to find small business sources, and document the file if they reject an OSDBU recommendation.
- Small Business Specialists: Assigned to contracting activities to assist in planning; they must be involved as early as possible in the acquisition process (no later than 30 days before solicitation).
- Small Business Administration (SBA) PCRs: Review proposed acquisitions and provide recommendations to increase small business participation.
- Contractors: Must accurately represent their size and socioeconomic status and "rerepresent" that status if a merger, acquisition, or contract option occurs.
Practical Implications
- Early Engagement is Critical: For government program managers, the 30-day mandatory coordination window means that small business strategies cannot be an afterthought; they must be baked into the acquisition timeline to avoid delays.
- Market Research Drives the Strategy: Since there is no order of precedence between socioeconomic programs, the CO's decision is heavily influenced by the results of market research. If a firm can prove there are at least two capable HUBZone or SDVOSB firms, they can effectively "force" a set-aside.
- Combatting "Once 8(a), Always 8(a)": Once a requirement is accepted into the 8(a) program, it is very difficult to move it to a different program or to full and open competition without SBA's explicit permission.
- Protection Against Bundling: Small businesses that feel a contract is being unfairly consolidated to their detriment can notify the OSDBU, which has a statutory duty to challenge restrictive solicitations and inform the agency’s advocate for competition.