The General Services Administration (GSA) has released a series of legislative proposals that have been transmitted to Congress as part of the revision and rewrite of the Federal Acquisition Regulations. The intent of the proposed changes is to revise federal acquisition statutes to, in the eyes of GSA, promote efficiency in federal contracting. These changes would not come into effect until and unless enacted by Congress.

There are several potential effects on small business contractors contained in the proposals.

Purchasing Threshold Increases

The proposed changes would significantly increase purchasing thresholds:

• • Simplified Acquisition Threshold (SAT): Increases from $250,000 to $10 million (phased over five years) for commercial products/services.
  • Micro-purchase Threshold: Increases from $10,000 to $100,000 (phased over five years)
  • Simplified Acquisition Procedures (SAP): Increases from $5 million to $50 million for commercial items

Notably, while the SAT would be increased to $10 million, the requirement in the Small Business Act (15 USC § 644) to reserve small business contracts between the micro-purchase threshold and the SAT would not apply to this increase in the SAT. The statutory requirement to set aside small business contracts would be limited to contracts between the micro-purchase threshold and $250,000.

This could have the result of more contracts in the $250,000 to $10 million range being awarded to large businesses, as opposed 8(a) or small business contractors, due to a reduction in the level of authorization needed to make a non-competitive award.

Buy American Act and Micro-Purchase Threshold

The proposed changes would raise the micro-purchase threshold (MPT) from the current $10,000 to $100,000 through a phase-in process over five years. The proposal would also decouple the MPT from the threshold for applicability of the BAA so that purchases above $10,000 remain subject to domestic sourcing and America First policies.

Inflation Adjustments

The proposed changes would require inflation adjustments to purchasing thresholds every three years, as opposed to the current five-year requirement.

Commercial Solutions Opening Authority for GSA and DHS

The proposed changes would provide permanent Commercial Solutions Opening (CSO) authority for the Department of Homeland Security (DHS), GSA, and NASA. DHS and GSA would have the authority to use CSO authority for contracts up to $100 million.

The GSA provided the following description of CSO authority.

The purpose of the CSO program is for the Government to access solutions that are either currently only in the production/commercialization phase (i.e., not yet sold for mass consumption) or adaptations of existing commercial solutions. Unlike traditional acquisitions that are carried out in accordance with the Federal Acquisition Regulation (FAR), CSO procedures are not subject to the FAR.

CSO promotes competition with a streamlined approach to addressing specific needs for innovative commercial items. It offers a range of advantages to start-up companies and others who may not have significant work experience with the Federal Government, including:

• • • • Streamlined solicitations requiring only minimal corporate and technical information, such as a brief description of the company instead of a multi-page narrative of the corporate background;
      • Fast-track vendor selection timelines;
      • Simplified contract administration procedures and requirements; and
      • Preference for the vendor retaining core intellectual property, as appropriate.

In 2022, the DoD was given permanent statutory authority to implement CSO solutions.

Task and Delivery Order Procedures

The proposed changes would confirm that civilian and defense agencies have the authority to exclude cost or price as an evaluation factor when awarding multiple task or delivery order contracts. This would apply when the agency plans to issue contracts to all qualified offerors and cost or price is considered during the issuance of task or delivery orders under the resulting contracts. The intent is to ensure contractors with superior technical capabilities secure positions on these multiple-award contracts, while encouraging robust price competition at the task order stage.

Congress included this requirement in the National Defense Authorization Act (NDAA) for FY2017 and FY2019, but a subsequent Court of Federal Claims, H Synergy, LLC and VCH Partners, LLC v. The United States, decision limited its application. This proposed legislation is intended to overrule that decision and confirm and expand the ability of agencies to include cost or price as an evaluation factor when awarding seats on a multiple award contract.

SBIT and STTR

The proposed changes would amend the Small Business Act to directly authorize assisted acquisition services under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs to bolster the participation and confidence of small businesses and agencies under these programs, ensuring that participating agencies have the support they need to accomplish all phases of SBIR and STTR.

To support this proposal, GSA explained that:

Servicing agencies currently operate under an SBA legal opinion and language in the SBIR/STTR Policy Directive, which is subject to change to provide services beyond those currently authorized. As such, explicit language in the Small Business Act would allay the concern of agencies that are uncertain about the authority for a non-participating Federal agency to provide SBIR and STTR assisted acquisition support or are unaware of SBA’s legal opinion and directive. In addition, such an authorization would encourage innovation on the part of agencies and small businesses because these entities would recognize that there is an acquisition solution in place to translate ideas into action. Furthermore, having a shared service through assisted acquisition for conducting SBIR and STTR procurements would ensure that both SBIR and STTR participating agencies and small businesses have access to needed acquisition expertise.

Protest Thresholds for Task and Delivery Orders

The proposed change would raise the civilian agency threshold for protests from $10 million to equal the defense agency threshold at $35 million. This would mean that task order and delivery order awards by civilian agencies could not be protested unless they are greater than $35 million.

The GSA explained that, in its view:

Raising the civilian agency protest threshold to $35 million will provide parity for all agencies, thereby simplifying protest procedures for ordering activities and interested bidders. Moreover, providing a consistent threshold for all agencies will not negatively impact bidding contractors because of statutory measures in place to promote competition. Additionally, actions are being taken to enhance debriefings for unsuccessful bidders in order to provide feedback that will improve their competitive performance and alleviate the need for some protests.

GSA Multiple Award Schedule Standard

The Competition in Contracting Act of 1984 (“CICA”) states that the GSA’s Multiple Award Schedule (MAS) program complies with CICA if:

(A) participation in the program has been open to all responsible sources; and

(B) orders and contracts under those procedures result in the lowest overall cost alternative to meet the needs of the Federal Government.

The “lowest overall cost alternative” standard applies to “orders and contracts,” which includes the GSA MAS contracts between GSA and the contractor and subsequent orders placed by agencies against those contracts.

The proposed legislation would replace the current language referring to “lowest overall cost alternative” with a plain-language “best value” standard. “Best value,” as defined by the Federal Acquisition Regulation (FAR) 2.101, “means the expected outcome of an acquisition that, in the Government’s estimation, provides the greatest overall benefit in response to the requirement.”

Cost Accounting Standards

The proposed changes would modify 41 U.S.C. § 1502 to provide for separate monetary thresholds for Cost Accounting Standards (CAS) applicability and Truth in Negotiations Act (TINA) applicability (as set forth at 10 U.S.C. § 3702(a)(1)(A)) and increase the threshold for CAS applicability from $2 million to $35 million. The proposal also eliminates the $7.5 million trigger contract threshold. According to the GSA, these “actions will reduce the barrier to entry into the federal marketplace and provide a simplified process for determining CAS applicability.”

Executive Compensation Reporting

The GSA is proposing to eliminate the statutory requirement requiring awardees of Federal contracts and grants to report the names and total compensation of their five most highly compensated officers. The GSA explained that:

This information has not proven to be useful in the 16 years since the requirement was enacted, while repealing it would:

• • Decrease the risk of sharing competition-sensitive data;
  • Lower the cost of doing business with the Government;
  • Promote competition by removing a disincentive for Government contractors; and
  • Eliminate the need for the Government to maintain database information that is not useful to acquisition professionals.

This article summarizes aspects of the law. This article does not constitute legal advice. For legal advice for your situation, you should contact an attorney.