FAR Final Rule Clarifies Discrepancies and Implements Changes to Multiple Award Contracts (MACs) for Small Businesses

By Elizabeth Sullivan

It’s not new that parts of the Small Business Administration (SBA) regulations and the Federal Acquisition Regulation (FAR) have contradicted one another. Or, that the acquisition workforce does not follow new SBA regulations because they are not in the FAR. Today the FAR Council published a final rule implementing regulations such as governmentwide policy for partial set-asides and set-asides for small businesses under multiple-award contracts (MACs), among other things.

Just to give a quick timeline –the SBA published a final rule with these changes in October 2, 2013 (78 FR 61114), and the FAR Council (DoD, GSA and NASA) published a proposed rule to implement the SBA changes on December 5, 2016 (81 FR 88072). So, it takes an average of three years for each step of the process. This needlessly long process further highlights the need for the SBA to have a seat on the FAR Council, as proposed in the Senate Small Business Committee SBA Reauthorization draft. 

Here are some of the key changes made by the rule, which is effective March 30, 2020:

• NAICS code(s) must be assigned to all solicitations, contracts, and task and delivery orders, and that the NAICS code assigned to a task or delivery order must be a NAICS code assigned to the multiple-award contract.
• FAR 19.301-2 is revised to clarify that, for multiple-award contracts with more than one NAICS code assigned, a contractor must rerepresent its size status for each of those NAICS codes.
• FAR 19.301-1 is revised to clarify that, for orders under basic ordering agreements and blanket purchase agreements (BPAs), offerors must be a small business at the time of award of the order and that a HUBZone small business is not required to represent twice for an award under the HUBZone Program. A HUBZone small business is required to represent at the time of its initial offer and be a HUBZone small business at time of award.
• Clarifies that the limitations on subcontracting and the nonmanufacturer rule apply to orders issued directly to one small business under a multiple-award contract with reserves.
• Clarifies the limitations on subcontracting compliance period for orders issued directly, under multiple-award contracts with reserves, to small businesses who qualify for any of the socioeconomic programs.
• FAR 19.507 is revised to apply to any multiple-award contract under which orders will be set aside, regardless of whether the multiple-award contract contains a reserve.
• FAR subpart 19.7 is revised to provide guidance to contracting officers on how to apply the requirement for small business subcontracting plans to multiple-award contracts assigned multiple NAICS codes. With the requirement to assign multiple NAICS codes, it will be possible for a contractor to be both a small business and an other than small business for a single contract.
• FAR subpart 19.13 is revised to clarify that the HUBZone price evaluation preference shall not be used for the reserved portion of a solicitation for a multiple-award contract. The price evaluation preference shall be used in the portion of a solicitation for a multiple-award contract that is not reserved. In addition, the clause at 52.219-4 is revised to remove the proposed text that stated the HUBZone price evaluation preference did not apply to solicitations that have a reserve for HUBZone small businesses.