Defense mandates disclosure of contract bundling

Defense Department procurement officials who combine a number of small contracts to create one larger deal now must disclose their actions on a public website, according to an interim rule published in the Federal Register on Tuesday.

The practice, known as contract bundling, has long been a top concern of small businesses owners, who argue larger acquisitions will be out of their financial reach. And, while the change to the Defense Acquisition Regulations System does not prohibit contract bundling, it will shine a light on an often-secretive process and possibly provide a window of opportunity for creative and quick-thinking small businesses.

At least 30 days before issuing a solicitation, Defense contracting officers now will be required to publish a notice on FedBizOpps, a federal website that advertises potential contracting opportunities, of their intent to bundle the requirement. If the department has determined that "measurably substantial benefits are expected to be derived as a result of bundling," it must describe those potential savings.

The rule, which went into place immediately and applies only when the contract is funded entirely by the Pentagon, implements a provision in the 2010 National Defense Authorization Act.

The Federal Acquisition Regulation previously required agencies simply to notify the affected incumbent contractor of their intentions to bundle a requirement. The contractor, generally a small business, would then have the opportunity to engage the government and possibly retain some unbundled business.

But, by mandating broader notification of all contract bundling, a wider swath of the small business community could have the opportunity "to compete for more work of which the firms might otherwise have been unaware," the notice said.

In a separate rule issued on Tuesday in the Federal Register, the Pentagon now will require its contracting officers to notify congressional defense or intelligence committees within 30 days of issuing sole-source task or delivery orders in excess of $100 million.

The head of the Defense component, meanwhile, must determine in writing that sole-source procurements meet one of four criteria:

  • The task or delivery orders expected under the contract are so integrally related that only one source can reasonably perform the work;
  • The contract provides only for firm-fixed-price task or delivery orders;
  • Only one source is qualified and capable of performing the work at a reasonable price to the government;
  • The contract is necessary because of exceptional circumstances.

The department is accepting public comments on both rules through Sept. 13.

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