A new bill, H.R. 190, proposes to amend the Small Business Act to increase the ability of the government to make sole-source awards to certain small business concerns.

On January 3, 2019, the new bill, called “Expanding Contracting Opportunities for Small Businesses Act of 2019” was introduced in the U.S. House of Representatives and referred to the House Committee on Small Business. The bill passed on January 16, 2019 and was sent to the Senate.

Existing law requires the government to compete awards among special status small businesses (i.e., SDVOSBs, WOSBs, and HUBZones) whenever the contracting officer expects that two or more qualified small businesses in that special status category will be able to submit an offer for the contract opportunity (the “Rule of Two”).  However, if the contracting officer does not expect to receive offers from two or more small business within that special status category, then contracting officer may make a direct award to a single small business within that category, i.e., a sole source award, provided the anticipated award price of the contract is below certain dollar thresholds, including option years.  Those thresholds vary slightly by program.  For the SDVOSB and WOSB programs the thresholds are $6.5 million for manufacturing contracts and $4 million for all other contracts.  For the HUBZone program, the thresholds are $7 million for a manufacturing contract and $4 million for all other contracts.

H.R. 190 tweaks the requirements for sole source awards to allow greater sole source opportunities.  First, H.R. 190 unifies the thresholds across programs at are $7 million for manufacturing contracts and $4 million for all other contracts. But the most important change made by H.R. 190 is that it eliminates the “including options” language.  Thus, under current law a contract may only be sole sourced if it is below the applicable threshold for the life of the contract.  But if H.R. 190 becomes law, the thresholds apply to each year of the contract.  In other words, in a typical government contract with a base year and four option years the size of the contract eligible for sole source would quintuple under H.R. 190.  This should vastly expand the number of awards available to be sole sources to small businesses.

Additionally, H.R. 190 makes some technical amendments to the Small Business Act, which will be triggered once the SBA implements a certification program for WOSBs and SDVOSBs as it has been required to do under prior laws.

Finally, H.R. 190 would require the GAO to conduct a study and develop a report of the policies and procedures used by the SBA and other Federal agencies to provide assurances that contracting officers s are properly classifying and awarding sole-source contracts.

Dan Ward

Author Dan Ward

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