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Sect. 809 panel: DOD should eliminate most set-asides

Recommends DOD practices align with private sector

      The congressionally-chartered Section 809 commission is recommending dramatic changes to the Defense Dept.’s small business procurements.

      The Advisory Panel on Streamlining and Codifying Acquisition Regulations, in its final volume of recommendations, proposed that DOD abolish small business set-asides for readily-available commercial item procurements valued over the Simplified Acquisition Threshold up to $15 million.

      Small business set-asides would stay in place for commercial acquisitions valued under the Simplified Acquisition Threshold.

      The commissioners said DOD is falling behind in acquiring technology due to legacy buying practices, and to remedy the situation DOD should simplify its buying practices and align them more closely with general business practices in what it called a Dynamic Marketplace Framework.

      This requires “revolutionary” changes, including cutting back sharply on small business set-asides, the report acknowledged.

      “Small business policies, which are focused on meeting quotas through indiscriminate set-asides and reservations, are not benefiting DoD or small businesses in a way that ensures DoD has access to a robust, innovative, and globally competitive small business vendor-base,” the report authors wrote.

Three categories

      The panel outlined acquisition approaches for three categories of items that DOD buys: readily available, partially customized and fully customized. The panel anticipates that most of its contracting could fall under “Readily Available.”

Readily Available

      In the “readily available” category, DOD would be able to buy items on a fixed-price up to $15 million either by direct solicitations or price quotes.

      They would not have to publicly advertise their requirements or issue solicitations. Contracting offices would do market research to determine whether there is adequate competition and what is a reasonable price.

      Other preferences, such as the Buy American Act and the Berry Amendment, which both give priority to U.S.-made products, would not apply.

      DOD also would not be able to demand more intellectual property than what is provided to their commercial customers.

Small business procurements

      Commercial products buys from small businesses would be treated differently in several ways, while a few practices would remain:

• DOD could make purchases from small and nontraditional businesses that haven’t registered in the System for Award Management (SAM);
• To replace set-asides, small businesses would get a 5% “price preference”;
• There would be no mandatory set-asides for procurements above the Simplified Acquisition Threshold but below $15 million;
• Bid protests would be restricted. Losing bidders would only be able to file a complaint with DOD in limited circumstances. They would no longer have access to the Government Accountability Office or the Court of Federal Claims for bid protests.
• All procurements below the Simplified Acquisition Threshold (SAT) would be “100% set-aside” for small business;
• The “Rule of Two” still would apply above the Simplified Acquisition Threshold;
• DOD would still have to meet small business procurement goals;
• Advance payments to small businesses of up to 15% of the value of the award would be enabled.

Readily available with customization

      DOD would follow similar rules for “Readily Available with Customization” procurements, which would cover most of DOD’s services spending. There would be more contracting stipulations, oversight and transparency.

      Requirements over $15 million usually would need solicitations, and losing bidders could protest to the GAO. At the same time, some constraints would be removed, such as the Buy American Act.

Customized

      For products and services that are unique to DOD, the panel recommended continued use of special authorities such as Other Transaction Authority to get flexibility in acquisitions.

      Overall, the commission advised a “portfolio management” approach: rather than acquiring for a single weapons system, the systems would be grouped together into portfolios of capabilities to achieve efficiencies by buying on a larger scale. Portfolio Acquisition Executives would manage risks, opportunities, schedules, budgets and sustainment for a portfolio of systems.

8(a) recommendation

      The panel recommended that the Small Business Administration must provide a response within 15 days to a request for releasing an acquisition program from 8(a).

      Under current law, a procurement that previously had been set aside for 8(a) must be recompeted as an 8(a) set-aside, unless the SBA authorizes release. Currently, there is no deadline for SBA to respond.

Other recommendations

      The Sect. 809 panel’s final report includes more than 100 proposed changes to legislation or regulations intended to reduce red tape, improving communication with industry and easing compliance, among other goals.

More information:
Section 809 panel report: https://section809panel.org/volume-3-report/

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