SBA Backs Set-Asides on GSA Schedule Orders A Florida group’s bid protest could lead to billions of dollars in new set-asides for small firms. SBA is supporting the protestor’s contention that GSA schedule orders must be set aside if they fall between $3,000, the micropurchase threshold, and $100,000, the simplified acquisition threshold. GSA disagrees. At issue is the provision of the Small Business Act requiring agencies to set aside contracts in that dollar range for small businesses. In a letter to the Government Accountability Office, SBA agreed with the protestor, FitNet Purchasing Alliance of St. Augustine, FL, that the law applies to GSA schedule orders. GSA says other provisions in law and regulation exempt the schedules from set-aside requirements. The Government Accountability Office has ruled as recently as last year that set-aside provisions do not apply to schedule orders above $100,000, but it has not ruled specifically on orders under $100,000, according to the SBA and GSA filings. FitNet President Raul Espinoza forwarded the agencies’ letters to Set-Aside Alert. GSA, in its response, argues that the Federal Acquisition Regulation says schedule orders do not have to be set aside, and that policy has been followed for many years. GSA says the average size of a schedule order is around $50,000, so the vast majority of orders are under $100,000. If those orders were set aside, GSA said, “medium and large businesses would effectively be eliminated from the program.” “Firms such as Dell, IBM, Home Depot, Office Depot and Northrop-Grumman, just to name a few, would see their business case for participating in the [schedule] program disappear. Not only would this reduce competition and increase costs to agencies, it would also negatively impact those small businesses that are part of large business subcontracting plans or who participate in teaming arrangements with large and medium sized businesses under the [schedule] program.” SBA argues that the Federal Acquisition Regulation cannot override provisions of the Small Business Act requiring set-asides. “There is nothing in statute or GAO rulings indicating that a GSA Schedule contract should or can take priority over this statutorily mandated small business reservation requirement,” SBA wrote. “…In sum, according to statute and regulations, small business set asides are mandatory for acquisitions valued between $3,000 and $100,000 and take priority over GSA Schedule contracts. This interpretation is consistent with the declared and unambiguous intent of Congress as it relates to Federal procurement and small businesses.” GSA issued a policy letter in 2005 permitting buyers to give preference to small businesses when ordering through GSA schedules, though it said set-asides were not permitted. (SAA, 7/22/05)Bills have been introduced in Congress to allow set-asides on the schedules, but they were not enacted. Agencies purchased $36 billion in goods and services through the schedules in 2006. About 35% of the money went to small businesses, according to GSA. FitNet filed its protest after the Army refused to set aside an order for wardrobe lockers valued at about $12,500. Espinoza said he may take the case to court if GAO dismisses the protest. Espinoza has been lobbying to remove all exemptions from small business preferences, including the provision that contracts awarded outside the United States are not eligible for set-aside. He says the exemptions cost small firms $64 billion a year in lost contracts. “Small businesses have been abused, screwed and discriminated against by government regulators,” he said in an interview.