On January 25, 2024, the Office of Management and Budget (OMB) issued a memo to Chief Procurement Officers and Senior Procurement Officers that required procurement agencies to request that two or more small and medium-sized businesses enter into orders under Multiple Order Agreements (MACs). Encouraged them to apply the rules. Two rules provide that competition is limited to small businesses if the contracting officer reasonably believes that two or more small businesses can perform the work at a fair price. This memo should document market research and mission considerations if the procuring agency does not hold the order and provide that information to the agency's Small Business Specialist (SBS) and Procurement Center Representative (PCR). It is stated that there is. Federal supply schedules are waived.
The question of whether the small business two “must” rules apply to orders goes back to the codification of the MAC concept in the Federal Acquisition Streamlining Act of 1994. Initially, the consensus was that the two rules applied at the contract level. Consider the fair opportunity requirements applicable to the MAC. Over the decades, there have been protests of scale, bid protests, reports to Congress, proposed final regulations, and actual legislation proposed, with two rules to follow before ordering: I tried to decide once and for all whether or not it would happen. Or select a contract vehicle. The OMB memo is not a regulation and has not gone through the traditional notice and comment procedures required by the Administrative Procedures Act, raising multiple operational and policy questions.
Is that policy actually necessary? In fiscal year 2022, the federal government awarded a record $162 billion to small businesses, representing 26.5% of all contract value. [1] The federal government has met or exceeded the statutory target of 23% for small businesses over the past decade. Small businesses fared even better under best-in-class MACs, receiving approximately 38% of total awards. [2] Small businesses received 40% of the amount awarded under the Professional Services OASIS MAC. [3] and more than 31% of the total amount awarded in the Information Technology Services CIO-SP3 MAC. [4]
Is this a fundamental change to the contract?, should large and medium-sized companies have the right to adjust prices to cover opportunity losses? These companies competed and priced these contracts based on historical and expected levels of competition and opportunities that no longer exist. This is especially important for mid-sized companies that rely on MAC for sourcing opportunities.
Will contract costs increase as a result of reduced competition? The current MAC range has essentially expanded to serve small and medium-sized businesses, as they no longer have to compete with large and medium-sized companies for specific orders. Will the federal government need to renegotiate contract price reductions from small and medium-sized businesses in light of this new expanded reservation within the existing MAC?
If a small business has a complete and open MAC, it is likely that they can fulfill all orders within the scope of that agreement. Under such circumstances, When will my MAC order be no longer on hold? Can an agent with a full and open MAC that includes small and medium-sized businesses make a successful decision not to hold orders?Simply put, can an agent with a full and open MAC that includes small and medium-sized businesses successfully make the decision not to hold orders? Signing an agreement means a decision that a small business can carry out the work. Similarly, as long as an agency has a side-by-side set-aside and a fully open MAC (such as OASIS), will the agency be using a full-and-open contract?
How effective are notes? Increased litigation and procurement delays Does it arise from a challenge to the contracting officer's business judgment regarding the small business's capabilities or fair market value? Similarly, SBA rules also require size recertification for layaway orders under full and open contracts. Are procuring agencies prepared for the additional delays associated with scale protests and appeals? If the parties do not like the SBA scale protests and appeals decisions, the potential for them to end up in federal court There is a gender.
Does this memo reflect the intent of Congress? In 2010, Congress attempted to address this issue and implement the recommendations of a 2007 Congressional report that stated that agencies “may suspend” orders under the MAC for small businesses. Courts and GAO disagree on the interpretation of the 2010 statute, and Congress has taken no action to further address the issue.
Potential administrative law issues aside, Is it fair or good public policy? Imposing such a significant policy through a memo without the notice and comment that would apply to traditional rulemaking? This memo is likely to affect the vast majority of federal contractors, which employ millions of individuals across the country and around the world. Moreover, the very questions posed here are the types that the regulatory notice and comment process is designed to partially address.
By streamlining regulatory, reporting, and procurement processes, we can attract more new and smaller entrants to the federal market.. It is the regulatory and compliance burden that drives small businesses out of the market or prevents them from entering in the first place. These barriers to entry are too high and costly for many small businesses.
In the interest of government and industry, agencies may wish to consider pausing implementation of the memo and working with all stakeholders to address government goals and the impact of the memo. .
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