The Defense Department’s acquisition advisory body recommended in its latest report “revising statutory guidance to clarify that the acquisition of commercial products and services has precedence over small-business set-asides,” a suggestion to lawmakers that could significantly change the outlook for small businesses that account for $61 billion in DoD contracts.
The Section 809 Panel, created by the 2016 National Defense Authorization Act for the purpose of “streamlining acquisition regulations” with “recognized experts in acquisition and procurement policy,” reviews DoD regs and makes recommendations to amend or repeal as necessary. This includes, according to the law, establishing and administering “appropriate buyer and seller relationships in the procurement system,” improving acquisition system function, ensuring “the continuing financial and ethical integrity of defense procurement programs” and putting the Pentagon first in the process.
Commissioners on the panel include active-duty and retired military officials, industry representatives and civilian DoD acquisition personnel.
The panel’s February “roadmap” on streamlining and codifying acquisition regulations consists of 98 identified ways to “adapt at the speed of a changing world,” “leverage the dynamic marketplace,” “allocate resources effectively,” “enable the workforce” and “simplify acquisition.”
“Currently, neither statute nor regulation provides an order of preference between the statute’s preference for acquiring commercial products or services and the requirement to procure certain products or services from small business,” the report states. “The panel recommends revising statutory guidance to clarify that the acquisition of commercial products and services has precedence over small-business set-asides.”
This was detailed as Recommendation 80 in Section 7, Simplifying Procurement and Contracting, of the Volume III Section 809 report released in January.
“When the government’s needs may be met by products or services available in the commercial marketplace and contracting officers are considering a small business set-aside, they may face a dilemma if the small-business solution does not satisfy the definition of commercial product or commercial service,” that finding stated.
“Practically speaking, if the government has a requirement that can be satisfied by a commercial product or service, and the commercial product or service that could satisfy the government’s requirement is only available from large businesses, but two or more small businesses are available that could meet the government’s requirement with a noncommercial product or service, then the government would be permitted to set-aside the procurement for small businesses and conduct the acquisition on a FAR Part 15 basis, thereby purchasing a developmental product when a commercial product or service already exists that meets the government’s needs,” the report continued. “Clearly, this outcome is inconsistent with Congress’s goals.”
The February report includes the recommendation on a procurement revamp list that “Congress should also adopt, and direct DoD to implement” regarding “improving commercial buying practices.”
“Doing so will incrementally increase DoD’s access to innovation in the private-sector marketplace in advance of full implementation of the readily available procedures,” the roadmap says. “The limitations on the existing system have led to commercial buying becoming less widespread in DoD than Congress intended.”
Kevin Fahey, assistant secretary of Defense for acquisition, said Feb. 13 that there is “a lot of good stuff” in the panel’s recommendations but “to go through and prioritize and figure out how we can actually implement it is challenging.”
Gloria Larkin, president and CEO of TargetGov, argued in a blog post last week that the replacement of most current small-business set-asides with a 5 percent price preference option “has the ability to harm the thousands of small businesses and tens of thousands small business employees serving our government and military operations throughout the nation.”
The report, she stated, “mentions that small businesses will ‘make extraordinary efforts to remain small’ in order to stay within the perceived protected set-aside bidding environment where only small businesses may compete.”
“According to official government reports at FPDS.gov, in the last full fiscal year 2017, DOD awarded $61,372,431,842 in prime contracts to small businesses in 1,416,194 contract ‘actions’ actually exceeding its self-assigned 22% goal by reaching 22.53%,” Larkin wrote. “The 809 Panel recommendations would essentially eliminate this DOD voluntary goal.”
