[Code of Federal Regulations]

[Title 13, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 13CFR125.2]



[Page 423-428]

 

                TITLE 13--BUSINESS CREDIT AND ASSISTANCE

 

                CHAPTER I--SMALL BUSINESS ADMINISTRATION

 

PART 125_GOVERNMENT CONTRACTING PROGRAMS--Table of Contents

 

Sec. 125.2  Prime contracting assistance.



    (a) General. Small business concerns must receive any award or 

contract, or any contract for the sale of Government property, that SBA 

and the procuring or disposal agency determine to be in the interest of:

    (1) Maintaining or mobilizing the Nation's full productive capacity;

    (2) War or national defense programs;

    (3) Assuring that a fair proportion of the total purchases and 

contracts for property, services and construction for the Government in 

each industry category are placed with small business concerns; or

    (4) Assuring that a fair proportion of the total sales of Government 

property is made to small business concerns.

    (b) Responsibilities in the acquisition planning process. (1) SBA 

Procurement Center Representatives (PCRs) are generally located at 

Federal agencies and buying activities which have major contracting 

programs. PCRs are responsible for reviewing all acquisitions not set-

aside for small businesses to determine whether a set-aside is 

appropriate and to identify alternative strategies to maximize the 

participation of small businesses in the procurement.

    (2) As early in the acquisition planning process as practicable, but 

no later than 30 days before the issuance of a solicitation, or prior to 

placing an order without a solicitation, the procuring activity must 

coordinate with the procuring activity's Small Business Specialist (SBS) 

when the acquisition strategy contemplates an acquisition meeting the 

dollar amounts in paragraph (b)(2)(i) of this section, unless the 

contract or order is entirely reserved or set-aside for small business 

concerns as authorized under the Small Business Act. The SBS must notify 

the agency Office of Small and Disadvantaged Business Utilization 

(OSDBU) if the strategy or plan includes bundled requirements that the 

agency has not identified as bundled or includes unnecessary or 

unjustified bundling of requirements. If the strategy involves



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substantial bundling, the SBS shall assist in identifying alternative 

strategies that would reduce or minimize the scope of the bundling.

    (i) The procuring activity must coordinate the acquisition strategy 

with the cognizant SBS in accordance with paragraph (b)(2) of this 

section if the estimated acquisition, contract or order value is:

    (A) $7 million or more for the Department of Defense;

    (B) $5 million or more for the National Aeronautics and Space 

Administration, the General Services Administration, and the Department 

of Energy; and

    (C) $2 million or more for all other agencies.

    (ii) If the strategy contemplates multiple award contracts or 

multiple award orders under the Federal Supply Schedule or a task or 

delivery order contract awarded by another agency, the thresholds in 

paragraph (b)(2)(i) of this section apply to the cumulative estimated 

value of the multiple award contracts or orders, including options.

    (3) A procuring activity must provide a copy of a proposed 

acquisition strategy (e.g., Department of Defense Form 2579, or 

equivalent) to the applicable PCR (or to the SBA Office of Government 

Contracting Area Office serving the area in which the buying activity is 

located if a PCR is not assigned to the procuring activity) at least 30 

days prior to a solicitation's issuance whenever a proposed acquisition 

strategy:

    (i) Includes in its description goods or services currently being 

performed by a small business and the magnitude of the quantity or 

estimated dollar value of the proposed procurement would render small 

business prime contract participation unlikely;

    (ii) Seeks to package or consolidate discrete construction projects; 

or

    (iii) Meets the definition of a bundled requirement as defined in 

paragraph (d)(1)(i) of this section.

    (4) Whenever any of the circumstances identified in paragraph (b)(2) 

of this section exist, the procuring activity must also submit to the 

applicable PCR (or to the SBA Office of Government Contracting Area 

Office serving the area in which the buying activity is located if a PCR 

is not assigned to the procuring activity) a written statement 

explaining why:

    (i) If the proposed acquisition strategy involves a bundled 

requirement, the procuring activity believes that the bundled 

requirement is necessary and justified under the analysis required by 

paragraph (d)(3)(iii) of this section; or

    (ii) If the description of the requirement includes goods or 

services currently being performed by a small business and the magnitude 

of the quantity or estimated dollar value of the proposed procurement 

would render small business prime contract participation unlikely, or if 

a proposed procurement for construction seeks to package or consolidate 

discrete construction projects:

    (A) The proposed acquisition cannot be divided into reasonably small 

lots to permit offers on quantities less than the total requirement;

    (B) Delivery schedules cannot be established on a basis that will 

encourage small business participation;

    (C) The proposed acquisition cannot be offered so as to make small 

business participation likely; or

    (D) Construction cannot be procured as separate discrete projects.

    (5) In conjunction with their duties to promote the set-aside of 

procurements for small business, PCRs will identify small businesses 

that are capable of performing particular requirements, including teams 

of small business concerns for larger or bundled requirements (see Sec. 

121.103(f)(3) of this chapter).

    (6)(i) If a PCR believes that a proposed procurement will render 

small business prime contract participation unlikely, or if a PCR does 

not believe a bundled requirement to be necessary and justified, the PCR 

shall recommend to the procurement activity alternative procurement 

methods which would increase small business prime contract 

participation. Such alternatives may include:

    (A) Breaking up the procurement into smaller discrete procurements;

    (B) Breaking out one or more discrete components, for which a small 

business set-aside may be appropriate; and



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    (C) Reserving one or more awards for small companies when issuing 

multiple awards under task order contracts.

    (ii) Where bundling is necessary and justified, the PCR will work 

with the procuring activity to tailor a strategy that preserves small 

business prime contract participation to the maximum extent practicable.

    (iii) The PCR will also work to ensure that small business 

participation is maximized through teaming arrangements and 

subcontracting opportunities. This may include:

    (A) Recommending that the solicitation and resultant contract 

specifically state the small business subcontracting goals, which are 

expected of the contractor awardee;

    (B) Recommending that the small business subcontracting goals be 

based on total contract dollars instead of subcontract dollars;

    (C) Reviewing an agency's oversight of its subcontracting program, 

including its overall and individual assessment of a contractor's 

compliance with its small business subcontracting plans. The PCR will 

furnish a copy of the information to the SBA Commercial Market 

Representative (CMR) servicing the contractor; and

    (D) Recommending that a separate evaluation factor with significant 

weight is established for the extent to which offerors attained their 

subcontracting goals on previous contracts.

    (7) In cases where there is disagreement between a PCR and the 

contracting officer over the suitability of a particular acquisition for 

a small business set-aside, whether or not the acquisition is a bundled 

or substantially bundled requirement within the meaning of paragraph (d) 

of this section, the PCR may initiate an appeal to the head of the 

contracting activity. If the head of the contracting activity agrees 

with the contracting officer, SBA may appeal the matter to the secretary 

of the department or head of the agency. The time limits for such 

appeals are set forth in 19.505 of the Federal Acquisition Regulation 

(FAR) (48 CFR 19.505).

    (8) PCRs will work with the cognizant SBS and agency OSDBU as early 

in the acquisition process as practicable to identify proposed 

solicitations that involve bundling, and with the agency acquisition 

officials to revise the acquisition strategies for such proposed 

solicitations, where appropriate, to increase the probability of 

participation by small businesses, including small business contract 

teams, as prime contractors. If small business participation as prime 

contractors appears unlikely, the SBS and PCR will facilitate small 

business participation as subcontractors or suppliers.

    (c) BPCR responsibilities. (1) SBA is required by section 403 of 

Public Law 98-577 (15 U.S.C. 644(l)) to assign a breakout PCR (BPCR) to 

major contracting centers. A major contracting center is a center that, 

as determined by SBA, purchases substantial dollar amounts of other than 

commercial items, and which has the potential to achieve significant 

savings as a result of the assignment of a BPCR.

    (2) BPCRs advocate full and open competition in the Federal 

contracting process and recommend the breakout for competition of items 

and requirements which previously have not been competed. They may 

appeal the failure by the buying activity to act favorably on a 

recommendation in accord with the appeal procedures set forth in Sec. 

19.505 of the FAR (48 CFR 19.505). BPCRs also review restrictions and 

obstacles to competition and make recommendations for improvement. Other 

authorized functions of a BPCR are set forth in 48 CFR 19.403(c) of the 

FAR and Section 15(l) of the Act (15 U.S.C. 644(l)).

    (d) Contract bundling--(1) Definitions--(i) Bundled requirement or 

bundling. The term bundled requirement or bundling refers to the 

consolidation of two or more procurement requirements for goods or 

services previously provided or performed under separate smaller 

contracts into a solicitation of offers for a single contract that is 

likely to be unsuitable for award to a small business concern due to:

    (A) The diversity, size, or specialized nature of the elements of 

the performance specified;

    (B) The aggregate dollar value of the anticipated award;

    (C) The geographical dispersion of the contract performance sites; 

or



[[Page 426]]



    (D) Any combination of the factors described in paragraphs (d)(1)(i) 

(A), (B), and (C) of this section.

    (ii) Separate smaller contract. A separate smaller contract is a 

contract that has previously been performed by one or more small 

business concerns or was suitable for award to one or more small 

business concerns.

    (iii) Single contract, as used in this definition, includes:

    (A) Multiple awards of indefinite-quantity contracts under a single 

solicitation for the same or similar supplies or services to two or more 

sources; and

    (B) An order placed against an indefinite quantity contract under a 

Federal Supply Schedule contract or a task or delivery order contract 

awarded by another agency (i.e., Government-wide acquisition contract or 

multi-agency contract).

    (iv) Substantial bundling means any bundling that meets the dollar 

amounts specified in paragraph (b)(2)(i) of this section.

    (2) Requirement to foster small business participation. The Small 

Business Act requires each Federal agency to foster the participation of 

small business concerns as prime contractors, subcontractors, and 

suppliers in the contracting opportunities of the Government. To comply 

with this requirement, agency acquisition planners must:

    (i) Structure procurement requirements to facilitate competition by 

and among small business concerns, including small business concerns 

owned and controlled by veterans, small business concerns owned and 

controlled by service-disabled veterans, qualified HUBZone small 

business concerns, small business concerns owned and controlled by 

socially and economically disadvantaged individuals and small business 

concerns owned and controlled by women; and

    (ii) Avoid unnecessary and unjustified bundling of contract 

requirements that inhibits or precludes small business participation in 

procurements as prime contractors.

    (3) Requirement for market research. In addition to the requirements 

of paragraph (b)(2) of this section and before proceeding with an 

acquisition strategy that could lead to a contract containing bundled or 

substantially bundled requirements, an agency must conduct market 

research to determine whether bundling of the requirements is necessary 

and justified. During the market research phase, the acquisition team 

should consult with the applicable PCR (or if a PCR is not assigned to 

the procuring activity, the SBA Office of Government Contracting Area 

Office serving the area in which the buying activity is located).

    (4) Requirement to notify current small business contractors of 

intent to bundle. The procuring activity must notify each small business 

which is performing a contract that it intends to bundle that 

requirement with one or more other requirements at least 30 days prior 

to the issuance of the solicitation for the bundled or substantially 

bundled requirement. The procuring activity, at that time, should also 

provide to the small business the name, phone number and address of the 

applicable SBA PCR (or if a PCR is not assigned to the procuring 

activity, the SBA Office of Government Contracting Area Office serving 

the area in which the buying activity is located).

    (5) Determining requirements to be necessary and justified. When the 

procuring activity intends to proceed with an acquisition involving 

bundled or substantially bundled procurement requirements, it must 

document the acquisition strategy to include a determination that the 

bundling is necessary and justified, when compared to the benefits that 

could be derived from meeting the agency's requirements through separate 

smaller contracts.

    (i) The procuring activity may determine a consolidated requirement 

to be necessary and justified if, as compared to the benefits that it 

would derive from contracting to meet those requirements if not 

consolidated, it would derive measurably substantial benefits. The 

procuring activity must quantify the identified benefits and explain how 

their impact would be measurably substantial. The benefits may include 

cost savings and/or price reduction, quality improvements that will save 

time or improve or enhance performance or efficiency, reduction in 

acquisition cycle times, better terms and conditions, and any other 

benefits that



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individually, in combination, or in the aggregate would lead to:

    (A) Benefits equivalent to 10 percent of the contract or order value 

(including options) where the contract or order value is $75 million or 

less; or

    (B) Benefits equivalent to 5 percent of the contract or order value 

(including options) or $7.5 million, whichever is greater, where the 

contract or order value exceeds $75 million.

    (ii) Notwithstanding paragraph (d)(5)(i) of this section, the 

Assistant Secretaries with responsibility for acquisition matters 

(Service Acquisition Executives) or the Under Secretary of Defense for 

Acquisition and Technology (for other Defense Agencies) in the 

Department of Defense and the Deputy Secretary or equivalent in civilian 

agencies may, on a non-delegable basis determine that a consolidated 

requirement is necessary and justified when:

    (A) There are benefits that do not meet the thresholds set forth in 

paragraph (d)(5)(i) of this section but, in the aggregate, are critical 

to the agency's mission success; and

    (B) Procurement strategy provides for maximum practicable 

participation by small business.

    (iii) The reduction of administrative or personnel costs alone shall 

not be a justification for bundling of contract requirements unless the 

administrative or personnel cost savings are expected to be substantial, 

in relation to the dollar value of the procurement to be consolidated 

(including options). To be substantial, such cost savings must be at 

least 10 percent of the contract value (including options).

    (iv) In assessing whether cost savings and/or a price reduction 

would be achieved through bundling, the procuring activity and SBA must 

compare the price that has been charged by small businesses for the work 

that they have performed and, where available, the price that could have 

been or could be charged by small businesses for the work not previously 

performed by small business.

    (6) OMB Circular A-76 Cost Comparison Analysis. The substantial 

benefit analysis set forth in paragraph (d)(5)(i) of this section is not 

required where a requirement is subject to a Cost Comparison Analysis 

under OMB Circular A-76 (See 5 CFR 1310.3 for availability).

    (7) Substantial bundling. (i) Where a proposed procurement strategy 

involves a substantial bundling of contract requirements, the procuring 

agency must, in the documentation of that strategy, include a 

determination that the anticipated benefits of the proposed bundled 

contract justify its use, and must include, at a minimum:

    (A) The analysis for bundled requirements set forth in paragraph 

(d)(5)(i) of this section;

    (B) An assessment of the specific impediments to participation by 

small business concerns as prime contractors that will result from the 

substantial bundling;

    (C) Actions designed to maximize small business participation as 

prime contractors, including provisions that encourage small business 

teaming for the substantially bundled requirement;

    (D) Actions designed to maximize small business participation as 

subcontractors (including suppliers) at any tier under the contract or 

contracts that may be awarded to meet the requirements; and

    (E) The identification of the alternative strategies that would 

reduce or minimize the scope of the bundling, and the rationale for not 

choosing those alternatives (i.e., consider the strategies under 

paragraphs (b)(6) (i) and (d) of this section).

    (ii) At least 30 days prior to the solicitation release, the 

procuring activity shall provide the PCR and the agency OSDBU a copy of 

the proposed acquisition, including the analysis required by paragraph 

(d)(7) of this section, the acquisition plan, any bundling information 

required under paragraph (b)(3) of this section, and any other relevant 

information. The PCR and agency OSDBU or SBS, as applicable, shall work 

together to develop alternative acquisition strategies identified in 

paragraph (b)(6) of this section to enhance small business 

participation.

    (8) Significant subcontracting opportunity. (i) Where a bundled or 

substantially bundled requirement offers a significant opportunity for 

subcontracting, the procuring agency must designate the following 

factors as significant factors in evaluating offers:



[[Page 428]]



    (A) A factor that is based on the rate of participation provided 

under the subcontracting plan for small business in the performance of 

the contract; and

    (B) For the evaluation of past performance of an offeror, a factor 

that is based on the extent to which the offeror attained applicable 

goals for small business participation in the performance of contracts.

    (ii) Where the offeror for such a bundled contract qualifies as a 

small business concern, the procuring agency must give to the offeror 

the highest score possible for the evaluation factors identified in 

paragraph (d)(5)(i) of this section.

    (e) OSDBU Oversight Functions. The Agency OSDBU must:

    (1) Conduct annual reviews to assess the:

    (i) Extent to which small businesses are receiving their fair share 

of Federal procurements, including contract opportunities under programs 

administered under the Small Business Act;

    (ii) Adequacy of the bundling documentation and justification; and

    (iii) Adequacy of actions taken to mitigate the effects of necessary 

and justified contract bundling on small businesses (e.g., review agency 

oversight of prime contractor subcontracting plan compliance under the 

subcontracting program).

    (2) Provide a copy of the assessment under paragraph (e)(1) of this 

section to the Agency Head and SBA Administrator.



[61 FR 3312, Jan. 31, 1996, as amended at 63 FR 31908, June 11, 1998; 64 

FR 57370, Oct. 25, 1999; 65 FR 45833, July 26, 2000; 68 FR 60012, Oct. 

20, 2003]