Is a firm, whose size status has changed since entering into a multiple-award total SDVOSB set-aside BPA, still allowed to compete for task order awards under that BPA? Please explain.
The following response is based solely on the question posed. No additional information has been obtained or solicited in formulating the response set forth below. DAU highly recommends you consult the Contracting Officer as well as the Legal Office regarding the specifics of your situation. The answer is for educational purposes only. It is not to be construed as legally binding or specific direction.
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To answer the question, foundational information must first be laid. It is clearly established that a Blanket Purchase Agreement (BPA) established under Part 8 or Part 13 of the Federal Acquisition Regulation (FAR) is not a contract. The BPA does not obligate any funds and, until an order is placed per the terms of the BPA, the Government is not contractually committed to procuring goods or services thereunder. Contractual obligations will arise only after an order is placed. This position is unequivocally stated under Chapter 1, Small Business Administration, of 13 CFR. Particularly at 121.404 (3) vi., the regulations states "A Blanket Purchase Agreement (BPA) is not a contract. Goods and services are acquired under a BPA when an order is issued." Further, the paragraph goes on to state; "Thus, a concern's size may not be determined based on its size at the time of a response to a solicitation for a BPA." The flip side of this statement seems to indicate that the size is determined with each order under a BPA given that it is not determined when responding to the BPA itself.
In 2006, Parts 121 and 124 of CFR 13 were changed to incorporate the foregoing language. The intent of the change is clearly set forth in Vol. 71, No. 220 of the Federal Register. The changes were driven by the fact that a firm that certifies itself as small as part of its offer for a contract is generally considered small for the life of the contract, even if it grows to be other than small during the life of the contract." However, the SBA recognized that the existing rules led to unsatisfactory results when applied to multiple award task or delivery order contracts. Thus, the SBA had solicited comments regarding re-certification of size "on an order-by-order basis". The final rule contains the following provision that bear on the issue. At paragraph (3) (v) of § 121.404, it states "Where the contracting officer explicitly requires concerns to recertify their size status in response to a solicitation for an order, SBA will determine size as of the date the concern submits its self-representation as part of its response to the solicitation for the order."
Note that, as a general rule, the SBA left the matter of recertification to the discretion of the Contracting Officer.
Although the SBA regulations do not mandate the re-certification on an order by order basis, DOD and GSA issued an interim rule, effective November 2011, which directly impacted, among other aspects, the Service-Disable Veteran Owned Small Business. The interim rule amending the Federal Acquisition Regulation (FAR) was promulgated to implement section 1331 of the Small Business Jobs Act of 2010 (Jobs Act). The change was specifically oriented to address set-asides of task and delivery-orders under multiple-award contracts. Although it specifically addressed "contracts" the intent can be extended to "agreements".
As part of this rule, FAR clause 52.219-27, Notice of Service-Disabled Veteran Owned Small Business Set-Aside was incorporated. The clause specifically states at paragraph (c) that "Offers are solicited only from service-disabled veteran-owned small business concerns." It goes on to state that "offers received from concerns that are not service-disabled veteran-owned small business concerns shall not be considered."
Going back to the foundational premise that a BPA is not a contract, and given the directive set forth at paragraph (c) of FAR clause 52.219-27, the position can be easily asserted that an agency cannot solicit or request quotes from an entity that is no longer a SDVOSB. And, although the SBA does not dictate that a contracting officer require re-certification, the FAR clause would appear to make this a requirement as the Contracting Officer must solicit offers only from SDVOSB concerns. In order to adhere to this dictate, the Contracting Officer must exercise due diligence in ascertaining that offers received are in fact from SDVOSB concerns.
So, the fact that a SDVOSB firm may have qualified as such when the BPA was created, the BPA is not a contract. If the SDVOSB status changes, it is grandfathered for each order under which it currently operates as they are deemed to be contracts. But, for future orders under the BPA, a business that is no longer a SDVOSB concern cannot be awarded such orders.
To bolster the position set forth above, reference, again, can be made to the intent of the changes that impacted Part 121 of CFR 13. The SBA, when addressing protests based on size certification differentiated options awarded under a contract from orders, stated "With respect to size protest in connection with a size certification for a particular order, if a concern is found to be other than small, the concern is not eligible for award of the order."
In sum, even if the Contracting Officer fails to validate that the offer is from a SDVOSB operation, the order can still be protested. And if it is determined that the potential awardee is no longer a SDVOSB, the award cannot be made.
The foregoing does not address the mechanics of orders placed at or below the micro purchase threshold.