Can we do a location restriction, "set-aside?" If so, what FAR reference allows us as I cannot find it?
This response is based on the information provided. We suggest you discuss with your comptroller/contracting officer and/or legal department as appropriate. The Army may have additional guidance and could possibly be more restrictive so check with your command FM/comptroller for service guidance.
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Under certain specific circumstances the government may restrict competition to a specific location. The FAR identifies those circumstances. From your scenario (and the news) it would not appear your situation meets these circumstances. The Houston area because of Hurricane Harvey is the type of situation this exception envisions. It came into play during Hurricane Katrina. The FAR language follows.
"FAR 6.208 -- Set-asides for Local Firms During a Major Disaster or Emergency.
(a) To fulfill the statutory requirements relating to 42 U.S.C. 5150, contracting officers may set aside solicitations to allow only offerors residing or doing business primarily in the area affected by such major disaster or emergency to compete (see Subpart 26.2).
(b) No separate justification or determination and findings is required under this part to set aside a contract action. The set-aside area specified by the contracting officer shall be a geographic area within the area identified in a Presidential declaration(s) of major disaster or emergency and any additional geographic areas identified by the Department of Homeland Security."
With that said, if your acquisition has a legitimate basis for limiting to an area, you would state them in your RFP/IFB. You must be careful to avoid being unduly restrictive. Given your scenario, it appears to be unduly restrictive. Why, for an upstate NY requirement, should only NY firms earn the award? Depending on what part of upstate NY, why not Pennsylvania or Vermont?