Set Asides Under the Federal Supply Schedule are Discretionary

In a recent Government Accountability Office (“GAO”) protest, the GAO again explained that agencies are not required to follow the rule of two or other small business regulations under Federal Acquisition Regulation (“FAR”) Part 19 when issuing orders or establishing Blanket Purchase Agreements (“BPA”) under Federal Supply Schedules (“FSS”). Financial & Realty Servs., LLC, B-422858, Nov. 25, 2024.

The case involved a Request for Quotations issued by the Department of Health and Human Services (“HHS”) for purchase through the FSS of facilities, maintenance and repair services at a building in the District of Columbia. The procurement was conducted pursuant to FAR Subpart 8.4, with competition between vendors holding General Service Administration (“GSA”) multiple award schedule contracts, using the GSA E-buy website. Initially, the solicitation was a service-disabled veteran owned small business (“SDVOSB”) set aside. When only one quote was received, the agency canceled the setside for small business. And when there was insufficient interest from small businesses, HHS then reissued the solicitation without any restrictions (full and open).

Financial & Realty challenged the decision to cancel the solicitation for small business, arguing that FAR 19.502-9 only permits canceling a small business set-aside if the agency does not receive a reasonably priced quotation from a small business.

The GAO stated that Section 1331 of the Small Business Jobs Act of 2010, added a provision , subsequently added to the regulations, by which agencies may “at their discretion” set aside orders placed against multiple award contracts for small business concerns. 15 USC 644(r). FAR 8.405-5. Set aside requirements of FAR Part 19 do not apply to FSS procurements except for certain discretionary actions and provisions not relevant here. This permits contracting officers, in their discretion, to set aside orders or BPA’s for any of the small business concerns in FAR Part 19 (i.e., small business, 8(a) participants, Historically Underutilized Business Zone small business, SVOSB concerns, and the two types of women owned business concerns.) Agencies therefore, are not required to follow the rule of two or other small business regulations under FAR Part 19 when issuing orders or establishing BPA’s under the FSS.

GAO denied the protest by dismissing it, noting that the contracting officer had both the discretion to set aside this FSS procurement and to withdraw the set aside. The grounds for the protest were not adequate to state a basis of protest, and therefore it was dismissed.

For other helpful suggestions on government contracting, visit:

Richard D. Lieberman’s FAR Consulting & Training at https://www.richarddlieberman.com/, and Mistakes in Government Contracting at https://richarddlieberman.wixsite.com/mistakes.