DATE: January 31, 2023

SUBJECT: Increasing Small Business Participation on Multiple-Award Contracts

TO: HCAs/Procurement Directors/Contracting Officers
FROM: Director, Contract and Financial Assistance Policy Division, Office of Policy, Office of Acquisition Management

SUMMARY: The Office of Management and Budget’s (OMB) Office of Federal Procurement Policy (OFPP) issued a memorandum outlining certain steps agencies should take to increase small business participation on Multiple-Award Contracts (MAC) in order to meet the President’s Management Agenda (PMA) and OMB’s Better Contracting Initiative (BCI).

The steps are summarized below.

In awarding new multiple-award contracts:

  1. Engage small business specialists Small Business Program Managers (SBPM) early in acquisition planning for all multiple-award contracts, giving consideration to total and partial small business set-asides, and providing detailed rationale, including the market research undertaken, when a multiple-award contract would not be fully or partially set aside for small businesses, or when a reserve would not be used.
  2. Consider on-ramps when developing the acquisition strategy for long-term (more than five years in duration—see FAR 19.301-2(a)) contracts. On-ramps allow for both small and large businesses to be added during the performance period for long-term contracts. The acquisition plan for multiple-award contracts should include an explanation if no on-ramps for small businesses are planned where small businesses are expected to enter the market after contract award and there is a sufficient volume of activity anticipated to provide meaningful opportunities for the added contract holders.
  3. Promote supplier resilience by allowing small businesses that have outgrown their small business size status during the period of contract performance of a set-aside multiple-award contract to remain on the contract as a small business until recertification, in lieu of “off-ramping” and removing such entities from the contract, unless the size status change results from a merger or acquisition of the business.

In awarding orders under new and existing agency and government-wide multiple-award contracts:

  1. Apply the rule of two to orders, with limited exception. Except for orders citing an exception to competition (e.g., FAR § 16.505(b)(2), exceptions to fair opportunity), contracting officers should set aside orders over the micro-purchase threshold for small businesses when the contracting officer determines there is a reasonable expectation of receiving offers from two or more small business contract holders under the multiple-award contract that are competitive in terms of market prices, quality, and delivery.
    • When not setting orders aside (including multiple-award contracts that have no or only one small business contract holder), the contracting officer must explain in the documentation 1) how both small-business market research (including research of small businesses not on the multiple-award contract under which the order would be placed) and mission considerations (e.g., desired terms and conditions, performance periods, past performance of potential sources) informed the agency’s basis for choosing the multiple-award contract to fulfill its needs; and what market research the agency conducted within the past 18 months.
    • A copy of the documentation shall be provided to the small business specialist for any order over the MPT and ensure the specialist has a reasonable opportunity to respond.
  2. Maximize orders to small businesses under the simplified acquisition threshold (SAT) to the maximum extent practicable. Because orders under the SAT are likely to be more suitable for small businesses, agency acquisition teams should work with their small business specialists to identify and proactively shift the buying strategies for recompetes of orders under the SAT to ensure that small businesses are afforded exclusive set-aside opportunities for these orders where market research shows that small entities are capable.

In using Best-in-Class (BIC) contracts:

  1. Consider using small business concerns as new BIC contracts are developed. As stated in OMB Memorandum M-22-03, Advancing Equity in Federal Procurement, spending on BIC solutions should not be prioritized at the expense of meeting socioeconomic small business goals.
  2. Determine whether use of a BIC could result in the addition of entities that are new to the agency’s contracting base through tools such as the government-wide Procurement Equity Tool and the SBA’s Dynamic Small Business Search Tool. If a BIC is not expected to produce this result, consider whether an open market set-aside would be a more effective way to meet the mission while expanding the supplier base.

Questions concerning this policy flash should be directed to the Contract and Financial Assistance Policy Division at DOE_oapmpolicy@hq.doe.gov.