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FAR Council Clarifies 8(a) Sole Source Justification Requirements for High Value Contracts

On October 15, the Federal Acquisition Regulatory Council (FAR Council), issued a proposed rule to clarify contracting officer and agency responsibilities when justifying sole source awards exceeding $22 million dollars made through the Small Business Administration’s 8(a) program.  The revisions directly address recommendations from a December 2012 Government Accountability Office (GAO) report titled, “Slow Start to Implementation of Justifications for 8(a) Sole-Source Contracts,” which, among other things, highlighted agency “confusion” about the existing justification requirements in the FAR.

The 8(a) sole source justification requirement for high value contracts is a statutory mandate, established by Section 811 of the FY 2010 National Defense Authorization Act, presumably to ensure that these high value awards are in the government’s best interest.  While the FAR Council published implementing regulations in April 2012, as noted in the 2012 GAO report, a number of agencies had difficulty complying with the new requirements, which differ from those governing other sole source justifications.

In subsequent GAO reports (published in September 2014 and in June 2016) reviewing the number of DoD issued 8(a) awards exceeding $20 million dollars, GAO identified a significant decline in high value sole source awards to 8(a) firms since implementation of the justification requirement in the Federal Acquisition Regulation (FAR).[1]  Some agency officials at least partly attributed these declines to the new regulations.  GAO also noted a corresponding increase in the number of competitively awarded high value 8(a) contracts.

Key aspects of the proposed rule are highlighted below:

  • The rule clarifies that agencies must use the 8(a) sole source justification specified in FAR 6.303-2 when it is applicable — they may not substitute another justification for other than full and open competition set forth at FAR 6.302, such as unusual and compelling urgency.

  • The rule adds a requirement for contracting officers to provide the appropriate Small Business Administration (SBA) District Office with a copy of the approved justification.  Previously, there was no explicit requirement in the FAR for agencies to share the justification with SBA for review.

  • Consistent with the current rule, agency approval must still come from the head of the procuring activity, or his designee, for any justification for a proposed award exceeding $13.5 million but less than $68 million (or for DoD, NASA, and the Coast Guard, less than $93 million).  The Senior Procurement Executive must approve any 8(a) sole source justifications in excess of this amount, and excepting the Department of Defense, may not delegate his authority to do so.

  • Finally, the preamble to the rule (but not the apparent revisions to the regulatory text) clarifies that an agency may not use 8(a) sole source authorities to justify out of scope modifications to existing contracts, which must be recompeted.

As this justification remains mandatory for large, sole source 8(a) awards, and must be posted publicly, where an agency does not follow the aforementioned requirements, 8(a) vendors may have valid grounds to protest the award decision.  However, non-8(a) vendors face potential challenges when protesting solely on the basis of an invalid or missing justification, absent other protest grounds.  As the justification may only explain why non-competitive sole source procedures are used when selecting among 8(a) firms, a non-8(a) vendor could have difficulty proving that it would otherwise be eligible for award.

The FAR Council will accept comments on these proposed revisions through January 17, 2017.

[1] The FAR Council issued a notice to revise the justification threshold upward from $20 million to $22 million dollars last year.  80 Fed. Reg. 38,293 (July 2, 2015).

© 2018 Covington & Burling LLP


About this Author

Jason A. "Jay" Carey, Covington Burling, Government Contracts Attorney,

Jason Carey represents clients in litigation with the government and other private parties, counsels clients regarding a wide range of formation and compliance matters, and defends clients under investigation by federal and state governments. Mr. Carey regularly represents government contractors in bid protests before the U.S. Government Accountability Office and the Court of Federal Claims. He has prosecuted and defended more than 80 protests covering a wide range of procurements

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Ryan Burnette, Covington Burling Law Firm, Government Contracts Attorney

Ryan Burnette is an associate in the firm’s Government Contracts practice. He advises companies in all industries on a range of contracting issues, including compliance with complex regulations, assistance with potential corporate transactions, bid protest litigation before the Government Accountability Office, and public policy matters.

Prior to joining Covington, Mr. Burnette served in the Office of Federal Procurement Policy in the Executive Office of the President, where he helped to manage government-wide contracting regulations and policies affecting more than $400 billion dollars worth of goods and services each year. While in government, he was responsible for the development and implementation of several contracting-related Executive Orders, and he worked with White House and agency officials on matters affecting contractor disclosure and agency responsibility determinations, labor and employment issues, IT contracting, commercial item acquisitions, performance contracting, GSA Schedules and interagency acquisitions, competition requirements, and suspension and debarment, among others. Additionally, in the wake of significant incidents affecting the program, Mr. Burnette was selected to serve on a core four person team that lead reform of processes affecting virtually all Federal background investigations, directly resulting in the creation of the new National Background Investigations Bureau.