DoD Changes Sole-Source Contracts: $100M Do Not Need Justification

The Department of Defense (DoD) has announced that contracting officers will not be required to issue a justification or obtain approval for the award of a sole-source contract under the Small Business Administration’s 8(a) program for awards up to $100 million, up from the prior $22 million limit, effective March 17, 2020.

The DoD deviation will implement the higher dollar amount that Congress set in the 2020 National Defense Authorization Act. The change will likely matter most for 8(a) concerns owned by an Indian Tribe, Alaska Native Corporation (ANC) or Native Hawaiian Organization (NHO).

Under the change, contracting officers must use a threshold of $100 million in lieu of the $22 million thresholds currently in a number of rules in the Federal Acquisition Regulation (FAR). FAR 6.302-5(b)(4), 6.303-1(b) and 19.808-1(a), after the change, will now allow sole-source contracts up to $100 million contract value with fewer agency requirements.

FAR 6.302-5(b)(4) applies to sole source awards under the 8(a) Program. For 8(a) sole-source awards over $100 million a contractor must provide a written justification, be approved by a higher-up agency official and the justification must be made public after award.

FAR 6.303-1(b). FAR 19.808-1(a), in turn, now allows the SBA to accept a sole source 8(a) contract up to $100 million without a DoD agency justification. Contracting officers can award a contract to an 8(a) business on a sole source basis if the estimated cost is $4 million or less.

The DoD class deviation has no effect on the limits found in SBA’s rules at 13 C.F.R. § 124.506. The guidelines noted that the dollar thresholds under 8(a) contract must be completed if “[t]here is a reasonable expectation that at least two eligible Participants will submit offers at a fair market price” and the requirement has not already been awarded a sole-source contract to a tribally-owned or ANC-owned concern.

Under the assumption that all the requirements are met, the DoD class deviation would have an effect on sole-source awards to non-tribal 8(a) companies. DoD would not have to prepare a justification for this type of procurement up to $100 million in contract value.

With the change, the increased threshold from $22 million to $100 million will make it easier for contracting officers to award much larger contracts as 8(a) sole sources without competition to 8(a) concerns owned by a tribe, ANC, or NHO.

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