Proposed Rule2025-00616
Federal Acquisition Regulation: Protests of Orders Under Certain Multiple-Award Contracts
Primary source
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Published
January 15, 2025
Issuing agencies
Defense DepartmentGeneral Services AdministrationNational Aeronautics and Space Administration
Abstract
DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to clarify protest rights for orders set aside under certain multiple-award contracts.
Full Text
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<title>Federal Register, Volume 90 Issue 9 (Wednesday, January 15, 2025)</title>
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[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Proposed Rules]
[Pages 3761-3763]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00616]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 16
[FAR Case 2024-007, Docket No. FAR-2024-0007, Sequence No. 1]
RIN 9000-AO76
Federal Acquisition Regulation: Protests of Orders Under Certain
Multiple-Award Contracts
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to clarify protest rights for orders set
aside under certain multiple-award contracts.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat Division at the address shown below on or before
March 17, 2025, to be considered in the formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2024-007 to the
Federal eRulemaking portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by searching
for ``FAR Case 2024-007''. Select the link ``Comment Now'' that
corresponds with ``FAR Case 2024-007''. Follow the instructions
provided on the ``Comment Now'' screen. Please include your name,
company name (if any), and ``FAR Case 2024-007'' on your attached
document. If your comment cannot be submitted using <a href="https://www.regulations.gov">https://www.regulations.gov</a>, call or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of this document for alternate
instructions.
Instructions: Please submit comments only and cite ``FAR Case 2024-
007'' in all correspondence related to this case. Comments received
generally will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
including any personal and/or business confidential information
provided. Public comments may be submitted as an individual, as an
organization, or anonymously (see frequently asked questions at <a href="https://www.regulations.gov/faq">https://www.regulations.gov/faq</a>). To confirm receipt of your comment(s),
please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>, approximately two to three
days after submission to verify posting.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
Ms. Carrie Moore, Procurement Analyst, at 571-300-5917 or by email at
<a href="/cdn-cgi/l/email-protection#1d7e7c6f6f7478337072726f785d7a6e7c337a726b"><span class="__cf_email__" data-cfemail="1d7e7c6f6f7478337072726f785d7a6e7c337a726b">[email protected]</span></a>. For information pertaining to status, publication
schedules, or alternate instructions for submitting comments if <a href="https://www.regulations.gov">https://www.regulations.gov</a> cannot be used, contact the Regulatory Secretariat
Division at 202-501-4755 or <a href="/cdn-cgi/l/email-protection#c186928093a4a692a4a281a6b2a0efa6aeb7"><span class="__cf_email__" data-cfemail="490e1a081b2c2e1a2c2a092e3a28672e263f">[email protected]</span></a>. Please cite FAR Case
2024-007.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to revise the FAR to clarify
protest rights, in accordance with existing statute and regulations,
when an order is or is not set aside. This includes whether the action
was taken in accordance with the policy proposed in FAR Case 2023-011,
Small Business Participation on Certain Multiple-Award Contracts,
published at XX FR XXX, on January XX, 2025.
To increase small business opportunities and maximize their
participation on multiple-award contracts, FAR Case 2023-011 proposes
guidance for contracting officers regarding how to exercise the
statutory grant of discretion to set aside an order for a small
business under a multiple-award contract. Under that proposed rule, if
the contracting officer determines that there is a reasonable
expectation of obtaining offers from two or more responsible small
business awardees that are competitive in terms of various criteria
under the applicable multiple-award contract, then the order should be
set aside for small business. This proposed rule for FAR Case 2024-007
clarifies that the proposed rule for FAR Case 2023-011 does not alter
the existing statutory grant of discretion to agencies as to whether or
not to set aside an order. The proposed rule for FAR Case 2023-011, if
finalized, cannot alter the existing protest rights in connection with
the issuance or proposed issuance of an order under a multiple-award
contract. (See FAR 16.505(a)(10), 41 U.S.C. 4106, and 10 U.S.C. 3406.)
II. Discussion and Analysis
This proposed rule adds clarifying text to FAR part 16 to specify
that a contracting officer's decision to set aside or not set aside an
order under a multiple-award contract is not grounds for protest.
Specifically, under 15 U.S.C. 644(r), Federal agencies, and
contracting officers acting on behalf of those agencies, are granted
discretion as to whether to set aside an order under a multiple-award
contract for small
[[Page 3762]]
businesses. This statutory grant of discretion means that agencies are
not required to set aside orders; it is a choice. To the extent a bid
protest challenges an agency's decision to set aside or not set aside
an order for small business, that protest challenges a discretionary
act statutorily committed to agency decision-making, and therefore
cannot form the basis for a protest seeking to compel an agency to make
a different choice.
This issue has not been clearly understood and has been subject to
litigation, which is why FAR Case 2023-011 proposes to clarify guidance
for agencies and this FAR Case 2024-007 proposes to clarify protest
rights. On the one hand, in a series of decisions, the U.S. Government
Accountability Office (GAO) has determined that 15 U.S.C. 644(r)
``clearly provides for granting agency officials discretion in deciding
whether to set aside orders under multiple-award contracts.'' Aldevra,
B-411752 (Oct. 16, 2015), 2015 CPD ] 339. In a separate decision, GAO
discussed 15 U.S.C. 644(r) and the regulations implementing that
provision in the FAR and issued by the SBA, and concluded that, ``we
think it is beyond debate that these regulations, by their plain
language, grant discretion to a contracting officer about whether to
set aside for small business participation task orders placed under
multiple-award contracts.'' See FAR 19.502-4 and 16.505(b)(2)(i)(F).
Edmond Scientific Co., B-410179 (Nov. 12, 2014), 2014 CPD ] 336. On the
other hand, the U.S. Court of Federal Claims, in Tolliver Group, Inc.
v. United States, 151 Fed. Cl. 70 (2020), held that an agency is
required to apply the Rule of Two prior to deciding to utilize a given
multiple-award contract, and that, if the Rule of Two is satisfied, the
agency is required to set the contract aside for small business. The
Court rejected the position that 15 U.S.C. 644(r) provides agencies
with discretion to utilize a multiple-award contract and then decide
whether to set the order aside for small business.
Through the proposed rule for FAR case 2023-011, as well as this
proposed rule, DoD, GSA, and NASA seek to address the confusion and
disagreement regarding the discretion that is provided to agencies by
clarifying the guidance previously issued under 15 U.S.C. 644(r). DoD,
GSA, and NASA agree with, and adopts, GAO's conclusion that ``the
statutory grant of discretion does not require application of the Rule
of Two prior to issuing an order, unless the multiple-award contract or
task order solicitation expressly anticipated the use of the Rule of
Two.'' ITility, LLC, B-419167 (Dec. 23, 2020), 2020 CPD ] 412.
Furthermore, as GAO explained in this decision, the discretion provided
by the statute necessarily means that an agency decision as to whether
to set aside an order, or not to set it aside, under a multiple-award
contract, is not a decision that can be challenged via a bid protest:
``Where Congress has enunciated a clear policy granting contracting
officials discretion, and the Executive Branch's regulatory
implementation similarly emphasizes the statutory grant of discretion,
our Office cannot substitute the parties' or our own judgments on the
matter.'' Id.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT) and for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items) or for Commercial Services
This proposed rule does not create new solicitation provisions or
contract clauses or impact any existing provisions or clauses.
IV. Expected Impact of the Rule
This proposed rule is expected to impact contractors and the
Government by clarifying that the proposed policies of FAR Case 2023-
011 and the existing statutory grant of discretion to agencies as to
whether or not to set aside an order do not alter the existing protest
rights in connection with the issuance or proposed issuance of an order
under a multiple-award contract. As such, this clarification is
expected to deter contractors from submitting protests of decisions to
set aside or not set aside orders placed against multiple-award
contracts, thereby saving contractors and the Government time and
resources.
This savings in time and resources is expected to expedite the
award of such orders and preclude delays in meeting mission needs. This
rule is also expected to provide clarity for all parties in the protest
process.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) and 13563
direct agencies to assess the costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). E.O. 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. This is not a significant
regulatory action under section 3(f)(1) of E.O. 12866 and, therefore,
was not subject to review under Section 6(b) of E.O. 12866, Regulatory
Planning and Review, dated September 30, 1993.
VI. Regulatory Flexibility Act
DoD, GSA, and NASA do not expect this proposed rule, if finalized,
to have a significant economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C.
601-612, because this rule only clarifies protest statute and
regulations for contractors and the Government. However, an Initial
Regulatory Flexibility Analysis (IRFA) has been performed and is
summarized as follows:
DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to specify that the policy of FAR Case
2023-011, which proposes guidance for contracting officers regarding
how to exercise the existing statutory grant of discretion to
agencies as to whether or not to set aside an order, does not alter
the existing protest rights in connection with the issuance or
proposed issuance of an order under a multiple-award contract.
The objective of this rule is to clarify protest regulations in
the FAR regarding the set-aside of certain orders under multiple-
award contracts. Promulgation of FAR regulations is authorized by 40
U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy
provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.
This proposed rule will impact small business contract holders
under certain multiple-award contracts. Specifically, small entities
will have clear guidance regarding when an order under a multiple-
award contract may be protested. The impacts of this rule cannot be
quantified, as there is no reliable way to estimate the number of
protests that would have occurred without this proposed rule;
therefore, there is no data with which to accurately reflect the
number of small entities to which this rule will apply. Instead,
this rule has the potential to benefit any small entity looking to
do business with the Government under certain multiple-award
contracts. According to data from the System for Award Management
(SAM), there are approximately 384,100 small entities currently
registered in SAM to do business with the Government. This proposed
rule has the potential to impact any number of these small entities,
depending on several factors, including: the primary industry of the
entity; the Government's future needs for products and services; and
the entity's submission of proposals and offers for orders to be
placed against multiple-award contracts.
The proposed rule does not impose any new reporting,
recordkeeping, or other compliance requirements for small entities.
The proposed rule does not duplicate or conflict with any other
Federal rules. This rule is related to and overlaps with the
proposed rule for FAR Case 2023-011.
[[Page 3763]]
There are no known significant alternative approaches to the
proposed rule that would accomplish the stated objectives of the
rule and further minimize any significant economic impact of this
proposed rule on small entities, as the economic impact is not
anticipated to be significant.
The Regulatory Secretariat Division has submitted a copy of the
IRFA to the Chief Counsel for Advocacy of the Small Business
Administration. A copy of the IRFA may be obtained from the Regulatory
Secretariat Division. DoD, GSA, and NASA invite comments from small
business concerns and other interested parties on the expected impact
of this proposed rule on small entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by the rule in
accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2024-007),
in correspondence.
VII. Paperwork Reduction Act
This rule does not contain any information collection requirements
that require the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. 3501-3521).
List of Subjects in 48 CFR Part 16
Government procurement.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of
Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR part 16 as
set forth below:
PART 16--TYPES OF CONTRACTS
0
1. The authority citation for 48 CFR part 16 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C.
chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C.
20113.
0
2. Amend section 16.505 by adding paragraph (a)(10)(iv) to read as
follows:
16.505 Ordering.
(a) * * *
(10) * * *
(iv) In accordance with 15 U.S.C. 644(r), a contracting officer's
decision to set aside or not set aside an order for small business
concerns is an exercise of discretion granted to agencies and not a
basis for protest. However, this does not preclude the filing of a
protest of such an order if such a protest would otherwise be
authorized on a separate basis recognized in accordance with paragraph
(a)(10)(i) of this section.
* * * * *
[FR Doc. 2025-00616 Filed 1-14-25; 8:45 am]
BILLING CODE 6820-EP-P
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