The U.S. Court of Federal Claims (COFC) issued a decision on Nov. 30, 2020 that supported the Small Business Administration’s position regarding the Rule of Two analysis requirements for government acquisitions.

The central question surrounding the case was whether the U.S. Army could cancel a Federal Acquisition Regulation (FAR) Part 8 service-disabled veteran-owned small business (SDVOSB) set-aside procurement under the General Services Administration’s Federal Supply Schedule (FSS) and move the requirement to a multiple-award indefinite-delivery, indefinite-quantity (MAIDIQ) contract vehicle that the plaintiff, The Tolliver Group, Inc. (Tolliver), did not hold.

In its protest, Tolliver argued, in part, that the Army’s actions violated the Rule of Two because the agency was required to determine whether two or more small businesses were capable of performing the requirement prior to choosing to put the procurement on the MAIDIQ contract.

The COFC’s decision confirms that the Rule of Two analysis applies before an agency elects to procure a requirement from a multiple-award contract (MAC) vehicle under FAR Part 16.5.

The Rule of Two requires contracting officers to set aside any acquisition over the simplified acquisition threshold for small business participation when there is a reasonable expectation that (1) offers will be obtained from at least two responsible small business concerns and (2) the award will be made at fair market prices.

In Tolliver, the Army argued that a Rule of Two analysis was not required because—according the Small Business Jobs Act, as implemented in 15 U.S.C. § 644(r)—federal agencies have the discretion to issue MACs without first conducting a Rule of Two analysis to determine whether it should be set aside for small businesses.

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