The Federal Acquisition Regulation (FAR) has been amended to implement regulatory changes made by the Small Business Administration, which provide a policy for partial set-asides and reserves, and for total set-asides to small businesses on multiple-award contracts.

The final rule goes into effect March 30, 2020.

As used in the new FAR rule, a “reserve” provides small businesses with opportunities to participate in federal contracts as prime contractors in circumstances where small businesses might not have otherwise been able to participate.

Reserves are applicable to Multiple-Award Contracts only and are to be used when market research indicates that a total or partial set-aside is not feasible.

The language at FAR 19.503 addresses factors the contracting officer must consider at the contract level. Multiple-award solicitations with reserves may result in contract awards to more than one small business.  FAR 19.504(c)(1) addresses procedures at the order level when more than one small business receives an award under a multiple-award solicitation with a reserve.

The new rule is expected to benefit small business by removing the current requirement for small business offerors to submit an offer for both the set-aside and non-set-aside portions of a partial set-aside. That requirement was burdensome for small business concerns looking to perform only the set-aside portion(s).  Now, small business offerors may submit an offer for only the set-aside portion if they are only interested in performing that portion. By allowing small business offerors to only submit an offer for the set-aside portion, the Government expects to have fewer proposals to evaluate for the non-set-aside portion of the solicitation, which would result in a reduction in burden.  However, there may be additional proposals received on the set-aside portion of the solicitation from offerors that previously did not submit a proposal for the requirement because they would have had to submit a proposal for all portions of the solicitation.

Other impacts of this final rule include the following:

• The rule provides contracting officers with the authority to issue orders directly to a small business under a reserve, which will increase opportunities for small business concerns awarded a contract under a multiple-award contract reserve but will result in lost opportunity for the other contractors with awards on the multiple-award contract.
• The rule removes the ability of interested parties to protest sole source awards under the service-disabled veteran-owned small business program.
• The rule requires certain multiple-award contracts to be assigned more than one NAICS code.
• The rule requires contracting officers to specify the compliance period for the limitations on subcontracting at either the contract or order level.
• The rule prohibits tiered evaluation of offers on multiple-award contracts unless the agency has statutory authority.

Applicable contract clauses governing the use of set-asides and reserves for multiple-award contracts are:

• Solicitations for multiple-award contracts that are total set-asides are to include FAR clause 52.219-6.
• Solicitations for multiple-award contracts that contain partial set-asides are to include FAR clause 52.219-7.
• Solicitations for multiple-award contracts that contain a reserve are to include FAR clause 52.219-31.