19.501 General
Source: FAR 19.501 on acquisition.gov
FAR 19.501 requires contracting officers to prioritize small business participation through set-asides or reserves, ensuring fair competition and compliance with size standards and fair market pricing.
Overview
FAR 19.501 outlines the general principles and requirements for small business set-asides and reserves in federal contracting. The section establishes that certain acquisitions may be limited exclusively to small business concerns, either totally or partially, to promote small business participation. It also introduces the concept of small business reserves for multiple-award contracts under full and open competition, clarifying that reserves are not used when a set-aside is possible. The contracting officer is responsible for determining whether an acquisition should be set aside or reserved for small businesses, considering input from the Small Business Administration (SBA) and agency small business offices. The regulation requires that all solicitations involving set-asides or reserves specify the appropriate NAICS codes and size standards, and prohibits awarding contracts under set-asides at prices exceeding fair market value. It also references additional rules on subcontracting limitations and the nonmanufacturer rule.
Key Rules
- Small Business Set-Asides
- Acquisitions may be set aside exclusively for small businesses, either totally or partially, to foster small business participation.
- Small Business Reserves
- Reserves allow small businesses to compete for multiple-award contracts under full and open competition when a set-aside is not feasible.
- Determination and Review
- Contracting officers must review acquisitions for set-aside or reserve potential, considering recommendations from SBA and agency small business offices.
- SBA Access and Review
- SBA representatives may review proposed acquisitions above the micro-purchase threshold.
- Solicitation Requirements
- Solicitations must specify NAICS codes and size standards for set-asides or reserves.
- Fair Market Price Limitation
- Contracts cannot be awarded under set-asides if the price exceeds fair market value.
- Reference to Subcontracting Rules
- Limitations on subcontracting and the nonmanufacturer rule apply as referenced in FAR 19.505.
Responsibilities
- Contracting Officers: Must determine and document set-aside or reserve status, consider SBA and agency recommendations, ensure solicitations include required codes and standards, and comply with fair market price limitations.
- Contractors: Must meet size standards, comply with set-aside/reserve requirements, and adhere to subcontracting and nonmanufacturer rules.
- Agencies: Should establish review thresholds and facilitate SBA access to acquisition information.
Practical Implications
- This section ensures small businesses have fair opportunities in federal contracting by reserving certain acquisitions for their participation. Contracting officers must be diligent in reviewing and documenting set-aside decisions, and contractors must be aware of eligibility and compliance requirements. Common pitfalls include failing to specify NAICS codes, exceeding fair market prices, or overlooking subcontracting limitations.
(a)
(1) The purpose of small business set-asides is to award certain acquisitions exclusively to small business concerns. A "set-aside for small business" is the limiting of an acquisition exclusively for participation by small business concerns. A small business set-aside may be open to any of the small business concerns identified at 19.000(a)(3). A small business set-aside of a single acquisition or a class of acquisitions may be total or partial.
(2) The purpose of small business reserves is to award one or more multiple-award contracts to any of the small business concerns identified at 19.000(a)(3), under a full and open competition. A small business reserve shall not be used when the acquisition can be set aside, in total or in part.
(b) The contracting officer makes the determination to make a small business set-aside, in total or in part, or a reserve. The Small Business Administration (SBA) procurement center representative (PCR) (or, if a PCR is not assigned, see 19.402(a)) may make a recommendation to the contracting officer.
(c) The contracting officer shall review acquisitions to determine if they can be set aside, in total or in part, or reserved for small business, giving consideration to the recommendations of agency personnel in the Office of Small and Disadvantaged Business Utilization, or for the Department of Defense, in the Office of Small Business Programs. Agencies may establish threshold levels for this review depending upon their needs.
(d) At the request of an SBA PCR (or, if a PCR is not assigned, see 19.402(a)), the contracting officer shall make available for review at the contracting office (to the extent of the SBA representative's security clearance) any proposed acquisition in excess of the micro-purchase threshold.
(e) All solicitations involving set-asides, in total or in part, or reserves shall specify the NAICS code(s) and corresponding size standard(s) (see 19.102).
(f) Except as authorized by law, a contract may not be awarded as a result of a small business set-aside if the cost to the awarding agency exceeds the fair market price.
(g) For the applicability of the limitations on subcontracting and the nonmanufacturer rule, see 19.505.