19.502-2 Total small business set-asides
Source: FAR 19.502-2 on acquisition.gov
FAR 19.502-2 requires most federal acquisitions above the micro-purchase threshold to be set aside for small businesses unless there is no reasonable expectation of competitive offers from at least two responsible small businesses.
Overview
FAR 19.502-2 establishes the requirements for total small business set-asides for federal acquisitions. It mandates that acquisitions of supplies or services above the micro-purchase threshold and up to the simplified acquisition threshold must be set aside exclusively for small businesses, unless the contracting officer determines there is not a reasonable expectation of receiving competitive offers from at least two responsible small businesses. For acquisitions above the simplified acquisition threshold, a total small business set-aside is required only if there is a reasonable expectation of receiving offers from at least two responsible small businesses at fair market prices. The regulation also outlines procedures if only one or no acceptable small business offers are received, and emphasizes the importance of market research and acquisition history, especially for research and development procurements.
Key Rules
- Mandatory Set-Asides for Certain Dollar Ranges
- Acquisitions above the micro-purchase threshold but not exceeding the simplified acquisition threshold must be set aside for small businesses unless competition is not expected.
- Set-Asides Above the Simplified Acquisition Threshold
- For acquisitions above the simplified acquisition threshold, set-asides are only required if there is a reasonable expectation of at least two competitive small business offers at fair market prices.
- Award Procedures
- If only one acceptable small business offer is received, award may be made to that firm; if none, the set-aside is withdrawn and the requirement may be resolicited unrestricted.
- Market Research and Past History
- Contracting officers must consider market research and past acquisition history, but these are not the only factors in determining reasonable expectation of competition.
- Special Considerations for R&D
- For research and development, there must be a reasonable expectation of obtaining the best scientific and technological sources from small businesses.
Responsibilities
- Contracting Officers: Must conduct market research, determine reasonable expectation of competition, set aside acquisitions as required, and follow procedures for award or withdrawal of set-asides.
- Contractors: Small businesses must submit competitive offers to benefit from set-asides.
- Agencies: Ensure oversight of set-aside determinations and compliance with small business participation goals.
Practical Implications
- This section ensures small businesses have fair access to federal contracts, especially for acquisitions below the simplified acquisition threshold.
- Contracting officers must document their market research and rationale for set-aside decisions.
- Failure to properly set aside or document exceptions can result in protests or compliance issues.
(a) Before setting aside an acquisition under this paragraph, refer to 19.203(b). Each acquisition of supplies or services that has an anticipated dollar value above the micro-purchase threshold, but not over the simplified acquisition threshold, shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of fair market prices, quality, and delivery. If the contracting officer receives only one acceptable offer from a responsible small business concern in response to a set-aside, the contracting officer should make an award to that firm. If the contracting officer receives no acceptable offers from responsible small business concerns, the set-aside shall be withdrawn and the requirement, if still valid, shall be resolicited on an unrestricted basis. The small business set-aside does not preclude the award of a contract as described in 19.203.
(b) Before setting aside an acquisition under this paragraph, refer to 19.203(c). The contracting officer shall 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) Award will be made at fair market prices. Total small business set-asides shall not be made unless such a reasonable expectation exists (see 19.502-3 for partial set-asides). Although past acquisition history and market research of an item or similar items are always important, these are not the only factors to be considered in determining whether a reasonable expectation exists. In making research and development small business set-asides, there must also be a reasonable expectation of obtaining from small businesses the best scientific and technological sources consistent with the demands of the proposed acquisition for the best mix of cost, performances, and schedules.