Consolidation
Consolidation of contract requirements over $2 million requires rigorous justification, coordination with small business offices, and documented benefits that substantially exceed alternative approaches.
Overview
FAR 7.107-2 establishes the requirements for justifying and documenting the consolidation of contract requirements when the estimated total value exceeds $2 million. The regulation aims to balance the potential benefits of consolidation, such as cost savings and efficiency, with the need to protect small business participation in federal contracting. Before proceeding with a consolidated acquisition, agencies must conduct market research, consider alternative approaches, coordinate with small business offices, assess impacts on small businesses, and take steps to include them in the strategy. The senior procurement executive (SPE) or chief acquisition officer (CAO) must make a written determination that consolidation is necessary and justified, based on substantial benefits that exceed those of alternative approaches. Specific thresholds for what constitutes "substantial benefits" are provided, and special provisions exist for mission-critical consolidations that do not meet these thresholds. Documentation must be included in the acquisition strategy and provided to the SBA upon request.
Key Rules
- Written Determination Requirement
- Consolidations over $2 million require a written justification by the SPE or CAO, ensuring compliance with statutory requirements and small business considerations.
- Market Research and Alternatives
- Agencies must conduct market research and identify less consolidated alternatives before proceeding.
- Small Business Coordination
- The determination must be coordinated with the agency's small business office, and impacts on small businesses must be identified and mitigated.
- Substantial Benefit Thresholds
- Consolidation is justified if anticipated benefits meet or exceed 10% (for contracts ≤ $94M) or 5%/$9.4M (for contracts > $94M) of contract value, or if non-quantifiable benefits are specifically identified.
- Mission-Critical Exception
- Approving authorities may justify consolidation for mission-critical needs even if benefit thresholds are not met, provided small business participation is maximized.
- Documentation and Reporting
- Justification must be documented in the acquisition strategy and provided to the SBA upon request.
Responsibilities
- Contracting Officers: Ensure all required analyses, coordination, and documentation are completed and included in the acquisition strategy; provide documentation to SBA if requested.
- Contractors: Be aware of consolidation justifications and advocate for small business participation where possible.
- Agencies: SPE/CAO must make and document determinations; agency small business offices must be involved in the process.
Practical Implications
- This section ensures that consolidation is only used when truly beneficial and not at the expense of small business opportunities. Failure to follow these requirements can result in protest, delays, or disapproval of the acquisition strategy. Contractors should monitor consolidation decisions and engage with agencies to promote small business inclusion.