Bundling
Bundling contract requirements is only permitted when agencies can demonstrate and document substantial, quantifiable benefits, with strict thresholds and protections for small business participation.
Overview
FAR 7.107-3 outlines the requirements and justifications for bundling contract requirements, emphasizing the need to balance government benefits with the potential impact on small business participation. Agencies must make a written determination that bundling is necessary and justified, demonstrating that the anticipated benefits are measurably substantial compared to separate, smaller contracts. The regulation specifies how to quantify these benefits, sets financial thresholds for what constitutes a substantial benefit, and details the types of benefits that may justify bundling. It also establishes special approval procedures for cases where benefits are critical to mission success but do not meet standard thresholds, and requires documentation and coordination with the Small Business Administration (SBA).
Key Rules
- Written Justification for Bundling
- Agencies must document that bundling is necessary and justified, showing substantial benefits over separate contracts.
- Quantification of Benefits
- Benefits must be quantified using market research and must meet specific financial thresholds (10% for contracts ≤ $94M; 5% or $9.4M for contracts > $94M).
- Types of Acceptable Benefits
- Acceptable benefits include cost savings, price reductions, quality improvements, reduced acquisition cycle times, and better terms and conditions.
- Administrative Cost Savings
- Administrative or personnel cost reductions alone are insufficient unless they meet the 10% threshold.
- Special Approval for Critical Mission Needs
- Senior officials may approve bundling below thresholds if benefits are critical to mission success and small business participation is maximized.
- Price Comparisons
- Agencies and SBA must compare prices charged by small businesses or use market research to estimate such prices.
- Documentation and SBA Notification
- Justifications must be included in acquisition strategy documentation and provided to SBA upon request.
Responsibilities
- Contracting Officers: Ensure bundling is justified, benefits are quantified, documentation is complete, and SBA is notified as required.
- Contractors: Be aware of how bundling decisions may affect opportunities and prepare to demonstrate value in bundled procurements.
- Agencies: Conduct thorough market research, quantify benefits, obtain appropriate approvals, and maintain compliance with small business participation requirements.
Practical Implications
- This section ensures that bundling is only used when it provides significant, measurable benefits, protecting small business opportunities. Failure to properly justify and document bundling can lead to procurement delays or challenges. Contractors should monitor agency bundling practices and be prepared to engage in market research or advocacy if their opportunities are affected.