B-223585, SEP 3, 1986, OFFICE OF GENERAL COUNSEL

B-223585, SEP 3, 1986, OFFICE OF GENERAL COUNSEL

FEDERAL ACQUISITION REGULATION - PROPOSED REVISION DIGEST: 1. GAO HAS NO OBJECTION TO A PROPOSAL TO AMEND FEDERAL ACQUISITION REGULATION (FAR) PARTS 13, 19, 20, AND 52 TO PROVIDE FOR THE USE OF SMALL PURCHASE PROCEDURES IN AWARDING SMALL BUSINESS SET-ASIDE CONTRACTS VALUED BETWEEN $10,000 AND $25,000. FEDERAL ACQUISITION REGULATION - PROPOSED REVISION 2. GAO HAS NO OBJECTION TO A PROPOSAL TO AMEND PARAGRAPH 5 OF TABLE 15 2 AT FEDERAL ACQUISITION REGULATION (FAR) SEC. 15.804-6(B)(2) AND STANDARD FORM 1411, WHICH APPEARS AT FAR 53.301-1411, TO ENSURE THAT THE GOVERNMENT HAS ACCESS TO THOSE RECORDS OF A CONTRACTOR NECESSARY TO PERMIT AN ADEQUATE EVALUATION OF THE PROPOSED PRICE.

MS. MARGARET A. WILLIS:

FAR SECRETARIAT

GENERAL SERVICES ADMINISTRATION

THIS IS IN RESPONSE TO YOUR LETTER OF JUNE 30, 1986, REQUESTING OUR COMMENTS ON FEDERAL ACQUISITION REGULATION (FAR) CASE NOS. 86-23 AND 86 32.

FAR CASE NO. 86-23 IS A PROPOSAL TO AMEND FAR PARTS 13, 19, 20, AND 52 TO EXTEND THE USE OF SMALL PURCHASE PROCEDURES IN AWARDING SMALL BUSINESS SET -ASIDES TO CONTRACT VALUED AT BETWEEN $10,000 AND $25,000. THE PROPOSAL IS CONSISTENT WITH A REQUIREMENT IN THE COMPETITION IN CONTRACTING ACT OF 1984 THAT THE FAR BE MODIFIED TO PROVIDE FOR SPECIAL, SIMPLIFIED PROCEDURES FOR PROCUREMENTS OF $25,000 OR LESS. 10 U.S.C. SEC. 2304(G) (SUPP. III 1985); 41 U.S.C. SEC. 253(G) (SUPP. III 1985). WE THEREFORE HAVE NO OBJECTION TO THE PROPOSED CHANGES.

WE WISH TO POINT OUT, HOWEVER, THAT ALTHOUGH UNDER MOST SMALL BUSINESS SET-ASIDES A SMALL BUSINESS NONMANUFACTURER MUST FURNISH A PRODUCT MANUFACTURED BY A SMALL BUSINESS, THE CURRENT REGULATION, FAR SEC. 19.102(F)(3) (WHICH IS NOT CHANGED UNDER THE PROPOSAL), PERMITS A NONMANUFACTURER UNDER A SMALL BUSINESS SET-ASIDE TO FURNISH ANY DOMESTIC PRODUCT-- EVEN ONE MANUFACTURED BY A LARGE BUSINESS-- WHEN SMALL PURCHASE PROCEDURES ARE USED. WE UNDERSTAND THAT THE CURRENT REGULATION WAS INTENDED TO PERMIT SMALL PURCHASE SET ASIDES FOR PRODUCTS WHICH ARE NOT MANUFACTURED BY A SMALL BUSINESS. WE HAVE FOUND THAT THIS PROGRAM HAS BEEN SUBJECT TO ABUSE AND SOMETIMES RESULTS IN THE GOVERNMENT'S PAYING A PRICE FOR AN ITEM SIGNIFICANTLY HIGHER THAN IT WOULD IN AN UNRESTRICTED PROCUREMENT. SEE CONTRACTING OFFICERS' EXPLANATION FOR PRICE INCREASES ON 125 SPARE PARTS, GAO/NSIAD-85-119, JULY 29, 1985 PP 11-12. SINCE THE PROPOSED CHANGES LIKELY WOULD RESULT IN AN INCREASE IN THE NUMBER AND COST OF SMALL BUSINESS SET-ASIDES USING SMALL PURCHASE PROCEDURES, WE SUGGEST THAT POLICY REPRESENTED BY FAR SEC. 19.102(F)(3) BE LIMITED TO SET-ASIDES OF $10,000 AND BELOW.

FAR CASE NO. 86-32 IS A PROPOSAL TO AMEND PARAGRAPH 5 OF TABLE 15-2 IN FAR SEC. 15.804-6(B)(2) TO ENSURE THAT THE GOVERNMENT HAS ACCESS TO THOSE RECORDS OF A CONTRACTOR NECESSARY TO PERMIT AN ADEQUATE EVALUATION OF THE PROPOSED PRICE. A SIMILAR CHANGE IN STANDARD FORM 1411, "CONTRACT PRICING PROPOSAL COVER SHEET," WHICH APPEARS AT FAR SEC. 53.301-1411, ALSO IS PROPOSED. WE HAVE NO OBJECTION TO THESE PROPOSED CHANGES.