B-229516, Jan 5, 1988, Office of General Counsel

B-229516, Jan 5, 1988, Office of General Counsel

PROCUREMENT - Socio-Economic Policies - Small Business 8(a) Subcontracting - Catalog/Market Price Exemptions - Federal Procurement Regulations/Laws - Amendments PROCUREMENT - Socio-Economic Policise - Small Business Set-Asides - Catalog/Market Price Exemptions - Federal Procurement Regulations/Laws Amendments DIGEST: In response to an interim Federal Acquisition Circular (FAC) amending parts 14, 19 and 52 of the Federal Acquisition Regulation (FAR) to implement changes regarding set-asides and 8(a) awards required by Pub. L. Nos. 99-661, 99-591 and 100-26, the General Accounting Office advises that an exception to the fair market price ceiling on 8(a) awards must be included in the FAR final rule to accommodate statutory provisions which permit payments over the fair market price.

Ms. Margaret A. Willis

This responds to your letter of October 20, 1987, requesting our comments on Federal Acquisition Circular (FAC) 84-31. The Circular amends various sections of Parts 14, 19, and 52 of the Federal Acquisition Regulation (FAR) to implement changes made by Pub. L. Nos. 99-661, 99-591, and 100- 26, concerning: (1) the requirement that awards of set-aside and 8(a) contracts not exceed the "fair market price," except as authorized by law, (2) the release of information regarding prospective offers under small business set-asides, (3) the requirement that separate industrial categories be used to ensure that a fair proportion of contract awards be made to small businesses, and (4) certain limitations on subcontracting.

With one exception, we believe that FAC 84-31 properly implements the statutory changes. The new FAR subsection regarding set-asides (Sec. 19.501) includes a general exception to the application of the fair market price ceiling on award prices (i.e., "Except as authorized by law ..."). The subsection regarding 8(a) awards (Sec. 19.805(b)), however, has no similar exception; it states only that an 8(a) contract may not be awarded at a cost exceeding the fair market price. We think the section should also provide for an exception because section 1207(e)(3) of Pub. L. No. 99 -661, for example, specifically permits payment of a 10 percent price differential over the fair market price for 8(a) awards made by the Department of Defense as well as for other awards made to small disadvantaged businesses under noncompetitive procedures.