Parent topic: 7,107 Additional requirements for acquisitions involving consolidation, grouping, or grouping of materials. (e) a reduction in administrative or personnel costs alone is not sufficient to justify consolidation, unless the savings achieved are likely to represent at least ten per cent of the estimated value of the contract or contract (including options) of the pooled needs; (a) Consolidation can bring significant benefits to the government. However, because of the potential impact on small business participation, the Agency must determine in writing that the consolidation is necessary and justified under paragraph 15 U.S.C. 644(e) before executing an acquisition strategy that involves a consolidation. A pooled requirement is considered necessary and justified if the Agency would achieve measurable benefits to meeting its Agency`s requirements through smaller separate contracts or contracts. An organization aggregates the services it purchases when it consolidates activities previously provided by separate sources and obtains the services through a single contract from a single vendor. The Ministry of Defense is paying increasing attention to this practice, as trading companies report that the consolidation offers potential for significant performance and cost benefits. However, the federal government`s objectives differ from those of commercial enterprises in that federal regulations require the Air Force and other federal organizations to place a fair share of purchases and contracts with small businesses and to maintain free and open competition among potential service providers in the federal government. Small businesses typically do not have the business reach or expertise to offer service packages as prime contractors. The authors of this report discuss recent small business protection legislation by ensuring that consolidation only takes place when it is likely to result in significant performance improvements or cost reductions for the federal purchaser. After examining the potential sources of such benefits, the authors suggest a methodology that could allow purchasing agencies to gather information on when and how to bundle the services they purchase and justify these decisions in a way that meets legal requirements. The number of bulk contracts awarded by federal agencies has reached its highest level in 10 years, hurting small businesses, according to a recent report by the Small Business Administration (SBA).
The problem with bundling is that several tasks are crammed into individual contracts, which prevents small businesses from submitting bids. This practice began to flourish after Congress passed the Federal Acquisition Streamlining Act in the mid-1990s. Know the rules An example of a consolidation: Your company provides landscaping services at a local military base. Nine months before your contract expires, you learn that contract staff are in the planning phase of a new RFP who are looking for a contractor to perform almost all of the base`s construction services, including building maintenance, concierge, laundry, food and, yes, landscaping services. While you`ve been an exemplary contractor with an excellent track record, your company has no chance of winning the contract as it has no experience beyond landscaping services. What can you do? Unfortunately, if you decide to put on the gloves, your struggle could be costly and end up in front of an examiner or court. The decision to consolidate is usually the result of a long process of agency meetings and discussions. There is now a special examination in this area, and increasingly these decisions are being made after careful consideration and justification. (This is, of course, a generalization.) In most cases, it is unlikely that a company will change the spirit that was invented. On the other hand, if you know the rules, you`ll be in a better position to influence decisions before the final decisions have been made. Definition/grouping procedure First of all, it is necessary to examine whether or not the new market falls within the definition of «bundling». Bulk selling is defined as «the consolidation of two or more government procurement requirements for goods or services previously supplied or provided under separate small contracts in a tender for a single contract that is unlikely to lend itself to a small business».
In determining whether the individual contract is «inappropriate» for a small business, a number of factors are considered, including the nature of the performance requirements, the size of the contract, and the geographic distribution of service locations. 15 U.S.C. 632(o)(2); FAR 2,101; 13 CFR 125.2(d). Given this definition, an important threshold question is whether two or more initial procurement requirements have been consolidated in the new contract. The answer is not always obvious. This was the subject of a recent hearing before the General Accounting Office (GAO). There, the agency argued that nine original container leases constituted a «procurement requirement» because, among other things, they all included the same general service. The GAO acknowledged that, while two or more previous contracts may in some cases constitute a procurement requirement, the nine contracts in this case were too different to be considered a single requirement.
Gao concluded that the definition had been met and spoke in favor of the protester. TRS Research, B-290644, September 13, 2002, www.gao.gov/decisions/bidpro/290644.htm. An important note to be drawn from the case is that bundling is not just the consolidation of disparate and independent goods and services into a contract – the «classic» way of looking at it. .