General Services Administration

Procurement loophole for Tribal and ANC 8(a) firms

There needs to be consistency of the 8(a) sole source allowances in direct federal contracting. While most 8(a)s have a cap on the amount they can be sole sourced ($3 million for services, $5 million for manufacturing), Tribal and ANC 8(a) firms are eligible to receive sole source 8(a) contracts regardless of dollar size, with no upper limit. This creates a huge incentive for subcontracting, as these small and disadvantaged businesses could be manipulated by large firms for subcontracting. The real small and disadvantaged business goal is not really met when a firm just outsources everything to a large company anyway. For example, ABC Tribal firm gets a sole source contract, and really subcontracts almost all of the work to Haliburton.

 

While there needs to be support for Tribal and ANC 8(a) firms, there also needs to be adequate oversight to prevent waste, fraud and abuse. I suggest capping the amount they can subcontract after they have been awarded a contract to prevent exploitation of the sole source procurement tool.

 

 

2 13 C.F.R. 124.506(b): (b) SBA may award a sole source 8(a) contract to a Participant concern owned and

controlled by an Indian tribe or an ANC where the anticipated value of the procurement exceeds the

applicable competitive threshold if SBA has not accepted the requirement into the 8(a) BD program as a

competitive procurement. There is no requirement that procurement must be competed whenever possible

before it can be accepted on a sole source basis for a tribally owned or ANC- owned concern, but a

procurement may not be removed from competition to award it to a tribally owned or ANC-owned concern

on a sole source basis

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Idea No. 11311