Micro-Purchase Awards & Simplified Acquisitions
Federal government agencies all adhere to a set of purchasing rules that govern Micro-Purchase Awards and Simplified Acquisition Awards. The Federal Acquisition Regulations (FAR) explains in detail these purchasing policies in FAR Part 13, Simplified Acquisition Procedures. This FAR Part makes it possible for contracting officers and others with purchasing authority to buy goods and services directly from small businesses; to receive quotes from small businesses and make immediate buying decisions; or to streamline acquisition procedures to decrease the time to award. These procedures can be used provided the total dollar amount of the acquisition falls within the Micro-Purchase Threshold, less than $10K, or above $10K up to the Simplified Acquisition Threshold of $250K.
Under the micro-purchase threshold, most purchases are completed by an organization’s Government Purchase Cardholder (GPC). These cardholders buy items for their organizations such as supplies, services under $2.5K, but not recurring services, and small construction under $2K. Such government buys do not require competitive bids or quotes, in most cases, and agencies can simply pay using their GPC, without involving the contracting office. Purchases exceeding the micro-purchase threshold must be referred to the contracting office for formal procurement procedures. In FY2020, the total DoD spend on GPC for micro-purchases was $3.35B1.
For purchases above the micro-purchase threshold, an organization must submit a requirements package to the contracting office. The contracting office will review the requirement and determine the acquisition method. For purchases above the micro-purchase threshold up to $25K, the contracting officer can solicit oral quotes from at least three small businesses and process an award. For acquisitions above $25K, the requirement must be advertised on the Government Point of Entry which is SAM.gov. As mentioned previously, requirements advertised on SAM can use simplified acquisition procedures to streamline the process leading to faster awards.
In FY 2020, the Department of Defense (DOD) spent approximately $422.4B on government contracts. Out of this number, $80.7B in government contracts were awarded to Small Businesses. To level the playing field for small businesses, the government sets aside or restricts certain contract actions to small businesses. Below are the definitions of each type of set-aside.
- Small Business Set-Asides: Set-asides for Small Business entities based on SBA Small Business Standards. This is the standard set-aside for actions above the micro-purchase threshold to the simplified acquisition threshold.
- Socio-Economic Set-Asides: The SBA has four different socio-economic classifications with different certification requirements for each. For actions above the simplified acquisition threshold, the contracting officer shall consider socio-economic small business set-aside before considering a small business set-aside.
The Small Business Administration (SBA), sets a goal each year for a percentage of dollars that should be awarded to small businesses. The SBA goal has typically been 23% of government contract spend should be set-aside for small businesses. There are additional goals for socio-economic small businesses as well, those have historically been 5% for Small Disadvantaged Businesses/8(a) /WOSB/EDWOSB and 3% for SDVOSB and HubZone. The DoD met their overall small business goal in FY2020 with 24.6%. However, they did not meet their goals for WOSB/EDWOSB (4%) and HubZone (2.2%)2.
Small Business Specialists
To achieve small business spending goals, the DoD recruits and hires Small Business Specialists (SBSs). These SBSs act as a go-between with the small business community and contracting officers responsible for buying goods and services. These SBSs can provide you with guidance and assist with doing business at their particular military base or defense organization.
To better understand how SBSs work directly with contracting officers to increase opportunities for small businesses, here are two real life examples:
- Contracting Officer is working on an RFP to renovate a building on a military base. The Contracting Officer anticipates the total spend on the project to be a maximum of $1 million dollars. The SBS reviews the RFP and points out there are a number of services and products that can be supplied by small businesses. With the recommendation of the SBS, one large RFP is broken down into several smaller set-asides or simplified acquisition awards.
- Contracting Officer is looking to purchase 500 work benches for their agency. The Contracting Officer wants to do a set-aside but is not sure there is a small business capable of supplying this amount of work benches in a short period of time at a fair price. Working with the SBS, they publish a Sources Sought Notice on SAM.GOV. The SBS reviews the list of Capability Statements they maintain on small businesses and contacts eligible firms to respond to the Sources Sought Notice. Working together, they find qualified small businesses to compete for the award.
These examples illustrate how SBSs work alongside contracting officers, while also networking with small businesses simultaneously.
To take advantage of the micro-purchase and simplified awards you should reach out to the SBSs of the DoD agencies that buy what you sell. Provide your capability statement and request that it be shared with the Government Purchase Card Coordinator to share with cardholders and also ask them to share it with their procurement staff for simplified opportunities.
To take advantage of set-aside opportunities, get certified under any of the socio-economic categories listed above for which you qualify. Small Business certification is self-certified by registering in SAM and meeting the size standard of the SBA. If you are already certified, then start networking with SBSs at the DoD agencies that buy what you sell. These SBSs are always seeking capable firms who can provide their agency with the products and services they need to achieve their mission and small business goals.
Learn more on this topic at our November 3rd webinar, Micro Awards: Gateway to DoD Contracting.
Thomas Burns, Norcal PTAC Procurement Specialist &
Nanci Pigeon, Norcal PTAC Procurement Specialist
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