FAR update delay lets $2.3B in contracts go unjustified

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Federal agencies awarded more than $2.3 billion in contracts awarded without posting a written justification because the Federal Acquisition Regulation Council was almost a year late in updating its 8(a) sole-source contract regulations, says the Government Accountability Office.

In a report (.pdf) dated Dec. 12, GAO notes that Congress in 2009 required the FAR Council to amend the regulations governing most agency procurements to require written justifications for 8(a) sole-source contracts worth more than $20 million. The national defense authorization act for fiscal 2010 gave the council 180 days to implement the change, but GAO says it took the council 504 days to implement the change.

Previously, no justification was required for a sole-source 8(a) contract award of any amount.

The Office of Federal Procurement Policy told GAO that the delay was primarily due to "time required to establish a process for consulting with Indian tribes and Alaska Native Corporations," says the report. However, the FAR Council did not hold any of its three tribal consultation meetings within the original 180-day window.

GAO says the majority of large dollar sole-source contracts awarded under the Small Business Administration's 8(a) program for small businesses owned and run by socially and economically disadvantaged individuals have gone to firms owned by Indian tribes and ANCs in recent fiscal years.

Since FAR changes have been put in place, GAO says that 14 sole-source 8(a) contracts that needed a justification were awarded but only two from the Air Force and one from the State Department included the new 8(a) justifications. For the other 11 contracts, worth more than $900 million, GAO says agencies did not follow the updated FAR because they were unaware or because they incorrectly used a different justification.

Confusion about the justification requirement has typically been in the start date of its application, when it applies to modifications in contracts and if it should be applied to contracts that already used other owner or business class justifications.

GAO recommends that OFPP issue further guidance to clarify when an 8(a) justification is required and that SBA officials adjust hiring and training programs to focus on verifying proper and complete justifications for awards.

For more:
- read the report, GAO-13-118 (.pdf)

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