DoD’s Implementation of Justification for 8(a) Sole-Source Contracts

By: Kelly Lynch

In recent years, oversight and scrutiny have increased on the award of sole-source contracts to 8(a) firms. Before 2009, no Federal Acquisition Regulation (FAR) requirement was in place for documented justification when awarding a contract greater than $20 million to an 8(a) firm using non-competitive means. The timeline of the key changes to this process is as follows:

  • October 2009: The FY 2010 National Defense Authorization Act (NDAA), Section 811, required that the FAR be revised to include the requirement that written justification be provided for sole-source awards to 8(a) firms. See full text of the article: FY 2010 National Defense Authorization Act
  • March 2011: The FAR was updated to reflect the requirement set forth in the FY 2010 NDAA. Agencies were required to implement the new justification requirement. The FAR requires that, as a minimum, the justification include five criteria:
    • Description of the needs of the agency concerned for the matters covered by the contract
    • Specification of the statutory provision providing the exception from the requirement to use competitive procedures in entering into the contract
    • Determination that the use of a sole-source contract is in the best interest of the agency concerned
    • Determination that the anticipated cost of the contract will be fair and reasonable
    • Such other matters as the head of the agency concerned shall specify for purposes of this section

  • December 2012: The Government Accountability Office (GAO) issued “Federal Contracting: Slow Start to Implementation of Justifications for 8(a) Sole-Source Contracts,” a report that highlighted the following:
    • Delayed implementation of the requirement across agencies
    • Lack of awareness and confusion amongst contracting and Small Business Administration (SBA) officials
    • Significant decrease in the number of sole-source contracts greater than $20 million being awarded to 8(a) firms since the final FAR rule was published

In February 2013, GAO issued a review of the Department of Defense’s (DoD) implementation of the requirement that written justification be provided for 8(a) sole-source contract awards greater than $20 million. In the review, GAO provided a supplemental evaluation of DoD implementation of the new FAR requirement. The focus of the review was on contracts awarded after March 16, 2011, when the interim rule was published in the FAR. Between March 16, 2011, and March 31, 2012, DoD awarded eight sole-source 8(a) contracts of an amount greater than $20 million. GAO found that six of the awards did not meet FAR requirements. The audit found that the requirement was not met because the contracting office did not prepare a justification or did not prepare justification that met the five criteria stated in the FAR. GAO did not issue additional recommendations based on the review, but did highlight the recommendations made in the December 2012 report that included clarification for both contracting officers and SBA officials.

For the full text of the report: DOD’s Implementation of Justifications for 8(a) Sole-Source Contracts, GAO-13-308R (Feb 8, 2013)

The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.