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Agencies propose to expand acquisitions for overseas small businesses

DoD, GSA and NASA are issuing a proposed rule to clarify that small business contracting rules may be applied to contracts performed outside the U.S.

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The Defense Department (DoD), General Services Administration (GSA) and National Aeronautics and Space Administration (NASA) are proposing to amend the Federal Acquisition Regulation (FAR) to support the Small Business Administration’s (SBA) policy of including overseas contracts in agency small business contracting goals, the agencies announced in a proposed rule.

The proposed FAR changes are consistent with October 2013 SBA regulatory changes clarifying that small business contracting rules, e.g., set-aside contracts, may be applied to contracts performed outside of the U.S.

Some contracting officers have interpreted current regulations to prohibit set-aside and sole-source contracting procedures embedded in FAR part 19 from being used for overseas procurements, while other contracting officers have interpreted regulations to mean that the procedures aren’t required to be used for overseas procurements, but may be used if the officers choose, the proposed rule says.

The conflicting interpretations have resulted in inconsistent use of FAR part 19 procedures for overseas procurements in federal agencies and also may contribute to low numbers of overseas contract actions set aside for small businesses, the proposed rule says.

“This proposed rule will clarify that contracting officers are allowed, but not required, to use the set-aside and sole-source procedures of FAR part 19 for overseas procurements,” DoD, GSA and NASA said.

Federal Procurement Data System data indicate that small businesses accounted for less than 1% of contract-related actions provided by the U.S. government to overseas entities from fiscal year 2017 to fiscal year 2018, as about 1.6 million awards were provided to unique large businesses and only 13,581 awards were provided to unique small businesses, the proposed rule states.

Comments should be submitted in response to FAR Case 2016-002 via or U.S. mail before Oct. 12. See the Federal Register notice for more information.

DoD, GSA and NASA invite comments from small business concerns and other interested parties on the expected impact of the proposed rule on small entities.

Brian Bradley

Based in Washington, D.C., Brian covers international trade policy for American Shipper and FreightWaves. In the past, he covered nuclear defense, environmental cleanup, crime, sports, and trade at various industry and local publications.