Government Contract Bundling What are the Rules?

Understand the Rules When You Allege Government Contract Bundling

As a small business, you may often wonder whether the government contracting agency is unlawfully engaging in bundling their contracts.

Others may wonder whether there is anything they can do about it. 

The first thing that small businesses must do is to understand the legal definition of government contract bundling.

Next one must ask whether the regulations completely bans bundling of small business contracts.

What is the Definition of Bundling?

Government contract bundling under the Small Business Act, 15 USC 632, means that the agency is: consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern due to:

1. The diversity, size, or specialized nature of the elements of the performance specified;
2. The aggregate dollar value of the anticipated award;
3. The geographical dispersion of the contract performance sites; or
4. Any combination of the factors described 1, 2, and 3.

The term “separate smaller contract” is defined as “a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.

First Know Whether Government Contract Bundling Exists

Contract bundling  for small businesses is not conclusively prohibited under procurement laws. What the law does say is that if there is bundling, then the agency has to overcome additional hurdles. Therefore, small businesses must first assess whether contract bundling exists. This is not the end of the legal analysis.

Companies challenging the solicitation is a bid protest, whether at the GAO or in a U.S. Court of Federal Claims bid protest, often make the grave mistake of simply arguing that the agency has engaged in contract bundling.  The government will win the bid protest simply because the protestor failed to overcome the second legal requirement – that the bundling was not justified.

What Else Must the Agency Do When Contract Bundling Exists?

During the acquisition planning stage, when the agency sees that the procurement involves government contract bundling, it must:

• First conduct market research to determine whether the bundling is necessary and justified;
• It must also consider the potential impact on small business participation,
• Ascertain whether the government will derive measurably substantial benefits from the bundling, and
• Quantify any benefits.

SBA Involvement Required When Government Contract Bundling Exists

The federal government is comprised of a checks and balance system. Contractors should know that Congress has put the SBA into place under the U.S. Constitution to oversee executive agencies and to make sure that they comply with the Small Business Act requirements and other relevant procurement statutes. As a result, when government contract bundling is present, the agency simply does not have a unilateral right to move forward with bundling its requirements.

In addition to performing the requisite market research, In addition, the agency must, at least 30 days before issuing a solicitation, provide its acquisition package to the SBA procurement representative (PCR) for review and also provide a statement why:

1. The proposed acquisition cannot be divided into reasonably smaller lots for small businesses,
2. Delivery schedules cannot be established that will encourage small business participation,
3. Proposed acquisition cannot be structured so to make it likely that small businesses can compete for the prime contract,
4. Consolidated construction project cannot be acquired as separate discrete projects, or
5. Bundling is necessary and justified.

Notification of Bundling to Incumbent Small Business Contractors Required

Within the same 30 days of notifying the SBA, federal agencies must also notify any affected incumbent small business concerns of contract bundling plans.

If you are planning on filing a bid protest due to government contract bundling to GAO or the U.S. Court of Federal Claims, call our bid protest lawyers for immediate help. Call 1-866-601-5518. FREE INITIAL CONSULTATION.

Note: You must meet the protest timeliness requirements.