Bundling federal contracts can save money but often hurts small businesses. Here’s what you need to know:

• What is Bundling? Combining smaller contracts into one large contract to reduce costs and improve efficiency. Agencies must prove benefits like savings (10% for contracts ≤ $94M or 5% for contracts > $94M) or faster timelines.
• Impact on Small Businesses: Bundling makes it harder for small businesses to compete, with fewer securing federal contracts. Women-owned and defense-related small businesses are particularly affected.
• Federal Rules: Agencies must justify bundling with market research, written explanations, and public notices. Small business participation is protected through documentation, SBA reviews, and protests.
• How Small Businesses Can Compete: Build partnerships, price bids competitively, and document performance. Legal protests are an option if bundling violates rules.

Quick Tip: Use subcontracting directories or team arrangements to handle larger contracts while staying competitive.

Federal Rules on Contract Bundling

Current Bundling Laws

The Federal Acquisition Regulation (FAR) lays out clear rules for contract bundling in GSA procurements. According to FAR 7.107-3, agencies are required to provide a written justification for any bundled contract, regardless of its size.

This ensures that bundling decisions are backed by clear, measurable benefits for the government.

"Bundling may provide substantial benefits to the Government. However, because of the potential impact on small business participation, before conducting an acquisition strategy that involves bundling, the agency shall make a written determination that the bundling is necessary and justified in accordance with 15 U.S.C. 644(e)." – FAR 7.107-3

In December 2021, the Department of Defense (DoD), GSA, and NASA updated these rules, requiring that substantial bundling determinations be publicly posted on the Governmentwide Point of Entry (GPE).

Small Business Requirements

Federal law includes measures to protect small businesses when contracts are bundled. Agencies must complete GSA Form 2689 (Small Business Analysis Record) for any bundled contract, regardless of its size.

Here’s how small business interests are safeguarded:

• Market Research
  Contracting officers need to confirm:
  • Current prices charged by small businesses
  • Potential prices small businesses may offer
  • How bundling might affect local small business participation
• Documentation
  The acquisition strategy must include:
  • A written explanation for bundling
  • An analysis of how bundling impacts small business involvement
  • Market research that quantifies the benefits
• Review Process
  Before moving forward, agencies must:
  • Share documentation with the Small Business Administration (SBA) if requested
  • Announce bundling decisions publicly on the GPE
  • Collect and consider feedback or protests from small businesses
  • Work closely with Small Business Technical Advisors (SBTA) to boost small business participation

Meeting Bundling Requirements

Contract Approval Steps

Bundled contracts require a clear justification and approval at multiple levels. Contracting officers must collaborate with key stakeholders before moving forward with these contracts.

1. Initial Documentation: Prepare a written determination that includes acquisition history, findings from market research, alternative approaches considered, the impact on small businesses, and the anticipated benefits.
2. Internal Review Process: Secure approvals from service-specific authorities, the GSA Office of Small and Disadvantaged Business Utilization, the AA OSDBU, and the SPE. Afterward, conduct market research to support these determinations.

Required Research and Notices

Once internal approvals are in place, thorough market research is needed to validate bundling decisions.

The benefits must meet the set thresholds as outlined earlier. It’s also necessary to track and report actual savings throughout the acquisition process.

Keep in mind, reductions in administrative costs alone cannot justify bundling unless they amount to at least 10% of the contract value. Benefits should go beyond cost savings and include improvements in quality, shorter acquisition cycle times, better terms and conditions, and measurable operational efficiencies.

What Are GSA MAS Contract Vehicles and Why Small Businesses Should Be On Them

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Small Business Success Methods

To thrive in bundled contracts, small businesses need to go beyond compliance basics and adopt effective strategies.

Team Building and Subcontracting

Creating strong partnerships is key for competing in bundled GSA contracts. Multiple Award Schedule (MAS) Contractor Team Arrangements (CTAs) allow smaller businesses to handle larger projects while keeping control over their work.

Here’s what a well-structured MAS CTA should include:

Collaborate with companies that bring complementary skills to the table. A strong MAS CTA can open up more opportunities, grow your market share, and reduce risks.

To find potential partners, use tools like the DSBS, SubNet, and GSA’s Subcontracting Directory. These resources help small businesses compete more effectively against the challenges posed by large bundled contracts.

Price Setting for Bundled Bids

Forming teams is only part of the equation – pricing your bids competitively is just as important. A detailed cost analysis can help you strike the right balance between affordability and profitability.

Here are some strategies to consider:

• Volume-Based Pricing: Offer tiered discounts for larger orders, keeping costs low for clients while protecting your margins.
• Value-Added Bundling: Combine related services into packages that deliver more value to customers.
• Cost Management: Use project management tools to track expenses and optimize budgets. Regular reviews can keep operations running efficiently.

For Lowest Price Technically Acceptable (LPTA) contracts, focus on streamlining operations, negotiating better supplier terms, planning for contingencies, and implementing detailed cost-tracking systems. These steps can make your pricing more competitive without sacrificing quality.

Contesting Bundled Contracts

When small business protections clash with bundling practices, there are legal options. Small businesses can challenge bundling decisions using established protest procedures. Below, we break down valid protest reasons, the SBA review process, and the steps and deadlines for filing a protest.

Valid Protest Reasons

Small businesses can file protests if an agency violates the Small Business Act. Common grounds for protest include:

For example, in the Sigmatech, Inc. case (August 10, 2005), a protest was upheld against the Army’s $130 million SETA services contract. The Army failed to conduct the required bundling analysis or notify the SBA about consolidating contracts previously held by small businesses.

SBA Review Process

The Small Business Administration (SBA) evaluates bundling protests to ensure compliance with the Small Business Act and procurement regulations.

1. Initial Assessment

The SBA checks if proper bundling notification was provided at least 30 days before the solicitation release. Agencies must submit the acquisition package and justification for bundling to the SBA.

2. Review Timeline

SBA officials aim to complete reviews within 15 business days. Around 80% of protests are resolved within this timeframe or through approved extensions.

3. Final Determination

The SBA issues written decisions to the contracting officer, protestor, and protested business. These decisions stand unless appealed to the SBA Office of Hearings and Appeals.

Protest Steps and Deadlines

To ensure their concerns are heard, small businesses must adhere to strict deadlines when filing protests. Here’s a breakdown:

Agency-Level Protests:

• File within 10 days of identifying the issue.
• Submit to the contracting officer with supporting legal and factual details.
• Resolution is typically expected within 35 days.

GAO Protests:

• File within 10 days through the Electronic Protest Docketing System (EPDS).
• Provide a copy to the agency within 24 hours.
• The agency must respond within 30 days.
• The protestor has 10 days to comment on the agency’s report.

Court of Federal Claims Protests:

• Submit a pre-filing notice one day before the formal filing.
• There’s no strict deadline, but earlier filing is recommended.
• The government has 60 days to respond.

For the best results, consult federal procurement attorneys. In FY 2021, federal agencies awarded over $154 billion to small businesses, highlighting the importance of protecting your rights through these procedures.

Conclusion

Small businesses aiming to secure federal contracts must align with the rules and strategies discussed earlier.

Small Business Guidelines

Understanding and applying GSA bundling rules is critical for small businesses to compete effectively. Agencies must meet clear savings thresholds to justify bundling contracts.

Here are some practical strategies for small businesses tackling bundled contracts:

Keep in mind, cost savings alone aren’t enough to justify bundling. Agencies must prove additional benefits beyond administrative efficiency. Use these substantial-benefit requirements to challenge unnecessary bundling.

Expert guidance can also make navigating these challenges more manageable.

GSA Focus: Expert Support for GSA Contracts

Successfully addressing bundling requirements often requires specialized expertise. GSA Focus provides assistance with documentation and compliance, helping small businesses challenge bundling decisions and position themselves competitively. This support complements the strategies outlined above, giving small businesses an edge.

Regulatory Requirement:

"Bundling may provide substantial benefits to the Government. However, because of the potential impact on small business participation, before conducting an acquisition strategy that involves bundling, the agency shall make a written determination that the bundling is necessary and justified" – Acquisition.GOV

This emphasizes the importance of knowing your rights as a contractor. With solid preparation and expert assistance, small businesses can confidently navigate bundled contracts and protect their position in the federal marketplace.

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• Regulatory Requirements for Federal Contracts
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