If you are considering consolidating into a single contract action (e.g. task or delivery order, single award contract, or multiple award contract) two or more existing contracts that are already performed by or could be performed by small business, then your acquisition planning must address contract bundling. Sound acquisition planning is the key to addressing contract bundling issues.

The Federal Acquisition Regulation (FAR), the General Services Administration Acquisition Manual (GSAM), and the Acquisition Planning Order prescribe policies and procedures pertaining to contract bundling. GSAM 507.103(a) states that you must “structure contract requirements to facilitate competition by and among small business concerns” and that you must “avoid unnecessary and unjustified bundling that precludes small business participation as contractors”. This applies to both contracts and orders (see GSA Order OGP 2800.1, Acquisition Planning).

Bundling. Bundling means 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 in 1 - 3 above. FAR 2.101

The bundling definition in the FAR states that a “single contract” includes multiple award IDIQ contracts (to two or more sources), issued under a single solicitation for the same or similar supplies or services. It also includes an order placed under a Federal Supply Schedule IDIQ contract. It also includes an order placed against a task-order contract or delivery-order contract awarded by another agency. Separate smaller contract means a contract that has been performed by one or more small business concerns or was suitable for award to one or more small business concerns. FAR 2.101

Steps to take once you realize you may have a bundled requirement:

(1) Small business impact. Identify the incumbent contractors and contracts affected by the bundling. Assess the impact of bundling on small businesses. FAR 7.105(b)(1), 10.001 (a)(3)(vi), and (c).

(2) Market research. Conduct market research to determine whether bundling is necessary and justified. [FAR 7.105(a)(1) and 10.001(a)(3)(vi). Consult with your GSA Small Business Technical Advisor/Small Business Specialiat (SBTA/SBS) and the SBA procurement center representative (PCR). FAR 10.001(c)(1)

(3) Bundling determination. Write a determination documenting that bundling would have sufficient “measurably substantial benefits”. If the market research authority was delegated to the contracting officer, the bundling determination must be approved one level above the contracting officer. If other than the contracting officer conducts the market research, the contracting officer may approve it. However, when bundling is necessary and the minimum “measurably substantial benefits” are not met, the determination must show benefits critical to the agency mission, maximum practical participation by small businesses, and be signed by the Deputy Administrator. FAR 7.107; GSA Acquisition Planning Order OGP 2800.1 paragraph 9.b.(4)

(4) Acquisition plan. Prepare a written comprehensive acquisition plan. Use the Acquisition Planning Wizard at apw.gsa.gov. Identify the incumbent contractors and the effect on small businesses. Include the bundling determination. Address the extent and results of the market research and indicate the impact on the various elements of the acquisition plan. If this also is “substantial bundling” document the additional required strategies in the acquisition plan. FAR 7.105(b)(1),7.107(e) and (f); The GSA Acquisition Planning Order paragraph 8.c.(1)(v)

(5) Source selection evaluation factors. For solicitations involving bundling that offer a significant opportunity for subcontracting, the contracting officer must include two factors:

  •Past performance indicating the extent to which the offeror attained applicable goals for small business participation under contracts that required subcontracting plans. FAR 15.304(c)(3)(iii)

  •For the offeror's proposed use of small businesses as subcontractors and their past performance in meeting subcontracting goals. FAR 15.304(c)(5)

(6) 30 day notice. At least 30 days before releasing your solicitation (or placing an order without a solicitation):

  •Notify any affected incumbent small business concerns of the government's intention to bundle the requirement, and how the concerns may contact the appropriate SBA representative. FAR 10.001(c)(1)

  •Provide a copy of the proposed acquisition package to your SBA PCR through your Small Business Specialist/Small Business Technical Advisor. If this is "substantial bundling" also provide it to the Office of Small Business Utilization (E).

FAR 19.202-1(e), and GSA Acquisition Planning Order paragraph 9.c.(2)(b)

(7) Size status of joint ventures. Apply size standards to individual persons or concerns, not to the combined assets, of the joint venture. FAR 19.101 “affiliates” paragraph 7(i)(A)

Please also note that the acquisition planner must coordinate all acquisition plans for requirements over the simplified acquisition threshold with their GSA small business technical advisor/small business specialist (SBTA/SBS), unless the requirement will be reserved or set-aside for small business under Part 19. GSA Acquisition Planning Order paragraph 9.c.(b)

For more information, see attached Frequently Asked Questions. Questions concerning this Acquisition Alert should be directed to Ms. Rhonda Cundiff at (202) 501-0044.

Attachment

Question: Who checks whether a contract or order would be considered bundled?

Answer: Ideally, it should be the acquisition team but the ultimate responsibility is the contracting officer.

Question: Where in the Federal Acquisition Regulation (FAR) can I find bundling regulations?

Answer:

References to bundling are also found in the GSA Acquisition Planning Order (OGP 2800.1, found at GSAM Appendix 507A), which requires a written comprehensive acquisition plan for bundled acquisitions.

Question: Is bundling prohibited?

Answer: No, after conducting market research, it may be determined that bundling is necessary and justified because the agency will derive sufficient “measurably substantial benefits”. If a cost comparison analysis will be performed in accordance with OMB Circular A-76, then this substitutes for the determination. Even if there are insufficient “measurably substantial benefits”, GSA's Deputy Administrator can determine the bundling is necessary and justified. See FAR 7.107(a) , (c), and (h)

Question: What are “measurably substantial benefits”?

Answer: “Measurably substantial benefits” from bundling may include, individually or in any combination or aggregate the following benefits:

  •Cost savings or price reductions.

  •Quality improvements that will save time or improve or enhance performance or efficiency.

  •Reduction in acquisition cycle times.

  •Better terms and conditions.

  •Any other benefits.

The bundling determination must quantify identified benefits and explain how their impact would be measurably substantial. FAR 7.107(b)

Question: How much must the “measurably substantial benefits” be?

Answer: “Measurably substantial benefits” must be equivalent to:

(1)  10%  of the estimated contract value (including options) if the value is $75 million or less; or

(2)  5%  of the estimated contract value (including options) or $7.5 million, whichever is greater, if the value exceeds $75 million.

Reduction in administrative or personnel costs is not sufficient justification for bundling, unless the cost savings are expected to be at least 10%  of the estimated value (including options) of the bundled requirement. FAR 7.107(b) and (d)

Question: When assessing cost savings that are expected to be at least 10%  of the estimated value (including options) of the bundled requirement, what must be considered?

Answer: The contracting officer must consider the cost that has been charged (or where data is available, could be charged) by small business concerns for the same or similar work. FAR 7.107(g)

Question: Does the bundling definition apply to contracts that will be awarded and performed entirely outside of the United States?

Answer: No FAR 2.101

Question: What is “substantial bundling”?

Answer: Substantial bundling is “bundling” resulting in a contract or order of:

      $7 million or more for the Department of Defense;
      $5 million or more for the National Aeronautics and Space Administration, the Department of Energy,
           and the General Services Administration;
      $2 million or more for all other agencies.

If the strategy contemplates the award of multiple contracts or orders, these thresholds apply to the cumulative maximum potential value, including options.

Question: What more do I have to do for a contract that is substantially bundled?

Answer: In cases involving substantial bundling, you not only need “measurably substantial benefits”, your acquisition strategies must:

      • Identify the specific benefits anticipated to be derived from bundling;
      • Include an assessment of the specific impediments to participation by small business concerns as contractors that result from bundling;
      • Specify actions designed to maximize small business participation as contractors, including provisions that encourage small business teaming;
      • Specify actions designed to maximize small business participation as subcontractors (including suppliers) at any tier under the contract, or order, that may be awarded to meet the requirements;
      • Include a specific determination that the anticipated benefits of the proposed bundled contract or order justify its use; and
      • Identify alternative strategies that would reduce or minimize the scope of the bundling, and the rationale for not choosing those alternatives. FAR 7.107(e)

Question: Does bundling apply when several contracts are consolidated but awards as a small business set-aside?

Answer: No. The bundling definition answers this question. You can consolidate two or more requirements for supplies or services previously provided or performed under separate smaller contracts, into a solicitation for a single contract as long as it is likely that it is suitable for award to a small business concern. A small business set-aside is a likely award to a small business. FAR 2.101

Question: Are there any contract reporting requirements for contract bundling?

Answer: Yes, FAR 4.601(e) & (f) require identification through Federal Procurement Data System-Next Generation (FPDS-NG) bundled contracts with a total contract value (including options) exceeding $5,000,000.

Question: Who makes the call on when a bundling review is necessary: the requiring activity, the Contracting Officer, the Small Business Specialist/Small Business Technical Adviser or Office of Small Business Utilization (OSBU)?

Answer: The planner and contracting officer are supposed to recognize a bundled procurement, and take the steps outlined in these FAQs. If they have failed to recognize that the acquisition is bundled, the small business specialist shall notify the Office of Small Business Utilization. FAR 7.104.

Question: Does the review level on orders placed against contracts apply to the thresholds of the requiring agencies or the thresholds of the agencies placing the orders?

Answer: The review levels apply to the requiring agency. For example, if agency A is requesting that agency B place an order against a Multiple Award Schedule contract, the threshold for agency A applies. GSA Acquisition Letter V-05-05 Purchases on Behalf of other Agencies.

Question: Are Architect and Engineering contracts exempt from the bundling definition?

Answer: No.

Question: Is there any additional guidance available other than these FAQs?

Answer: Yes, Department of Defense has guidance at http://www.acq.osd.mil/osbp/news/contractconsolidation.pdf