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The 'Rule of Two' Can Only Work When You Are Viable AND Visible!

Posted By Guy Timberlake, The American Small Business Coalition, LLC, Monday, June 23, 2014
Updated: Monday, June 23, 2014

The 'Rule of Two' Can Only Work When You Are Viable AND Visible!

Subpart 19.5 of the Federal Acquisition Regulations contains guidance for agencies when it comes to set-asides for small business concerns to include what is commonly referred to as the 'Rule of Two.' Generally speaking, the 'Rule of Two' is most often associated with streamlined purchases conducted under the Simplified Acquisition Procedures when the value of the purchase falls within the Simplified Acquisition Threshold of $3000 to $150,000.

In summary the rule states: 'Each acquisition of supplies or services that has an anticipated dollar value exceeding $3,000 but not over $150,000, is automatically reserved exclusively for small business concerns and shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery.' 

Recently, my friend and colleague Steven Koprince published Rule Of Two: Small Business’s Notification Of Interest Was Too Late, a review of a recent protest involving this rule. In a nutshell, a small business concern notified the agency of its interest as a small business after a Full & Open RFQ was issued. The company protested the fact the Bureau of Prisons did not set-aside the requirement for a small business concern although its notice was not in response to agency market research, but an actual procurement action. For that reason I think the company should have pursued a different course, one that wouldn't jeopardize program funding or potentially their reputation with the customer at FCI Edgefield or Bureau of Prisons at-large.

I did a little research on the company and found it has a long history of doing business with thirty-one different Bureau of Prisons facilities dating back to 1996. Based on this information, the company appears to have more in their favor than not for knowing about this opportunity (and others) prior to RFQ release. Additionally, since several of the buys for the parenting services were under $25K, the limit at which agencies are to issue a synopsis, this company could have easily been on the short list of vendors getting the call, had this been a researched opportunity versus an apparent reaction to one.

In his article Steve cites from the GAO's decision 'Before issuing the RFQ, the DOJ contracting officer reviewed the SBA Dynamic Small Business Search database, which did not identify any small businesses within South Carolina under the applicable NAICS code that provided parenting instruction or similar instruction.'

I repeated this search and also searched for the protesting company in SAM and SBA DSBS using their name and DUNS. I was unable to locate a public record for them in either system. While it's possible in SAM for companies to make their profiles visible only to agencies, I don't believe this is the case in the Dynamic Small Business Search tool. If the company is in fact not listed in DSBS, then no matter what search was done by the contracting officer, it appears the company is invisible. Yes, the pun was intended.

By the way, the contracting officer performed all of the market research he/she was required to do, in a way the FAR allows them to do it. In this case, without actually speaking to a company. Here's where being 'top-of-mind' would likely have paid off.

Without question I agree this is an unfortunate situation since a small business missed an opportunity to pursue business at an agency where they have substantive past performance. The culprit here is not the Government's unwillingness to stop a procurement in order to accommodate a company that did not perform market research, the culprit is a relationship. Specifically, a lack of relationship between the company and the buyer and/or end-user customer.

Given the company has done millions of dollars in business with more than thirty different installations over the course of  eighteen years, it would seem to me the opportunity to develop and maintain relationships was very possible. That's the basis for 'getting in front of opportunities!' How many Bureau of Prisons employees and contractors might they know and what's the possibility some landed at FCI Edgefield? Perhaps in positions of greater responsibility than where they were previously?

It gets better.

The company, which is based in Georgia, has been awarded twenty-three (23) unique purchases since December 2009 at Bureau of Prison facilities in West Virginia and California, for what appears to be the same work specified in the RFQ they protested. From a geographic perspective, it would seem easier to create awareness with customers located in the state next-door versus those four or more states away.

Finally, what's not known is if the company submitted a response to the RFQ regardless of it not being set-aside. Given their long and active history with Bureau of Prisons, I hope so. If not, why? If so, what was the result? I'll be keeping an eye out.

While I don't know the outcome of the procurement yet, I do know t
he 'Rule of Two' can only work when you are viable AND visible!


The Chief Visionary

"The person who says it cannot be done should not interrupt the person doing it."

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