At the outset of a small business set-aside procurement, the contracting officer (CO) assigns the procurement a North American Industry Classification System (NAICS) code, which has a corresponding size standard. The CO is also responsible for structuring the procurement as one for manufactured products or supply items, or for services. When a contract for manufactured products or supply items is set aside for small business, the prime contractor must either manufacture the end item or qualify under the nonmanufacturer rule. Entities may qualify as a manufacturer if they manufacture the end item in the United States. Under the relevant regulations, a manufacturing entity utilizes its own facilities to perform the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being procured. Notably, there can only be one manufacturer of an end item for size purposes. The Small Business Administration (SBA) conducts an analysis under three factors enumerated in 13 C.F.R. § 121.406(b)(2)(i) to determine whether an entity is the manufacturer. These factors are:

• (A) The proportion of total value in the end item added by the efforts of the entity, excluding costs of overhead, testing, quality control, and profit.
• (B) The importance of the elements added by the entity to the function of the end item, regardless of their relative value.
• (C) The entity’s technical capabilities; plant, facilities and equipment; production or assembly line processes; packaging and boxing operations; labeling of products; and product warranties.

The General Services Administration (GSA) Federal Supply Schedule (FSS) program requires pre-approved schedule contractors to publish an authorized FSS pricelist containing all the supplies and services they offer. The pricelists include the terms and conditions for each Special Item Number (SIN) on the contractors’ schedules. Federal Acquisition Regulation (FAR) 8.401 defines a SIN as a group of generically similar (but not identical) supplies or services intended to serve the same general purpose or function. When issuing requests for quotes (RFQs) under FAR subpart 8.4, procuring agencies may include a provision identifying a SIN and expressly limit the procurement to that SIN. In such procurements, only contractors with the identified SIN on their schedule contracts may compete to fulfill the requirement. Additionally, in service procurements, contractors may only propose labor categories (LCATs) that fall under the applicable SIN. However, procuring agencies do not always identify an applicable SIN or limit the contractors’ ability to only propose LCATs from a particular SIN. In the absence of such SIN limitations, contractors may compete for the RFQ if the quoted goods and services are available on their underlying FSS contracts without regard to a particular SIN.

The Federal Acquisition Regulation (FAR) provides seven exceptions to the Competition in Contracting Act’s (CICA) general requirement for agencies to provide full and open competition. The public interest exception authorizes procuring agencies to forego full and open competition when the head of the agency determines that it is in the public interest to do so and when no other exceptions to full and open competition are applicable. The agency head’s authority to invoke this exception is non-delegable, and procuring agencies must adhere to specific documentation and notification requirements to properly invoke the public interest exception. One such requirement involves the preparation of a written determination and findings (D&F) document by the head of the agency. Following FAR 1.704, this D&F document must provide sufficient facts, circumstances, or reasoning to support the determination and clearly and convincingly justify the agency’s reliance on the public interest exception. Additionally, to use this authority, the FAR requires that the procuring agency notify Congress of the public interest determination no less than 30 days before the contract is awarded.

In addition to providing procedural information in the prescribed agency format, the FAR requires the D&F document to include information regarding the nature and description of the approved action. The D&F must also identify the appropriate statute or regulation on which it is based. Thus, the determination must reasonably rely on the findings and justify the proposed action under the applicable statute or regulation. When reviewing the procuring agency’s D&F document in the context of a bid protest, a protest adjudicative forum, such as the Government Accountability Office (GAO), addresses whether the D&F provides, on its face, a clear and convincing justification that foregoing full and open competition furthers the public interest identified. To withstand scrutiny under a bid protest, the D&F must include facts relevant to the stated public interest and should not rely upon materially inaccurate information. However, once the D&F provides a clear and convincing justification that limiting full and open competition is in the public interest, the GAO will not sustain a protest based on the protester’s disagreements with the conclusions provided in the D&F.