Analysis: GSA's interim rule could hurt some small businesses

Monday - 11/7/2011, 8:41pm EST

Larry Allen, president, Allen Federal

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The General Services Administration is trying to help small businesses with a new rule. But that new rule might actually wind up hurting the small businesses it's supposed to help. Larry Allen, president of Allen Federal, explains explains the impact of the change in an interview with In Depth with Francis Rose.

From Allen's newsletter:

A new interim rule effective November 2nd allows and encourages federal buyers to set-aside task orders for GSA Multiple Award Schedule orders for small businesses. The move had been expected since the passage of legislation last year that empowered agencies to make this choice. Until now, agency buyers were allowed to use small business status as an evaluation factor in their task orders, if they identified it as a factor, but could not totally set aside schedule orders for small businesses. The interim rule allows for set-asides for any socio-economic class. It contains language that promotes the use of set asides so that more business flows from the schedules program to smaller firms. The rule, however, creates a conundrum. While it may help small business prime contractors, many more small firms are participating dealers or subcontractors to large schedule contractors. These companies, some of which are "the small of the small" may actually be harmed by the new language. Still, it is important to remember that an early draft of the empowering legislation would have required set asides for all schedule purchases under the Simplified Acquisition Threshold. The "may" provision of the interim rule allows contractors to have discussions with buyers about whether or not a particular project could be a good set-aside candidate.