Creative Contracting on the $25B CMS SPARC IDIQ

By Desirea Votaw, Independent Business Development Professional

As an IDIQ, SPARC is subject to FAR Part 16.504 which requires task orders larger than $3,500 are released to all contract holders to be given fair opportunity to respond. As with all things FAR-related, there are circumstances where fair opportunity does not have to be given under FAR Part 16.505(b)(2), and task orders can be directed to one IDIQ awardee. It seems the CMS Office of Acquisition & Grants Management (OAGM) is open to using these exceptions on SPARC as they have recently awarded two 8(a) sole source task orders. One to an entity who already graduated, but still has the 8(a) designation on SPARC, and one who recently was designated 8(a). Not an 8(a)?  Keep reading, you will glad you did, because socio-economic categories aren’t the only exceptions listed by the FAR.

FAR Part 16.505(b)(2)(i) Exceptions to the fair opportunity process says the contracting officer shall give every awardee a fair opportunity to be considered for task order exceeding $3,500 unless one of the following statutory exceptions applies:

1. The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays.
2. Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized.
3. The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order.
4. It is necessary to place an order to satisfy a minimum guarantee.
5. For orders exceeding the simplified acquisition threshold, a statute expressly authorizes or requires that the purchase be made from a specified source.
6. In accordance with section 1331 of Public Law 111-240 (15 U.S.C. 644(r)), contracting officers may, at their discretion, set aside orders for any of the small business concerns identified in 000(a)(3). When setting aside orders for small business concerns, the specific small business program eligibility requirements identified in part 19 apply.

Now that you are adequately bored, let’s discuss these options and their implications.

Easy ones first, (C) we are all very familiar with from the slew of Logical Follow-Ons resulting from ESD expiring task orders. You must already have the work to justify a Logical Follow-On, so that is a great strategy for keeping your work, for at least 18 more months. (D) we can essentially ignore as the minimum guarantee is $1,000 which each awardee received with the IDIQ award. (E) is unlikely to happen based on the types of task orders anticipated for release on SPARC.

If your designation is large or small business with no socio-economic designation, that leaves (A) and (B) to consider when awardees are developing strategies to solicit and win business on SPARC. For new work, crafting a case for (A) or (B) could be the difference the between competing against several vendors, or being the only awardee to whom a task order request for proposal is solicited. Not an easy task, admittedly, but at least it’s something. If you can get far enough ahead of it, you can begin crafting the justification, as the FAR clearly lays out the information required, and the CMS personnel channels through which the justification must go for approval.

For those with the socio-economic designations, your task is admittedly easier.

Section (F) is a boon for those awardees with a socio-economic designation as it is saying socio-economic set-asides are subject to FAR Part 19, which includes sole sourcing options. OAGM does not have to do any additional justification for sole sourcing on SPARC, other than the usual FAR Part 19 requirements as stated in FAR Part 16.505 (b)(ii) which states that no justification is needed for the exception described in paragraph (b)(2)(i)(F) of this section (other than what is required by FAR Part 19 which is everyday business at CMS). This means that contractors with 8(a) status under SPARC can have their 8(a) work sole sourced to them under SPARC as long as the work logically falls under the SPARC Scope of Work. As this section is governed by FAR Part 19, the $4 million dollar threshold for services still applies.

There is no reason for only the 8(a) entities to take advantage of this clause. The FAR has been updated to allow sole source awards for WOSBs and HubZones at FAR Parts 19.506 and 19.1306 respectively. For WOSB sole sourcing, the procurement must be in a NAICS code in which WOSBs have been determined to be underrepresented. SPARC’s NAICS code is 541512, which is one of the 445 NAICS codes determined by an SBA study in which WOSBs are underrepresented.

As the WOSB and HUBZone sole source regulations are fairly new, admittedly it appears CMS has not yet embraced this method of contracting. However, during the last fiscal year, I have seen a few HUBZone sole source contracts come out of CMS, and I anticipate that number will increase as the agency and industry become more comfortable with this new method of contracting.  For the WOSBs out there, the onus is on you to start promoting the WOSB sole source program.

As you are developing your strategies and pipelines for the next couple of years, I encourage you, get creative!  Our goal, as contractors, is to help CMS achieve its missions, goals, and priorities. Let’s try to make their jobs as easy as possible. Let’s take solutions to CMS instead of problems.