Government Contracts Proposed FAR Rule Clarifies Overseas Set-Aside Requirements
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Wednesday, September 4, 2019

Proposed FAR Rule Clarifies Overseas Set-Aside Requirements

By Government Contracts Editorial Staff

The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation to support the Small Business Administration’s policy of including overseas contracts in agency small business contracting goals. The proposed rule implements a 2013 final rule (¶70,425.507) that amended SBA 125.2 to clarify that small business contracting rules, such as set-asides, may be applied to contracts performed outside the United States. SBA began including overseas contracts in small business goals for FY 2016 to broaden the base of contracts that could be awarded to small businesses under FAR Part 19.

Conflicting Interpretations. FAR 19.000(b) currently states that all but one subpart of FAR Part 19 “applies only in the United States or its outlying areas,” and some contracting officers have interpreted this section as prohibiting the use of FAR Part 19 set-aside and sole-source procedures for overseas procurements. Other COs have interpreted the phrase to mean that the use of FAR Part 19 procedures for overseas procurements is discretionary. These conflicting interpretations have resulted in inconsistent use of small business program procedures. The rule would amend FAR 19.000 and FAR 19.309 to clarify that COs are allowed, but not required, to use FAR Part 19’s set-aside and sole-source procedures for overseas procurements. Also, the rule would amend the definition of “bundling” at FAR 2.101 to make the definition applicable outside the U.S. Comments on the proposed rule referencing FAR Case 2016-002 are due October 11, 2019. For the text of the rule, see ¶70,006.340.

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