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On March 22, 2006, the Government Accountability Office (“GAO”) issued a decision in OMNI Government Services, LP, B-297240.2, et seq.  The GAO denied OMNI’s protest on the ground that “the proposed contract constituted a new requirement that could be submitted for performance under the SBA’s 8(a) program, notwithstanding the incumbent small business contractor’s interest in competing for the work.”

In OMNI, the issue was whether the proposed contract violated Section 8(a) of the Small Business Act. 
Section 8(a) grants authority to the Small Business Administration (“SBA”), in the words of the OMNI decision, “to contract with other government agencies, and to arrange for the performance of those contracts via subcontracts awarded to socially and economically disadvantaged small businesses.”  However, in order for an “existing requirement” of a contract to be considered a “new requirement,” the expansion or modification of the existing requirement must result in a price adjustment of at least 25 percent.  In those situations, an agency may propose a new contract to be placed in programs such as the one implementing Section 8(a), even though the old contract was not. 

The SBA and the Army successfully argued in OMNI that, after accounting for inflation, there was a price difference of 31% and that the proposed contract could be offered to a different company – one that meets the requirements of the new procurement.  Incumbents, therefore, should be aware of the possibility that significant cost savings to the Government might result in dramatic changes to the future of a contract being solidly performed.

This update is published by Venable LLP. Venable publications are not intended to provide legal advice or opinion. Such advice may only be given when related to specific fact situations. © Copyright by Venable LLP 2006.