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Significant Shift in DoD Sole-Source Thresholds: What Federal Contractors Need to Know


he federal contracting space is witnessing a remarkable shift, particularly for businesses engaged with the Department of Defense (DoD). Recent amendments to the Senate-Passed 2024 National Defense Authorization Act (NDAA) indicate that the sole-source threshold for several socioeconomic set-aside programs will see a significant hike. Furthermore, a novel mechanism to address DoD sole-source thresholds in light of inflation is also on the horizon.

A Deeper Dive into the Amendments

The Senate’s rendition of the 2024 NDAA holds within it an amendment set to uplift the sole-source caps pertaining to contracts awarded by the Department of Defense. This encompasses various categories, including:

  •  8(a) Program participants
  • Woman-Owned Small Businesses (WOSB)
  • Economically Disadvantaged WOSB (EDWOSB)
  • HUBZone Program participants
  • Service-Disabled Veteran-Owned Small Businesses (SDVOSB)

This amendment was propelled by Senator Ben Cardin from Maryland. Should it gain ratification into law, the implications on the sole-source thresholds for manufacturing contracts are expected to be:

Similarly, the thresholds for non-manufacturing contracts within the DoD will also be revised:

Additionally, in a bid to ensure consistency across statutes, the amendment will bring about alterations to the contracting goal statutes for SDVOSBs and VOSBs.

A DoD-Centric Approach

What stands out about this amendment is its exclusive applicability to DoD contracts. Rather than replacing the prevalent sole-source thresholds altogether, it embeds a specific provision catering only to the DoD, all the while allowing for inflationary adjustments by the Federal Acquisition Regulatory Council under Section 1.109 of the FAR.

Such a DoD-centric approach could be a double-edged sword. While the changes are bound to benefit contractors within the DoD ambit, it remains restricted in its outreach, thus not impacting the entirety of the federal contracting ecosystem.

The Implication of Inflationary Adjustments

An intriguing facet of this amendment is the latitude it provides for addressing inflation. The introduced language paves the way for the Federal Acquisition Regulatory Council to periodically adjust the DoD sole-source thresholds, reflecting inflationary trends. This might serve as a valuable tool to ensure that thresholds remain relevant and in alignment with the broader economic landscape.

In Summation

While the Senate has given the nod to this version of the NDAA, the final outcome remains shrouded in anticipation. If the amendment materializes into law, it’s essential for federal contractors to be cognizant of its scope and implications. The adjustments, though substantial, remain confined to the Department of Defense contracts, which might be a point of contention for many. Nonetheless, the initiative to realign thresholds and acknowledge inflationary pressures reflects the dynamic nature of federal contracting and the government’s commitment to ensuring a balanced and fair playing field.

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