Department of Defense Increases the Justification and Approval Threshold for Its Sole-Source Contract Awards to 8(a) Contractors to $100 Million

On June 5, 2020, the Department of Defense (DoD) amended the DoD Federal Acquisition Regulation Supplement (DFARS) to implement Section 823 of the FY 2020 National Defense Authorization Act. Section 823 increases the threshold for DoD justification and approval (J&A) for certain 8(a) program sole-source awards and provides that the approving authority for any such justification is the head of the procuring activity or a designee in the rank above brigadier general (or a civilian serving in a comparable grade). The DFARS amendment incorporates the DoD class deviation that went into effect earlier this year.

Under the amended DFARS Part 206.303-1, a formal J&A is not required for an 8(a) program sole-source award unless that award exceeds $100 million. This is a significant increase from the current threshold of $22 million that still applies to other procurements conducted under FAR Part 6.3. Unless further legislative action is taken, this change will only benefit entity-owned 8(a) program participants (entities owned by Indian Tribes, ANCs, or NHOs) because, under the current SBA regulations, they are the only participants eligible for sole-source awards above the competitive thresholds of $4 million ($7 million for manufacturing contracts).

The Ward & Berry team will continue to monitor developments surrounding this issue and its potential impact on federal government contractors. If you have any questions regarding this change or if you would like to discuss other small business matters please do not hesitate to contact us.