FAR 19.502-10—Automatic dissolution of a small business set-aside.
Plain-English Summary
FAR 19.502-10 addresses what happens when a small business set-aside, or part of one, does not result in an award. It explains the automatic dissolution of the set-aside for the unawarded portion, meaning the government is no longer bound to keep that portion reserved for small business and may instead procure the remaining supplies or services through sealed bidding or negotiation, as appropriate. The section also requires the contracting officer, before reissuing a solicitation for the dissolved items, to make sure the delivery schedule is realistic in light of all relevant factors, including what small business concerns can actually perform. In practice, this provision prevents procurement delays from forcing an unrealistic small business competition and gives the agency a lawful path to complete the acquisition. It also protects the integrity of the acquisition process by requiring the contracting officer to reassess schedule feasibility rather than simply re-solicit the same requirement on the same terms. For contractors, it signals that a set-aside can disappear automatically for the unawarded portion if no award is made, and that the government may broaden the competition or change the acquisition approach for the remaining requirement.
Key Rules
Unawarded portion dissolves automatically
If a small business set-aside acquisition, or part of it, is not awarded, the set-aside determination is automatically dissolved for the portion that was not awarded. No separate cancellation action is required to remove the set-aside status for that unawarded portion.
Remaining requirement may be reprocured
The supplies or services that were not awarded may be acquired by sealed bidding or negotiation, depending on what is appropriate for the acquisition. This gives the contracting activity flexibility to complete the procurement outside the dissolved set-aside.
Applies to unilateral or joint set-asides
The rule covers both unilateral and joint determinations to set aside the acquisition. The automatic dissolution applies regardless of how the set-aside decision was made.
Delivery schedule must be realistic
Before issuing a new solicitation for items from a dissolved set-aside, the contracting officer must ensure the delivery schedule is realistic. The schedule must be evaluated in light of all relevant factors, including the capabilities of small business concerns.
Small business capability must be considered
The contracting officer cannot simply reuse the prior schedule without review. The schedule must be tested against market realities and small business performance capability so the re-solicitation is fair and achievable.
Responsibilities
Contracting Officer
Determine how to acquire the unawarded portion after the set-aside dissolves, using sealed bidding or negotiation as appropriate. Before reissuing a solicitation, review and adjust the delivery schedule as needed to ensure it is realistic based on all relevant factors, including small business capability.
Agency/Acquisition Team
Support the contracting officer by assessing the remaining requirement, market conditions, and schedule feasibility so the reprocurement approach reflects actual procurement needs and industry capability.
Small Business Concerns
Understand that if no award is made for a set-aside or part of it, the set-aside status for that unawarded portion ends automatically and the requirement may be re-solicited under a different acquisition approach.
Practical Implications
A failed small business set-aside does not stay reserved by default for the unawarded portion; the agency can move quickly to another procurement method.
The contracting officer should not simply reissue the same solicitation unchanged, especially if the original delivery schedule was too aggressive for the small business market.
This rule helps avoid repeated failed solicitations by forcing a realistic schedule review before re-solicitation.
Contractors should watch for a change in competition strategy after a set-aside fails, because the remaining requirement may be competed differently.
Documentation of the schedule review and acquisition approach is important to show the agency considered market capability and did not set up an unworkable re-solicitation.
Official Regulatory Text
(a) If a small business set-aside acquisition or portion of an acquisition is not awarded, the unilateral or joint determination to set the acquisition aside is automatically dissolved for the unawarded portion of the set-aside. The required supplies and/or services for which no award was made may be acquired by sealed bidding or negotiation, as appropriate. (b) Before issuing a solicitation for the items called for in a small business set-aside that was dissolved, the contracting officer shall ensure that the delivery schedule is realistic in the light of all relevant factors, including the capabilities of small business concerns.