FAR 19.504—Orders under multiple-award contracts.
Plain-English Summary
FAR 19.504 explains how contracting officers may place orders under multiple-award contracts when small business participation is involved. It covers three major situations: orders under multiple-award contracts generally, orders under total or partial small business set-aside contracts, and orders under reserves. It also addresses when order set-asides are discretionary versus mandatory, how the simplified acquisition threshold affects the choice of small business program, and the need to follow both small business eligibility rules and the ordering procedures for the underlying contract vehicle. In practice, this section tells contracting officers how to decide whether an order can be competed among all holders, limited to certain small business concerns, or issued directly to a single small business awardee. It matters because the ordering decision can affect competition, compliance with small business goals, and whether the order is properly reserved for a particular socioeconomic program. Contractors need to understand it because their ability to compete for an order depends on whether they hold the right underlying contract and whether the order is set aside, reserved, or unrestricted.
Key Rules
Order set-asides are discretionary
Contracting officers may, at their discretion, set aside orders under multiple-award contracts for the small business concerns identified in FAR 19.000(a)(3). The solicitation and resulting contract must say whether order set-asides will be discretionary or mandatory when the conditions for a set-aside are met.
Program choice depends on dollar value
For orders at or below the simplified acquisition threshold, the contracting officer may set aside the order for any eligible small business concern. For orders above the simplified acquisition threshold, the contracting officer must first consider the small business socioeconomic programs—8(a), HUBZone, SDVOSB, and WOSB—before using a general small business set-aside.
Eligibility rules still apply
A set-aside order must satisfy the specific eligibility requirements for the applicable small business program, in addition to the general conditions in FAR 19.502-2 and the ordering procedures for the contract vehicle. The contracting officer must also follow the correct ordering rule set for the vehicle, such as FAR 8.405-5 for Federal Supply Schedules or FAR 16.505 for other multiple-award contracts.
Total set-aside contracts allow further set-asides
When the underlying multiple-award contract is a total small business set-aside, the contracting officer may still set aside individual orders for the socioeconomic small business concerns identified in FAR 19.000(a)(3), if the general set-aside conditions and program eligibility requirements are met.
Partial set-aside competition is limited
For a partial set-aside multiple-award contract, only small business concerns that received awards for the set-aside portion may compete for orders issued under that portion. If a small business also received an award for the non-set-aside portion, it may compete with other than small business awardees for orders under the non-set-aside portion.
Reserve orders follow award structure
When a multiple-award contract is reserved for a small business type, the contracting officer may set aside orders for that same type if there are two or more awards for that concern, or may issue an order directly to one small business concern if only one award exists and the work is within that concern’s capability.
Non-set-aside orders may still include small businesses
If an order is not set aside, a small business awardee may compete against other than small business awardees for the order if the small business received a contract award for the supplies or services being ordered.
Responsibilities
Contracting Officer
Decide whether to set aside an order under a multiple-award contract and document whether set-asides are discretionary or mandatory in the solicitation and resulting contract. Apply the correct small business program rules, consider socioeconomic programs first for orders above the simplified acquisition threshold, and follow the proper ordering procedures for the contract vehicle.
Contracting Officer
When the underlying contract is a total set-aside, partial set-aside, or reserve, limit competition or direct the order only as allowed by the structure of the contract and the applicable eligibility rules.
Small Business Offerors/Awardees
Compete only for orders for which they are eligible based on the underlying contract award, the set-aside or reserve status of the order, and the specific program requirements. Ensure they continue to meet the applicable small business or socioeconomic status requirements for the order.
Agency/Acquisition Team
Build the solicitation and contract structure so it clearly states how order set-asides will be handled and how the multiple-award contract will support small business participation. Ensure ordering personnel understand the hierarchy of program selection and the applicable ordering procedures.
Practical Implications
The solicitation must be clear up front about whether order set-asides will be discretionary or mandatory; if it is silent or unclear, the agency risks protest or compliance problems.
For orders above the simplified acquisition threshold, the contracting officer should not jump straight to a general small business set-aside without first considering 8(a), HUBZone, SDVOSB, and WOSB options.
The underlying contract structure controls who can compete for the order. A contractor may be eligible for the base contract but still be excluded from a particular order because the order is set aside or reserved.
Contracting officers must use the correct ordering authority for the vehicle. Mixing up FAR 8.405-5 and FAR 16.505 can create ordering errors even if the small business decision itself is sound.
Small business status alone is not enough; the contractor must also satisfy the specific program eligibility rules at the time of the order, which is a common source of mistakes.
Official Regulatory Text
(a) General. In accordance with section 1331 of the Small Business Jobs Act of 2010 ( 15 U.S.C. 644 (r)(2)), contracting officers may, at their discretion, set aside orders placed under multiple-award contracts for any of the small business concerns identified in 19.000 (a)(3). (1) The contracting officer shall state in the solicitation and resulting contract whether order set-asides will be discretionary or mandatory when the conditions in 19.502-2 are met at the time of order set-aside, and the specific program eligibility requirements, as applicable, are also then met. (2) When setting aside an order at or below the simplified acquisition threshold, the contracting officer may set aside the order for any of the small business concerns identified in 19.000 (a)(3). (3) When setting aside an order above the simplified acquisition threshold, the contracting officer shall first consider setting aside the order for the small business socioeconomic contracting programs ( i.e. , 8(a), HUBZone, service-disabled veteran-owned small business, and women-owned small business) before considering a small business set-aside. (4) The contracting officer shall comply with the specific program eligibility requirements identified in this part in addition to the ordering procedures for a multiple-award contract (for orders placed under the Federal Supply Schedules Program, see 8.405-5 ; for orders placed under all other multiple-award contracts, see 16.505 ). (b) Orders under set-aside contracts— (1) Orders under total set-aside contracts. Under a total small business set-aside, contracting officers may at their discretion set aside orders for any of the small business socioeconomic concerns identified in 19.000(a)(3) provided that the requirements at paragraph (a) of this section, 19.502-2(b), and the specific program eligibility requirements are met. (2) Orders under partial set-aside contracts . (i) Only small business concerns awarded contracts for the portion(s) that were set aside under the solicitation for the multiple-award contract may compete for orders issued under those portion(s). (ii) Small business awardees may compete against other than small business awardees for an order issued under the portion of the multiple-award contract that was not set aside, if the small business received a contract award for the non-set-aside portion. (c) Orders under reserves. (1) The contracting officer may— (i) Set aside orders for any of the small business concerns identified in 19.000 (a)(3) when there are two or more contract awards for that type of small business concern; or (ii) Issue orders directly to one small business concern for work that it can perform when there is only one contract award to any one type of small business concern identified in 19.000 (a)(3). (2) Small business awardees may compete against other than small business awardees for an order that is not set aside if the small business received a contract award for the supplies or services being ordered.