FAR 7.107-2—Consolidation.
Plain-English Summary
FAR 7.107-2 addresses when and how the Government may consolidate requirements into a single acquisition, and it is designed to balance efficiency against the risk of reducing small business participation. This section covers the threshold for special review when the estimated total dollar value of a consolidated acquisition exceeds $2 million, the requirement for a written determination by the senior procurement executive (SPE) or chief acquisition officer (CAO), and the findings that must be made before consolidation can proceed. It explains the required market research, identification of less-consolidated alternatives, coordination with the agency’s small business office, assessment of negative impacts on small business, and steps to include small business concerns in the strategy. It also defines what counts as a “necessary and justified” consolidation, including the types of benefits that may support the decision, how to measure substantial benefits, and when non-quantifiable benefits may be considered. The section further sets special approval authority for cases where benefits do not meet the normal threshold but are critical to mission success and the strategy maximizes small business participation. In practice, this rule is a documentation and justification gate: agencies must show they considered small business impacts and alternative approaches before combining requirements, and contractors should expect consolidation decisions to be supported by a formal record that may be reviewed by SBA.
Key Rules
Written justification required
For consolidated acquisitions over $2 million, the SPE or CAO must make a written determination that consolidation is necessary and justified under 15 U.S.C. 657q. This is not optional and must be supported by the required findings in the rule.
Market research and alternatives
Before approving consolidation, the agency must conduct market research and identify alternative contracting approaches that would involve a lesser degree of consolidation. The decision must be based on a comparison against those alternatives, not just a general preference for a larger contract.
Small business coordination
The determination must be coordinated with the agency’s Office of Small Disadvantaged Business Utilization or Office of Small Business Programs. The agency must also identify any negative impact on small business concerns and take steps to include small business concerns in the acquisition strategy.
Substantial benefits standard
The SPE or CAO may approve consolidation when the benefits substantially exceed the benefits of the identified alternatives. Benefits may be quantifiable, such as cost savings or price reductions, or non-quantifiable, such as quality, cycle time, or terms and conditions improvements.
Benefit thresholds
Quantifiable benefits are substantial if they equal at least 10 percent of the estimated contract or order value when the value is $94 million or less, or 5 percent of the value or $9.4 million, whichever is greater, when the value exceeds $94 million. Non-quantifiable benefits must be specifically identified and, where feasible, quantified.
Administrative savings alone insufficient
Reduction of administrative or personnel costs by itself is not enough to justify consolidation unless the expected savings are at least 10 percent of the estimated consolidated value. This prevents agencies from relying on internal efficiency alone to justify a smaller small-business footprint.
Mission-critical exception
Even if the normal benefit thresholds are not met, the approving authority may still find consolidation necessary and justified if the benefits are critical to mission success and the strategy provides maximum practicable participation by small business. This is a higher-level exception with a strong small business participation requirement.
Documentation and SBA access
If consolidation is approved, the contracting officer must include the determination in the acquisition strategy documentation and provide it to SBA upon request. This creates a record for oversight and review.
Responsibilities
Senior Procurement Executive (SPE) / Chief Acquisition Officer (CAO)
Make the written determination that consolidation is necessary and justified for consolidated acquisitions over $2 million, after confirming the required market research, alternative approaches, small business coordination, impact analysis, and mitigation steps. The SPE or CAO also applies the substantial-benefit standard and, where applicable, the administrative-cost and mission-critical exceptions.
Approving Authority for Mission-Critical Exception
For cases where benefits do not meet the normal substantial-benefit thresholds but are critical to mission success, determine whether consolidation is necessary and justified. For DoD, this authority is the SPE; for civilian agencies, it is the Deputy Secretary or equivalent.
Contracting Officer
Ensure the consolidation determination is included in the acquisition strategy documentation and provide it to SBA upon request. The contracting officer also supports the acquisition planning record and implements the approved strategy.
Agency Market Research Team / Acquisition Team
Conduct market research, identify alternative contracting approaches with less consolidation, assess the likely impact on small business participation, and develop steps to include small business concerns in the acquisition strategy.
Office of Small Disadvantaged Business Utilization / Office of Small Business Programs
Coordinate on the consolidation determination and help evaluate the impact on small business participation and possible mitigation measures.
Small Business Administration (SBA)
May request and review the consolidation determination as part of oversight of small business impacts and compliance with consolidation requirements.
Practical Implications
Consolidation is not just an acquisition-planning choice; it triggers a formal justification process when the value exceeds $2 million. Agencies should build time into planning for market research, small business coordination, and senior-level approval.
The biggest compliance risk is treating consolidation as a convenience decision. The record must show why less-consolidated alternatives were not sufficient and how the strategy preserves small business participation to the maximum practicable extent.
Agencies should be careful not to rely on vague claims of efficiency. The rule requires specific benefits, and quantifiable benefits must meet the stated thresholds unless the mission-critical exception applies.
Administrative or personnel savings alone are usually weak support for consolidation. If those are the main benefits, the agency must show they reach the 10 percent threshold or find other substantial benefits.
Contracting officers should expect SBA scrutiny and should maintain a clear acquisition strategy file with the determination, supporting analysis, and small business mitigation steps. Missing documentation is a common pitfall even when the underlying business case is strong.
Official Regulatory Text
(a) Consolidation may provide substantial benefits to the Government. However, because of the potential impact on small business participation, before conducting an acquisition that is a consolidation of requirements with an estimated total dollar value exceeding $2 million, the senior procurement executive (SPE) or chief acquisition officer (CAO) shall make a written determination that the consolidation is necessary and justified in accordance with 15 U.S.C. 657q, after ensuring that- (1) Market research has been conducted; (2) Any alternative contracting approaches that would involve a lesser degree of consolidation have been identified; (3) The determination is coordinated with the agency's Office of Small Disadvantaged Business Utilization or the Office of Small Business Programs; (4) Any negative impact by the acquisition strategy on contracting with small business concerns has been identified; and (5) Steps are taken to include small business concerns in the acquisition strategy. (b) The SPE or CAO may determine that the consolidation is necessary and justified if the benefits of the acquisition would substantially exceed the benefits that would be derived from each of the alternative contracting approaches identified under paragraph (a)(2) of this section, including benefits that are quantifiable in dollar amounts as well as any other specifically identified benefits. (c) Such benefits may include cost savings or price reduction and, regardless of whether quantifiable in dollar amounts- (1) Quality improvements that will save time or improve or enhance performance or efficiency; (2) Reduction in acquisition cycle times; (3) Better terms and conditions; or (4) Any other benefit. (d) Benefits. (1) Benefits that are quantifiable in dollar amounts are substantial if individually, in combination, or in the aggregate the anticipated financial benefits are equivalent to- (i) Ten percent of the estimated contract or order value (including options) if the value is $94 million or less; or (ii) Five percent of the estimated contract or order value (including options) or $9.4 million, whichever is greater, if the value exceeds $94 million. (2) Benefits that are not quantifiable in dollar amounts shall be specifically identified and otherwise quantified to the extent feasible. (3) Reduction of administrative or personnel costs alone is not sufficient justification for consolidation unless the cost savings are expected to be at least 10 percent of the estimated contract or order value (including options) of the consolidated requirements, as determined by the SPE or CAO (15 U.S.C. 657q(c)(2)(B)). (e) (1) Notwithstanding paragraphs (a) through (d) of this section, the approving authority identified in paragraph (e)(2) of this section may determine that consolidation is necessary and justified when- (i) The expected benefits do not meet the thresholds for a substantial benefit at paragraph (d)(1) of this section but are critical to the agency's mission success; and (ii) The procurement strategy provides for maximum practicable participation by small business. (2) The approving authority is– (i) For the Department of Defense, the SPE: or (ii) For the civilian agencies, the Deputy Secretary or equivalent. (f) If a determination is made that consolidation is necessary and justified, the contracting officer shall include it in the acquisition strategy documentation and provide it to the Small Business Administration (SBA) upon request.