DOD issued a rule to implement legislative restriction on the use of the controversial practice of “tiered” evaluations in making awards.  The 2006 defense authorization act directed DOD to issue guidance prohibiting the use of these so-called “cascading set-asides” unless the contracting officer has complied with certain market research and documentation requirements.  The new DOD rule prohibits their use unless the CO (1) has conducted market research in accordance with FAR Part 10 (2) is unable, despite such research, to determine whether or not a sufficient number of qualified small businesses are available to justify limiting competition and (3) includes in the contract file a written explanation why the CO was unable to make the determination.

Under a tiered evaluation the solicitation allows offers to be submitted by all types of businesses but evaluation starts with the level that enjoys the highest preference and ends if the award can be made at that level.  For example, if an award can be made after considering small business firms from HUBZone areas then offers from large businesses or other small non-HUBZone businesses are not even considered.  Though agencies praised the technique for its efficiency, contractor groups came out in force against it arguing that it caused them to waste precious resources on proposals that were never evaluated.

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