Small business subcontracting improvements

The DoD, GSA, and NASA published proposed revisions to the Federal Acquisition Regulations (FAR) on June 10,  2015 in order to implement the changes made by the Small Business Administration (SBA) in its final rule which was published July 16, 2013. The changes stem from the Small Business Jobs Act of 2010 and include amendments to FAR subparts 1.1, 2.1, 15.3, 19.3, and 52.2.

Highlights of the changes include granting the Contracting Officer the authority to require a Small Business (SB) Subcontracting Plan (SP) from those SB awardees who have grown large and are required to rerepresent their size based on the criteria in FAR 19.301-2 provided that the contract contained the FAR Clause 52.219-9 “Small Business Subcontracting Plan.” Also, the new language authorizes Contracting Officers to establish additional SBSP subcontracting goals in terms of total contract dollars (currently, the SB Subcontracting Plan only requires the percentage of dollars planned for subcontracting to small businesses to be based on the total amount of money that will subcontracted. For example, if the total contract value is $1M and the total amount planned to be subcontracted is $250,000, and of that $250,000, $100,000 is planned to go to SBs – then the percentage planned to be subcontracted to SBs is 40%. But, using the total contract value of $1M, the percentage being subcontracted to SBs is only 10%.) It isn’t clear whether the use of the phrase “in addition to the goals established as a percentage of total subcontract dollars” is meant to reflect the establishment of different goals or just allows an additional way to calculate the percentage of the same dollars being spent on subcontracting to SBs.

Another notable change is reflected in the new language in FAR 19.703 in discussing what a prime contractor may rely on to determine whether a subcontractor is small. First, the prime decides what NAICS code is appropriate for the product or service being subcontracted. Then, the prime may accept a subcontractor’s representation of its size/status for that NAICS code if (a) the subcontractor is registered in the System for Award Management (SAM); and (2) the subcontractor represents that the size/status representations made in SAM are current, accurate and complete as of the date of the offer for the subcontract. If the subcontractor is not registered in SAM, the prime can rely on the subcontractor’s written representations that the size/status representations provided with its offer are current, accurate, and complete as of the date of the offer for the subcontract.

In addition, language has been added to the FAR reflecting the SBA’s requirements that an offeror will make assurances in their SBSP to make a good faith effort to “acquire articles, equipment, supplies, services or materials, or obtain the performance of construction work from the small business concerns that the offeror used in preparing the bid or proposal…” and that the offeror “will not prohibit a subcontractor from discussing with the contracting officer any material matter pertaining to payment to or utilization of a subcontractor… .”

For the complete rule and all proposed changes, see The Federal Register, Vol. 80, No. 111, June 10, 2015 which can be accessed at http://www.gpo.gov/fdsys/pkg/FR-2015-06-10/pdf/2015-14055.pdf. Comments are due by August 10, 2015.

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