Limitations On Subcontracting: FAR Change In The Works

It’s been more than a year since the SBA issued a final rule overhauling the limitations on subcontracting for small business contracts.  The SBA’s rule, now codified at 13 C.F.R. 125.6, changes the formulas for calculating compliance with the limitations on subcontracting, and allows small businesses to take credit for work performed by similarly situated subcontractors.

But the FAR’s corresponding clauses have yet to be changed, and this has led to a lot of confusion about which rule applies–especially since many contracting officers abide by the legally-dubious proposition that “if it ain’t in the FAR, it doesn’t count.”  Now, finally, there is some good news: the FAR Council is moving forward with a proposed rule to align the FAR with the SBA’s regulations.

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GAO: Protester Must Show Awardee’s “Specific Exception” to Subcontracting Limitation

A protester challenging an awardee’s compliance with the FAR’s limitation on subcontracting faces an uphill battle.

As explained in a recent GAO bid protest decision, an offeror’s compliance with the limitation on subcontracting is presumed; a protester, therefore, must present specific evidence demonstrating that the awardee will not comply with the limitation. In many cases–especially when the solicitation does not require offerors to provide a breakdown of costs of the work performed by the prime and its subcontractors–such evidence may be next to impossible to obtain.

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