Limitations On Subcontracting: Important New SBA Rule Takes Effect June 30, 2016

The SBA has issued a final rule implementing the changes to the limitations on subcontracting enacted by Congress in the 2013 National Defense Authorization Act.

The SBA’s final rule takes effect June 30, 2016–and will significantly change the way the limitations on subcontracting are calculated and enforced moving forward.

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Limitations on Subcontracting: SBA Proposes Sweeping Changes

The limitations on subcontracting would undergo sweeping changes under a recent SBA proposal.

On December 29, the SBA issued a proposed rule to enact the changes implemented by Congress in the National Defense Authorization Act of 2013–including a thorough re-write of the way that compliance with the subcontracting limits is calculated and enforced.

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Limitations on Subcontracting Clause Allows Small Business Subcontractors, Says GAO

The FAR’s limitations on subcontracting clause allows the prime contractor to count small business subcontractors toward the prime’s own performance requirement, according to the GAO.

In a recent bid protest decision, the GAO confirmed that the National Defense Authorization Act of 2013 permits prime contractors to meet the requirements of the limitations on subcontracting clause by including work performed by “similarly situated” subcontractors.

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