Subcontracting is a way of life for many federal government contractors; however, the identification and selection of such subcontractors is usually left up to the reasonable discretion of the prime contractor. So what happens when a solicitation prescribes that a particular subcontractor be retained, but that subcontractor won’t assist in bid preparation efforts?
Well, in one recent case, the prospective prime contractor was out of luck.
GAO ordinarily will not hear any argument that is based on a company’s small business status, even if the alleged large company is only a proposed subcontractor.
In a recent decision, GAO declined to hear a protester’s argument that the awardee’s supposedly-small subcontractors were affiliated with other entities, holding that such a determination is reserved solely for the SBA.
I sometimes suggest that a government subcontract include a so-called “pass-through” dispute resolution provision, in which the prime contractor agrees to sponsor its subcontractor’s claims against the government. A recent Armed Services Board of Contract Appeals case demonstrates why pass-through provisions can be so important.
In its decision, the ASBCA held that a subcontractor lacked a valid claim against the government–and therefore, had no ability to pursue relief at the ASBCA.
Under a solicitation for a cost-reimbursable contract, an offeror’s proposed costs are not controlling, because the government is on the hook for the contractor’s actual and allowable incurred costs. Before making an award decision, the government must consider whether the proposed costs should be upwardly adjusted.
A recent GAO bid protest decision highlights the need for offerors bidding on cost-reimbursable work to make sure that their proposed costs are realistic and substantiated—including the proposed costs of major subcontractors.
An offeror was not entitled to a high past performance score merely because it proposed a subcontracting relationship with the incumbent prime contractor.
In a recent bid protest decision, the GAO held that an agency had properly assigned the offeror a mere “Satisfactory” past performance score, despite a subcontracting relationship with the incumbent, because the prospective prime contractor had not sufficiently demonstrated its own relevant past performance.
When the SBA found a subcontractor to be affiliated with its prime contractor under the ostensible subcontractor rule, the subcontractor could not appeal the SBA’s finding to the SBA Office of Hearings and Appeals.
In a recent size appeal decision, OHA held that a subcontractor lacks the ability to file a size appeal because the subcontractor is not directly affected by the size determination.
Subcontractors sometimes prefer to submit their cost or price proposals directly to the government, instead of submitting their cost or pricing information through the prime contractor. In cases where a procuring agency allows it, such independent submissions can ease a subcontractor’s concerns about disclosing sensitive information to the prime contractor.
But when a subcontractor circumvents the prime contractor and independently submits its pricing, the prime contractor is unable to review the subcontractor’s proposal to ensure that it complies with the terms of the solicitation. As demonstrated in a recent GAO bid protest decision, if the subcontractor’s proposal is non-compliant, the entire team may pay the price.