Congress Requires Large Primes to Provide Past Performance Reviews to Small Subcontractors–And Agencies to Consider Them

Breaking into the federal government contracting marketplace can be challenging, and many small businesses choose to start as subcontractors. But when those companies later bid on prime contracts, they sometimes find that they cannot get past performance reviews for their subcontract work, or that the government won’t consider such reviews.

Now, Congress has stepped in. A provision in the 2021 National Defense Authorization Act will require large prime contractors to provide small businesses with past performance reviews in certain cases, and will require agencies to consider them.

Section 868 of the 2021 NDAA allows certain small businesses to claim past performance credit for work performed as part of a joint venture–a change we recently covered here on SmallGovCon. But Section 868 also includes a separate paragraph entitled “Past Performance Ratings of First-Tier Small Business Subcontractors.”

Under the 2021 NDAA, when a first-tier subcontractor (that is, a subcontractor with a direct contractual relationship with the prime) performs work under a so-called “covered contract,” the subcontractor is entitled to request a past performance review from the prime. (A “covered contract” is simply one in which the prime is required to develop a subcontracting plan–meaning that the reach of the 2021 NDAA is effectively limited to large primes).

The 2021 NDAA requires large primes to provide past performance reviews. It says that, upon request:

[T]he prime contractor for such covered contract shall submit to such small business concern a record of past performance for such small business concern with respect to such covered contract.

That’s all well and good, but getting a past performance review from the prime isn’t helpful if the procuring agency ignores it. One could argue that for FAR Part 15 acquisitions, at least, agencies already should consider such information under FAR 15.305(a)(2)(ii). But I’ve certainly seen my share of solicitations restricting allowable past performance information to prime contracts–or even prime contracts performed for a particular agency.

The 2021 NDAA doesn’t leave the agency with any discretion to exclude past performance reviews provided by large subcontractors. It says:

If a small business concern elects to use such record of past performance, a contracting officer shall consider such record of past performance when evaluating an offer for a prime contract made by such small business concern.

There is little doubt that Section 868 of the 2021 NDAA will prove helpful to small businesses–especially those looking to break into the ranks of federal prime contractors for the first time. However, Congress has left some important details up to SBA.

For instance, how long will a prime contractor have to respond to a request for a past performance review? What form will the review take? (Will it mirror a CPAR, for instance?) And will agencies be required to give equal weight to these reviews, or will they be able to treat them as less relevant than past performance gained as a prime?

These are important questions, and SBA doesn’t have a lot of time to answer them. The 2021 NDAA requires SBA to issue rules to carry out Section 868 “[n]ot later than 120 days after the date of the enactment of this Act.”

The 2021 NDAA has passed both House and Senate, but is under a veto threat. Congress may have the votes to override the veto, but even if the bill is amended to accommodate the President, Section 868 appears very likely to become law, as the President’s concerns are unrelated to Section 868 or the 2021 NDAA’s other small business provisions. We’ll keep you posted here at SmallGovCon.

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