The SBA proposes to amend its regulations to implement new provisions of the National Defense Authorization Act (NDAA) for fiscal year 2021 that provides small business contractors with new tools to establish past performance when bidding on prime contracts for Government procurements. The proposed rules would add two new methods for small businesses to obtain qualifying past performance. One proposed rule would allow a small business with no relevant past performance of its own to use the past performance of a joint venture in which it took part. The second proposed rule would require prime contractors to provide, to small businesses that served as a first-tier subcontractor, a record of the business’s past performance for use by the small business in future proposals.
The proposed rules are here.
Past performance is not always required in order to win prime federal contracts, and its weighting and restrictions can vary greatly by procurement. Nonetheless, many small businesses find it difficult to do business with Government agencies when these small businesses have no record for the agencies to evaluate. The proposed rules are aimed at reducing obstacles faced by small businesses with respect to demonstrating past performance when seeking Government agency contracts.
Joint Ventures
The first proposed rule addresses past performance ratings of joint ventures for small businesses. This proposed rule creates a new 13 CFR § 125.11(a) (125.11 houses SDVOSB rules and will be moved to a different section) which addresses the circumstance upon which an agency is required to consider past performance of small businesses that have been members of certain joint venture or first-tier subcontractors.
Under the rule, a small business would be able to include the past performance of the joint venture as part of its offer on a prime contract when bidding in its own name, when the small business was a member of the joint venture. The contracting officer is required to consider the joint venture’s past performance where the small business cannot independently demonstrate past performance necessary for award, and the small business elects to use the joint venture’s past performance, provided the small business identifies: “(i) the joint venture; (ii) the contract(s) of the joint venture that the small business elects to use; and (iii) describe to agency what duties or responsibilities the small business carried out as a joint venture member.” The small business cannot, however, claim past performance credit for work performed exclusively by other joint venture partners.
This proposed rule also authorizes a small business to supplement its relevant past performance when the small business cannot independently demonstrate the past performance on its own. The SBA provides a helpful example of how the proposed rule works in practice. A solicitation might require three past performance examples. The proposed rule would authorize the small business offeror to submit two examples from performance in its own name and one example from performance of a joint venture of which it was a member if the small business cannot independently provide the third example of past performance on its own.
Subcontractors
The proposed rules also include provisions allowing small businesses to obtain past performance ratings for its performance as a first-tier subcontractor. The rule would require prime contractors, on contracts for which a small business served as a first-tier subcontractor, to provide the small business a past performance rating with respect to that prime contract. This proposed rule would modify 13 CFR § 125.3 to require prime subcontractors’ to provide a rating of a first-tier subcontractor’s past performance. Under the rule, the performance rating provided by the prime contractor “would be prepared to include, at a minimum, the following evaluation factors in the requested rating: (a) Technical (quality of product or service); (b) Cost control (not applicable for firm-fixed-price or fixed-price with economic price adjustment arrangements); (c) Schedule/timeliness; (d) Management or business relations; and (e) Other (as applicable).” The prime contractor would be required to provide the rating of the first-tier subcontractor’s past performance within 15 days of the first-tier subcontractor’s request.
This is similar to CPARS ratings for prime contractors. If the small business elects to use the past performance rating the contracting officer, in turn, would be required to consider the past performance rating when evaluating its offer on a prime contract. Indeed, where the small business does not have a CPARS rating, “the agency shall consider the small business’s subcontractor past performance rating as being equivalent to a CPARS rating.” The proposed rule only applies to small businesses that performed as first-tier subcontractors on prime contracts that included subcontracting plans.
This proposed rule also clarifies the use of performance by a joint venture composed of small businesses members. Under the proposed rule, the joint venture could use past performance for work that the joint venture performed as a first-tier subcontractor. In addition, a small business joint venture member subcontractor could request a past performance rating from the prime contractor for a contract for which the joint venture served as a subcontractor if the prime contract included a subcontracting plan.
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If a joint venture or first-tier subcontractor meets the criteria provided in the proposed rule, the agency is required to consider the small businesses’ past performance; it is not discretionary. However, the proposed rule only requires consideration, so the agency would have some leeway in how it considers the past performance.
Overall, these proposed rules would expand the opportunities for small businesses to establish past performance; and, if adopted, will prove beneficial to many small businesses by enabling them to be more competitive when bidding for prime contracts. Comments must be received on or before January 18, 2022 if you have concerns about the proposed rules.
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