It’s commonly misunderstood that the FAR requires procuring agencies to consider the capabilities, past performance and experience of an offeror’s proposed subcontractors. Unfortunately, that’s just not true.
But now, as part of a comprehensive new final rule, the SBA will require agencies to consider the capabilities, past performance and experience of small business subcontractors in certain cases.
The small business set-aside “rule of two” is not satisfied unless the procuring agency has a reasonable expectation of receiving proposals from at least two small businesses capable of performing the work.
Although this sounds like a commonsense interpretation of the rule of two, it may give agencies leeway to define “capability” in manner that eliminates small businesses from participation. In a recent bid protest decision, the GAO held that an agency appropriately issued a solicitation as unrestricted based on the agency’s determination that there were not two or more small businesses with at least five years of relevant experience. Of concern, the GAO did not require the agency to prove that five years of relevant experience was necessary to render a firm “capable” of performing the contract.