Tag Archives: Limitations on Subcontracting

Govology Webinar Announcement: Limitations on Subcontracting: A Step-by-Step Compliance Guide, May 19, 2026

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Limitations on Subcontracting (LoS) is one of the most confusing—and most enforced—rules in government contracting.

For small businesses and their teaming partners, getting it wrong can lead to serious consequences. And the challenge? You may be asked to prove compliance at any point—before, during, or after contract performance.

Our very own SmallGovCon author John Holtz will break down the LoS in clear, practical terms so you can understand what’s required and how to stay compliant.

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GovCon FAQs: How Can I Maximize My Teammates’ Participation in Performing Larger Government Contracts?

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Most federal contractors are well-aware of the potential benefits of using one of the FAR-prescribed teaming options to perform government contracts. But one question we get a lot from small business federal contractors is how to most effectively utilize those teaming options (i.e., how to maximize team participation) on larger government contracts within the bounds and limitations of the law. And luckily, we’ve got a formula for that.

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Confusion About the Nonmanufacturer Rule: When Does it Apply?

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One of the rules we get asked about the most as government contracts attorneys is what’s known as the nonmanufacturer rule, 13 C.F.R. § 121.406 (So much so that we felt it wise to go over the rule in one of our “Back to Basics” posts to help clear some things up). It’s pretty understandable why: It has numerous provisions, exceptions, and requirements that can make it pretty difficult to follow. It also shows up in two different regulations: 13 C.F.R. § 121.406 as mentioned above, as well as FAR 19.505. Unfortunately, this often leads to contractors getting tripped up by the rule, either not realizing it applies where it does or, as we’ll explore here, thinking it applies where it doesn’t. Recently, SBA addressed a size protest that asserted the awardee didn’t meet the requirements of the nonmanufacturer rule, and noted to the unfortunate protestor that the rule didn’t apply for the procurement anyways.

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Webinar Event! October 1, 2024 – Limitations on Subcontracting and the Nonmanufacturer Rule hosted by Texas El Paso APEX Accelerators

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For small businesses and their teammates, few topics in government contracting are as confusing as the limitations on subcontracting for set-aside and socioeconomic sole source contracts.  And if that isn’t stressful enough, the “LoS” is an area with heavy potential penalties if a contractor gets it wrong.

The nonmanufacturer rule is the flip side of the LoS, but for supply contracts in the federal government contracting realm. It is also one we encounter quite often in our role assisting federal contractors.

In this course, Greg Weber and I will help you make sense of the limitations on subcontracting and nonmanufacturer rule. Using a step-by-step process and plenty of examples to help bring the rules to life will help you ensure that you understand and comply with these essential rules. We hope you will join us at 10:00 am MDT on October 1. Register here.

Ostensibly OK: SBA Decision on Ostensible Subcontractor Rule Gives Contractors Some Clear Guidelines

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In a recent post, we looked at the implications of BA OHA’s reasoning in In & Out Valet Co., SBA No. VSBC033-P, 2024 (June 12, 2024) on the full-time devotion requirement. Today we look at the impact of that case on another of SBA’s rules that has implications for both small businesses and for companies in the 8(a) Program, Women-Owned Small Business Program (WOSB), and the Service-Disabled Veteran-Owned Small Business Program (SDVOSB)–the ostensible subcontractor rule. The rule requires contractors not to rely too heavily on a subcontractor in the performance of a contract set aside under an SBA socioeconomic program. In practice, this standard may be confusing to a lot of hopeful contractors. What, after all, constitutes “undue reliance?” How reliant is too reliant? OHA’s reasoning in this recent decision helps clarify their application of the regulations, with results that may have far-reaching implications.

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Even Rules have their Limits, Says SBA OHA about the Nonmanufacturer Rule

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In a recent size appeal, the SBA OHA made it clear that the nonmanufacturer rule has it limits, and will not apply depending on the dollar value of the acquisition. OHA reminded contractors that the nonmanufacturer rule applies only to acquisitions over the simplified acquisition threshold.

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Back to Basics: Similarly Situated Entities

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If you are a small business government contractor who ever utilizes subcontractors to complete federal set-aside contracts, knowing what a “similarly situated entity” is for a given contract is vital to your success. So, let’s take it back to the basics of “similarly situated entities.”

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