The Small Business Administration (SBA) Office of Inspector General (OIG) has a mission to “provide independent, objective, and timely oversight to improve the integrity, accountability, and performance of SBA and its programs.” As part of this mission, it investigated and recently issued a report on the federal government’s “oversight work to identify opportunities to strengthen federal-wide compliance with limitations on subcontracting requirements for set-aside awards.” The SBA’s rules on limitations on subcontracting limit how much of a federal contract a small business prime contractor can subcontract to subcontractors that are not similarly situated. OIG identified a number of areas where federal agencies could improve their oversight of small business subcontracting, noting “recurring deficiencies in the federal contracting community’s ability to interpret the rule’s requirements, apply them consistently, and monitor and enforce compliance throughout the life of a contract.” SBA has indicated it will issue a revised rule to address some of these concerns. Let’s take a look.
Continue readingTag Archives: Limitations on Subcontracting
COFC: Limitation on Subcontracting Certification Trips Up Contractor Where Solicitation Requires it to be Signed and Attached
When it comes to federal contracting, there are parts that are very detail-oriented. Countless signatures for countless certifications. We certainly empathize with contractors on this aspect of federal contracting. But just because we are empathetic does not mean that a contractor can ignore such requirements. In a recent decision, Revelations Counseling & Consulting, LLC v. United States, 180 Fed. Cl. 721 (2026), the Court of Federal Claims (COFC) made it very clear: Where the solicitation says sign the certification and include it in the proposal, sign it and include it in the proposal. Anything less and not only should you expect a rejection, the agency is often required to reject the proposal. In this case, the certification was a VA limitations on subcontracting clause that has cropped up multiple times lately in our practice and is an important part of small business contracting. We look at that decision today.
Continue readingGovCon FAQs: What Costs Can I Exclude From Limitations on Subcontracting Calculations?
If your small business performs federal government contracts, chances are, you’ve already calculated your small business’s compliance with the applicable limitation on subcontracting (LoS) a time or two. But whether you’re new to the LoS equation–or you’ve long since mastered that math–knowing which costs you can exclude from your calculations is vital. Indeed, such can impact everything from the accuracy of a bidder’s regulatory compliance representations and certifications to a contractor’s critical contract performance and subcontracting decisions. In fact, under current SBA affiliation regulations, LoS compliance can even provide a defense to certain contract-specific findings of affiliation. But calculating LoS compliance and determining exactly which costs to include and exclude on a given contract is not always easy or straightforward. And that’s why we so frequently get this question and break down the answer in this article.
Continue readingGovology Webinar Announcement: Limitations on Subcontracting: A Step-by-Step Compliance Guide, May 19, 2026
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.
Continue readingGovCon FAQs: How Can I Maximize My Teammates’ Participation in Performing Larger Government Contracts?
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.
Continue readingConfusion About the Nonmanufacturer Rule: When Does it Apply?
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.
Continue readingWebinar Event! October 1, 2024 – Limitations on Subcontracting and the Nonmanufacturer Rule hosted by Texas El Paso APEX Accelerators
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.