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.
Continue readingTag Archives: Limitations on Subcontracting
Even Rules have their Limits, Says SBA OHA about the Nonmanufacturer Rule
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.
Continue readingBack to Basics: Similarly Situated Entities
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.”
Continue readingLimitations on Subcontracting: Partial Set Asides
Subcontracting is a hot topic in the federal government contracting world. Large businesses placing bids on federal procurements are often required to have a small business subcontracting plan, while small businesses are limited to exactly how much work they can subcontract out. The FAR and SBA rules contain the details relevant to small businesses’ limitations on subcontracting. These regulations are, in general, pretty straightforward. Well, at least when it comes to total small business set asides for one specific type of work. Further, there are a ton of resources available to help small business federal contractors understand these limits. Just googling “limitations on subcontracting” comes up with webinars, blogs, federal government sites, and even YouTube videos on the topic, but most only focus on the more general limitations. There aren’t nearly as many resources that take on the topic of partial set asides, but these limitations are important as well. In this post, I am going to walk you through how these limitations apply to partial set asides to show that contracts partially set aside for small businesses are not nearly as intimidating as they may seem.
Continue readingEvent: Limitations on Subcontracting and the Nonmanufacturer Rule Webinar hosted by Texas El Paso APEX Accelerators, June 6, 10:00-11:30am MDT
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 of heavy enforcement: get it wrong, and a contractor can face major penalties. The nonmanufacturer rule is another commonly misunderstood rule in the federal government contracting realm–but also, one we encounter quite often in our role assisting federal contractors.
In this course, government contracts attorneys, Nicole Pottroff & Stephanie Ellis, from Koprince McCall Pottroff LLC, will help you make sense of the limitations on subcontracting and nonmanufacturer rule. Using a step-by-step process and plenty of examples to bring these rules to life will help you ensure both understanding and compliance. Hope you will join us! Registration link here.
SBA New Rule: Guidelines for Compliance with Limitations on Subcontracting in 13 C.F.R. 125.6
13 C.F.R. § 125.6 sets out the limitations on subcontracting for all small business set-asides (including 8(a), SDVOSB/VOSB, HUBzone, and WOSB/EDWOSB set asides.) These limitations on subcontracting are crucial for any small business federal contractor to be familiar with, and we have discussed how they work here. But, while the regulation does provide for certain legal penalties for violations of these limitations, up until SBA’s recent rule change, it didn’t provide for any direct consequences for a company’s past performance (although conceivably an agency could mention limitations on subcontracting as part of a CPARS review). Furthermore, SBA now will require that compliance with the limitations be looked at on an order-by-order basis for multi-agency set aside contracts where more than one agency can issue orders under the contract, and for full and open contracts where the task order is set aside for small businesses. All this is effective May 30, 2023, and we explore these changes here.
Continue readingNew Defenses to the Ostensible Subcontractor Rule are Coming
You may have noticed that SBA issued a final rule last week that created sweeping changes to the SBA’s 8(a) Program regulations, but along with that, SBA made sure to slip in a change to the ostensible subcontractor rule that has been a sticking point for many contractors when facing affiliation concerns. With this final rule, SBA will update the regulations to provide contractors certain ways to defend against potential ostensible subcontractor rule affiliation, depending on the type of contract at issue. This represents a shift in thinking, related to how to combat allegations brought under this affiliation rule and could present some new wrinkles for contractors to consider when setting up subcontracting arrangements.
Continue reading