Tag Archives: Limitations on Subcontracting

Limitations on Subcontracting and GAO Bid Protests

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GAO bid protests regarding a competitor’s compliance with the applicable limitation on subcontracting can be difficult to win.

As the GAO held in a recent bid protest decision, unless the competitor’s proposal “on its face” should have led the procuring agency to recognize that the limitation on subcontracting would be violated, the agency is free to assume that the offeror intends to comply.  Of course, as was the case in the recent decision, it doesn’t hurt the protested company to specifically state that it will comply with the limitation on subcontracting.

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Strange But True: Small Business Protests Small Business Set-Aside

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Recently, I brought you the story of a contractor protesting its own award.

Now, in the same “strange but true” category comes a GAO bid protest decision in which a small business argued that the procuring agency should not have set aside the procurement for small businesses.

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8(a) Contractor Terminated For Subcontracting Limit Violations

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A contractor was recently terminated from the SBA’s 8(a) Program for failing to comply with the subcontracting limits applicable to its 8(a) contracts.

The SBA Office of Hearings and Appeals upheld the termination, writing that the SBA had properly terminated the 8(a) contractor for “willfully violating SBA regulations.”  SBA OHA rejected the contractor’s argument that it was exempt from the subcontracting limits under the so-called non-manufacturer rule.

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8(a) Program Fraud: Contractor Pleads Guilty in Case That “Has It All”

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A Florida resident has pleaded guilty in an 8(a) Program fraud case that seemingly has it all in terms of small business violations, from affiliation to subcontracting limits.

According to a press release issued by the U.S. Attorney’s Office for the Eastern District of Virginia, Michael Dunkel has pleaded guilty on charges of major government fraud, and faces the potential of significant prison time when sentencing occurs this fall.

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GAO: 8(a) Company Not Entitled To High Past Performance Score Based On Sub’s Experience

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A procuring agency appropriately refused to give an 8(a) participant the highest-possible past performance score, despite the 8(a) company’s plan to subcontract to the successful incumbent contractor.

In a recent GAO bid protest decision, the GAO held that in evaluating past performance, the agency properly focused on the experience of the 8(a) prime, which was required to perform at least 51% of the contract work and manage the contract.

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8(a) Fraud: Proposal Claimed Past Performance Of Fake NASA Contract

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A proposal submitted on behalf of an 8(a) company claimed that the company had performed a $3 million NASA contract even though no such contract existed, according to a recent report issued by the SBA Office of Inspector General.  As alleged in the SBA OIG report, the same honesty-challenged 8(a) company claimed to have 33 employees, even though it never had more than two.

Perhaps it is little wonder that the company in question is alleged to have passed through nearly 100% of its work on several 8(a) set-asides to its non-8(a) subcontractor.

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Limitations On Subcontracting: Congress Enacts Major Changes

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Congress has enacted major changes to the limitations on subcontracting rules for small government contractors.

The 2013 National Defense Authorization Act, signed into law by President Obama on January 3, contains two important changes to the subcontracting limits.  First, for services contracts, compliance with the limitations on subcontracting will be based on the total amount paid to the small business, not the cost of the contract incurred for personnel.  Second, small businesses will be able to meet their own performance requirements by subcontracting to other small companies.

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