The SBA does not evaluate compliance with the limitations on subcontracting as part of the SBA size protest process.
In a recent decision, the SBA Office of Hearings and Appeals confirmed that subcontracting limits are the domain of the procuring agency, which is to consider compliance (or lack thereof) as part of its responsibility determination.
A SBA size determination, in which the SBA found a contractor to be an eligible small business for purposes of a particular procurement, was irrelevant to the question of whether the same contractor would violate the limitation on subcontracting under a different solicitation.
In a recent bid protest decision, the GAO (correctly) rejected the procuring agency’s argument that a recent SBA size determination was evidence that a contractor would comply with the subcontracting limitation.
I am on my way home from Denver, where I have been since Tuesday for the Association of Procurement Assistance Centers Spring Conference. My talk today was the final presentation of the conference (I like to think that APTAC saves the best for last!) and focused on recent SBA proposals regarding the limitations on subcontracting, “universal” mentor-protege, and women-owned small businesses, among other topics.
It was great to see so many familiar faces and have the chance to talk to so many PTAC counselors. Thank you to Becky Peterson, Jason Porch, and the APTAC leadership for inviting me to speak, and thank you to all the PTAC-ers who stayed until the end of the conference to catch my presentation. As always, you were a fantastic audience.
If you are a small business, you may be surprised at the many ways that your local PTAC can help you–usually free of charge. Visit the APTAC website to get started.
The ostensible subcontractor affiliation rule would be modified to include an exception for “similarly situated” entities serving as subcontractors, if a recent rule change proposed by the SBA goes into effect.
Under the SBA’s proposal, a small business would be exempt from ostensible subcontractor affiliation with another small business for a small business set-aside contract, an 8(a) participant with another 8(a) participant for an 8(a) set-aside contract, and so on.
The limitations on subcontracting would undergo sweeping changes under a recent SBA proposal.
On December 29, the SBA issued a proposed rule to enact the changes implemented by Congress in the National Defense Authorization Act of 2013–including a thorough re-write of the way that compliance with the subcontracting limits is calculated and enforced.
Compliance with the limitations on subcontracting are not adequately being monitored by the contracting officers responsible for 8(a) contracts, according to a recent GAO report.
After reviewing a representative sample of ten 8(a) contracts, the GAO determined that contracting officers effectively monitored subcontracting limit compliance on two of those contracts. In other cases, agency contracting officers failed to effectively monitor compliance, even in situations presenting a heightened risk of potential violations–such as where ineligible incumbents were serving as subcontractors.
Under the FAR’s limitations on subcontracting clause, the work to be performed by a 1099 independent contractor did not count toward the prime contractor’s performance.
In a recent bid protest decision, the GAO held that a procuring agency properly rejected an offeror’s proposal because the offeror was relying, in part, on an independent contractor to meet its obligations under the limitations on subcontracting clause.