Tag Archives: Subcontracting

GAO: Procuring Agency May Withhold Names Of Incumbent’s Subcontractors

Posted on by

Bidding against an incumbent prime contractor often presents unique challenges.  In some cases, the incumbent has been highly successful, and the procuring agency may hope to award the follow-on to the same company.  Even if the agency is not predisposed to favor the incumbent, the incumbent often knows more than its challengers about how the new procurement will actually operate “in real life.”

But just because an incumbent has unique information about the ongoing procurement does not mean that the procuring agency is necessarily required to level the playing field by releasing that information to challengers.  For instance, in one recent GAO bid protest decision, the GAO held that the procuring agency was not required to release the names of the incumbent’s subcontractors or other proprietary and confidential information about the incumbent contract.

Continue reading →

OMB Pushes Prompt Payment To Small Subcontractors

Posted on by

Small subcontractors sometimes find themselves facing a cash flow crunch when they take on new work.  Under some subcontract payment clauses, a small subcontractor might not be entitled to payment until 30 days or more after the prime contractor receives payment from the government for the subcontractor’s work.  Even subcontracts with more generous payment terms often require small subcontractors to make significant up-front investments in terms of employee salaries, materials, and the like before receiving payment.

The Office of Management and Budget apparently recognizes that there is a problem, because yesterday OMB issued a memorandum entitled “Providing Prompt Payment to Small Business Subcontractors,” setting forth three steps the government is taking to address the matter.  One of these steps–if it comes to fruition–may even have some “teeth.”

Continue reading →

Subcontractors And Past Performance: What Are The Risks?

Posted on by

Inexperienced small government contractors sometimes rely primarily (or completely) on larger subcontractors to boost their past performance scores.  Although this practice sometimes results in better past performance scores, there are two risks small government contractors should be aware of when it comes to relying on a subcontractor’s past performance: poor evaluations and ostensible subcontractor affiliation.

A recent GAO bid protest decision, coupled with a decision of the SBA Office of Hearings and Appeals, demonstrates how each risk may affect a small government contractor.

Continue reading →

Convictions in Massive DOT DBE Fraud Case Put Spotlight on Illegal Small Business “Pass-Throughs”

Posted on by

“Guilty.”

That was the verdict Pennsylvania jurors handed down on 26 of 30 charges against Joseph W. Nagle, stemming from what an FBI press release called a 15-year scheme to commit fraud within the DOT’s Disadvantaged Business Enterprise program.  Nagle, the former president, CEO and part-owner of Schuylkill Products Inc. was convicted of conspiracy to defraud the DOT, 11 counts of wire fraud, six counts of mail fraud, and 11 counts of money laundering, among other charges.  Nagle faces the possibility of many years in federal prison and millions of dollars in fines and restitution.

Nagle’s crimes, which involved using a small company as a “front” to pass DBE work through to non-DBE concerns, should serve as a warning that small government contractors can face penalties much more severe than a successful SBA size protest for serving as “pass-throughs” to other businesses.

Continue reading →

Lack of Detail on Subs’ Pricing Leads to Lost Contract

Posted on by

Small government contractors competing on set-asides are in a unique position.  Unlike in the commercial world (and on unrestricted government contracts), small primes in the set-aside arena routinely subcontract to larger and more powerful companies.  Sometimes these large subcontractors aren’t used to being in a secondary role, and can make life difficult for their smaller primes.

Case in point: subcontractors sometimes balk at providing small government prime contractors with their direct labor, fringe benefit, General and Administrative, or other pricing information, preferring to simply offer a fixed-price lump sum.  Even when the government is uninterested in such details, having a full breakdown can help ensure compliance with the FAR’s subcontracting limits.  But as one prime contractor found out, when the government wants a pricing breakdown, failing to include a subcontractor’s information can be fatal.

One small contractor recently learned this lesson the hard way.

Continue reading →

Army Rejects Large Prime’s Proposal For Failing to Commit to Small Business Subcontracting

Posted on by

For small government subcontractors, here’s some good news from the U.S. Army.  In a recent GAO bid protest decision, the Army eliminated a proposal from consideration because the prime contractor appeared to ignore the small business subcontracting requirement—and the GAO denied the prime’s GAO bid protest.

Continue reading →

Large Contractor Downgraded for Inadequate Subcontracting Plan

Posted on by

Many contractors, large and small, will tell you that the government is taking its small business obligations seriously these days.  The renewed emphasis on small business can be seen not only at the prime contracting level, where we are finally getting close to the 23% government-wide goal, but also at the subcontracting level.

Contracting agencies are closely scrutinizing large businesses’ subcontracting plans for small and disadvantaged businesses.  Case in point: the agency evaluation in L-3 STRATIS, B-404865 (June 8, 2011).

Continue reading →