On October 6, 2015, the Small Business Administration (SBA) issued a Proposed Rule implementing Section 1614 of the 2014 National Defense Authorization Act pertaining to small business subcontracting plans. Under current law, large prime contractors that are required to have small business subcontracting plans only receive small business credit toward their plan's goal performance at the first tier. The Proposed Rule, as authorized by Section 1614, "would allow an another than small prime contractor that has an individual subcontracting plan for a contract to receive credit towards its small business subcontracting goals for subcontract awards made to small business concerns at any tier."
The Proposed Rule also addresses the manner in which small business size status is to be determined at the subcontract level. Specifically, the Proposed Rule states that Prime Contractors are to assign to a subcontract solicitation and the resulting subcontract, the NAICS Code that best describes the principal purpose of the subcontract. This is somewhat of a deviation from what occurs generally, which is that the Prime Contractor simply flows down the NAICS Code assigned to the Prime Contract. In addition, it seems to imply that Prime Contractors will be required to issue a formal solicitation for subcontracts - which as many know, is not currently a common practice. Thus, if you intend to submit comments on this Proposed Rule, this may be a point to comment on.
Other things the Proposed Rule does:
- Allows Prime Contractors to rely on a Subcontractor's electronic reps and certs if the solicitation for the subcontract contains a clause which provides that the Subcontractor verifies by submission of its offer that its size/socioeconomic reps and certs are current, accurate and complete as of the date of the offer.
- Prime Contractors cannot require Subcontractors to to use the System for Award Management (SAM) for purposes of representing size/socioeconomic status in connect with a subcontract.
- Where a Prime Contractor or Subcontractor is required to have an individual subcontracting plan, the Prime Contractor or Subcontractor will, among other things, review and approve subcontracting plans submitted by their Subcontractors, monitor their Subcontractors' compliance with the plan(s) and ensure that reports are submitted by their Subcontractors.
- Prime Contractors must include in their Subcontracting Plan, a recitation of: (1) the types of records they will maintain to demonstrate procedures which have been adopted to ensure subcontractor compliance with the goals set forth in the plan; and (2) the efforts to identify and award subcontracts to small business concerns.
Comments on the Proposed Rule are due on or before December 7, 2015. If you have any questions about the Proposed Rule, or Subcontracting Plans please contact us at: (808) 369-9710 or firstname.lastname@example.org.