Small Business Subcontracts – Comments to Proposed Rule

Craig Stetson CPA, CGMA

Director | Government Contract Regulatory Compliance Practice | Capital Edge Consulting

In response to the June 10th proposed rule to amend the FAR (https://www.federalregister.gov/articles/2015/06/10/2015-14055/federal-acquisition-regulation-small-business-subcontracting-improvements), the ABA Section of Public Contract Law provided comments to the GSA earlier this week (http://pub.bna.com/ptcj/ABA_PCLS_Comments.pdf).  Several of the comments were aimed at easing or clarifying the requirements contained in the proposed rule and applicable to prime contractors.  Among them:

  1. Small Business Size Representations – allow written representation received directly from the subcontractor when the subcontractor is registered in the System for Award Management (SAM).  The proposed rule requires use of SAM as the only means when contractors are registered.  Also, the ABA comments request electronic signature of the representation be considered as an acceptable delivery method.
  2. Contract modifications and thresholds – when a contract modification arises and increases the value of a contract in excess of the applicable threshold requiring submission of a subcontracting plan ($650,000 and $1.5M for construction), clarify that the requirement to submit a subcontracting plan is when ‘significant’ opportunity exists for subcontracting activity as a result of the modification.  Currently, the proposed rule simply says ‘that subcontracting opportunities exist’.
  3. Goals – apply subcontracting goals to the value of total subcontracts, rather than total contract value.
  4. NAICS Codes – eliminate the requirement to specifically identify all NAICS Codes and size standards in subcontracting plans.
  5. Options – revise language to clarify that each contract has only one subcontracting plan and that options exercised may require revision of the initial plan; rather than, submission of a new plan due to the exercise of the option.

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