Enforcing True Equity in Subcontractor Relationships

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Way back when, there was an NDAA provision that said that Prime contractors had to provide a report of which subcontractor they actually used. This was necessary because small businesses were forever complaining that they would be on a Prime’s team but never got any business. The Prime won task orders, but they used other subs that were more favored – even though many times these other subs were not part of the original bid.

Then another NDAA provision was added which gave subs ability to go directly to the contracting officers and indicate that they were not getting paid (or not getting paid promptly). This was followed by still other NDAA provisions that served to strengthen the OSDBU – trying to give the OSDBUs more “teeth” in their enforcement of true equity in subcontractor relationships.

The specific intent here is to strengthen the contracting officer, OSDBU, and subcontractors’ ability to enforce equity in the subcontracting relationship. Truth be told, Primes are just not very good, or uniform, at treating subs as an actual “partner.”

Now comes SEC. 1821. GOOD FAITH IN SUBCONTRACTING, in this year’s NDAA:

‘‘(20) shall review all subcontracting plans required by paragraph (4) or (5) of section 8(d) to ensure that the plan provides maximum practicable opportunity for small business concerns to participate in the performance of the contract to which the plan applies.’’. (c) GOOD FAITH COMPLIANCE.—Not later than 270 days after the date of enactment of this title, the Administrator of the Small Business Administration shall provide examples of activities that would be considered a failure to make a good faith effort to comply with the requirements imposed on an entity (other than a small business concern as defined under section 3 of the Small Business Act.”

What this does is to ensure that the large business must report on actual usage of the small businesses that bid with it on the original subcontract. This will highlight using other small businesses, and not using the originals.

TRANSPARENCY, that’s the ticket to compliance.


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