Maximum Practicable Opportunity for Small Business Subcontractors – New SBA Final Rule

The U.S. Small Business Administration (SBA) issued a final rule on July 16, 2013 to implement provisions of the Small Business Jobs Act of 2010, an act that was signed into law on September 27, 2010.

One thing the rule states is that primes must provide “maximum practicable opportunity” to small businesses. What does that mean? It means the onus is on the large company to source out appropriate small business contractors and give them the opportunity to fulfill the work of the project.

This practice is more enforceable than previous efforts, because the agency’s contracting officer now has the responsibility to evaluate the prime contractor in terms of their compliance with small business contracting regulations. In fact, the contracting officer will record the large business’s performance in the Contractor Performance Assessment Reporting System (CPARS).

This is extremely important because these ratings are given annually. In the past the standard for this performance – whether prime contractors met their small business goals – was only measured over the entire life of the contract.

What that meant in practicality was that primes would conclude that they didn’t have to pay attention to this until the end of the contract. As a result, they wouldn’t bother to give the subcontractors much extra business. In many cases, they’d simply ignore the small businesses over the life of the contract. When the contract ended, it was over and no one cared anymore. The contracting officers were too busy with the next contract and no one was enforcing or following up on the small business contracting issue.

With this new rule in place, prime contractors will have to pay attention to their small business numbers every year, not just when the contract comes to a close. Will there be more paperwork? Absolutely. Will this rule help small businesses? Absolutely! Small businesses WILL get more work under these rules.

In some cases it will be up to you as the small business to call attention to these changes. At TAPE, LLC, we just sent a note about this announcement to one of our primes, so they’d understand that they’d be rated on whether they included us in their work share, and in the same scope, amount and quality as indicated in the proposal that won them the work.

This issue of scope, amount and quality relates to another new requirement under the SBA final rule, which we’ll talk about next time. Stay tuned!