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What is Considered a Small Business Subcontract?

Closing a Small Business Loophole

For Federal Contracting Success, Backcasting Works As Well As Forecasting

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Bill Jaffe
October 2, 2013
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If the small business activity a prime claims has nothing to do with the main contract, it may no longer qualify as small business subcontracting activity.

The new SBA final rule includes more clarification about what constitutes a small business contract. It needs clarifying, because unfortunately some prime contractors have been skirting the rules about small business requirements. They might claim a small business contractor participated in the project, even if that meant they went down to their local “Mom and Pop” shop to have some photocopies done.

It’s great to support local Mom and Pop shops, but that shouldn’t take away the prime’s responsibility to bring in small businesses to perform a certain portion of the actual project.

With the new rule, if the small business activity a prime claims has nothing to do with the main contract, it may no longer qualify as small business subcontracting activity.

The thing about all of these new SBA rules is that they give the contracting officer the authority to look at these issues, and they allow more actual small business subcontracting activity to be counted in the small business plan.

If the contracting officers know about them and enforce the rules, but the prime isn’t following them, the CPARS ratings of prime contractors can be downgraded, and that can get their attention. And believe me, that will make a difference.

It’s our job as small business owners to inform our contracting officers about these changes. I mentioned this in the last post about how subcontracting can now be monitored at the task order level, and it is worth repeating here. It’s really just a matter of education.

Organizations like the NCMA – the National Contract Management Association – do a great job with educational events to get this news out there to the contracting professionals, and there are also resources like the Veterans Affairs Acquisition Academy, the Defense Acquisition University, and the Federal Acquisition Academy.

Here are links to all the posts in this series about the SBA final rules:

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

Small Business Subcontractors Are Feeling Used

Primes Who Are Slow to Pay Can Be Reported

Closing a Small Business Loophole

Related posts:

  1. Closing a Small Business Loophole
  2. Small Business Subcontractors Are Feeling Used
  3. Maximum Practicable Opportunity for Small Business Subcontractors – New SBA Final Rule
  4. Primes Who Are Slow to Pay Can Be Reported
  5. Five Myths About Doing Business with the Federal Government as a Small Business
Related Posts

The All-Small Mentor-Protégé Program

SBA had a well-established mentor-protégé program (MPP) for SBA 8(a) certified firms but lacked an MPP program for other small business concerns and specifically, one for specialized certified concerns such as WOSB, EDWOSB, SDVOSB, & HubZone. The 2010 Jobs Act and 2013 NDAA gave SBA the authorization to address this by establishing an all-encompassing mentor-protégé program. Ms. Sandi Clifford, deputy director of the All Small Mentor-Protégé Program (ASMPP), visited the Mid-Tier Advocacy (MTA) earlier this year to discuss the program. Here are some of the highlights of this candid and informative discussion: As Ms. Clifford explained, mentor services to protégés include: • Management and technical assistance (internal business management systems) • Financial assistance (in the form of equity investments and/or loans) • Contracting assistance (contracting processes, capabilities acquisitions and performance) • International trade education (learn how to export, international trade business plan, finding markets) • Business development assistance (strategy, finding contracting and partnership opportunities) • General and/or administrative assistance (business processes and support) As administrators of the program, SBA provides: • Central HQ as opposed to 8(a) distributive model • Online application – certify.sba.gov • Online course tutorial requirement • Annual review and evaluation • Template agreements, i.e., MPA (Mentor-Protégé Agreement) Other All-Small Mentor-Protégé Program (ASMPP) details: • A protégé may generally only have one mentor at a time; SBA may approve a second (two is the maximum) where no competition exists, or if the protégé registers under a new NAICS or otherwise requires new mentor skills.  • Both protégé and mentor must be for-profit (with exception of protégé being an agriculture cooperative). • A mentor may have no more than three protégés at same time (no lifetime limit). • A participant can be both a protégé and mentor at the same time, if there is no competition or conflict. • The ASMPP is self-certifying and is open to businesses who qualify as small in their primary NAICS code, or who are seeking business development assistance in a secondary NAICs where they also qualify as small.  • SBA will not authorize MPAs in second NAICS in which firm has never performed any work; or where firm would only bring “small” status to Mentor and nothing else. • Existing 8(a) firms in last 6 months of the 8(a) program may transfer their MPA to the ASMPP via the online application process. Coordinate with 8(a) office to fine tune the process but there is no reapplication required. • Application requirements include upload of business plan, but no financial statements or tax returns. • JV agreements: ASMPP will not review and approve joint venture agreements. How to apply for the ASMPP: • Applicants are required to register in the System for Award Management (SAM) prior to submitting their mentor/protégé application. • Complete your business profile in certify.SBA.gov. • Evaluate and select your mentor prior to applying. This is not a matching program. SBA will not find a mentor for you. • Begin the ASMPP application process. • Protégés and mentors must complete the online tutorial and have their certificate of completion and all other required documents ready for upload Thank you to Sandi Clifford, Deputy Director, All Small Mentor-Protégé Program, for this helpful overview. TAPE has mentored several small businesses over it’s life as a large business (we’re large in some NAICS codes, though still small in others) and it has been gratifying, satisfying, and integral to our success. As protégés ourselves, we have benefitted from working with some really classy large businesses, and have also had the experience of being a protégé and really getting no tangible benefits. We are currently working with two small businesses, and negotiating ASMPP agreements. You can learn more about the ASMPP on the SBA site. To join MTA and attend future events like this one, please visit www.midtier.org.
Bill Jaffe
August 23, 2017
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