What is Considered a Small Business Subcontract?

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


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