SBA Subcontracting Rule Draws Fire Industry groups and members of Congress are objecting to a proposed SBA rule that they say could force small prime contractors to develop subcontracting plans. The proposed rule, published Oct. 20, is designed to provide a road map to determine whether primes are making “good-faith efforts” to comply with small business subcontracting plans. (SAA, 10/31/03) But small business advocates say it comes with an unintended consequence: it would require all primes, not just large ones, to provide “maximum practicable subcontracting opportunities for small business concerns.” In its analysis of the proposed rule, SBA said, “SBA believes that the responsibility to maximize subcontracting opportunities for small businesses applies equally to all prime contractors that receive contracts above the simplified acquisition threshold. This provision does not, however, extend the requirement for subcontracting plans to small business concerns.” But the rule also provides that a prime’s subcontracting performance may be considered as an evaluation factor in awarding future contracts. Advocates say that would penalize small primes unless they developed subcontracting plans and could show that they complied with the plans. In its comment, the Professional Services Council said, “Simply, Congress could not have been clearer that small business is exempt from these subcontracting plan requirements.” The two senior members of the House Small Business Committee agree. Chairman Donald Manzullo (R-IL) and the ranking Democrat, Nydia Velazquez (NY), wrote that the rule “contradicts the intent of the Small Business Act.” “We find that the requirements are nonsensical given the fact that the federal government met its statutory objective by awarding the (prime) contract to a small business in the first instance,” they added. Others objecting to the provision include Women Impacting Public Policy, the Contract Services Association of America, National Association of Small Disadvantaged Businesses and the HUBZone Contractors National Council. Ron Newlan, chairman of the HUBZone group, wrote that the rule “may require small businesses to subcontract work to other small businesses just for the sake of subcontracting to small businesses.” Women Impacting Public Policy also objected to what it called a change in emphasis in the rule. Current regulations provide for “maximum utilization” of small firms as subcontractors, while the proposed rule calls for “maximum practicable subcontracting opportunities for small business concerns.” “The (proposed) rule sends the message that whether small businesses received subcontract dollars is irrelevant, so long as those businesses have an opportunity to compete,” WIPP said. “…(T)he emphasis of this rule needs to be placed on the actual award of subcontracts.” The proposed rule says contracting officers “may” consider a prime’s subcontracting performance as an evaluation factor. The National Women’s Business Council urged SBA to change “may” to “should.” The comment period ended Dec. 19. SBA will consider the comments before issuing its final rule.