OMB Official Says Tougher Subcontracting Rule Is Coming The Small Business Administration will soon issue a final rule aimed at “holding prime contractors’ feet to the fire” to make sure they keep their promises to provide subcontracting opportunities to small firms, said Robert Burton, acting administrator of OMB’s Office of Federal Procurement Policy. The rule was proposed in October as part of the Bush administration’s anti-bundling initiative. (SAA, 10/31/03) Burton said the final version might be released next month. Under the final rule, he said, a prime’s success or failure in meeting subcontracting goals “will be viewed as an element of past performance” when that prime is evaluated for future contracts. He called the rule “a major step forward.” However, SBA’s proposed rule said contracting officers “may” consider a prime’s subcontracting performance as an evaluation factor. In a comment on the proposal, the National Women’s Business Council urged SBA to change “may” to “should.” (SAA, 1/9) Large primes must submit a subcontracting plan for any contract worth more than $500,000, or $1 million for construction. By law, the plan must include dollar and percentage goals that reflect “the maximum practicable utilization” of small businesses in all socioeconomic categories. Small firms have long complained that some primes submit a subcontracting plan naming their subcontractors, then ignore them. In many cases, Burton acknowledged, “they don’t comply with it and nobody enforces it.” He spoke April 22 at a Washington conference sponsored by the Contract Services Association and the law firm of Piliero, Mazza & Pargament. In comments on the proposed rule, some small business advocates said that, because compliance with subcontracting rules would be an evaluation factor, small prime contractors might be forced to write subcontracting plans in order to win a favorable evaluation. SBA said it did not intend to require small firms to develop subcontracting plans. Small businesses are exempt from subcontracting requirements by law. (SAA, 1/9) The proposed rule would give primes a road map of steps to take to show that they had made a good-faith effort to comply with their subcontracting plans. It outlined eight steps: *Breaking out contract work items into units that are “economically feasible” for small firms; *“Conducting market research to identify small business subcontractors and suppliers through all reasonable means, such as performing on-line searches on SBA’s PRO-Net, posting Notices of Sources Sought and/or Requests for Proposal on SBA’s SUB-Net, and attending pre-bid conferences;” *Seeking out small business subcontractors as early in the acquisition process as practicable to give them time to submit an offer for the subcontract; *“Providing interested small businesses with adequate and timely information about the plans, specifications, and requirements for performance of the prime contract to assist them in submitting a timely offer for the subcontract;” *“Negotiating in good faith with interested small businesses;” *Directing small businesses that need additional assistance to SBA; *Helping small firms to obtain “bonding, lines of credit, required insurance, necessary equipment, supplies, materials, or services;” and *Utilizing the available services of small business associations; local, state, and federal small business assistance offices; and other organizations. A prime that fails to make a good-faith effort can be found in material breach of contract and be terminated for default or assessed liquidated damages, although contract lawyers say that rarely if ever happens.