Rule targets primes not using subs

The federal acquisition councils have published a final rule aimed at reducing situations in which federal prime contractors name small business subcontractors in their bids, but then do not follow through in hiring those subcontractors when the contract is won. It includes other provisions to improve small business subcontracting as well.

The final rule was published in the Federal Register on July 14. It implements a proposed rule from June 2015.

Under the final rule, prime contractors must make a good faith effort to utilize their proposed small business subcontractors during performance of a contract “to the same degree the prime contractor relied on the small business in preparing and submitting its bid or proposal.”

If, for some reason, the prime is unable to make a good faith effort as described, then the prime must explain to the contracting officer, in writing, within 30 days of contract completion, why it was not able to do so.

In addition, the final rule:

— Authorizes contracting officers to calculate subcontracting goals in terms of total contract dollars, in addition to the required goals in terms of total subcontracted dollars.
— Provides contracting officers with the discretion to require a subcontracting plan in instances where a small business re-represents its size as an other than small business.
— Requires subcontracting plans for modifications if the modifications would cause the contract to reach the minimum threshold requiring a subcontracting plan.
— Requires prime contractors to assign North American Industry Classification System (NAICS) codes to subcontracts.
— Restricts prime contractors from prohibiting a subcontractor from discussing payment or utilization matters with the contracting officer.
— Requires prime contractors to resubmit a corrected subcontracting report within 30 days of receiving the contracting officer’s notice of report rejection.
— Requires prime contractors to provide the socioeconomic status of the subcontractor in the notification to unsuccessful offerors for subcontracts.
—Requires prime contracts with subcontracting plans on task and delivery order contracts to report order level subcontracting information after November 2017.
— Funding agencies receiving small business subcontracting credit.
— On IDIQ multiple-award contracts, the contracting officer may establish subcontracting goals at the order level (but not a new subcontracting plan).

More information: Federal Register notice: https://goo.gl/uZz8JW

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