SBA Proposes Subcontractor Compliance Tests The Small Business Administration is proposing a detailed road map for large prime contractors and federal contracting officers to follow in determining whether primes are making “good-faith efforts” to comply with small business subcontracting plans. The proposed rule was issued in conjunction with final rules implementing President Bush’s anti-bundling strategy. (See story, page 1.) SBA said comments on the bundling rule pointed to the need for additional guidance on providing subcontracting opportunities for small firms. The proposed rule sets out eight steps a prime can take “to provide the maximum practicable subcontracting opportunities for small business concerns:” •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. Following the guidelines “may serve as evidence that the large business prime contractor made a good-faith effort to comply with its subcontracting plan,” SBA said. 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 that rarely if ever happens. “Contracting officers also consider a contractor’s good-faith efforts to achieve its subcontracting goals as an important factor in determining whether the contractor deserves an acceptable past performance rating,” SBA said. In its final bundling rule, the agency recommended, but did not require, that subcontracting achievements should be given “significant weight” in a prime’s past-performance evaluation. The proposed rule also directs SBA’s commercial marketing representatives to conduct training for new prime contractors on how to comply with subcontracting requirements. The training program is called the Subcontracting Orientation and Assistance Review (SOAR). The General Accounting Office criticized SBA’s subcontracting oversight in a report last year. It found the agency conducted on-site reviews of subcontracting plans of only 15% of civilian prime contractors in 2000, because of a shortage of staff and travel money. (SAA, 1/25/02) Most primes were subject only to a “desk review” of the paperwork related to their subcontracting performance. SBA now has only 10 full-time commercial marketing representatives to monitor civilian-agency subcontracting, although other employees perform the duties part-time. The Defense Contract Management Agency monitors DOD subcontracting.