Subbing change draws objections

The Small Business Administration’s recent proposed rule regarding credit for lower-tier small business subcontractors is getting pushback from several directions.

Under the proposal, federal prime contractors with subcontracting plans would be allowed to earn credit toward their small business goals by counting subcontracts in the second tier and beyond. Currently, only the first tier is counted toward those goals.

Small businesses may be negatively affected by an “unintended consequence” of the rule, Jonathan Williams and Kathryn Flood, attorneys with PilieroMazza PLLC, suggested in their written comments.

The rule may have the unintended effect of reducing the incentives for primes to award small business subcontracts at the first tier, Williams and Flood wrote.

“These primes may now rely on subcontracts made at any tier to receive credit towards their goals,” they wrote. “We understand from industry that the profitability of subcontracts awarded to small businesses reduces significantly with each level below the prime contract award.”

They suggested the SBA could mitigate this problem by requiring the primes to have separate lower-tier subcontracting goals.

The Professional Services Council and other industry groups also have concerns, including the burden of reporting additional data.

More Information: Regulations.gov RIN 3245-AG71: http://Regulations.gov
Williams and Flood comments: http://goo.gl/w49AEA
PSC comments: http://goo.gl/EVYe9

Subbing change draws objections

Alaska Native 8(a) revenues decline

Report says NIH SBIR, STTR lack diversity

Top 100 8(a) Set-Aside Opportunities for 2016

Column: Small business goodies in the National Defense Authorization Act

Washington Insider: