The U.S. Department of Defense (DOD), the National Aeronautics and Space Administration (NASA), and the U.S. General Services Administration (GSA) proposed to amend the Federal Acquisition Regulation (FAR) to comply with a 2013 U.S. Small Business Administration (SBA) final rule that seeks to increase subcontracting opportunities for small businesses. The SBA rule implements requirements already codified in the Small Business Jobs Act of 2010.
The agencies’ proposed rule requires that a prime contractor make a good faith effort to employ small business subcontractors to the same degree illustrated in the prime contractor’s bid or proposal. If a prime contractor does not reach this goal, it must submit a written explanation to the contracting officer explaining the rationale for its shortcoming. Failure to comply in good faith with the subcontracting plan will result in a material breach of the contract.
Further, the proposal seeks to change how agencies receive small business subcontracting credit. In the past, the agency that awarded the contract would receive the small business credit; however, under the new proposed rule, the funding agency will have this ability.
Public comment on the proposed rule will be accepted until August 9, 2015.
This is not the first effort made by GSA and DOD to increase small business subcontracting by implementing provisions of the 2013 SBA rule. In a proposal published June 2, 2015, the two agencies suggest adoption of the SBA’s definition of multiple-award contracts. While the FAR references this type of contract, it currently provides no definition.