New Rules Changes to Subcontracting Plans and Good Faith Efforts to use Subs used on Bid Preparation

DoD, GSA, and NASA are proposing to revise the FAR to implement regulatory changes made by the Small Business Administration in its final rule at 78 FR 42391, dated July 16, 2013, concerning small business subcontracting. Among other things, SBA's final rule implements the statutory requirements

1. Increasing Small Business Opportunities - SBA's final rule revised 13 CFR 125.3, implementing changes to improve subcontracting regulations

   These changes include: Authorizing contracting officers to establish subcontracting goals in terms of total contract dollars in addition to the required goals in terms of total subcontracted dollars, for individual plans. Providing contracting officers discretion to require a subcontracting plan in instances where a prime contractor's size status changes from small to other than small business as a result of re-representation. Requiring subcontracting plans, to the extent that subcontracting opportunities exist, when a modification causes the overall contract value to exceed the subcontracting plan threshold, even if the modification's value is less than the threshold. Requiring prime contractors to assign North American Industry Classification System (NAICS) codes to subcontracts. Providing that prime contractors cannot prohibit a subcontractor from discussing payment or utilization matters with the contracting officer. Requiring prime contractors to resubmit a corrected subcontracting report within 30 days of receiving the contracting officer's notice of report rejection. Clarifying a requirement that prime contractors notify unsuccessful offerors for subcontracts in writing. Requiring prime contractors with individual subcontracting plans to report order level subcontracting information. Clarifying that failure to comply in good faith with the subcontracting plan shall be a material breach of the contract and may be considered in any past performance evaluation of the prime contractor.

2. The proposed rule will implement a change in the method that Federal agencies will receive small business subcontracting credit.

   The proposed rule changes this model by allowing the funding agency to receive the small business credit. SBA implemented this change of providing funding agency credit in its final rule in deference to the concerns expressed by the users of multi-agency contracts (MACs) and Government-wide acquisition contracts (GWACs), who have long been of the opinion that the agencies using these vehicles, i.e., the funding agencies, should receive the small business subcontracting credit. For consistency, this proposed FAR rule implements the requirement for funding agencies receiving small business subcontracting credit for all contract vehicles, not just MACs and GWACs.

3. Changes to Reporting on Summary Subcontract Reports

   This proposed FAR rule also changes the requirement for a prime contractor to submit Summary Subcontract Reports (SSRs) for DoD and NASA contracts to be annually rather than semi-annually, and deletes the requirement for a prime contractor to submit a separate report to each DoD component for construction and related maintenance and repair contracts.