Tougher Subcontracting Plan Rules Proposed

Subcontracting Plans: SBA Proposes Stronger Enforcement

Source: SmallGovCon, By Amanda Wilwert,  January 20, 2015

Large businesses’ subcontracting plans would be subject to stricter compliance standards under a SBA proposed rule introduced December 29.

The intent of the new regulations is to compel prime contractors to make good faith efforts to comply with their subcontracting plans by implementing reporting mechanisms and harsher penalties for fraudulent actions or actions made in bad faith.  Small businesses subcontractors are likely to agree that these are positive changes.

Many large businesses take their subcontracting obligations seriously, and make every effort to meet (or exceed) their goals.  But there are also the bad apples–those that continually over-promise and under-deliver when it comes to small business subcontracting.  Dealing with these bad apples have led some small businesses to become skeptical that large primes will follow through on their stated subcontracting intentions.

The SBA’s proposed regulation attempts to address this problem.  Under the new rule, a large business that identifies a small business by name in a proposal would be required to notify that small business in writing prior to identifying the small business in a proposal, bid, offer or subcontracting plan.  The hope is to discourage large business prime contractors from using the names of small businesses in proposals simply to create the appearance of an intent to use those small businesses, despite any teaming agreement or binding arrangement to do so (and despite, in some cases, the small business’s knowledge that its name has been used in this fashion).  More…


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