New Subcontracting Limits Explained

June 2, 2016

Limitations On Subcontracting: Important New SBA Rule Takes Effect June 30, 2016

Source: SmallGovCon, Steven Koprince, May 31, 2016

The SBA has issued a final rule implementing the changes to the limitations on subcontracting enacted by Congress in the 2013 National Defense Authorization Act.

The SBA’s final rule takes effect June 30, 2016–and will significantly change the way the limitations on subcontracting are calculated and enforced moving forward.

The SBA’s final rule makes a number of important changes regarding the limitations on subcontracting.  Below are the highlights.

Similarly Situated Entities

First, as directed by Congress, the SBA’s regulations will allow prime contractors to take credit for the work performed by “similarly situated” subcontractors.  The SBA explains that the regulation “creates a shift from the concept of a required percentage of work to be performed by a prime contractor to the concept of limiting a percentage of the award amount to be spent on subcontractors.”  READ MORE….

Need clarification about the new subcontracting rules?  Contact your nearest PTAC for more information.


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