Proposed Changes to harmonize the FAR with SBA Regulations

Change of Plans: New Proposal Would Alter FAR Subcontracting Plan Requirements

The FAR requires most large business contractors to have a plan approved by the government to subcontract a certain amount of their work to the various types of small business contractors (i.e., SDB, WOSB, SDVOSB, etc.). In the last few years, we have seen a noticeable increase in activity related to these subcontracting plans.

SBA changed its subcontracting rules in July 2013 and since then has stepped up its audits to determine how well contractors are complying with their subcontracting plans. The FAR, which has lagged behind the updated SBA regulations, is now poised to catch up in several respects based on proposed changes released on June 10, 2015.

One of the more controversial aspects of the 2013 SBA rule change was the requirement that a prime contractor must assign a NAICS code and size standard to each subcontract. While perhaps reasonable for individual subcontracting plans that would have subcontracts tied to a particular federal contract, assigning a NAICS code and size standard to every purchase order and invoice is simply not feasible for many large contractors with commercial subcontracting plans.

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Source: PilieroMazza PLLC, Article written by Jon Williams, published June 12, 2015


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