The SBA is proposing two new methods for small businesses to obtain the often elusive qualifying past performance commonly required when competing for federal contracts. The proposed rules implement new provisions of the National Defense Authorization Act (NDAA) Fiscal Year 2021 (FY 2021), which will permit a small business government contractor to use the past performance of a joint venture, of which it was a member, “provided that the small business worked on the joint venture’s contract or contracts.” The proposed rules will also authorize small businesses to use past performance as a first-tier subcontractor.

A small business may use the past performance of a joint venture if the small business cannot independently demonstrate its own qualifying past performance. Under the proposed rule, a contracting officer shall consider the past performance of the joint venture when evaluating the small business’ past performance. For a small business to use a joint venture’s past performance for an offer on a prime contract, a small business must:

  1. Identify to the contracting officer the joint venture of which the small business was a member;
  2. The contract(s) of the joint venture the small business elects to use; and
  3. Inform the contracting officer what duties and responsibilities the small business carried out as part of the joint venture.

Not surprisingly, a small business cannot claim past performance credit for work performed exclusively by other members of the joint venture.

Relatedly, the proposed rule also provides that a small business may use a past performance rating of a joint venture to supplement the relevant past performance of the small business when it cannot independently demonstrate past performance. The SBA explains that a solicitation may require three past performance examples. The proposed rules will allow small businesses to submit two past performance examples from performance in their own name and a third example from the performance of a joint venture of which it was a member if a small business cannot provide a third example on its own.

In addition to the above, the proposed rules aim to address past performance consideration for a small business that has performed as a first-tier subcontractor. Small business concerns may request that the prime contractor provide a rating of the small business’ performance on the contract. The prime contractor will then have 15 days to provide the requested rating. Note that this process will be limited to small businesses performing as first-tier subcontractors on a prime contracts that include subcontracting plans. The requested rating would include, at a minimum, the following evaluation factors:

  1. Technical (quality of product or service);
  2. Cost control (not applicable for firm-fixed-price or fixed-price with economic price adjustment arrangements);
  3. Schedule/timeliness;
  4. Management or business relations; and
  5. Other (as applicable).

As mentioned above, the proposed rule directs that if the small business elects to use past performance rating in its offer on a new prime contract, then the contracting officer the past performance rating when evaluating the small business’ offer. One scenario in which this applies is when a small business lacks a Contractor Performance Assessment Reporting System (CPARS). If a small business does not have a CPARS rating, “the agency shall consider the small business’s subcontractor past performance rating as equivalent to a CPARS rating.”

Furthermore, a joint venture comprised of small businesses may receive past performance consideration for the work it performed as first-tier subcontractor. . Here too, any such request for a past performance rating must be provided by the prime contractor within 15 days of the request.

Comments on these proposed rules are due no later than January 18, 2022.

If you have any comments or would like to discuss these proposed rules, our Government Contracting Group is available to assist you on this or any other government contracting matters.