When an agency decides to set aside an acquisition for participation only by small businesses, certain subcontracting limitations apply to the small business awardee. For construction contracts, the small business contractor cannot pay subcontractors more than 85% of the amount they receive from the agency. For service and supply contracts, the small business contractor cannot pay more than 50% of the amount paid to it by the agency to other entities that are not similarly situated. Work performed by similarly situated entities is not considered in determining if the limitation on subcontracting is violated. A similarly situated entity is defined as a small business subcontractor that is a participant of the same small business program as the prime contractor and is small for the NAICS code assigned by the prime contractor to the subcontract.
Continue Reading Recent GAO Decision Suggests SBA Regulation Regarding Limitations on Subcontracting Takes Precedence Over the FAR
Subcontracting
Accelerating Payments to Small Business Subcontractors
By Michael H. Payne on
Posted in Small Business Contracting
By: Michael H. Payne
The recession (which really is not over, despite what the economists have to say), has led to greater emphasis by the federal government on assuring prompt payment to government contractors. In fact, on September 14, 2011, the Office of Management and Budget (OMB) issued Memorandum 11-32, “Accelerating Payments to Small…