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Fed Reg Vol 81 No 104, May 31, 2016 finally implemented the “Similarly Situated Entity“ rule of the 2013 NDAA. Specific updates to 13CFR125 change the overall tenor of the Limitations on Subcontracting to a true limit on the amount that can be subcontracted rather than a prime performance requirement. Based on much of the reasoning included in that Fed Reg, the intent was to bring parity to the various programs, including the Limitations on Subcontracting. The Reg however did not change 48 CFR 52.219 and the various FAR clauses -3, -14, -27, -29, and -30 that implement the limitations on subcontracting requirements. Vern will be disappointed to see that in the 13CFR125 revision they REMOVED the definition of “Cost of contract performance incurred for personnel”, yet that term is still used in the aforementioned FAR clauses. Of particular concern, the new 13CFR125.6(a)(3) requirement identifies the limitations on subcontracting for general construction as “not pay more than 85% of the amount paid by the government to it to firms that are not similarly situated”. Similarly (a)(4) requires not more than 75% for special trade contractors. Yet the current FAR 52.219-3 (Notice of HUBZone set-aside) requires that for both types, 50% of “the cost of personnel for contract performance be spent for employees of the concern or employees of other HUBZone small business concerns” (e.g. similarly situated entities) AND requires at least 15% (general) or 25% (trade) performance by employees of the prime. So there is an inherent contradiction between the two. The 50% requirement is very difficult for HUBZone construction and trade contractors and I personally know of at least two former HUBZone contractors that have given up maintaining their HUBZone certification on that basis. It was thought that the new revised rule would bring the requirement back to 15% (general) or (25%) trade consistent with the other programs. So, 1) is there any reason why one would have precedence over the other (13CFR125 vs 48CFR52) as they are contradictory, and 2) is anyone aware of any pending changes to the FAR clauses to reconcile the discrepancies (not just this one) and bring it in-line with the new regulation?
Question for any experts out there in the SEWP Contract arena. If a small business acquires a company that IS a Prime Contractor on the SEWP Contract Full and Open category can the small business be grandfathered into the appropriate SEWP Small Business Category? In this example the company acquiring the SEWP Full and Open Prime company is a SDVO/Hubzone certified company. Can they be added to the Hubzone Group? Or do they remain Full and Open category regardless of surviving Business socioeconomic status?
Does FAR 19.1307 (HUBZone price evaluation preference) apply to task orders / delivery orders competed under a GSA Federal Supply Schedule? It appears not, since the list of contract clauses for an FSS contract omit FAR clause 52.219-4. So if this is the case, my follow-on question is that while it is clear why the price preference doesn't apply to the award of the FSS contract itself, what is the reason that FSSes are exempt from having to apply 19.1307 for task/delivery order competed under them?
(Another) Limitation on Subcontracting Issue Again, a FFP HUBZone construction contract in NW Fla. Based on the latest FAR clause, the HUBZone must self-perform (or subcontract to other HUBZone entities) 50% of the work…even for construction. We bid with a plan to achieve this goal. Now the contract has a change order pending that will drastically reduce the scope of work that we (the prime) were going to self-perform and increases the scope of work to be performed by a key Subcontractor. Incorporating the change, it will be nearly impossible to satisfy the referenced FAR requirement for self-performance. Given this change, the only options I see are: A ) Try to negotiate out the implicating FAR clause associated with the change (I’m not sure the CO thinks they have the authority to do that), or B ) Bid additional people (cost) to sit on their butts and watch the work being done, until we achieve the goal. Any other ideas?