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Nature of SBA Contractual Commitment Upon 8(a) Award

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We are a subcontractor on a prime contract for services made pursuant to an 8(a) award. The copy of the prime contract which we have does not reflect execution by the SBA, but the contract contains FAR 52.219-17.

The 8(a) small business is in substantial arrears of our invoices (there are no disputes about the services), which is a subcontract default allowing us to cease performance immediately. If we do so, the 8(a) is unlikely to be able to pick up the performance gap for the services, which are essential services. The agency is able and likely to use its own resources for an unknown period of time to provide the services. Under the prime contract it may then, among its remedies, backcharge the cost of doing so to the contractor.

Am I correct that, technically, the contractor is the SBA? Might the SBA then be liable for the cost of the agency to provide the services itself? If the answers to the two questions are "yes", would informing the appropriate SBA District Office of the arrearage and potential for the 8(a) to default (if we cease performance without notice) be something the SBA would be likely to broach to the 8(a)? Or would the SBA be likelier to allow events to follow their course without any kind of intervention?

We're trying to analyze whether, if the 8(a) company has any money, putting the fear of God, the agency and the SBA into them might get us first place on the payment list - or if snitching on the 8(a) to the agency and the SBA is just going to earn us a big yawn.

Thanks for any insight.

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Am I correct that, technically, the contractor is the SBA? Might the SBA then be liable for the cost of the agency to provide the services itself?

Yes, the prime contractor is technically the SBA. See FAR 19.800(a).

No, the SBA will not be liable for termination or reprocurement costs. See 13 CFR 124.518(a):

§ 124.518 How can an 8(a) contract be terminated before performance is completed?

(a) Termination for default. A decision to terminate a specific 8(a) contract for default can be made by the procuring activity contracting officer after consulting with SBA. The contracting officer must advise SBA of any intent to terminate an 8(a) contract for default in writing before doing so. SBA may provide to the Participant any program benefits reasonably available in order to assist it in avoiding termination for default. SBA will advise the contracting officer of this effort. Any procuring activity contracting officer who believes grounds for termination continue to exist may terminate the 8(a) contract for default, in accordance with the Federal Acquisition Regulations (48 CFR chapter 1). SBA will have no liability for termination costs or reprocurement costs.

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