SubK

Small bus Set Aside 50%, can pass part of that to another Small?

10 posts in this topic

I am a new Subcontract Administrator for a small company. Very new to contracting, I understand that FAR prohibits a small business from giving over 50% of the work on a set aside contract to a large business. But what if you have a large team and say 35% is going to a Large and 23% to several other small businesses? That would only give the prime small business 42%.

Also is this 50% based on labor $'s only or does it include ODC's? Is it over the life of the contract or measured each year?

Any help will be GREATLY APPRECIATED!

Share this post


Link to post
Share on other sites

Because different rules apply to different types of set-asides, please explain what type of set-aside this is and what provision or clause is used to limit subcontracting. Thanks.

Share this post


Link to post
Share on other sites

This is a 100% Total Small Business set aside and it is not on a schedule but it is an IDIQ.

Thanks,

Share this post


Link to post
Share on other sites

And the Far Clause is

FAR 52.219-14 Limitations on Subcontracting, which in part states:

Services (except construction), at least 50% of the cost of performance will be expended for employees of the concern.

That tells me that the prime/concern must perform at least 50%.

But I have read in FAR 19.101 towards the bottom:

vi) Size determination for teaming arrangements. For size determination purposes, apply the size standard tests in paragraphs (7)(i)(A) and (b of this section when a teaming arrangement of two or more business concerns submits an offer, as appropriate.

So I am not sure how to interpret this, one clause says you have to perform the work then the additional clause states vaguely that you can possibly combine small concerns portion of the work to total the 50%.... am I reading this right?

Share this post


Link to post
Share on other sites

Is this 50% based on labor $'s only or does it include ODC's? Is it over the life of the contract or measured each year?

See 13 CFR 125.6(e), "Definitions," subparagraph (2):

(2)Cost of contract performance incurred for personnel.

Direct labor costs and any overhead which has only direct labor as its base, plus the concern's General and Administrative rate multiplied by the labor cost.

If the contract is for one year with one-year options, the measurement is made in each year, not cumulatively over the life of the contract. Each year is separately funded and stands alone.

Share this post


Link to post
Share on other sites

Thank you, Vern. I was a part of a Schedule contracting telecom where they stated that the measurement was made each year, but if you had a subcontractor doing most of their portion of the work upfront and you (the prime) were going to do the rest (which would total more than the 50%), then you could write a letter of justification explaining the intentions and they would possibly approve it.

I know that was only for the specific schedule, but is there anything similar that would apply in this case?

Share this post


Link to post
Share on other sites

But I have read in FAR 19.101 towards the bottom:

vi) Size determination for teaming arrangements. For size determination purposes, apply the size standard tests in paragraphs (7)(i)(A) and (b of this section when a teaming arrangement of two or more business concerns submits an offer, as appropriate.

FAR 19.101 doesn't apply; it's for determining affiliation and eligibility to participate in a SBA program. It has nothing to do with our issue as your company was already awarded the contract under the set-aside program (assuming it wasn't awarded to a joint venture of yours and another company).

Share this post


Link to post
Share on other sites

Subk, look at 13 CFR 125.6(g) for the period over which compliance with the limitation on subcontracting will be judged.

Share this post


Link to post
Share on other sites

Thank you, Vern. I was a part of a Schedule contracting telecom where they stated that the measurement was made each year, but if you had a subcontractor doing most of their portion of the work upfront and you (the prime) were going to do the rest (which would total more than the 50%), then you could write a letter of justification explaining the intentions and they would possibly approve it.

I know that was only for the specific schedule, but is there anything similar that would apply in this case?

Nothing of which I am aware.

Share this post


Link to post
Share on other sites

I agree with what I think FAR fetched was implying --

if you had teamed with one of your subs in a JV, then your firm and theirs could do the "over 50%" in any combuination you wanted.

But by being the prime, and they your Sub, your firm by itself has to do the "over 50%" all by itself.

Limitations on Subcontracting is often not enforced.

Some strategies I've seen attempted to escape LD:

*** treating it like a subKt plan target, I've seen missing the "target" rationalized by the SB Prime, and that accepted by the CO - in writing.

*** Prime arguing the nature of the work ("it's not services, it's construction.")

*** arguing that the nature of the work changed, and the Prime no longer had organic capacity.

*** teaming after the fact.

If there are no Liquidated Damages stated in the Prime Kt for missing this, maybe you can skate.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.