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Small Business Committee Request for Status Update on FAR Subcontracting Rule.

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Just a quick update. I talked/emailed the House Small Business Committee to see if they heard from OMB (the letter states that they would like to get the response by 9/28). I received a response very quickly that they are still waiting to hear back from OMB. At least, someone is monitoring the situation. Also, does the change to "proposed rule" from "interim final rule" mean that they would be publishing the rule for public comments again? If that is the case, this another year long process!

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On ‎10‎/‎9‎/‎2018 at 11:50 AM, Retreadfed said:

Pepe, note that the NDAA made changes to the Small Business Act in regard to limitations on subcontracting.  Thus, the SBA has primary jurisdiction to implement the statutory changes, which it has done.  I would argue that SBA's rules take precedence over what is in the FAR particularly since the FAR Councils have had more than enough time to implement the SBA rules, which is what they are doing.

In my experience, Contracting offices rarely if ever go beyond the FAR, and in the DoD offices they are specifically prohibited from using non-FAR regulations without specific approval from well above the KO level.  It is frustrating to see CFR regulation changes that allow KO's to do something but the FAR lags years behind the change to the point where people forget that the change has even been contemplated.

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I am curious why the FAR Council is delaying the implementation. Yes, they have changed from issuing an “interim rule” to a “proposed rule” . But why?

It is apparent that SBA and the FAR Council don’t agree about something. Is this too politically sensitive to publicize? 

It isn’t as though the SBA was particularly quick in making the changes. That took about three years after the legislation passed. 

Now it looks like it will be six years for the FAR revision.

Edit: I stated on Oct 6 in another thread

(http://www.wifcon.com/discussion/index.php?/topic/4509-open-far-cases-limitations-on-subcontracting/&tab=comments#comment-43228 ) 

I think that the “similarly situated subcontractor” exception to the subcontracting limitations pretty well guts the limitations, unless the sub actually has to self-perform its subcontract.  Otherwise the subcontractor could sub out all or part of the actual effort to whomever it wants to.  I wonder if such a seemingly hollow “limitation” has anything to do with the delays. 

I couldn’t find any links to articles explaining “why the delay”. 

 

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2 hours ago, DWGerard1102 said:

In my experience, Contracting offices rarely if ever go beyond the FAR, and in the DoD offices they are specifically prohibited from using non-FAR regulations without specific approval from well above the KO level. 

However, in order to understand what the words in the Limitation on Subcontracting clause mean and how to compute compliance with the 50% requirement, contracting officers and contractors have to look at the SBA regulations.  Because the current SBA regulations do not address the FAR clause, we have to go back to the SBA regs as they existed in the 2012-2013 time frame.

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22 hours ago, Retreadfed said:

However, in order to understand what the words in the Limitation on Subcontracting clause mean and how to compute compliance with the 50% requirement, contracting officers and contractors have to look at the SBA regulations.  Because the current SBA regulations do not address the FAR clause, we have to go back to the SBA regs as they existed in the 2012-2013 time frame.

I agree, but I have had many cases where the KO and the Contracting office have refused to abide by the 13 CFR regulation and only go by what the FAR says.  They send in a KO protest to the SBA because the FAR says one thing, then the SBA responds with the CFR regulation and then the SBA has to argue with the KO/Contracting Office on which regulation is applicable. 

One case where this really needs to be resolved is in the FAR 19.000(b) language.  The FAR language is interpreted to mean if a procurement has the slightest OCONUS touch (Product: US; Contracting Office: US; Delivery location: OCONUS), then the procurement is exempt from FAR 19.  The CFR has for years indicated that SB regulations apply to US procurements when the preponderance of the process (as above), is domestic and FAR 19 is only exempted when the preponderance of the procurement is OCONUS (Product: OCONUS; Contacting Office: US or OCONUS; Delivery location: OCONUS).

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1 hour ago, DWGerard1102 said:

The FAR language is interpreted to mean if a procurement has the slightest OCONUS touch (Product: US; Contracting Office: US; Delivery location: OCONUS), then the procurement is exempt from FAR 19. 

However, if an agency is challenged on this in a protest, as pointed out in this forum on several occasions, the agency generally caves.

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6 hours ago, DWGerard1102 said:

The CFR has for years indicated that SB regulations apply to US procurements when the preponderance of the process (as above), is domestic and FAR 19 is only exempted when the preponderance of the procurement is OCONUS (Product: OCONUS; Contacting Office: US or OCONUS; Delivery location: OCONUS).

Where does it say that?

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21 hours ago, Don Mansfield said:

Where does it say that?

It was changed after this GAO ruling:  https://www.gao.gov/products/D09410#mt=e-report

I lost all my CFR bookmarks when my computer was reformatted about a year ago so I can't find where in the CFR the changes were made.  It was prior to 2016 as that language is being used in the FAR case that Pepe linked in his message.

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@DWGerard1102

Here is a link to the 2018 edition of the Code of Federal Regulations:

https://www.gpo.gov/fdsys/browse/collectionCfr.action?selectedYearFrom=2018&go=Go

You might want to look at Title 13, Part 125 (Government Contracting Programs).

Here is the full Part 125:

https://www.gpo.gov/fdsys/pkg/CFR-2018-title13-vol1/pdf/CFR-2018-title13-vol1-part125.pdf

 

PepeTheFrog searched the full Part 125 for the word "preponderance" and did not find any instance. Do you have any other references than what is copied below? 

 

Did you mean these references from Part 125.2?

"What are SBA’s and the procuring agency’s responsibilities when providing contracting assistance to small businesses? (a) General. The objective of the SBA’s contracting programs is to assist small business concerns, including 8(a) BD Participants, HUBZone small business concerns, Service Disabled Veteran-Owned Small Business Concerns, Women-Owned Small Businesses and Economically Disadvantaged Women-Owned Small Businesses, in obtaining a fair share of Federal Government prime contracts, subcontracts, orders, and property sales. Therefore, these regulations apply to all types of Federal Government contracts, including Multiple Award Contracts, and contracts for architectural and engineering services, research, development, test and evaluation. Small business concerns must receive any award (including orders, and orders placed against Multiple Award Contracts) or contract, part of any such award or contract, any contract for the sale of Government property, or any contract resulting from a reverse auction, regardless of the place of performance, which SBA and the procuring or disposal agency determine to be in the interest of: (1) Maintaining or mobilizing the Nation’s full productive capacity; (2) War or national defense programs; (3) Assuring that a fair proportion of the total purchases and contracts for property, services and construction for the Government in each industry category are placed with small business concerns; or (4) Assuring that a fair proportion of the total sales of Government property is made to small business concerns."

 

"(c) Procuring Agency Responsibilities— (1) Requirement to Foster Small Business Participation. The Small Business Act requires each Federal agency to foster the participation of small business concerns as prime contractors and subcontractors in the contracting opportunities of the Government regardless of the place of performance of the contract."

 

Or maybe from 125.22:

"(b) Contracting Among Small Business Programs. (1) Acquisitions Valued At or Below the Simplified Acquisition Threshold. The contracting officer shall set aside any acquisition with an anticipated dollar value exceeding the Micropurchase Threshold but not exceeding the Simplified Acquisition Threshold (defined in the FAR at 48 CFR 2.101) for small business concerns, regardless of the place of performance, when there is a reasonable expectation that offers will be obtained from at least two small business concerns that are competitive in terms of quality and delivery and award will be made at fair market prices."

 

 

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1 hour ago, DWGerard1102 said:

It was changed after this GAO ruling:  https://www.gao.gov/products/D09410#mt=e-report

I read this decision.  Note that it references a change to SBA regs that took place in 2013.  I looked at the FR for the particular rule change.  On Oct. 2, 2013, the SBA amended its rules to clearly state that they apply regardless of where the contract is to be performed.  I went back to the 2012 version of the CFR to look at 13 CFR 125.2 and could find no indication there that the SBA rules only applied to contracts to be performed in the US.

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Guest Vern Edwards

Don Mansfield wrote a comprehensive analysis of the FAR 19.000(b) problem for the September 2015 issue of The Nash & Cibinic Report entitled, "Small Business Programs Do They Apply Outside the United States?" He analyzes the case law and indicts all culprits.

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The GAO report on VA monitoring of limitations on subcontracting posted on the WIFCON home page today is interesting reading .  It shows how agencies can address the disconnect between the FAR and SBA regulations.

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