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Prime vs Sub Percentages Question


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#1 obinnae

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Posted 11 April 2011 - 03:27 PM

Is there any rule mandating that a prime contractor perform 51% of the work on a specific contract?

How about on a set-aside contract in a situation where the prime contractor and sub contractor both have the same socio-economic status? As an example - an 8(a) set aside contract where the proposed prime contractor and sub contractor are both 8(a)s. Would the prime truly have to perform at least 51% of the work?

Thanks in advance!

#2 Cajuncharlie

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Posted 11 April 2011 - 04:17 PM

RTFC (read the f-f-full contract). B)

Does it contain the clause at FAR 52.236-1? 52.244-2? How were the blanks filled in?

#3 joel hoffman

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Posted 11 April 2011 - 06:06 PM

Is there any rule mandating that a prime contractor perform 51% of the work on a specific contract?

How about on a set-aside contract in a situation where the prime contractor and sub contractor both have the same socio-economic status? As an example - an 8(a) set aside contract where the proposed prime contractor and sub contractor are both 8(a)s. Would the prime truly have to perform at least 51% of the work?

Thanks in advance!


Please advise whether or not this answers your question. If the contract is a set-aside for sole source 8(a), competitive 8(a) or small business, the following clause is required:

52.219-14 -- Limitations on Subcontracting.

As prescribed in 19.508(e) or 19.811-3(e), insert the following clause:

Limitations on Subcontracting (Dec 1996)

(a) This clause does not apply to the unrestricted portion of a partial set-aside.

(b ) By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for --

(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

(2) Supplies (other than procurement from a nonmanufacturer of such supplies). The concern shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials.

(3) General construction. The concern will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees.

(4) Construction by special trade contractors. The concern will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees.

(End of Clause)

#4 obinnae

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Posted 11 April 2011 - 08:59 PM

RTFC (read the f-f-full contract). B)

Does it contain the clause at FAR 52.236-1? 52.244-2? How were the blanks filled in?



Clause 52.244-2 is in the contract, but there is no "form" associated with it. It is just in the list within the "clauses incorporated by reference" section.

#5 obinnae

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Posted 11 April 2011 - 09:01 PM

Please advise whether or not this answers your question. If the contract is a set-aside for sole source 8(a), competitive 8(a), small business or other small Disadvantaged Business, the following clause is required:

52.219-14 -- Limitations on Subcontracting.

As prescribed in 19.508(e) or 19.811-3(e), insert the following clause:

Limitations on Subcontracting (Dec 1996)

(a) This clause does not apply to the unrestricted portion of a partial set-aside.

(b ) By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for --

(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

(2) Supplies (other than procurement from a nonmanufacturer of such supplies). The concern shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials.

(3) General construction. The concern will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees.

(4) Construction by special trade contractors. The concern will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees.

(End of Clause)



I guess I should have provided more details, sorry. It is an SDVOSB set aside contract that was competed. Both the prime and sub are SDVOSBs under within the revenue threshold for the NAICS code. T&M contract. Does the prime have to do at least 51% of the work?

#6 joel hoffman

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Posted 11 April 2011 - 09:20 PM

RTFC (read the f-f-full contract). B)

Does it contain the clause at FAR 52.236-1? 52.244-2? How were the blanks filled in?


The clause at 52.236-1 is inapplicable to 8(a) set-aside contracts for construction. This is for unrestricted contracts. The clause that I mentioned specifies the minimum self-performance requirements for 8(a) set-aside contracts. There is fairly clear explanation of this in the SBA Code of Federal Regulations, that will answer your question. The "concern" is considered the "Contractor" and your sub is just that - a subcontractor.

#7 joel hoffman

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Posted 11 April 2011 - 09:24 PM

I guess I should have provided more details, sorry. It is an SDVOSB set aside contract that was competed. Both the prime and sub are SDVOSBs under within the revenue threshold for the NAICS code. T&M contract. Does the prime have to do at least 51% of the work?


I don't have access to the required clauses for your type set-aside contract, tonight. Is 52.219-14 in the contract? If it is, then the percentage for the applicable type of work apply to the prime.

#8 obinnae

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Posted 11 April 2011 - 09:30 PM

I don't have access to the required clauses for your type set-aside contract, tonight. Is 52.219-14 in the contract? If it is, then the percentage for the applicable type of work apply to the prime.


52-219-14 is not in the contract. BTW - thanks for your help. I very much appreciate it!

#9 Guest_carl r culham_*

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Posted 11 April 2011 - 09:37 PM

How about FAR clause 52.219-27 is it in your contract? If so does its content answer your questions?

#10 joel hoffman

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Posted 12 April 2011 - 06:34 AM

How about FAR clause 52.219-27 is it in your contract? If so does its content answer your questions?


Thanks for the help, Carl! I can go directly to clauses that I'm familiar with at the Hill AFB website on this Blackberry. But I can't navigate through FAR in the "windows" for that site or at the Acqnet website, unless I am on a regular computer. I apologize for my "limitations on research" capabilities.

The Notice of Set-aside clause you referenced for Service-disabled Veteran-owned Small Business Set-asides has similar requirements as the Limitation on Subcontracting clause at 52.219-14 that is used in small business and 8(a) set-asides.

And I forgot that HUBZone set-asides use a similar Notice of Set-aside clause (52.219-3) as the one used SDVOSB set-asides. Sorry.

I have also found that the definitions in the SBA's regulations for self-performed work in Title 13 vary slightly between HUBZone and other types of set-asides, like 8(a). So one should read that coverage, too.

#11 obinnae

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Posted 12 April 2011 - 07:39 AM

How about FAR clause 52.219-27 is it in your contract? If so does its content answer your questions?


52.219-27 is not in the contract either.

#12 joel hoffman

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Posted 12 April 2011 - 08:36 AM

52.219-27 is not in the contract either.



First you were an 8(a) firm, now an SDVOSB firm. My feeling is that you have wasted several people's time playing musical contracting guessing games. My advice is this - ask the contracting office that you plan to deal with or that you are dealing with what, if any requirements for self-performance are or should be in your contract. Of course, you probably don't want to raise the point, since it appears that you already have some type of strategy for accomplishing the work.

#13 obinnae

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Posted 12 April 2011 - 09:06 AM

First you were an 8(a) firm, now an SDVOSB firm. My feeling is that you have wasted several people's time playing musical contracting guessing games. My advice is this - ask the contracting office that you plan to deal with or that you are dealing with what, if any requirements for self-performance are or should be in your contract. Of course, you probably don't want to raise the point, since it appears that you already have some type of strategy for accomplishing the work.


I apologize if I wasted anyone's time, that was certainly not my intent. I am simply trying to get an answer. My contracting shop literally has no clue and I want to make sure we're performing within the requirements in the FAR. That is all. In the third message, I said I guess I should have been more clear. I was trying to create a hypothetical and didn't realize that the rules were different for an 8(a) vs SDVOSB.

As I stated in my reply. These are the facts of the contract: 2 SDVOSBs, 1 is a prime, 1 is a sub. It was an SDVOSB set-aside competed contract, NOT sole source.

To restate my question more clearly: Is there any FAR clause that states that the prime must actually do 51% of the work if both the prime and sub are SDVOSBs?

#14 Don Mansfield

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Posted 12 April 2011 - 09:17 AM

If the acquisition was a SDVOSB set-aside, it must contain FAR 52.219-27. That clause requires the following:

Agreement. A service-disabled veteran-owned small business concern agrees that in the performance of the contract, in the case of a contract for?

(1) Services (except construction), at least 50 percent of the cost of personnel for contract performance will be spent for employees of the concern or employees of other service-disabled veteran-owned small business concerns;

(2) Supplies (other than acquisition from a nonmanufacturer of the supplies), at least 50 percent of the cost of manufacturing, excluding the cost of materials, will be performed by the concern or other service-disabled veteran-owned small business concerns;

(3) General construction, at least 15 percent of the cost of the contract performance incurred for personnel will be spent on the concern?s employees or the employees of other service-disabled veteran-owned small business concerns; or

(4) Construction by special trade contractors, at least 25 percent of the cost of the contract performance incurred for personnel will be spent on the concern?s employees or the employees of other service-disabled veteran-owned small business concerns.


As such, the prime need not perform 51% of the work--however, SDVOSBs must perform 51% of the work. This is different than the requirement under FAR 52.219-14, which is used in small business set-asides and 8(a) acquisitions.
This clause states:

By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for?

(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

(2) Supplies (other than procurement from a nonmanufacturer of such supplies). The concern shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials.

(3) General construction. The concern will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees.

(4) Construction by special trade contractors. The concern will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees.



#15 obinnae

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Posted 12 April 2011 - 09:57 AM

If the acquisition was a SDVOSB set-aside, it must contain FAR 52.219-27. That clause requires the following:



As such, the prime need not perform 51% of the work--however, SDVOSBs must perform 51% of the work. This is different than the requirement under FAR 52.219-14, which is used in small business set-asides and 8(a) acquisitions.
This clause states:


Thank you! This is extremely helpful. Much appreciated.

#16 joel hoffman

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Posted 12 April 2011 - 01:44 PM

If the acquisition was a SDVOSB set-aside, it must contain FAR 52.219-27... As such, the prime need not perform 51% of the work--however, SDVOSBs must perform 51% of the work. This is different than the requirement under FAR 52.219-14, which is used in small business set-asides and 8(a) acquisitions.


Thanks for the correction, Don. When i read through 52.219-27, this morning I completely overlooked the difference in wording between it and the -14, Limitations on Subcontracting clause. It appears that the requirements in the -27 clause differ from the other set-aside contract categories, in that it allows other, SDVOSB firms to fulfill the minimum percentage of "self-performed work" requirements. So I suppose that there isnt really a "self-performed" work requirement in such a set-aside.

#17 Don Mansfield

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Posted 12 April 2011 - 02:03 PM

Thanks for the correction, Don. When i read through 52.219-27, this morning I completely overlooked the difference in wording between it and the -14, Limitations on Subcontracting clause. It appears that the requirements in the -27 clause differ from the other set-aside contract categories, in that it allows other, SDVOSB firms to fulfill the minimum percentage of "self-performed work" requirements. So I suppose that there isnt really a "self-performed" work requirement in such a set-aside.

joel,

HUBZone set-asides are similar to SDVOSB set-asides in that respect (see FAR 52.219-3). I just checked the clauses for EDWOSB set-asides and WOSB set-asides and they require self-performance of the specified percentages by the prime (similar to FAR 52.219-14).




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