Jump to content

Limitation on Subcontracting - Community Based Organizations as Small Business Concern?

Just the FAC

Recommended Posts

Hi All, 

I'm currently working on setting up a Call Order under a multi-award BPA which was a total small business set-aside.  For this current proposal, several of the vendors are planning to subcontract with Community Based Organizations (CBOs).  Some examples of these are: 

  • Neighborhood organizations, associations, community councils
  • Minority serving institutions
  •  Community colleges
  • Community development corporations
  • Local nonprofits serving community residents
  • Faith-based organizations
  • Volunteer-run organizations with deep ties in the community (some issue-based alliances and coalitions, such as health, housing, food access)

One of the vendors has asked if dollars spent by these CBOs would count against the limitation on subcontracting rule that 51% of government money must be toward contract work performed by the prime.  I'm trying to figure out if these CBOs might count as similarly situated entities, in this case small business concerns.  If they are, dollars spent by a CBO would not count against the 51% per 52.219-14(a)1 since this is for services.  

While I believe all these CBOs would definitely meet the NAICS size standard, what's tripping me up is the definition of "Concern" in FAR Part 19: 

"Concern means any business entity organized for profit (even if its ownership is in the hands of a nonprofit entity) with a place of business located in the United States, etc..." 

The fact it mentions business entity organized for profit makes me think most of these would not qualify as small business concerns, i.e. I can't see a neighborhood association meeting that definition.  On the other hand, I could potentially see a Community College qualifying and I'm altogether unsure about a nonprofit given the parenthetical caveat. 

Any guidance from the Wifcon community on this would be much appreciated.    

Link to comment
Share on other sites

It looks like the only exception to the "organized for profit" requirement is for small agricultural cooperatives. From 13 CFR 121.105:




§ 121.105 How does SBA define “business concern or concern”?

(a)(1) Except for small agricultural cooperatives, a business concern eligible for assistance from SBA as a small business is a business entity organized for profit, with a place of business located in the United States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.

(2) A small agricultural cooperative is an association (corporate or otherwise) acting pursuant to the provisions of the Agricultural Marketing Act (12 U.S.C.A. 1141j) whose size does not exceed the size standard established by SBA for other similar agricultural small business concerns. A small agricultural cooperative's member shareholders are not considered to be affiliates of the cooperative by virtue of their membership in the cooperative. However, a business concern or cooperative that does not qualify as small under this part may not be a member of a small agricultural cooperative.

(b) A business concern may be in the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative, except that where the form is a joint venture there can be no more than 49 percent participation by foreign business entities in the joint venture.

(c) A firm will not be treated as a separate business concern if a substantial portion of its assets and/or liabilities are the same as those of a predecessor entity. In such a case, the annual receipts and employees of the predecessor will be taken into account in determining size.



Link to comment
Share on other sites

This topic is now closed to further replies.
  • Create New...