Type: Law Bulletins
Date: 07/26/2022

New SBA Rule to Assist Small Businesses by Counting Subcontracting and Joint Venture Past Performance

On July 22, the Small Business Administration (SBA) published a final rule amending 13 C.F.R. Part 125 and implementing the National Defense Authorization Act (NDAA) FY 2021. The new rule is intended to assist small businesses, and expand the opportunities for past performance to be evaluated – and counted – during source selection. The final rule is available here.

Historically, small businesses were in a catch-22 – their past performance experience was too limited to win contract awards as a prime, so they became subcontractors or the 51% owner of a joint venture. But, at proposal time, agencies did not have to evaluate or give credit to past performance for anything other than prime contracts. So small businesses really couldn’t leverage their experience as subcontractors or as joint venture partners.

Under the new rule, which goes into effect on Aug. 22, a small business will need to either:

  1. In the case of subcontracting past performance, obtain a past performance reference for its first-tier subcontract work from its prime contractor. Prime contractors will now be required to comply as part of the subcontracting plan efforts. Prime contractors will have 15 days to provide a rating, and the rating should address technical (quality), cost control, schedule (timeliness), management (business relations), and other factors based on the five-scale rating system at FAR 42.1503 – i.e. the same Contractor Performance Assessment Reporting System (CPARS) scale used for prime contract efforts.
  2. In the case of a joint venture, identify pertinent information about the joint venture, the contract(s), and the duties and responsibilities the small business carried out as part of the joint venture.

During source selection, the contracting officer shall give due consideration to the small business’ past performance as a subcontractor and/or the relevant portions of its performance through the joint venture, when making contracting decisions.

This new rule is intended to allow small businesses to claim credit for the past performance work they have done at multiple levels and is expected to support approximately 4,000 small businesses to better compete for prime federal contracts.

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