DATE: December 20, 2004

SUBJECT: Small Business Administration; Small Business Subcontracting

SOURCE: Federal Register, December 20, 2004, Vol. 69, No. 243, page 75820

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Final Rule

SYNOPSIS: SBA is revising its regulations in 13 CFR 125.3, Subcontracting Assistance, to address various aspects of small business subcontracting. Of particular note is the list of factors to be considered in the evaluation of a prime contractor's performance and good-faith efforts to achieve the requirements in its subcontracting plan, and the authorization to use goals in subcontracting plans, and/or past performance in meeting such goals, as a factor in source selection when placing orders against Federal Supply Schedule (FSS) contracts, government-wide acquisition contracts (GWACs), and multi-agency contracts (MACs).

EDITOR'S NOTE: The SBA's regulations are in Title 13 of the Code of Federal Regulations (CFR). The SBA small business subcontracting regulations are in Chapter 1, Small Business Administration; Part 125, Government Contracting Programs.

For more on SBA’s proposed rule on subcontracting plan goal achievement, see the October 20, 2003, FEDERAL CONTRACTS DISPATCHSmall Business Administration (SBA); Achievement of Subcontract Plan Goals.”

For more on SBA’s rule on contract bundling which led to SBA’s subcontracting plan proposed rule, see the January 31, 2003, FEDERAL CONTRACTS DISPATCHFederal Acquisition Regulation (FAR) and Small Business Administration (SBA); Contract Bundling,” and the October 20, 2003, FEDERAL CONTRACTS DISPATCHFederal Acquisition Circular (FAC) 2001-17 and Small Business Administration (SBA); Contract Bundling.”

EFFECTIVE DATE: December 20, 2004.

FOR FURTHER INFORMATION CONTACT: Dean Koppel, Assistant Administrator, Office of Policy and Research, 202-401-8150, or e-mail: dean.koppel@sba.gov.

SUPPLEMENTAL INFORMATION: On January 31, 2003, SBA solicited comments on its proposed rule that would implement several recommendations in the Office of Management and Budget (OMB) report “Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business” (see the October 30, 2002, FEDERAL CONTRACTS DISPATCH "Office of Federal Procurement Policy (OFPP); Contract Bundling: A Strategy for Increasing Federal Contracting Opportunities for Small Business"). Several of those responding to SBA's proposed rule identified the need for more guidance on evaluating large prime contractor performance and efforts to achieve the goals specified in their subcontracting plans, including examples of what types of conduct constitute "good-faith" efforts to comply with subcontracting plans. SBA said it agreed “that effective procedures to mitigate the effects of contract bundling on small businesses necessitates more stringent requirements for monitoring compliance with subcontracting plans to ensure that small businesses receive the maximum practical opportunity to participate as subcontractors in large federal contracts." Therefore, on October 20, 2003, SBA published a proposed rule that would amend 13 CFR 125.3 to address this issue and others pertaining to small business subcontracting.

SBA received 19 comments from members of Congress, federal agencies, prime contractors, trade associations, small business advocacy groups, small businesses, and a private citizen. As a result of these comments, SBA is adopting, with changes, the October 20, 2003, proposed rule. The following are the significant provisions of the final rule, with the differences between the proposed and final rules identified:

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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