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A Gift from Congress for Small Businesses - March 2014

March 25, 2014

by Jack Rephan

Included within the National Defense Authorization Act of 2014, which was passed by Congress on December 26, 2013 and signed by President Obama, is an amendment to the Small Business Act, which should be good news for contractors doing business with the federal government. Prior to this amendment, in a case of contracts for construction of any public facility exceeding $1,000,000, or $500,000 in a case of all other contracts, before any contract award, contractors are required to submit a subcontracting plan containing goals for small business subcontracts and, under the Federal Acquisition Regulation (FAR), prime contractors were allowed to count only first-tier small business subcontractors towards meeting these goals. Under the amendment, in determining whether or not a prime contractor has attained its goals, a prime contractor can claim credit for small business concerns performing as first-tier subcontractors and for subcontractors performing at any tier, in an amount equal to the dollar value of the work awarded to such small business concerns. Now that prime contractors can receive credit against their goals for small business subcontracting for subcontracts awarded to small business contractors at any tier, the new law should offer more opportunities to small businesses to participate in federal contracts. This change in the law was largely due to the support and lobbying efforts of Associated General Contractors of America. However, the new rule applies to any contract let by any federal agency so it applies to procurement of supplies and services as well as construction. There are, under the amendment, a number of new reporting requirements and responsibilities for both prime and subcontractors which will become effective only when final rules interpreting the law are issued by the SBA and by the FAR council.