New rule requires larger focus on small business subcontractors

Wednesday - 7/17/2013, 4:40pm EDT

By Cogan Schneier
Special to Federal News Radio

Agencies and prime contractors need to pay more attention to their small business subcontractors.

Under a final rule issued by the Small Business Administration (SBA) in Tuesday's Federal Register, prime contractors will need to issue more notices to contracting officers, specifically when they are late in their payments to small firms, and agency contracting officers must monitor small business subcontractors' plan performance more closely.

The changes were made in response to the 2010 Small Business Jobs Act.

In addition to better communication around late payments, prime contractors must notify contracting officers in writing if they do not use the small business contractor originally referenced in preparing a bid.

The final rule also clarified for agencies and primes which subcontracts they should include or exclude in data reporting, as well as elaborated on which data agencies and primes should record on subcontracts. The rule states award data that prime contractors record should be limited to awards made to immediate next-tier subcontractors. The rule said credit cannot be taken for awards made beyond the immediate next-tier.

The rule also changes subcontracting plan thresholds and provides updates on the use of the electronic subcontracting reporting system (eSRS). The system will need to be updated, the notice said, to let large business contractors report on subcontractors on an order-by-order basis.

SBA published another final rule earlier in the month, which required small businesses to update their size statuses annually in the System for Award Management (SAM).

This new final rule takes effect Aug. 15.

Cogan Schneier is an intern for Federal News Radio.

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