New law adds more requirements to small-business plans

Prime contractors need to make good on subcontracting promises

Government contractors will face new requirements involving bundling, small-business certification and other contracting issues under a new small business law signed today by President Barack Obama.

Among the provisions of the Small Business Jobs and Credit Act (H.R. 5297) is a requirement that prime contractors provide a written explanation when they fail to use the subcontractors in the manner described in the subcontracting plan.


SBA leader vows to crack down on small-business fraud

New law puts contractor performance in the public spotlight

If the explanation doesn't satisfy the contracting officer, it can hurt the evaluation of the prime contractor's performance on the contract, according to the law.

Furthermore, a contractor that continually fails to meet its subcontracting plan will be identified as having that history in the Federal Awardee Performance Integrity Information System.

FAPIIS is a public website detailing contractors and their work on government contracts. The database is intended to increase the amount of information available to government contracting officers as they evaluate contractors competing for their contracts. In July, the website became public.

As for the small-business bill, the House passed the legislation 237 to 187, and the Senate passed the bill a week earlier 61 to 38.

The bill also addresses these other small-business contracting issues:

Bundling. The bill establishes a governmentwide bundling limit of $2 million for contracts, which decreases the current $10 million limit. It creates a 5-year small business teaming pilot program to assist small businesses in forming teams or joint ventures to help them compete for larger or bundled contracts.

It also directs each agency to post on their websites a list of all bundled contract awards and the rationale behind why they were bundled.

Certifications. The legislation attempts to stop fraud in small-business contracting, an issue several investigations by the Government Accountability Office have revealed as a major problem. Small businesses now have annual certification requirements to determine that the company meets the standards to be a small business. Each bid and contract must have a certification, and a procurement official must sign the certifications.

Fraud. The bill also creates a presumption of stealing from the government if a company misrepresents itself as a small business. Officials will have to set a governmentwide policy for prosecuting the fraud.

Subcontracting. The bill puts more pressure on prime contractors to follow their subcontracting plans, which are submitted with their proposals for contracts. Contractors have to buy services and materials from the small businesses and in the amount and quality specified in the plans.

Size standards. It requires the Small Business Administration to review and update small-business size standards every five years.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Tue, Sep 28, 2010

When will the government prosecute major primes for fraud when they manipulate or ignore thier small business obligations (which are as much a contractual obligation as a certification? No teeth in this policy means no results. Primes lie to win contracts and nothing happens.

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