In an article published by Law360, Bass, Berry & Sims attorney Todd Overman discussed a rule proposal from the Small Business Administration (SBA) that could boost the use of small-business contractors in federal contracts.

On January 23, the comment period closed for the proposed rule poised to overhaul how prime contractors count subcontracting credit for lower-tier subcontracts toward their subcontracting goals by widening the scope of subcontractors that may be counted.

The December 2022 proposed rule would change that requirement by making four notable revisions:

  1. Eliminate the mandate to allow prime contractors to select whether to receive credit for lower-tier subcontracts in certain situations.
  2. Prohibit agencies from setting tier-specific goals for prime contractors using lower-tier subcontract credit.
  3. Implement new record-keeping requirements.
  4. Increase the threshold for a required subcontracting plan to $750,000.

While the contracting community is generally excited with the issuance of the proposed rule, some have expressed reservations about potential consequences of dulling prime liability for inadequate performance. While there are valid arguments on both sides, the proposed rule should ultimately help the small business community by driving increased participation and it’s a long awaited and welcome change for the contracting community.

The full article, “SBA Proposal May Boost Use Of Small-Business Contractors,” was published by Law360 on March 30 and is available online (subscription required). Todd also wrote about the proposed rule for the firm’s GovCon & Trade blog; that content can be found here.