A new rule by the Small Business Administration makes several changes to small business contracting regulations. These changes, set to go into effect June 30, are aimed at increasing small-business competition and enabling small businesses to potentially obtain larger contracts without increasing compliance costs. In April, AGC submitted comments on the proposed rule.
Notably, the rule standardizes subcontracting limits for small-business set-aside contracts under $150,000 by limiting the percentage of a contract award that can be spent on subcontractors. For general construction contracts, no more than 85 percent of the contract award may be paid to subcontractors, and for specialty trade construction, the percentage must not be greater than 75 percent. This subcontracting limit will specifically exclude subcontractors that are “similarly situated” to small-business prime contractors as long as the subcontractors perform the subcontracted work and do not pass it along to a larger, secondary subcontractor.
The rule also allows a joint venture to qualify as a small business and compete for government contracts as long as each individual entity in the joint venture qualifies individually as a small business under the NAICS code assigned to the procurement.
For more information, please contact Brynn Huneke at (703) 837-5376.