The Federal Acquisition Regulation (FAR) Council implemented regulations last week that were first adopted by the Small Business Administration in 2013. The ruling imposes business-related obligations on prime contractors and lays out consequences for failing to abide by by those requirements. The major features of the ruling include repercussions for failure to make “good faith” efforts, clarification of subcontracting plans, NAICS codes that accurately correspond to the intent of the subcontract and a requirement that contractors take such factors as subcontracting goals and achievements to determine the total value of projects to present for specified IDIQ contracts.
- Contractors must include assurances in their small business subcontracting plans that they will use “good faith efforts” to use the small business subcontractors identified in their bid or proposal.
- Should a contractor not acquire from a small business identified in the bid or proposal, the contractor must inform its contracting officer in writing within 30 days of contract completion.
- A failure to provide good faith efforts results in a material breach of the contract that could lead to liquidated damages. The failure could also be considered in future past performance evaluations.
“large prime contractors would be well advised to assess developing new subcontracting plans to confirm compliance with the Final Rule’s requirements.”