Small businesses face a on-going problem: not possessing enough past performance to compete for federal contracts. Fortunately, SBA has heard the lamentations. A new proposed rule aims to give small business additional sources of usable past performance.
The new rule addresses a small business’s ability to claim credit for past performance it gained through its participation in a joint venture and as a subcontractor. Let’s discuss both in turn.
Past performance gained as a joint venturer
This proposed rule is the second SBA rule to break down down barriers between joint venture past performance and the past performance of the JV members. A couple years ago, SBA implemented a rule (13 C.F.R. 125.8(e)) to require agencies to attribute JV member past performance to the joint venture.
With its new proposed rule, SBA seeks the converse: allowing small businesses to take advantage of past performance gained through a joint venture. As proposed, a small business could use JV past performance where the small business can’t alone demonstrate sufficient past performance for award. But naturally, a small business cannot leverage JV past performance performed exclusively by other JV members.
When a small business chooses to use JV experience, it must do the following its proposal:
- identify the joint venture;
- identify the joint venture contract(s) that it elects to use for past performance; and
- inform the agency of the duties and responsibilities that the firm carried out in the joint venture.
During evaluation, the agency must consider the joint venture’s past performance–even where the small business lacks a CPAR as a prime contractor.
Past performance gained as a subcontractor
Another important source of past performance, especially for small businesses, is subcontractor work. The proposed rule recognizes this fact and allows firms to leverage their work as first-tier subcontractors. But how is this performance tracked?
Small businesses–working as a subcontractor to a prime with a subcontracting plan–may request a past performance rating from the prime. After the small business’s request, the prime must supply the rating within 15 days, which tracks the elements below. Unsurprisingly, the evaluative categories largely track those in CPARs for prime contractors.
- Technical (quality of product or service)
- Cost control (not applicable for firm fixed-price contracts
- Schedule/timeliness
- Management or business relations
- Other (as applicable)
Where a JV serves as a first-tier subcontractor, a small business JV member may request an evaluation from the prime. And it can use that past performance in the same way that it could use the JV’s past performance as a prime.
When a small business submits past performance gained as a subcontractor (whether individually or as a part of a JV), a procuring agency must consider it. But the past performance must be fresh: within 3 years of the completed performance (or within 6 years for construction and architect-engineering contracts). Moreover, an agency’s obligation to consider subcontractor past performance holds even if the small business doesn’t have a CPAR as a prime contractor.
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Overall, this proposed rule offers a real boon to small businesses and the federal government. Small businesses get to leverage JV and subcontractor work when competing for prime work, and the federal government gets (in theory) greater numbers of offerors with the necessary experience and competence to compete. In my view, the rule is good business and good policy.
Comments on the proposed rule are due by January 18, 2022.
If you have any questions about relating to small business government contracting, give us a call at 913-354-2630.