SBA Improves Regulations Governing Small Business Subcontractors with New Rule

July 19, 2013

Construction Law


In response to the 2010 Small Business Jobs Act, the U.S. Small Business Administration has issued a new rule that will force agencies and prime contractors to pay more attention towards their small business subcontractors.

Effective August 15, 2013, prime contractors in a “covered contract” (a contract for which a small business subcontracting plan is required) must provide written notices to contracting officers if they do not utilize the small business subcontractor referenced in preparing a bid or proposal during contract performance. Prime contractors must also provide written notices to contracting officers whenever they reduce payments to small business subcontractors or when payments to small firms are 90 days or more past due. Also included in the rule, contracting officers are responsible for monitoring small business subcontractors’ plan performance more closely.

In addition, the new rule clarifies for agencies and prime contractors which subcontracts must be included or excluded from data reporting, as well as the way on which subcontracting data is reported. The rule also changes subcontracting plan thresholds and references updates on the use of the electronic subcontracting reporting system (eSRS).

For more information, and to see the Federal Register publication of the SBA rule in its entirety, click here