on Wednesday, May 08, 2002 - 11:45 am:
I have received a proposal on a
buildings services contract. It is a small business set aside. I
will try to simplom The offeror has certified himself as a small
business. He plans to subcontract out all of the work - a little
more than half of it to a large business (who is the incumbent
contractor, I might add - the last time we went out for these
services, it was an unrestricted procurement.) As far as I can
tell, this offeror has no employees other than himself. Is this
I would be interested to hear what you experts think about this.
joel hoffman on Wednesday, May 08, 2002 - 12:28 pm:
Is the "Limitations on
Subcontracting" Clause in your solicitation? FAR 52.219-14. I
believe the clause is mandatory for such a contract over $100k,
but you can check the prescription at 19.508 (e).
If this is an RFP, the term "non-responsive" is inapplicable.
However, if the above clause is in your solicitiation, the offer
would appear to be non-conforming and requires discussions and
revision to be conforming. happy sails! joel
Vern Edwards on Wednesday, May 08, 2002 - 12:33 pm:
The proposal is probably
unacceptable (rather than nonresponsive).
Since the procurement is a small business set-aside, if the
expected amount of the contract exceeds $100,000 the
solicitation should include the clause at FAR § 52.219-14,
Limitations on Subcontracting (DEC 1996). That clause says that
in a procurement of services (except construction): "At least 50
percent of the cost of contract performance incurred for
personnel shall be expended for employees of the concern." That
clause effectively prohibits the contractor from subbing out all
of the work.
If the procurement is being conducted in accordance with FAR
Part 15, then a proposal to subcontract all of the work under a
small business set-aside would be unacceptable (not "nonresponsive").
See the GAO's decision in the matter of: Orincon Corporation,
B-267704, July 18, 1997, in which the GAO said:
"As a general matter, an agency's judgment as to whether a small
business offeror will comply with the subcontracting limitation
is a matter of responsibility, and the contractor's actual
compliance with the provision is a matter of contract
administration. Ann Riley & Assocs., Ltd., B-271741.2,
Aug. 7, 1996, 97-1 CPD ¶ 120 at 3; Global Assocs. Ltd.,
B-271693; B-271693.2, Aug. 2, 1996, 96-2 CPD ¶ 100 at 5.
However, where a proposal, on its face, should lead an agency to
the conclusion that an offeror could not and would not comply
with the subcontracting limitation, we have considered this to
be a matter of the proposal's technical acceptability; a
proposal that fails to conform to a material term and condition
of the solicitation such as the subcontracting limitation is
unacceptable and may not form the basis for an award.
National Medical Staffing, Inc.; PRS Consultants, Inc., 69
Comp. Gen. 500, 502 (1990), 90-1 CPD ¶ 530 at 3-4; Ann Riley
& Assocs., Ltd., supra."
If the procurement is conducted in accordance with FAR Part 14,
then a bid that is based upon subbing all of the work might be
nonresponsive. But if the procurement is conducted by sealed
bidding how do you know that the bidder is planning to sub all
of the work?
on Wednesday, May 08, 2002 - 12:49 pm:
Yes, the clause 52.219-14 should
be in the solicitation - unfortunately it was inadvertently left
out. The clause "notice of a total small business set aside"
(number escapes me right now) WAS included.
The procurement is being conducted under FAR part 15. We
received proposals, so I know for sure that this offeror is
planning to sub all of the work out - and over 50% of it will be
to a large business.
Linda Koone on Wednesday, May 08, 2002 - 01:17 pm:
You're thinking of FAR 52.219-6,
Notice of Total Small Business Set-Aside, but that won't cover
you because the agreement in the clause for a company to furnish
items manufactured by US small business concerns does not apply
to service or construction contracts.
Looks like you may need to amend your solicitation to include
the inadvertently omitted clause.
Vern Edwards on Wednesday, May 08, 2002 - 02:03 pm:
If the clause is required, but
was omitted, then the right thing to do is to insert the clause
by amendment of the solicitation. That will give the offeror in
question a lot of heartburn, but it will not have any valid
legal objection--i.e., he could not win a protest.
joel hoffman on Wednesday, May 08, 2002 - 02:28 pm:
Since the clause is mandatory,
you should amend the solicitation during discussions. I have
previously issued admin mods to insert the clause in some
construction contracts, where it had been inadvertantly left out
or where the wrong clause was used.
In addition to the FAR prescription, it is a requirement of the
"Small Business Act" Statutes which authorize small business
set-asides. About 10 years ago, I researched the statutes
concerning 8(a) authorization and self-performance, in an effort
to define "self performed work" and found the legal origin for
the clause. Section 921 of the National defense Authorization
Act for FY 1987 (Pub. L. 99-661, entitled Small Business
Set-Asides, amended sections 8 and 15 of the Small Business Act
(15 USC 637; 15 USC 644)to include requirements for self
performance of work by small or small disadvantaged businesses.
Identical Amendements were included in the DOD Appropriations
Act of 1987 (Pub. L 99-591) Later, technical corrections to the
amendments were made by the Defense Technical Corrections Act of
1987 (Pub. L. 99-591) The FAR was initially revised through
interim rule by notice in the Fed Register on Oct 14, 1987 (FAC
84-31) and it was finalized by FAC 84-40, Item X. on Oct 26,
In coordination with the Small Business Administration, Atlanta
Regional Office, at that time, I developed a provision which
clearly explains, for small business set-aside, 8(a), or SDB
set-aside construction contracts, what is "self performed work".
It could be modified for service contracts. happy sails! joel
on Wednesday, May 08, 2002 - 02:38 pm:
Thanks, everyone for your help. I
will amend the solicitation to incorporate the clause (and try
not to be a knucklehead next time!)