More than five years after Congress directed the Executive Branch to change the way small business contract performance requirements are calculated, the U.S. Department of Defense (DoD) and the Federal Acquisition Regulation (FAR) Council announced significant steps yesterday to adopt these new requirements.

By way of background, in June 2016, the U.S. Small Business Administration (SBA) issued a final rule changing its regulations regarding the limitations on subcontracting applicable to small business set-aside contracts. SBA’s amended regulations were promulgated in response to a directive in the 2013 National Defense Authorization Act (2013 NDAA) which required changes to how limitations on subcontracting requirements are quantified and which required inclusion of “Similarly Situated Entities” (SSEs) in the prime contractor’s portion of the work under set-aside contracts.

The contracting community has been anxiously awaiting an amendment to the FAR, which has been asserted to be necessary for these Congressionally-mandated changes to become effective.  On Dec. 5th, the DoD issued a Class Deviation which adopts SBA’s current approach to Limitations on Subcontracting. The Class Deviation is effective immediately and applies to all DoD solicitations and contract awards from that date forward.

DoD’s Class Deviation was issued in conjunction with a notice of proposed rule-making issued by the FAR Council, which proposes to amend the FAR’s Limitations on Subcontracting clause (52.219-14) to conform with the statutory requirement and SBA’s previously announced final rule.

Keep reading this article at: https://www.jdsupra.com/legalnews/dod-issues-a-limitations-on-58789/

See commentary about the limitations on subcontracting rule at: http://smallgovcon.com/statutes-and-regulations/limitations-on-subcontracting-far-council-finally-proposes-rule-change/