Update on Regulations
Category: Articles
The SBA has proposed new regulations in the Federal Register related to small business subcontracting. In addition, the Cost Accounting Standards Board (CAS Board) has proposed new regulations to clarify the exemption from the Cost Accounting Standards (CAS) for firm fixed price contracts and subcontracts awarded without submission of certified cost or pricing data.
The SBA's proposed rules on small business subcontracting encompass the following changes to existing practices:
For covered contracts, a prime contractor would be required to inform the contracting officer if the prime does not utilize the subcontractor used in preparing its bid or proposal during contract performance.
Prime contractors would be required to contracting officers in writing whenever the prime reduces payments to a subcontractor or when payments are more than 90 days past due to a subcontractor.
Generally speaking, both of these proposed rules are positive developments which should expand opportunities for subcontractors. Other changes include:
Clarification that the CO is responsible for monitoring and evaluating small business subcontracting plan performance.
Clarification as to which subcontracts are to be included in subcontracting data reporting, and the way such data should be reported;
Although these clarifications are not as significant as the first two, contractors should be familiar with them.
The CAS Board has also proposed to add clarify 48 CRF 9903.201-1(b)(15). Currently, firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of cost or pricing data are exempted from coverage under the CAS. The Board intends to clarify that this regulation exempts firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of certified cost or pricing data.
The reason for the change is to conform to the definitions of "certified cost or pricing data" and "data other than certified cost or pricing data". Both of these phrases have been understood to encompass cost or pricing data. The proposed clarification to the standards is to eliminate the unintended interpretation.