Overview
This section outlines the criteria and procedures for subcontractors to qualify as small business concerns under a prime contractor’s subcontracting plan. It establishes how size and socioeconomic status are verified, the reliance on subcontractor representations, and special counting rules for tribal entities.
Key Rules
- Self-Representation: Subcontractors must self-represent their status (e.g., Small Business, HUBZone, SDVOSB) based on definitions in FAR 2.101 and 19.001.
- Size Determination: A concern is considered small if it does not exceed the size standard for the NAICS code assigned to the subcontract by the prime contractor.
- Methods of Verification: Prime contractors may accept written representations or utilize the System for Award Management (SAM) data, provided the subcontractor certifies the information is current, accurate, and complete.
- SAM Limitations: Prime contractors are prohibited from requiring subcontractors to be registered in SAM for the purpose of representing size or socioeconomic status.
- Good Faith Reliance: In accordance with SBA regulations, prime contractors acting in good faith are protected from liability regarding a subcontractor’s misrepresentation of status.
- Protests: Any interested party, the contracting officer, or the contractor may challenge a subcontractor's size or HUBZone status through formal protest procedures.
- ANC and Indian Tribe Exceptions: Subcontracts awarded to Alaska Native Corporations (ANCs) or Indian tribes count toward small business and small disadvantaged business (SDB) goals regardless of the entity's actual size or SBA certification status.
Practical Implications
- Prime contractors must exercise due diligence in assigning appropriate NAICS codes to subcontracts, as this determines the size standard the subcontractor must meet to be counted toward goals.
- While primes are protected by "good faith" reliance, they must maintain a system for collecting and tracking subcontractor certifications to demonstrate compliance during Small Business Subcontracting Program reviews or audits.