After much anticipation, the Small Business Administration has issued a final rule implementing numerous small business contracting reforms from the 2013 National Defense Authorization Act aimed at relaxing burdensome requirements and eliminating duplicative reporting. Overall, the new regulations are favorable to contractors, increasing contracting opportunities for small business through clearly defining limitations on subcontracting and the application of the nonmanufacturer rule and eased affiliation rules, especially for joint ventures. The rule also clearly defines and limits the scope of familial affiliation. The harsh penalties for limitations on subcontracting violations that were required by the NDAA and included in the proposed rule, however, remain. The new rules go into effect June 30, 2016.
Limitations on Subcontracting: Clarifying Services v. Supply Contracts -
A large portion of the SBA’s final rule is dedicated to rewriting the often misunderstood and much-litigated rules regarding limitations on subcontracting. As a threshold matter, the final rule clarifies that limitations on subcontracting do not apply to contracts valued between $3,000 and $150,000.
Originally published in Law360, New York on June 23, 2016.
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