For many federal government contracts, the prime contractor is required by law to certify that it has included small businesses in its subcontracting plan. But what happens when the contract work begins and ends, and the small business subcontractor doesn’t actually have the opportunity to be involved in the work?
On August 15, a new regulation will go into effect that requires that contractors report to the government when something goes wrong with their subcontracts in any number of ways. As Jill Aitoro reported recently in the Washington Business Journal, contractors now need to inform the government contracting officer whenever they fail to adhere to their submitted subcontracting plans, reduce payments to small business subcontractors, or pay the small businesses’ invoices late, which is defined as more than 90 days after the due date.
For some time, small businesses had complained that although they were frequently included in contract opportunities, those opportunities seemed to dissipate once the contract was actually carried out, and they had no recourse. That is what this new rule is supposed to provide. Of course, it is merely a reporting provision, and it is not immediately clear how it is to be enforced. Still, any change that shows that the federal agencies take this matter seriously is an important one.
Things do move slowly in government, as the regulation that is intended to fix the situation is one that implements provisions included in the 2010 Small Business Jobs Act that require prime contractors to provide small business subcontracting plans. A draft regulation was put out for comment in 2011, comments were received, and a final rule was put forward earlier this year.
We applaud this development. Anything that helps the government fulfill its promises to small businesses, which have been made by Congress and by federal government departments on many occasions without full implementation, is a good thing. We have a national commitment to helping small businesses succeed, but in the real world, they are not always placed in the position that Congress clearly wants them to be in. Any small business that needs to traverse the complicated rules surrounding government contracting is well advised to contact appropriate legal counsel.