In a previous post, we mentioned the April 27, 2023 Small Business Administration (SBA) Final Rule, which made a number of revisions to the Small Business Regulations. A few of those revisions relate to the Ostensible Subcontractor Rule, a topic that has confused contractors for years. The Final Rule seeks to clear up that confusion, or at least some of it. Specifically, the Final Rule revises 13 CFR 121.103(h) to (1) clarify how the Ostensible Subcontractor Rule applies to general construction contracts and (2) provide guidance on the utilization of the DoverStaffing factors in determining whether a subcontractor is an “ostensible subcontractor.”
Small Business Contractors Rejoice or Repent: Final SBA Rule Adds Teeth to 13 CFR 125.6 Subcontracting Limitations
On April 27, 2023, the Small Business Administration (SBA) issued a final rule, finalizing a September 9, 2022 proposed rule, and making a myriad of changes to the Small Business Regulations. Those changes are effective at the end of this month, on May 30, 2023. We will be covering a number of those changes in upcoming posts. But for now, we’re focusing on a change that will make some contractors very happy and other contractors very worried: real, negative consequences for small businesses that fail to comply with 13 CFR 125.6, which governs subcontracting limitations for small business set-aside contracts over the simplified acquisition threshold (presently defined in FAR 2.101 as $250,000).
When Is an REA Also a ‘Claim?’
When issues arise during performance of a federal government contract, causing a contractor to experience delays and/or to incur additional, unanticipated costs, contractors have a choice of remedies. They can request the contract duration or price be adjusted by submitting either a request for equitable adjustment (REA), or a claim. Though REAs and claims largely