FAR Regulations Now Recognize Similarly Situated Entities

A five-year-old obvious disconnect between the U.S. Small Business Administration (SBA) regulations and those of the Federal Acquisition Regulation (FAR) regarding the limitations on subcontracting is about to change. Earlier this month, the FAR Council issued a final rule available here.

At a very high level, the limitations on the subcontracting rule apply to procurements that are set aside for small businesses, and the rule is designed to ensure that a small business prime contractor is performing at least 50% of the cost of contract performance.¹ In short, the point is to ensure that the small business is growing and actually performing the contract work; not just partnering with a large business that was ineligible to compete for the set-aside contract, to perform the bulk of the work.