Lesson 7: Additional Subcontracting Situations After a contract is awarded, there are a number of situations that can arise related to subcontracting. In this lesson, you’ll learn about some of these situations. 7-1

Terminal Learning Objective Identify common subcontracting situations that may arise after the contract is awarded and ways to address them. Subcontracting 7-2

Enabling Learning Objective Given a scenario, identify and address common post-award subcontracting situations. Subcontracting 7-3

Open Discussion How can the Government ensure that prime contractors comply with their small business subcontracting requirements? Small business subcontracting plans and small business participation commitment documents have little value if contractors ignore their commitments once the contract is awarded. Subcontracting 7-4

Contract Modification Contract Award or Contract Modification >$700,000 ($1.5 million for construction) Subcontracting opportunities Small Business Subcontracting Plan Required A small business subcontracting plan can be changed post-award or can be required post-award, although it may not have been required initially. This can happen if a change to the contract value exceeds the dollar thresholds and triggers a requirement for a small business subcontracting plan. In this instance, the current small business subcontracting plan must be modified, or a new one included and accepted by the Contracting Officer. Subcontracting 7-5

Limitations on Subcontracting Small Business Set-Aside Limitations on Subcontracting For acquisitions that are set aside, there are limitations on small businesses with respect to how much of the work the small business prime contractor must perform (see FAR 52.219-14). Subcontracting 7-6

Why Is Small Business Subcontractor Payment Important? $$$$ Prompt Payment Improved Cash Flow Increased Liquidity Unlocked Capital SB Growth and Prosperity Increased SB Participation in DoD Contracts Nonpayment or late payment of small business subcontractors is another matter they may encounter. The Government wants to support small business growth and prosperity as an engine to drive economic activity and job creation throughout the country. Prompt payment helps to improve cash flow for small businesses, increases liquidity, unlocks capital for the purposes of investment and growth, and increases small business participation in Federal contracting. Subcontracting 7-7

Open Discussion How can the Government influence prompt payment to small business subcontractors? Subcontracting 7-8

Activity 7.1: Post-Award Subcontracting Situations Activity Context: Post-award is the point at which small businesses actually experience the benefits of being awarded subcontracts. Many situations can arise, and you need to know how to deal with them. Subcontracting 7-9

Activity 7.1: Post-Award Subcontracting Situations (cont’d.) Read each scenario. Fill out the worksheet with regulatory support information. Determine the best response to each scenario. Be prepared to explain the reasons for your response. Subcontracting 7-10

Lesson Summary Untimely Payment Limitations on Subcontracting Bait and Switch Increased Scope of Work Untimely Payment Terminal Learning Objective Identify common subcontracting situations that may arise after the contract is awarded and ways to address them. Enabling Learning Objective Given a scenario, identify and address common post-award subcontracting situations. During the lesson, students addressed the following scenarios: Scenario A: Potential Bait and Switch Scenario B: Increased Scope of Work Scenario C: Limitations on Subcontracting Scenario D: Untimely Payment to a Subcontractor Subcontracting 7-11

Action Planning Identify one key insight from this lesson. Identify one thing you will do differently on the job. Discuss with your accountability partner. Remember that your ultimate goal is to operate within the acquisition and contracting process to maximize opportunities for small business to execute the Agency’s mission to ultimately support the warfighter.   Subcontracting 7-12