Is this legal?
FAR 19.508 lists the solicitation clauses and provisions to insert into small business set-asides. Note that it only has 52.219-6 as a requirement for purchases under $150,000, the SAP threshold. Check the contract to see if FAR clauses 52.219-8 or 52.219-14 are included. If those clauses are in the contract, there may be some recourse on the contractor. Basically, unless there are clauses or something in the contract that states otherwise, there is nothing contractually that can stop a contractor from doing this in your situation.
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