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  • Question

    Does the Small Business prime contractor have to maintain 51% of the work in all years and at all times, or would it be allowable and acceptable for the large business Subcontractor to have (for example) 70% of the work in the base year, with the Small Business prime contractor gaining additional work each year (and the large business Subcontractor getting less work as time goes on) such that by the end of the contract, the Small Business prime contractor performed 51% or more of the work. Is that OK? Does the Small Business need to perform 51% of the work at all times in all years?

    Answer

    A small business prime must comply with FAR clause 52.219-14, Limitations of Subcontracting, for the base period and all option periods.  The base period and option periods are each treated separately, as there is no guarantee that all options will be exercised, so if a small prime subcontracted out 70% of the work to a large sub in the base period and the 1st option was not exercised, then the small prime would not be in compliance with FAR 52.219-14. Also, see 13 CFR 125.6(e), "The period of time used to determine compliance for a total or partial set-aside contract will be the base term and then each subsequent option period..."

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