A new Small Business Administration (“SBA”) rule implementing Section 868 of the 2021 National Defense Authorization Act (“NDAA”) went into effect and will have implications for both large and small U.S. government contractors. Prime contractors with small business subcontracting plans will be required to provide CPARS-like performance evaluations for their first-tier subcontractors. This change will allow subcontractors to demonstrate past performance with greater ease than ever before.

Previously, the weight the government attributed to past performance was seen as a significant impediment to small businesses competing for prime contracts who had never before been awarded a prime contract. The hope is that this new rule will allow new subs-turned-prime contractors and joint venturers to rise to the occasion, with evaluations in tow. Overall, this will likely enhance competition and competitive pricing.

In light of this new rule, prime contractors with subcontracting plans will need to be prepared to put a system in place to comply with these new requirements. After a first-tier subcontractor’s request, the prime must supply an evaluation within 15 days. This obligation will not be open-ended, as the subcontractor only has a 30-day request window after completion of a prime contract period of performance. Subcontractors should take advantage of the new evaluation requirements and make timely requests to their prime contractors for CPARS-like ratings to use on future government bids.

Although these requirements still need to be implemented through the Federal Acquisition Regulation (“FAR”), it is expected that first-tier subcontractor ratings requests will flood prime contractor inboxes in the very near future. Prime contractors should be prepared; ignoring requests may be costly. A failure to comply could lead to contract termination action, withholding of award fees, decreased subcontracting performance ratings, liquidated damages, and, on the extreme end, debarment.  

In preparation, prime contractors should act now to implement rule changes, request systems, and CPARS-inspired evaluation rubrics for potential first-tier subcontractor ratings requests.

Fluet attorneys are able to assist clients with updating their subcontracting plans and implementing viable ratings systems for incoming requests.

Note: The information contained on this page does not constitute legal advice and reading the information does not automatically start an attorney-client relationship. The details are meant to serve as general information and are not comprehensive of all legal requirements or situations.