PF 2019-30 CAAC Letter 2019-01, Class Deviation from the Federal Acquisition Regulation Regarding Limitations on Subcontracting for Small Business Concerns

Section 1651 of the National Defense Authorization Act for FY13 (15 U.S.C. 657s) revised and standardized the limitations on subcontracting.

Office of Management

July 30, 2019

DATE: July 25, 2019

SUBJECT: CAAC Letter 2019-01, Class Deviation from the Federal Acquisition Regulation Regarding Limitations on Subcontracting for Small Business Concerns

TO: Heads of Contracting Activities/Procurement Directors/Contracting Officers
FROM: Director, Contract and Financial Assistance Policy Division, Office of Policy, Office of Acquisition Management

SUMMARY:  

Section 1651 of the National Defense Authorization Act (NDAA) for Fiscal Year 2013 (15 U.S.C. 657s) revised and standardized the limitations on subcontracting, including the nonmanufacturer rule, that apply to small business concerns under Federal Acquisition Regulation (FAR) part 19 procurements.

Section 1651 changed the focus of the limitations on subcontracting rules. Instead of requiring a percentage of work to be performed by a prime contractor, the limitations on subcontracting rules now limit subcontracting to a percentage of the overall award amount to be spent by the prime on subcontractors.

The Small Business Administration (SBA), in its final rule published in the Federal Register at 81 FR 34243 on May 31, 2016 and made effective June 30, 2016, implemented the statutory requirements of section 1651.

The Civilian Agency Acquisition Council (CAAC) issued CAAC Letter 2019-01 on April 3, 2019 providing agencies a model class deviation to implement regulatory changes made by SBA to limitations on subcontracting in its final rule. The class deviation updates the limitations on subcontracting and the nonmanufacturer rule for all small businesses in the clauses relating to set-asides and sole source awards under FAR part 19 for: (1) Small business concerns; (2) 8(a) Program participants; (3) Historically Underutilized Business Zone (HUBZone) small business concerns; (4) Service-disabled veteran-owned small business (SDVOSB) concerns; (5) Economically disadvantaged women-owned small business (EDWOSB) concerns; and (6) Women-owned small business (WOSB) concerns eligible under the WOSB Program.

The DOE class deviation and CAAC Letter 2019-01 with FAR Deviation clauses are attached. 

For questions concerning this policy flash should be directed to the Contract and Financial Assistance Policy Division at doe_oapmpolicy@hq.doe.gov.

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