Most acquisitions over $100,000 are government negotiated contracts governed by FAR Part 15 where price and non-price factors are considered, discussions are allowed and revisions to proposals are common once proposal deficiencies are pointed out. Under negotiated proposals, subcontractor information and eligibility are key items.

Subcontractor Participation. Some regulations or contract terms may limit the offeror’s ability to use subcontractors In small business set aside prime contracts the "Limitations on Subcontracting" clause (FAR 52.219-14) restricts the amount of subcontracting in service contracts where the prime must use at least 50% of the cost of contract performance incurred for personnel for its own employees. Construction contracts will commonly prescribe certain percentages of the work done. Several clauses strongly encourage prime government contractors to subcontract with small business concerns and disadvantaged small businesses and FAR 52.219-10 requires that each successful offeror on a contract exceeding $500,000 ($1 million for construction) submit an acceptable subcontracting plan where monetary incentives for outstanding performance (FAR 52.219-10) and penalties for lack of good faith performance (FAR 52-219-6) is included. Subcontracting is important in research and development contracting where in FAR 35 the government emphasizes agencies need to know whether proposed subcontractors are qualified and hence need to have advanced knowledge of subcontracts for technical or scientific work.

Organization Conflict of Interest. Sometimes organizational conflict of interest (COI), which exists when because of other activities or relationships an organization is unable or potentially unable to render impartial assistance to the government, can create grounds for protests. The GAO has held an awardee will have an unfair competitive advantage when the proposed subcontractor possessed competition-available information through its prior government work which is not available to other offerors.

Subcontractor Experience. When the solicitation has no restrictions on subcontracting there is significant room to use subcontractor to enhance proposals because the government may accept a proposal with substantial subcontracting and no offeror may be penalized merely for proposing subcontractors. Agencies may reasonably consider a proposed subcontractor’s experience when rating prime contractor qualification if the solicitation allows subcontractors to perform the particular work and if the RFP does not prohibit such evaluations. Also, no prohibition exists against more than one offeror proposing the same contractor.

Subcontractor Past Performance. When evaluating an offeror’s past performance the agency may grade the offeror based on the performance of its proposed subcontractors on previous projects because the prime contractor is responsible for its subcontractors’ performance. Government evaluators may reasonably decide not to credit the offeror with its subcontractor’s performance when the subcontractor would do minimal work under the contract.

Mistakes in Subcontract Offers. The general principle is that awards can be adjusted for mistakes when they are clear-cut clerical or mathematical errors or misreading of specifications as opposed to judgmental errors. When the prime contractor’s error is based on the subcontractor’s error the prime contract is still adjustable as long as the prime contractor was unaware of the underlying error.

Subcontractor Responsibility. COs are prohibited from awarding contracts to "nonresponsible" contractors (e.g. deficient in financial resources, ability to meet contract requirements, satisfactory performance record, integrity and ethics) so contractors need to affirmatively demonstrate its responsibility including that of its subcontractors. Agencies may assume the prime properly ascertained its subcontractor’s responsibility unless evidence shows the prime made an insufficient investigation. The government is entitled to make its own independent determination of a subcontractor’s responsibility.

Debarment and Suspension. Agencies may debar or suspend subcontractors form participating in government contracts when they are debarred or suspended. The government uses the List of Parties Excluded From Federal Procurement and Non-procurement Programs available at http://epls.arnet.gov .

Subcontractors’ Right of Protest. In general, since subcontractor arrangements are essentially private matters between prime contractors and subcontractors, aggrieved subcontractors have few rights in a federal forum to challenge alleged violations of procurement rules before award of the contract. The General Accounting Office is the usual forum for "protests" - a written objection by an interested party to a solicitation or award where the objection alleges improprieties in the award of a contract. Since an "interested party" is defined as an "actual or prospective bidder or offeror whose direct economic interest would be affected by the award" a subcontractor would not meet this definition. This interested party exclusion also applies to protest efforts at either the U.S. Court of Federal Claims and at the agency level since the definition of interest party is the same.

The GAO does recognize an exception for subcontractor protests where the subcontract selection is "by" the government. This process occurs when all or most meaningful aspects of the procurement are controlled by the federal agency officials and the prime contractor is a mere conduit of the agency whose primary concern is administrative. Also, subcontractors may be entitled to monetary relief when their prime contractors prevail in a joint effort protest to the GAO where successful protesters may recover costs for bid and proposal preparation costs and protest costs.

{TAG_FORM_TITLE}