The Catholic University of America

Summary of Federal Laws

Government Contracts

Small Business Act

15 U.S.C. § 631 et seq. (amended by Pub. L. No. 105-135, 111 Stat. 2592 (1997)); 13 C.F.R. § 125.1 et seq., 48 C.F.R. Part 3, 48 C.F.R. § 52.219-8, 48 C.F.R. § 19.708; 60 Fed. Reg. 48,258 (Sept. 18, 1995), 60 Fed. Reg. 49,644 (Sept. 26, 1995), 61 Fed. Reg. 25,516 (May 21, 1996), 61 Fed. Reg. 26,042 (May 23, 1996), and 62 Fed. Reg. 25,648 (May 9, 1997)

Imposes requirements on subcontracting when involved in a prime contract with the federal government. The requirements apply to utilization of women-owned small businesses, small business concerns, and small business concerns owned and controlled by socially and economically disadvantaged individuals.

For contracts of at least $500,000 or $1 million, if for construction of a public facility, the regulations require submission and approval of a subcontracting plan than includes percentage goals, plan administrator, maintenance and submission of records on compliance, and description of efforts to utilize small businesses.

For subcontracts over $10,000, the prime contractor is required to notify unsuccessful bidders of who received the bid when preferential treatment is involved.

The Federal Acquisition Regulation (FAR) clause must be put in contracts over $50,000. See 48 C.F.R. § 13.103(b), the simplified acquisition threshold.

The regulations also require a contractor to establish procedures to ensure timely payment of amounts due to these subcontractors. Changes, summarized at 60 Fed. Reg. 48,258 and implementing the Federal Acquisition Streamlining Act of 1994 (FASA) (Pub. L. No. 103-355, 108 Stat. 3243), removed the labor surplus area (LSA) set aside program from the FAR. Section 7106 of FASA revised the Small Business Act to set a government wide goal of 5% of women-owned small businesses, placing them on equal footing with disadvantaged businesses. The proposed policy on subcontracting plans is set forth at 60 Fed. Reg. 49,644. The federal government's response (61 Fed. Reg. 26,042) to the Supreme Court holding in Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995), is the proposed structure for amending the affirmative action provisions of the FAR and the Defense FAR supplement. See also 63 Fed. Reg. 35,726 (June 30, 1998) for amendments to eligibility procedures for admission to the 8(a) program.

This is an unsettled area of the law, as it is unclear how courts will decide whether government contracting practices and requirements violate the strict scrutiny requirement for differential treatment enunciated in Adarand.


MLM updated CFR links 7/7/15