Federal Government
Successful Protester Paid upon Receipt of Costs — If Only It Were So Easy
Small businesses competing for or performing set-aside contracts are caught in a difficult position because of delays in statutory implementation by the FAR Council, which follow delays in statutory implementation by the Small Business Administration (SBA). The Federal Acquisition Regulation (FAR) provides a specific formula, included in a mandatory clause for all small business set-aside solicitations and contracts, to be used in evaluating whether a small business complies with subcontracting limitations.1 The Court of Federal Claims has held that this clause is a material portion of the contract, which may mean that contractors that violate the clause can be terminated for default.= Further, without weighing in on the validity of the charge, the Department of Justice has pursued contractors under the False Claims Act for violating this clause.3 The statute imposes hefty penalties for violations,4 and the SBA considers violation of the subcontracting limitations to be potential grounds for debarment.5