Glossary term
Limitations on Subcontracting
Rules capping how much of a set-aside contract a small-business prime may pass to non-similarly-situated subcontractors.
On set-aside awards, a small-business prime must perform a defined minimum share of the work itself, measured as a percentage of the amount paid. Work subcontracted to "similarly situated entities" — firms holding the same set-aside status — counts toward the prime's own share. These limits exist to stop small businesses being used as fronts, and non-compliance carries serious consequences.
Categories
- set-asides
- compliance
Related terms
- Prime ContractorThe contractor holding the contract directly with the government and accountable for all performance under it.
- SubcontractorA firm performing part of a contract under agreement with the prime rather than with the government.
- Rule of TwoThe requirement to set an acquisition aside for small business when at least two capable small businesses are expected to bid at fair prices.