SBA Rule on Small Business Past Performance

A Small Business Administration (SBA) final rule established in the 2021 National Defense Act took effect on Aug. 22, 2022, which should improve small businesses’ abilities to demonstrate past performance.


Two specific rules within this final rule, will enable small businesses to better use past performances as joint venture members, and receive written performance records that vouch for their track records as subcontractors to large business primes.


“This SBA rule brings about much needed change to how the Federal Government evaluates small business proposals,” said Leslie Faircloth, deputy director for Naval Air Warfare Center Training System Division’s small business programs.


“These changes are a step in the right direction, finally allowing small businesses to get credit for the work being done as first tier subcontractors and members of JVs.  While requesting a rating within 30 calendar days after the prime contract’s end is the minimum required by law, small businesses may consider negotiating an extension to this time period as a part of the subcontract terms with large businesses,” she said.


One of these rules address past performance ratings wherein a small business contributed to a joint venture. More specifically, it establishes a new requirement to describe the context in which agencies are required to evaluate past performance of a small business that worked as a member of specific joint venture or a first-tier subcontractor.


Within this rule are some key components:

First, to receive a past performance credit, a small business must specify the joint venture they were involved in, name that joint venture’s contracts which the small business wishes to utilize, and inform the agency on which specific duties and responsibilities the small business fulfilled in that joint venture. The small business receives no credit for work it did not do.

Second, the agency is required to review the past performance of the joint venture when considering the past performance of the small business concern. The agency also needs to provide a thorough examination of the facts presented regarding the duties and responsibilities the small business performed.

While the agency involved needs to take into account the past performance example submitted by the small business, this consideration does not ensure that the past performance example will result in a high past performance score, or be perceived in a manner that benefits the small business. However, if all required data points are submitted to an agency, it must at least consider the joint venture’s past performance example. Overall, this rule is expected to ease the burden on small businesses that want to cite a specific example of past performance in a joint venture for a specific petition.


The prominent aspects of the other rule that addresses past subcontractor performance, involves small businesses receiving performance ratings for work done on large business prime contracts that included a subcontracting plan, wherein they acted as first-tier subcontractors. Thirty calendar days after the performance period ends on a prime contractor’s government contract, the subcontractor needs to request a rating of its performance.


Within 15 calendar days of the request, the prime contractor must assign a rating to that small business’ performance. If a prime contractor fails to provide a rating by the required deadline, the SBA recommends that the subcontractor report that failure to the contracting officer.


Afterwards, a small business can present that rating of past performance to agencies when submitting for future prime contracts, which the agencies are required to consider. The evaluation factors follow the Contractor Performance Assessment Reporting System, with designations of exceptional, very good, satisfactory, marginal and unsatisfactory.


The rule also allows for joint venture small business members, which are subcontractors to large primes, to ask for past performance ratings from prime contractors wherein the joint ventures worked as subcontractors, if the prime contracts included subcontracting plans. This is expected to give further help to small businesses in improving past performance records and receive due assessment for those past performances when they assumed a subcontractor role.

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