Meeting past performance requirements is one of the primary challenges for small government contractors seeking to compete for direct awards of prime contracts from the U.S. Government. Typically, the federal agency responsible for a procurement opportunity requires each offeror to provide several examples of past performance where they have satisfactorily performed as a prime contractor for the same or similar services. Those small business concerns lacking the requisite experience as a prime contractor are therefore forced to choose between joining an established prime contractor’s team as a potential subcontractor or foregoing pursuit of the opportunity altogether. Even if the small business concern opts to participate in the opportunity as team member and is lucky enough to be on a winning team, they will likely have little to no control over the amount of work they actually perform on the awarded prime contract.

Section 868 of the National Defense Authorization Act (NDAA) for Fiscal Year 2021, as passed by both the U.S. House of Representatives and the U.S. Senate last week, will greatly enhance the ability small business contractors to meet past performance requirements in the future. While President Trump has threatened to veto the legislation for reasons completely unrelated to this provision, the votes approving the passage of the NDAA in the House (335 to 78) and in the Senate (84-13) were by more than sufficient margins to override a Presidential veto.

Section 868(a) of this year’s NDAA expressly allows a small business concern who is a member of a joint venture and has performed work on a federal prime contract awarded to such JV to choose, at their option, to use the record of that work experience to fulfill past performance qualifications in competing for direct prime contract awards on their own. If the small business concern makes such an election, the contracting officer responsible for the procurement will be required to consider such past performance in evaluating the submitted offer. This change will help small business concerns take full advantage of the work experiences they gain as the member of a joint venture. It will also further enhance the business justifications for small business concerns utilizing joint ventures as part of their growth strategy.

Similarly, Section 868(b) of the 2021 NDAA allows small business concerns to use work experience gained as a first-tier subcontractor on certain federal prime contracts in order to fulfill past performance qualifications. Unlike the case with JV work experience, the applicability of this provision is limited to work done by a small business concern on those federal prime contracts where the prime contractor was subject to a mandatory subcontracting plan. But similar to Section 868(a), this provision also gives the small business concern the option to choose whether or not to utilize the record of qualifying work experience gained as a first-tier subcontractor to meet past performance requirements. And similar to Section 868(a), if that election is made the responsible contracting officers will be obligated to consider such past performance in their evaluations. This important change should significantly enhance the ability of small business contractors to come up with the necessary examples of past performance in order to pursue direct awards of federal prime contracts.

The Administrator of the U.S. Small Business Administration (SBA) is required to issue the regulations necessary for the implementation of these provisions within 120 days after the 2021 NDAA officially becomes law. If President Trump follows through on his threatened veto of the passed bill, additional votes in both chambers of Congress will be needed to override the veto before the law is formally enacted.

This is the second in a series of blog posts about the 2021 NDAA. For more information, please contact MWL Partner Peter Fish.