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Similarly Situated Entities: The New Rule to Help You Meet the Limitations on Subcontracting!

 In GovCon Tips

Starting out as a small business, but can’t meet the percentage of work? Read this article to learn more about similarly situated entities, the new rule to help you meet the limitations on subcontracting!


The latest class deviation issue, DARS Tracking Number 2019-O0003, about similarly situated entities on January 8, 2018 has created rules that favor the little guys in the federal marketplace. 

With this new rule, contractors can now meet their subcontracting percentage goals by utilizing what the government terms as a “similarly situated entity.”

A “similarly situated entity” means a first-tier subcontractor, including an independent contractor, that has the same small business program status as you are. 

Previously, your only option was to self-perform the entire percentage goal of your contract or not accept the contract at all. But with this new rule, you can now meet that performance goal with the help of a firm similar to your small business size. 

For instance, if you are on a contract as an 8a business, then you can bring in another 8a firm to help you meet your 50% requirement while you subcontract the other 50% to others. 

Note: If the project is a set-aside, the respective firm must have the same set-aside to deem you eligible for satisfaction of the requirements.

“So, this is great news for small businesses out there because a lot of times people are just getting started and you may not have everything that you need to get the wheels turning, so… the government is creating rules, policies to allow small businesses to really embark on this journey. So, they’re making it more favorable for the little guys to get started and to start growing their business.”


So, for those firms that may find it difficult to fully staff up the job on a large contract, then this is an effective alternative that is now being accepted at the federal level.

However, if you can meet the percentage requirement, then this rule does not impact your firm at all. You can still self perform all of your respective prime contracting work within your ability.

With this in mind, if you want to learn more about certain federal contracting rules or how to navigate the federal marketplace overall, then check the resources below. 

You can also join us here at GovCon Giants or check the new GovCon Edu where you learn everything about government contracting!

Similarly Situated Entity helps Limitations on SUBCONTRACTING for small firms

Explaining the rules for subcontracting small business contracts

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