Senate Adopts Casey Subcontractor Notification Amendment

An amendment offered by Senator Bob Casey (D-PA) to the SBIR and STTR Reauthorization Act (S. 493) has been adopted by a vote of 99-0.

It is aimed at preventing “contractors from fraudulently adding minority and women-owned businesses to bids without the intention of following through to deliver work to listed subcontractors,” according to a press release from earlier this year.

Some background:

Currently, prime contractors frequently list minority business enterprises (MBE) or women business enterprises (WBE) as subcontractors on their bids in order to strengthen their applications, at times without the knowledge of the MBE or WBE.  When a contract is awarded, the MBE or WBE are sometimes unaware of their inclusion in the contract and sometimes do not receive the business from that contract.

The legislation contained in this amendment would:

  • Require subcontractors identified on a solicitation for a competitive proposal made by an executive agency be notified by the prime contractor before the application is submitted.  A written agreement between the prime contractor and the subcontractor must be submitted to the contracting officer that includes the identity of the subcontractor, the scope of the work to be performed under the subcontract and the dollar amount of the subcontract.
  • Failure to notify subcontractors of their inclusion on proposals will result in the following: First time offense: fine of 20 percent of the overall contract; second time offense: fine of fifty percent and prohibited from seeking federal contracts for one year; third time offense: permanently prohibited from seeking federal contracts.
  • Establish a reporting mechanism that allows a subcontractor to report fraudulent activity by a contractor.

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