Federal Acquisition Regulation: Subcontracting to Puerto Rican and Covered Territory Small Businesses
Published Date: 1/3/2025
Rule
Summary
Starting January 17, 2025, new rules will make it easier and more rewarding for big government contractors to team up with small businesses in Puerto Rico and other U.S. territories. This change helps these small businesses get more chances to shine and win government work, thanks to updated incentives from the Small Business Administration. If you’re a contractor or small biz in these areas, get ready to benefit from these fresh opportunities!
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
Mentor Contractors Get Two New Incentives
Starting January 17, 2025, a mentor with an SBA-approved mentor‑protégé agreement that subcontracts to its protégé (if the protégé is a covered territory business or has its principal office in Puerto Rico) can receive positive consideration in the mentor's past performance evaluation and may count costs of training the protégé toward the mentor's subcontracting plan goals. These incentives apply to mentor‑protégé pairs regardless of contract dollar value, including contracts at or below the Simplified Acquisition Threshold and contracts for commercial products (including COTS).
More Opportunities for Territory Small Businesses
The rule is expected to benefit small businesses with principal offices in the Commonwealth of Puerto Rico and covered territory small businesses (U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands) because mentors may be incentivized to enter SBA‑approved mentor‑protégé agreements and issue subcontracts to them. The final rule notes the Government awarded about 506 contracts in FY2021, 438 in FY2022, and 435 in FY2023 (about 460 unique small‑entity awards per year), and that 6,318 small businesses in Puerto Rico are registered in SAM.
Certain Statutory Small Entities Exempt from Subcontracting Plans
The rule decreases compliance burden by specifying that subcontractors who are treated as small business concerns by statute (for example, Alaska Native Corporations as cited at 13 CFR 125.3(b)(2)) are not required to submit subcontracting plans as subcontractors. The general subcontracting‑plan thresholds cited remain $750,000 (and $1.5 million for construction) for requiring subcontractors to adopt plans.
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Key Dates
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Previous / Next Documents
Previous: 2024-31404, Federal Acquisition Regulation: Rerepresentation of Size and Socioeconomic Status
Starting January 17, 2025, businesses working with the government must update their size and socioeconomic status info more often, thanks to new rules from DoD, GSA, and NASA. This change helps keep things fair and clear when companies compete for contracts. If you’re a contractor, get ready to keep your info fresh or risk missing out on opportunities!
Next: 2024-31408, Federal Acquisition Regulation; Federal Acquisition Circular 2025-03; Small Entity Compliance Guide
Starting January 3, 2025, small businesses working with the government will see clearer and fairer rules about suspensions, size status, and subcontracting with Puerto Rican and other covered territory small businesses. These updates make sure everyone plays by the same rules and helps small entities know exactly where they stand. If you’re a small business contractor, these changes could affect how you prove your size and who you can team up with, so keep an eye on deadlines and details!