Blog

June 24, 2013

Determining Financial Responsibility - What is a Subcontractor Receiving "Significant Funding" In A Calendar Year?

You may be able to guess the answer before I give it ... it depends!

"Significant funding" is a sliding metric based on purchasing system volume and number of subcontractors participating within the system. In general it should be a line in the sand that effectively tracks performance of system subcontractors without unduly burdening the system. When drawing that line keep in mind that more subcontractors than not should be rated annually.

For a small to midsize business the basement will likely be the simplified acquisition threshold. As a baseline the SAP works well as a meaningful border between nit-and-nat subcontractors and ones upon which the system depends on a regular basis because of some of the additional requirements that pop over $150K (source justifications for noncompetitive commercial item purchases; Anti-Lobbying Act; Anti-Kickback Act, etc.). However, for a larger business (processing, say, $1B+ in revenue through their purchasing system) that line watermark may be legitimately higher - say $700K.

In general, I suggest drawing the vendor rating "low limit" or basement at a public law requirement if at all possible as that will provide a bright and easily explained line (e.g. once SAP PLs apply that sub becomes "significant funding" to track for a SB; anything that could implicate CAS or TINA may be significant funding for a larger business). If the line is drawn at an "arbitrary" number (like $1M), I suggest being able to effectively explain to the review team how you came to that number in case they ask.