Paul Murphy, Senior Data Analyst at Bloomberg Government
April 29, 2016

Congress is finally getting serious about the woefully inadequate subcontract reporting contained in the federal government’s Electronic Subcontracting Reporting System (ESRS).
Section 1821 of the just-passed Chairman’s Mark of H.R. 4909, the 2017 National Defense Authorization Act contains a potentially game-changing procurement reform innocently called, “Good Faith in Subcontracting.” It states: “. . . failure to provide contractual documentation showing compliance with a subcontracting plan is a material contract breach, just as existing law states that failing to comply with a subcontracting plan is a material breach.” In other words, any vendor found not to be compliant with their announced subcontracting plans could face breach of contract charges from their agency client. This is huuuge.

Breach of contract is one of the most serious charges federal prosecutors can bring against a vendor. If a vendor is found to have negotiated a contract in bad faith, or if they committed to subcontract plans they had no capability to fulfill, a material breach could lead to corrective action, fines or worse punishment.

Tens of thousands of vendors, hundreds of thousands of contracts and billions of dollars are potentially impacted by this one, simple sentence in HASC Chairman Rep. Mac Thornberry’s new bill. The markup, which just passed out of committee in the wee hours of April 28th, will likely come to the House floor within two weeks, followed by a trip over to the Senate before final reconciliation and approval. Clearly, the new subcontracting language has the Chairman’s support.


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