I’m terms of subcontracting. And by that I mean, subbing out 100% of the work as a middleman / pass through… My understanding is that, as long as the contract of for $150k or less, OR the business that you are subbing out the work to is similarly situated - meaning they’re a small, woman owned, or hub zone business - that you can sub out 100% regardless of dollar amount. Please provide some clarification to this. Thank you very much.
Derek Please respond if you see this it's a very important question. From my understanding of what you said you can sub out 100% under 250k. SO if my business makes less the 47 million revenue per year I am a small business? Thank you for always responding
can you do a video example on how the middleman strategy applies to product contracts vs service contracts and the regulations that apply to product contracts ..or any info you have regarding this subject would be helpful please i would appreciate it greatly !!
What is the absolute source of truth for determining if the organization you are subcontracting with is what they say they are? Do subs have to have a UEI? Thanks!
Thanks for the video, Derek. Having spoken with other companies, they know they are fully certified and continue with their proposals. I know its confusing and the check-box in SAM may give these entities the feeling they are certified. I feel for these companies that are submitting proposals without knowing the required process, but have no sympathies for people knowingly committing fraud.
100% agree. The worst part is that companies like yours are getting screwed over on the deal. All you can do is protest but that’s not a popular option for some.
Sam doesn't give entities the feeling they are certified. SAM enables you to self-certify. By “self-certifying” and completing solicitation clauses related to your organization’s socio-economic characteristics and size, you certify that your business information is accurate. So, whether anyone is submitting proposals without knowing the required process, is neither here nor there, as the rules and regulations for 'self-certifying' are clearly laid out. The law doesn't have any feelings for those that knowingly commit fraud, hence the penalties that are imposed when those that commit fraud, do so.
If a SDVOSB is a dealer of products made by a large business, does this mean they can not sell these products when the solicitation is set aside for SDVOSBs? Does that only apply if the order is for more than $150k?
Not just businesses under $150K, if you subcontract to a similarly situated business, you can also be the middleman with no issues. Remember, the Govt wants to ensure that this money ends up with small businesses similarly situated within their set-aside. The $150K threshold is because not that much money will go to big business, as the SBA understands most subcontracting limitations.
Watched twice and taking notes. Am I to understand that... Simplified acquisition threshold refers to contract amounts >$250k, however all award amounts have a 50% (or some fixed percentage) as a threshold for maximum sub-contract work. In other words, I can farm out work up to 50% of the job? and Similarly situated refers to 8a to 8a, or SDVO to SDVO and so on. What about SDVO to 8a, or SDVO to woman owned? Is that similarly situated, or must it be the same small biz classification? Does the 50% threshold apply here?
Simplified only applies to small biz contracts over the SAT (currently 250k). Similarly situated must share the same small business program. 8a to 8a. You can’t mix and match 8a to SDVOSB, that doesn’t satisfy the requirement. Remember, if the gov is trying to send money to veteran owned businesses, then the money needs to go to veteran owned businesses. That’s the reality check that will keep you compliant.
Why follow the rules? I caught my mexican born aunt and uncle defrauding the United States in excess of $500M US tax dollars. They paid back $125K to the Govt, and they continue to lie and steal small business contracts, up to $17M for 2022 so far. No prison time. The case is United States vs Main Building Maintenance. Now, you know where your hard earned tax dollars are being diverted to. I told you. I wrote and approved this, the whistleblower. Daniel.
Just for clarity i have seen being a consultant/or an agreement with a company that is qualified to do govcon. And if contracts are won the consultant can receive the agreed percentage (example 20% of profit). Isnt this legal as long as the consultant is hired or has agreement with qualified company?
There are no parallels between what I’m discussing in this video and being a consultant. As a consultant, the award still goes to the company, not the consultant. The regulation then applies to the company the contract was awarded to. I’m not a proponent of the “govcon consultant” model- the way it’s being used recently and it’s going to be confusing for those to navigate who don’t know what they’re doing
@@GovKidMethod ok i got it, main thing is the examples you gave the individuals were taking the money. Which the the funds are for the companies winning the contracts. Got it💪🏾💪🏾👍🏽👍🏽
Hey Derek, thank you for the value! VERY NEW. Going through your videos to learn more and a question I have are you able to fulfill the needs of a contract (example masks or neck ties) from China or another country over seas and send them to the contracts desired location? So essentially just buying and shipping the products back to the USA and to the agency requesting these services? Does this violate anything? Thanks again!
@@GovKidMethod Thanks for the quick response man! Appreciate the link. From what I can see would this "buy american act" apply to all contracts? Or is there a section on beta sam that mentions this on the contract opportunities? Or would I have to mention to them that I am sourcing from countries outside of the U.S and they will tell me if they can still buy or not depending on there specific parameters? Sorry if this is a dumb question. As mentioned VERY NEW haha Really appreciate you and the value you are giving! Thanks Derek! :)
@@zacharisatosha7108 every solicitation has different clauses and far clauses referenced within it. You have to read the contract clauses. Sometimes it will be in there other times it’s not. That’s the only true way to get your answer.
if im a small business and i sub out to another small business, regardless of total contract value, limitations to subcontracting do not apply, correct?
How do you get out of an illegal past through scheme if you find yourself inadvertently in one? I'm new to contracting and I entered into a sub contract with the prime contractor.
Let’s say the government is asking for 5000 masks. Would it be illegal if I got a quote from a company for 5000 masks, bid on the contract, and then buy the masks so I can send them to the government to fulfill the mask contract?
So because it’s a fixed rate is that what makes it a pass through scheme? I’m confused and it has to be a certain dollar amount for it to be legal? I’m replaying the video like 3 times so that I understand.
1) make sure it applies to you (dollar value) 2) if it does, perform the minimum percentage with your company before having a subcontractor do the whole job
Great video Derek, I pretty much understand everything you said, but the only thing that I'm still trying to figure out is. Does the company I would subcontract out to have to be a fully registered govcon company? Or is it ok just as long as I'm the one that is fully registered? I hope that makes sense 😅
@@GovKidMethod follow up. I'm a small business registered in SAM, I team with another small business not registered in Sam, I can go above the 50 percent amount for a service business, what is the highest percentage I can allow the other sub to do? Can I do ten allowing sub to do 90?
So as long as the contract is under 150k I don’t have to worry about percentages or the similarly situated entity clause? And can I do however many contracts I want that way as long as they are under 150k per contract? Like is there an overall combined contracts limit? Also, I know it’s 250k now but is that just temporary because of Covid and it will go back to 150k?
Thanks Derek! This was a great explanation!
I'm glad it was helpful!
I’m terms of subcontracting. And by that I mean, subbing out 100% of the work as a middleman / pass through…
My understanding is that, as long as the contract of for $150k or less, OR the business that you are subbing out the work to is similarly situated - meaning they’re a small, woman owned, or hub zone business - that you can sub out 100% regardless of dollar amount.
Please provide some clarification to this. Thank you very much.
I thought I read the same thing
Derek Please respond if you see this it's a very important question. From my understanding of what you said you can sub out 100% under 250k. SO if my business makes less the 47 million revenue per year I am a small business? Thank you for always responding
can you do a video example on how the middleman strategy applies to product contracts vs service contracts and the regulations that apply to product contracts ..or any info you have regarding this subject would be helpful please i would appreciate it greatly !!
What is the absolute source of truth for determining if the organization you are subcontracting with is what they say they are? Do subs have to have a UEI? Thanks!
Thanks for the video, Derek. Having spoken with other companies, they know they are fully certified and continue with their proposals. I know its confusing and the check-box in SAM may give these entities the feeling they are certified. I feel for these companies that are submitting proposals without knowing the required process, but have no sympathies for people knowingly committing fraud.
100% agree. The worst part is that companies like yours are getting screwed over on the deal. All you can do is protest but that’s not a popular option for some.
That is STILL a lot of 💰💡📝
Sam doesn't give entities the feeling they are certified. SAM enables you to self-certify. By “self-certifying” and completing solicitation clauses related to your organization’s socio-economic characteristics and size, you certify that your business information is accurate. So, whether anyone is submitting proposals without knowing the required process, is neither here nor there, as the rules and regulations for 'self-certifying' are clearly laid out. The law doesn't have any feelings for those that knowingly commit fraud, hence the penalties that are imposed when those that commit fraud, do so.
If a SDVOSB is a dealer of products made by a large business, does this mean they can not sell these products when the solicitation is set aside for SDVOSBs? Does that only apply if the order is for more than $150k?
So as long as each contract is under $150k we can be the middle man with no issues. This is great to know
Not just businesses under $150K, if you subcontract to a similarly situated business, you can also be the middleman with no issues. Remember, the Govt wants to ensure that this money ends up with small businesses similarly situated within their set-aside. The $150K threshold is because not that much money will go to big business, as the SBA understands most subcontracting limitations.
So a small business that makes under 47 mill per year must sub to another similar or an 8a, hubzone etc.@@josephcelestine1945
I completed the whole playlist. Right on. Thank you 8Mile!
Watched twice and taking notes. Am I to understand that...
Simplified acquisition threshold refers to contract amounts >$250k, however all award amounts have a 50% (or some fixed percentage) as a threshold for maximum sub-contract work.
In other words, I can farm out work up to 50% of the job?
and
Similarly situated refers to 8a to 8a, or SDVO to SDVO and so on. What about SDVO to 8a, or SDVO to woman owned? Is that similarly situated, or must it be the same small biz classification?
Does the 50% threshold apply here?
Simplified only applies to small biz contracts over the SAT (currently 250k). Similarly situated must share the same small business program. 8a to 8a. You can’t mix and match 8a to SDVOSB, that doesn’t satisfy the requirement. Remember, if the gov is trying to send money to veteran owned businesses, then the money needs to go to veteran owned businesses. That’s the reality check that will keep you compliant.
So if we wanted to give 100% of the work to another similarly situated entity we could do that?
Do you have any videos where you discuss net 0 - Net 30s?
Why follow the rules? I caught my mexican born aunt and uncle defrauding the United States in excess of $500M US tax dollars. They paid back $125K to the Govt, and they continue to lie and steal small business contracts, up to $17M for 2022 so far. No prison time. The case is United States vs Main Building Maintenance. Now, you know where your hard earned tax dollars are being diverted to. I told you. I wrote and approved this, the whistleblower. Daniel.
Ppp😊😊😊😊😊ppppppppppppppp😊p😊pollp
Ppp
Derek, great info. Question, does this apply when buying goods from a third party and selling to the government? Acquisitions
So good. Thank you so much for posting this video.
Just for clarity i have seen being a consultant/or an agreement with a company that is qualified to do govcon. And if contracts are won the consultant can receive the agreed percentage (example 20% of profit). Isnt this legal as long as the consultant is hired or has agreement with qualified company?
There are no parallels between what I’m discussing in this video and being a consultant. As a consultant, the award still goes to the company, not the consultant. The regulation then applies to the company the contract was awarded to. I’m not a proponent of the “govcon consultant” model- the way it’s being used recently and it’s going to be confusing for those to navigate who don’t know what they’re doing
@@GovKidMethod ok i got it, main thing is the examples you gave the individuals were taking the money. Which the the funds are for the companies winning the contracts. Got it💪🏾💪🏾👍🏽👍🏽
Hey Derek, thank you for the value! VERY NEW. Going through your videos to learn more and a question I have are you able to fulfill the needs of a contract (example masks or neck ties) from China or another country over seas and send them to the contracts desired location? So essentially just buying and shipping the products back to the USA and to the agency requesting these services? Does this violate anything? Thanks again!
If the contract is buy American then you can’t source from China
www.gao.gov/mobile/products/105519
@@GovKidMethod Thanks for the quick response man! Appreciate the link. From what I can see would this "buy american act" apply to all contracts? Or is there a section on beta sam that mentions this on the contract opportunities? Or would I have to mention to them that I am sourcing from countries outside of the U.S and they will tell me if they can still buy or not depending on there specific parameters? Sorry if this is a dumb question. As mentioned VERY NEW haha Really appreciate you and the value you are giving! Thanks Derek! :)
@@zacharisatosha7108 every solicitation has different clauses and far clauses referenced within it. You have to read the contract clauses. Sometimes it will be in there other times it’s not. That’s the only true way to get your answer.
if im a small business and i sub out to another small business, regardless of total contract value, limitations to subcontracting do not apply, correct?
What if Jerry received 50% of the money and singleton got a lower percentage of the money
Really trying to understand this. If i operate in the SAT contract zone (and i don't quality for setasides like 8a) then pass-through is legal?
If the contract is under the SAT, Limitations on Subcontracting does not apply.
In lamest terms basically as long as your company pays 50% or more to its subcontractors then your fine 🙂? ????
50 percent of profit?
How do you get out of an illegal past through scheme if you find yourself inadvertently in one? I'm new to contracting and I entered into a sub contract with the prime contractor.
Contact an attorney and they will advise you.
Let’s say the government is asking for 5000 masks. Would it be illegal if I got a quote from a company for 5000 masks, bid on the contract, and then buy the masks so I can send them to the government to fulfill the mask contract?
This is called reselling, its legal.
No issue with this
So because it’s a fixed rate is that what makes it a pass through scheme? I’m confused and it has to be a certain dollar amount for it to be legal? I’m replaying the video like 3 times so that I understand.
1) make sure it applies to you (dollar value) 2) if it does, perform the minimum percentage with your company before having a subcontractor do the whole job
Great video Derek, I pretty much understand everything you said, but the only thing that I'm still trying to figure out is. Does the company I would subcontract out to have to be a fully registered govcon company? Or is it ok just as long as I'm the one that is fully registered? I hope that makes sense 😅
Only the prime needs to be registered :)
Easy day! Thank you sir!
@@GovKidMethod follow up. I'm a small business registered in SAM, I team with another small business not registered in Sam, I can go above the 50 percent amount for a service business, what is the highest percentage I can allow the other sub to do? Can I do ten allowing sub to do 90?
is it considered pass through if you enter into an unincorporated joint venture? That seems like the loop hole to me.
It’s best to not look for loop holes. There are enough opportunities to do this legally without having to resort to other methods.
Amazing. Thank you so much for this video.
Also thanks to coprince
Thank you for the video!
If I’m 8a can I sub to women own and still not have to worry about the limitations?
Does this apply to state contracts ?
My content is focused on Federal contracts
Hey man, would you be interested in working with me hands on so I can learn how to run a gov contracting business the right way?
Good Video.
how can we outsource work is that legal?
Do part of it yourself
@@GovKidMethod is managing the contract doing part of the work? Like project management?
@GovKidMethod answer the question above please
The big thing here is being certified
Being registered in SAM will do nothing to protect you if you are participating in an illegal pass through scheme.
So as long as the contract is under 150k I don’t have to worry about percentages or the similarly situated entity clause?
And can I do however many contracts I want that way as long as they are under 150k per contract? Like is there an overall combined contracts limit?
Also, I know it’s 250k now but is that just temporary because of Covid and it will go back to 150k?
If it’s under the SAT it doesn’t apply. No limit to quantity of contracts. No one knows when the SAT will change again
20 yrs. God🤦♂️🙏🏿
📝💡🤦♂️🙏🏿🚨🚨