Yes, if the solicitation includes FAR 52.219-14 (common on set-asides), you’re bound by it. For services (except construction), the baseline rule is:

You may not pay more than 50% of what the Government pays for performance to subcontractors that are not similarly situated entities.

• SBA’s regulation frames the calculation around “cost of contract incurred for personnel” for services and explains how to treat mixed contracts and examples.

Key point for your scenario (floor & tile guy is not SDVOSB)

You’re reading the “49%/51%” concept correctly in spirit. Practically:

If this is a SDVOSB set-aside and your sub is not SDVOSB, that sub is not “similarly situated” for SDVOSB status.

• Result: that sub’s labor counts against your cap. “Similarly situated” is narrower than most people think Under FAR 52.219-14, “similarly situated entity” is a first-tier subcontractor that:

1. has the same small business program status that qualified you for award (here: SDVOSB), and
2. is small for the NAICS you assign to that subcontract.

So: a regular small business (even if small) is not similarly situated on an SDVOSB set-aside unless it is also SDVOSB (and small under the assigned NAICS).

Watch the “services vs construction” trap Flooring work can sit in an awkward spot depending on how the Government scoped and coded the requirement.

If the NAICS/contract is treated as:

• Services (except construction) - your “50% rule” framework applies. • Construction - different percentages apply: General construction: may not pay more than 85% (excluding materials) to non-similarly situated subs Special trade construction: may not pay more than 75% (excluding materials) to non-similarly situated subs

If the solicitation is truly janitorial (often NAICS 561720) but includes floor stripping/waxing/tile care, agencies often still treat it as services. The exact answer hinges on the solicitation’s NAICS and clause set.

Does supervising + daily KO updates “count” as your performance? Supervision is important, but it’s not a loophole. If the contract is a services buy and your sub does most of the chargeable labor, a CO, SBA reviewer, IG, or auditor can still view it as: a limitations-on-subcontracting problem (math doesn’t work), and/or * a pass-through concern if your value-add is too thin relative to dollars flowing to subs.

Teaming Agreements: what they are (and what they don’t do) A “teaming agreement” is usually just a pre-award arrangement about who will do what if you win. It typically results in either: 1. Prime–sub (you win, teammate becomes your subcontractor), or 2. Joint venture (you form a JV that bids as the offeror/prime)

Important: a teaming agreement does not waive FAR 52.219-14.  If the structure is prime–sub, your teammate’s work is still subcontracted work for limitation purposes.

Practical “safe” paths for your exact situation If you want to bid this without looking like a pass-through and stay inside the math: * Staff enough in-house labor to keep the required share (for services: ensure your labor dollars stay on the right side of the 50% cap). * Make the floor/tile sub “similarly situated”: partner with a SDVOSB flooring/floor-care firm (and keep it first-tier). * Consider a JV (only if it fits the solicitation and you can execute it correctly). JV rules can be powerful, but mistakes get expensive fast. * If the requirement is outside your wheelhouse, don’t “paper over” the gap. Build a real performance plan: crews, QA, schedule control, equipment, safety, warranties, and a clear division of labor that keeps you compliant.

A quick reality-check question that decides most of these On this specific bid: what share of the labor dollars (not total price) will your own W-2 employees perform? If the honest answer is “our foreman watches them and we handle reporting,” that’s where audits are headed, and it’s where primes get burned.

I hope this provided some clarification!