McLean Performance Group · Federal Teaming Reference

Primary and vital requirements come first — the 51/49 split follows

Two independent SBA/FAR tests. Passing one does not satisfy the other.

Confidential — prepared for the recipient identified above. Illustrative planning model, not a live proposal figure.

Method: which rule leads?
Step 1 — Primary and vital requirements (the ostensible-subcontractor rule, 13 CFR 121.103(h)) is the threshold gate. It asks a factual question — who actually performs the primary and vital requirements, provides key personnel, and directs the work — not a percentage. It is assessed at the time of offer/award and can void the entire award on affiliation grounds if failed, regardless of any dollar split. By regulation, this test does not apply to a similarly situated subcontractor (13 CFR 125.6(c), cross-referencing 121.103(h)(3)) — only to a non-similarly-situated one.

Step 2 — The 51/49 labor-cost split (FAR 52.219-14(e)(1); 13 CFR 125.6(a)(1)) is the ongoing dollar-based compliance layer, checked against amounts paid over each option period or order. It applies once Step 1 is cleared — it does not clear Step 1 on its own.

Both tests must be satisfied independently. A structure can hit 51/49 on paper and still fail Step 1 if the non-similarly-situated partner holds the primary and vital work.
1Primary and vital requirements — the threshold gate

2

Labor base — 100%
+
Not labor · not reviewed under either test
Baseline product license
Custom instance license

Does CPaT's ceiling change with HE teaming?
The rules, verbatim: FAR 52.219-14(e)(1) — for services, the contractor "will not pay more than 50 percent of the amount paid by the Government for contract performance to subcontractors that are not similarly situated entities." 13 CFR 125.6(a)(1) states the same 50% test and lists excludable direct costs "such as airline travel… cloud computing services, or mass media purchases" — the category CPaT's platform/license fee is modeled against here. "Similarly situated entity" is defined at FAR 52.219-14(b). 13 CFR 125.6(c) confirms a similarly situated subcontractor's self-performed labor is not counted as subcontracted, and that SBA excludes a subcontract to a similarly situated entity from the ostensible-subcontractor rule entirely (13 CFR 121.103(h)(3)). The legal floor on the dollar test is any amount over 50%; this model uses 51% as a one-point safe-compliance margin, not a separate legal number.
This is a structuring illustration for internal discussion, not a legal opinion. Confirm the similarly-situated determination, the CLIN treatment of the platform fee, the ostensible-subcontractor exposure under 13 CFR 121.103(h), and NAICS-code fit with counsel before finalizing any teaming agreement or proposal. © 2026 Bust Out Performance LLC dba McLean Performance Group. All rights reserved.