FAC Number: 2023-01 Effective Date: 12/30/2022
19.705-2 Determining the need for a subcontracting plan.
The contracting officer shall take the following actions to determine whether a proposed contractual action requires a subcontracting plan:
(a)
(1) Determine whether the proposed total contract dollars will exceed the subcontracting plan threshold in 19.702 (a).
(2) Determine whether a proposed modification will cause the total contract dollars to exceed the subcontracting plan threshold (see 19.702 (a)).
(b) Determine whether subcontracting possibilities exist by considering relevant factors such as-
(1) Whether firms engaged in the business of furnishing the types of items to be acquired customarily contract for performance of part of the work or maintain sufficient in-house capability to perform the work; and
(2) Whether there are likely to be product prequalification requirements.
(3) Whether the firm can acquire any portion of the work with minimal or no disruption to performance (with consideration given to the time remaining until contract completion), and at fair market value, when a determination is made in accordance with paragraph (a)(2).
(c) If it is determined that there are no subcontracting possibilities, the determination shall include a detailed rationale, be approved at a level above the contracting officer , and placed in the contract file.
(d) In solicitations for negotiated acquisitions , the contracting officer may require the submission of subcontracting plans with initial offers , or at any other time prior to award. In determining when subcontracting plans should be required, as well as when and with whom plans should be negotiated, the contracting officer must consider the integrity of the competitive process, the goal of affording maximum practicable opportunity for small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns to participate, and the burden placed on offerors .
(e) A contract may not have more than one subcontracting plan. However, a contracting officer may establish separate subcontracting goals for each order under an indefinite-delivery, indefinite-quantity contract ( 19.705-1 (b)(2)). When a contract modification exceeds the subcontracting plan threshold (see 19.702 (a)) or an option is exercised, the goals of an existing subcontracting plan shall be amended to reflect any new subcontracting opportunities not envisioned at the time of contract award. These goal changes do not apply retroactively.
(f) If a subcontracting plan has been added to the contract due to a modification (see 19.702 (a)(1)(iii)) or a size re-representation (see 19.301-2 (e)), the subcontracting goals apply from the date of incorporation of the subcontracting plan into the contract and the contractor's achievements must be reported on the ISR (or the SF-294, if applicable) on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.
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ACQUISITION.GOV
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48 CFR § 52.219-9 - Small Business Subcontracting Plan.
- Table of Popular Names
As prescribed in 19.708(b) , insert the following clause:
(a) This clause does not apply to small business concerns.
(b) Definitions. As used in this clause -
Alaska Native Corporation (ANC) means any Regional Corporation, Village Corporation, Urban Corporation, or Group Corporation organized under the laws of the State of Alaska in accordance with the Alaska Native Claims Settlement Act , as amended ( 43 U.S.C. 1601 , et seq. ) and which is considered a minority and economically disadvantaged concern under the criteria at 43 U.S.C. 1626(e)(1) . This definition also includes ANC direct and indirect subsidiary corporations, joint ventures, and partnerships that meet the requirements of 43 U.S.C. 1626(e)(2) .
Commercial plan means a subcontracting plan (including goals) that covers the offeror's fiscal year and that applies to the entire production of commercial products and commercial services sold by either the entire company or a portion thereof ( e.g., division, plant, or product line).
Commercial product means a product that satisfies the definition of “commercial product” in Federal Acquisition Regulation (FAR) 2.101 .
Commercial service means a service that satisfies the definition of “commercial service” in FAR 2.101 .
Electronic Subcontracting Reporting System (eSRS) means the Governmentwide, electronic, web-based system for small business subcontracting program reporting. The eSRS is located at http://www.esrs.gov.
Indian tribe means any Indian tribe , band, group, pueblo, or community, including native villages and native groups (including corporations organized by Kenai, Juneau, Sitka, and Kodiak) as defined in the Alaska Native Claims Settlement Act ( 43 U.S.C. A. 1601 et seq. ), that is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs in accordance with 25 U.S.C. 1452(c) . This definition also includes Indian-owned economic enterprises that meet the requirements of 25 U.S.C. 1452(e) .
Individual subcontracting plan means a subcontracting plan that covers the entire contract period (including option periods), applies to a specific contract, and has goals that are based on the offeror's planned subcontracting in support of the specific contract, except that indirect costs incurred for common or joint purposes may be allocated on a prorated basis to the contract.
Master subcontracting plan means a subcontracting plan that contains all the required elements of an individual subcontracting plan , except goals, and may be incorporated into individual subcontracting plans, provided the master subcontracting plan has been approved.
Reduced payment means a payment that is for less than the amount agreed upon in a subcontract in accordance with its terms and conditions, for supplies and services for which the Government has paid the prime contractor.
Subcontract means any agreement (other than one involving an employer-employee relationship) entered into by a Federal Government prime Contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract .
Total contract dollars means the final anticipated dollar value, including the dollar value of all options.
Untimely payment means a payment to a subcontractor that is more than 90 days past due under the terms and conditions of a subcontract for supplies and services for which the Government has paid the prime contractor.
(1) The Offeror, upon request by the Contracting Officer, shall submit and negotiate a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. If the Offeror is submitting an individual subcontracting plan , the plan must separately address subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). The subcontracting plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be negotiated within the time specified by the Contracting Officer. Failure to submit and negotiate the subcontracting plan shall make the Offeror ineligible for award of a contract.
(i) The Contractor may accept a subcontractor 's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran -owned small business, or a women-owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract .
(ii) The Contractor may accept a subcontractor 's representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran -owned small business, or a women-owned small business in the System for Award Management (SAM) if -
(A) The subcontractor is registered in SAM ; and
(B) The subcontractor represents that the size and socioeconomic status representations made in SAM are current, accurate and complete as of the date of the offer for the subcontract .
(iii) The Contractor may not require the use of SAM for the purposes of representing size or socioeconomic status in connection with a subcontract .
(iv) In accordance with 13 CFR 121.411 , 124.1015 , 125.29 , 126.900 , and 127.700 , a contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor 's size or socioeconomic status.
(d) The Offeror's subcontracting plan shall include the following:
(1) Separate goals, expressed in terms of total dollars subcontracted, and as a percentage of total planned subcontracting dollars, for the use of small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns as subcontractors. For individual subcontracting plans, and if required by the Contracting Officer, goals shall also be expressed in terms of percentage of total contract dollars , in addition to the goals expressed as a percentage of total subcontract dollars. The Offeror shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs. In accordance with 43 U.S.C. 1626 -
(i) Subcontracts awarded to an ANC or Indian tribe shall be counted towards the subcontracting goals for small business and small disadvantaged business concerns, regardless of the size or Small Business Administration certification status of the ANC or Indian tribe ; and
(ii) Where one or more subcontractors are in the subcontract tier between the prime Contractor and the ANC or Indian tribe , the ANC or Indian tribe shall designate the appropriate Contractor(s) to count the subcontract towards its small business and small disadvantaged business subcontracting goals.
(A) In most cases, the appropriate Contractor is the Contractor that awarded the subcontract to the ANC or Indian tribe .
(B) If the ANC or Indian tribe designates more than one Contractor to count the subcontract toward its goals, the ANC or Indian tribe shall designate only a portion of the total subcontract award to each Contractor. The sum of the amounts designated to various Contractors cannot exceed the total value of the subcontract .
(C) The ANC or Indian tribe shall give a copy of the written designation to the Contracting Officer, the prime Contractor, and the subcontractors in between the prime Contractor and the ANC or Indian tribe within 30 days of the date of the subcontract award.
(D) If the Contracting Officer does not receive a copy of the ANC 's or the Indian tribe 's written designation within 30 days of the subcontract award, the Contractor that awarded the subcontract to the ANC or Indian tribe will be considered the designated Contractor.
(2) A statement of -
(i) Total dollars planned to be subcontracted for an individual subcontracting plan ; or the Offeror's total projected sales, expressed in dollars, and the total value of projected subcontracts , including all indirect costs except as described in paragraph (g) of this clause, to support the sales for a commercial plan ;
(ii) Total dollars planned to be subcontracted to small business concerns (including ANC and Indian tribes);
(iii) Total dollars planned to be subcontracted to veteran-owned small business concerns;
(iv) Total dollars planned to be subcontracted to service-disabled veteran -owned small business;
(v) Total dollars planned to be subcontracted to HUBZone small business concerns;
(vi) Total dollars planned to be subcontracted to small disadvantaged business concerns (including ANCs and Indian tribes); and
(vii) Total dollars planned to be subcontracted to women-owned small business concerns.
(3) A description of the principal types of supplies and services to be subcontracted, and an identification of the types planned for subcontracting to -
(i) Small business concerns;
(ii) Veteran-owned small business concerns;
(iii) Service-disabled veteran -owned small business concerns;
(iv) HUBZone small business concerns;
(v) Small disadvantaged business concerns; and
(vi) Women-owned small business concerns.
(4) A description of the method used to develop the subcontracting goals in paragraph (d)(1) of this clause.
(5) A description of the method used to identify potential sources for solicitation purposes (e.g., existing company source lists, SAM , veterans service organizations, the National Minority Purchasing Council Vendor Information Service, the Research and Information Division of the Minority Business Development Agency in the Department of Commerce , or small, HUBZone, small disadvantaged, and women-owned small business trade associations). A firm may rely on the information contained in SAM as an accurate representation of a concern's size and ownership characteristics for the purposes of maintaining a small, veteran-owned small, service-disabled veteran -owned small, HUBZone small, small disadvantaged, and women-owned small business source list. Use of SAM as its source list does not relieve a firm of its responsibilities (e.g., outreach, assistance, counseling, or publicizing subcontracting opportunities) in this clause.
(6) A statement as to whether or not the Offeror included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with -
(i) Small business concerns (including ANC and Indian tribes);
(v) Small disadvantaged business concerns (including ANC and Indian tribes); and
(7) The name of the individual employed by the Offeror who will administer the Offeror's subcontracting program, and a description of the duties of the individual .
(8) A description of the efforts the Offeror will make to assure that small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns have an equitable opportunity to compete for subcontracts .
(9) Assurances that the Offeror will include the clause of this contract entitled “Utilization of Small Business Concerns” in all subcontracts that offer further subcontracting opportunities, and that the Offeror will require all subcontractors (except small business concerns) that receive subcontracts in excess of the applicable threshold specified in FAR 19.702(a) on the date of subcontract award, with further subcontracting possibilities to adopt a subcontracting plan that complies with the requirements of this clause.
(10) Assurances that the Offeror will -
(i) Cooperate in any studies or surveys as may be required;
(ii) Submit periodic reports so that the Government can determine the extent of compliance by the Offeror with the subcontracting plan;
(iii) After November 30, 2017, include subcontracting data for each order when reporting subcontracting achievements for indefinite-delivery, indefinite-quantity contracts with individual subcontracting plans where the contract is intended for use by multiple agencies;
(iv) Submit the Individual Subcontract Report (ISR) and/or the Summary Subcontract Report (SSR), in accordance with paragraph (l) of this clause using the Electronic Subcontracting Reporting System (eSRS) at http://www.esrs.gov. The reports shall provide information on subcontract awards to small business concerns (including ANCs and Indian tribes that are not small businesses), veteran-owned small business concerns , service-disabled veteran -owned small business concerns , HUBZone small business concerns , small disadvantaged business concerns (including ANCs and Indian tribes that have not been certified by SBA as small disadvantaged businesses), women-owned small business concerns, and for NASA only, Historically Black Colleges and Universities and Minority Institutions. Reporting shall be in accordance with this clause, or as provided in agency regulations;
(v) Ensure that its subcontractors with subcontracting plans agree to submit the ISR and/or the SSR using eSRS;
(vi) Provide its prime contract number, its unique entity identifier , and the email address of the Offeror's official responsible for acknowledging receipt of or rejecting the ISRs, to all first -tier subcontractors with subcontracting plans so they can enter this information into the eSRS when submitting their ISRs; and
(vii) Require that each subcontractor with a subcontracting plan provide the prime contract number, its own unique entity identifier , and the email address of the subcontractor 's official responsible for acknowledging receipt of or rejecting the ISRs, to its subcontractors with subcontracting plans.
(11) A description of the types of records that will be maintained concerning procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of the offeror's efforts to locate small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns and award subcontracts to them. The records shall include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated):
(i) Source lists (e.g., SAM), guides, and other data that identify small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns.
(ii) Organizations contacted in an attempt to locate sources that are small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concerns.
(iii) Records on each subcontract solicitation resulting in an award of more than the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, indicating -
(A) Whether small business concerns were solicited and, if not, why not;
(B) Whether veteran-owned small business concerns were solicited and, if not, why not;
(C) Whether service-disabled veteran-owned small business concerns were solicited and, if not, why not;
(D) Whether HUBZone small business concerns were solicited and, if not, why not;
(E) Whether small disadvantaged business concerns were solicited and, if not, why not;
(F) Whether women-owned small business concerns were solicited and, if not, why not; and
(G) If applicable, the reason award was not made to a small business concern .
(iv) Records of any outreach efforts to contact -
(A) Trade associations;
(B) Business development organizations;
(C) Conferences and trade fairs to locate small, HUBZone small, small disadvantaged, service-disabled veteran -owned, and women-owned small business sources; and
(D) Veterans service organizations.
(v) Records of internal guidance and encouragement provided to buyers through -
(A) Workshops, seminars, training, etc.; and
(B) Monitoring performance to evaluate compliance with the program's requirements.
(vi) On a contract-by-contract basis, records to support award data submitted by the offeror to the Government, including the name, address, and business size of each subcontractor . Contractors having commercial plans need not comply with this requirement.
(12) Assurances that the Offeror will make a good faith effort to acquire articles, equipment , supplies , services, or materials , or obtain the performance of construction work from the small business concerns that it used in preparing the bid or proposal, in the same or greater scope, amount, and quality used in preparing and submitting the bid or proposal. Responding to a request for a quote does not constitute use in preparing a bid or proposal. The Offeror used a small business concern in preparing the bid or proposal if -
(i) The Offeror identifies the small business concern as a subcontractor in the bid or proposal or associated small business subcontracting plan, to furnish certain supplies or perform a portion of the subcontract ; or
(ii) The Offeror used the small business concern 's pricing or cost information or technical expertise in preparing the bid or proposal, where there is written evidence of an intent or understanding that the small business concern will be awarded a subcontract for the related work if the Offeror is awarded the contract.
(13) Assurances that the Contractor will provide the Contracting Officer with a written explanation if the Contractor fails to acquire articles, equipment , supplies , services or materials or obtain the performance of construction work as described in (d)(12) of this clause. This written explanation must be submitted to the Contracting Officer within 30 days of contract completion.
(14) Assurances that the Contractor will not prohibit a subcontractor from discussing with the Contracting Officer any material matter pertaining to payment to or utilization of a subcontractor .
(15) Assurances that the offeror will pay its small business subcontractors on time and in accordance with the terms and conditions of the underlying subcontract , and notify the contracting officer when the prime contractor makes either a reduced or an untimely payment to a small business subcontractor (see 52.242-5 ).
(e) In order to effectively implement this plan to the extent consistent with efficient contract performance, the Contractor shall perform the following functions:
(1) Assist small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation by such concerns. Where the Contractor's lists of potential small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time.
(2) Provide adequate and timely consideration of the potentialities of small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns in all “make-or-buy” decisions.
(3) Counsel and discuss subcontracting opportunities with representatives of small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business firms.
(4) Confirm that a subcontractor representing itself as a HUBZone small business concern is certified by SBA as a HUBZone small business concern by accessing SAM or by accessing the Dynamic Small Business Search (DSBS) at https://web.sba.gov/pro-net/search/dsp_dsbs.cfm.
(5) Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small, veteran-owned small business, HUBZone small, small disadvantaged, or women-owned small business for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the Contractor's subcontracting plan.
(6) For all competitive subcontracts over the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, in which a small business concern received a small business preference, upon determination of the successful subcontract offeror, prior to award of the subcontract the Contractor must inform each unsuccessful small business subcontract offeror in writing of the name and location of the apparent successful offeror and if the successful subcontract offeror is a small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concern .
(7) Assign each subcontract the NAICS code and corresponding size standard that best describes the principal purpose of the subcontract .
(f) A master subcontracting plan on a plant or division-wide basis that contains all the elements required by paragraph (d) of this clause , except goals, may be incorporated by reference as a part of the subcontracting plan required of the Offeror by this clause; provided -
(1) The master subcontracting plan has been approved;
(2) The Offeror ensures that the master subcontracting plan is updated as necessary and provides copies of the approved master subcontracting plan , including evidence of its approval, to the Contracting Officer; and
(3) Goals and any deviations from the master subcontracting plan deemed necessary by the Contracting Officer to satisfy the requirements of this contract are set forth in the individual subcontracting plan .
(g) A commercial plan is the preferred type of subcontracting plan for contractors furnishing commercial products and commercial services. The commercial plan shall relate to the offeror's planned subcontracting generally, for both commercial and Government business, rather than solely to the Government contract. Once the Contractor's commercial plan has been approved, the Government will not require another subcontracting plan from the same Contractor while the plan remains in effect, as long as the product or service being provided by the Contractor continues to meet the definition of a commercial product or commercial service . A Contractor with a commercial plan shall comply with the reporting requirements stated in paragraph (d)(10) of this clause by submitting one SSR in eSRS for all contracts covered by its commercial plan . A Contractor authorized to use a commercial subcontracting plan shall include in its subcontracting goals and in its SSR all indirect costs, with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation; interest ; income taxes ; property taxes ; lease payments ; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. This report shall be acknowledged or rejected in eSRS by the Contracting Officer who approved the plan. This report shall be submitted within 30 days after the end of the Government's fiscal year.
(h) Prior compliance of the offeror with other such subcontracting plans under previous contracts will be considered by the Contracting Officer in determining the responsibility of the offeror for award of the contract.
(i) A contract may have no more than one subcontracting plan. When a contract modification exceeds the subcontracting plan threshold in FAR 19.702(a) , or an option is exercised, the goals of the existing subcontracting plan shall be amended to reflect any new subcontracting opportunities. When the goals in a subcontracting plan are amended, these goal changes do not apply retroactively.
(j) Subcontracting plans are not required from subcontractors when the prime contract contains the clause at FAR 52.212-5 , Contract Terms and Conditions Required to Implement Statutes or Executive Orders - Commercial Products and Commercial Services, or when the subcontractor provides a commercial product or commercial service subject to the clause at FAR 52.244-6 , Subcontracts for Commercial Products and Commercial Services, under a prime contract.
(k) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled “Utilization Of Small Business Concerns,” or (2) an approved plan required by this clause, shall be a material breach of the contract and may be considered in any past performance evaluation of the Contractor.
(l) The Contractor shall submit ISRs and SSRs using the web-based eSRS at http://www.esrs.gov. Purchases from a corporation, company, or subdivision that is an affiliate of the Contractor or subcontractor are not included in these reports. Subcontract awards by affiliates shall be treated as subcontract awards by the Contractor. Subcontract award data reported by the Contractor and subcontractors shall be limited to awards made to their immediate next-tier subcontractors . Credit cannot be taken for awards made to lower tier subcontractors , unless the Contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from an ANC or Indian tribe . Only subcontracts involving performance in the United States or its outlying areas should be included in these reports with the exception of subcontracts under a contract awarded by the State Department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the United States and its outlying areas.
(1) ISR. This report is not required for commercial plans. The report is required for each contract containing an individual subcontracting plan .
(i) The report shall be submitted semi-annually during contract performance for the periods ending March 31 and September 30. A report is also required for each contract within 30 days of contract completion. Reports are due 30 days after the close of each reporting period, unless otherwise directed by the Contracting Officer. Reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or the previous reporting period. When the Contracting Officer rejects an ISR, the Contractor shall submit a corrected report within 30 days of receiving the notice of ISR rejection.
(A) When a subcontracting plan contains separate goals for the basic contract and each option, as prescribed by FAR 19.704(c) , the dollar goal inserted on this report shall be the sum of the base period through the current option; for example, for a report submitted after the second option is exercised, the dollar goal would be the sum of the goals for the basic contract, the first option, and the second option.
(B) If a subcontracting plan has been added to the contract pursuant to 19.702(a)(1)(iii) or 19.301-2(e) , the Contractor's achievements must be reported in the ISR on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.
(iii) When a subcontracting plan includes indirect costs in the goals, these costs must be included in this report.
(iv) The authority to acknowledge receipt or reject the ISR resides -
(A) In the case of the prime Contractor, with the Contracting Officer; and
(B) In the case of a subcontract with a subcontracting plan, with the entity that awarded the subcontract .
(i) Reports submitted under individual subcontracting plans.
(A) This report encompasses all subcontracting under prime contracts and subcontracts with an executive agency , regardless of the dollar value of the subcontracts . This report also includes indirect costs on a prorated basis when the indirect costs are excluded from the subcontracting goals.
(B) The report may be submitted on a corporate, company or subdivision (e.g. plant or division operating as a separate profit center) basis, unless otherwise directed by the agency .
(C) If the Contractor or a subcontractor is performing work for more than one executive agency , a separate report shall be submitted to each executive agency covering only that agency 's contracts, provided at least one of that agency 's contracts is over the applicable threshold specified in FAR 19.702(a) , and the contract contains a subcontracting plan. For DoD, a consolidated report shall be submitted for all contracts awarded by military departments/agencies and/or subcontracts awarded by DoD prime contractors.
(D) The report shall be submitted annually by October 30 for the twelve month period ending September 30. When a Contracting Officer rejects an SSR, the Contractor shall submit a revised report within 30 days of receiving the notice of SSR rejection.
(E) Subcontract awards that are related to work for more than one executive agency shall be appropriately allocated.
(F) The authority to acknowledge or reject SSRs in eSRS, including SSRs submitted by subcontractors with subcontracting plans, resides with the Government agency awarding the prime contracts unless stated otherwise in the contract.
(ii) Reports submitted under a commercial plan.
(A) The report shall include all subcontract awards under the commercial plan in effect during the Government's fiscal year and all indirect costs.
(B) The report shall be submitted annually, within thirty days after the end of the Government's fiscal year.
(C) If a Contractor has a commercial plan and is performing work for more than one executive agency , the Contractor shall specify the percentage of dollars attributable to each agency .
(D) The authority to acknowledge or reject SSRs for commercial plans resides with the Contracting Officer who approved the commercial plan .
Alternate I (NOV 2016). As prescribed in 19.708(b)(1)(i) , substitute the following paragraph (c)(1) for paragraph (c)(1) of the basic clause:
(1) The apparent low bidder, upon request by the Contracting Officer, shall submit a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. If the bidder is submitting an individual subcontracting plan , the plan must separately address subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be submitted within the time specified by the Contracting Officer. Failure to submit the subcontracting plan shall make the bidder ineligible for the award of a contract.
Alternate II (NOV 2016). As prescribed in 19.708(b)(1)(ii) , substitute the following paragraph (c)(1) for paragraph (c)(1) of the basic clause:
(1) Proposals submitted in response to this solicitation shall include a subcontracting plan that separately addresses subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. If the Offeror is submitting an individual subcontracting plan , the plan must separately address subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be negotiated within the time specified by the Contracting Officer. Failure to submit and negotiate a subcontracting plan shall make the Offeror ineligible for award of a contract.
Alternate III (JUN 2020). As prescribed in 19.708(b)(1)(iii) , substitute the following paragraphs (d)(10) and (l) for paragraphs (d)(10) and (l) in the basic clause:
(iii) Submit Standard Form (SF) 294 Subcontracting Report for Individual Contract in accordance with paragraph (l) of this clause. Submit the Summary Subcontract Report (SSR), in accordance with paragraph (l) of this clause using the Electronic Subcontracting Reporting System (eSRS) at http://www.esrs.gov. The reports shall provide information on subcontract awards to small business concerns (including ANCs and Indian tribes that are not small businesses), veteran-owned small business concerns , service-disabled veteran -owned small business concerns , HUBZone small business concerns , small disadvantaged business concerns (including ANCs and Indian tribes that have not been certified by the Small Business Administration as small disadvantaged businesses), women-owned small business concerns, and for NASA only, Historically Black Colleges and Universities and Minority Institutions. Reporting shall be in accordance with this clause, or as provided in agency regulations; and
(iv) Ensure that its subcontractors with subcontracting plans agree to submit the SF 294 in accordance with paragraph (l) of this clause. Ensure that its subcontractors with subcontracting plans agree to submit the SSR in accordance with paragraph (l) of this clause using the eSRS.
(l) The Contractor shall submit a SF 294. The Contractor shall submit SSRs using the web-based eSRS at http://www.esrs.gov. Purchases from a corporation, company, or subdivision that is an affiliate of the Contractor or subcontractor are not included in these reports. Subcontract awards by affiliates shall be treated as subcontract awards by the Contractor. Subcontract award data reported by the Contractor and subcontractors shall be limited to awards made to their immediate next-tier subcontractors . Credit cannot be taken for awards made to lower tier subcontractors , unless the Contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from an ANC or Indian tribe . Only subcontracts involving performance in the U.S. or its outlying areas should be included in these reports with the exception of subcontracts under a contract awarded by the State Department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the United States and its outlying areas.
(1) SF 294. This report is not required for commercial plans. The report is required for each contract containing an individual subcontracting plan . For Contractors the report shall be submitted to the Contracting Officer, or as specified elsewhere in this contract. In the case of a subcontract with a subcontracting plan, the report shall be submitted to the entity that awarded the subcontract .
(i) The report shall be submitted semi-annually during contract performance for the periods ending March 31 and September 30. A report is also required for each contract within 30 days of contract completion. Reports are due 30 days after the close of each reporting period, unless otherwise directed by the Contracting Officer. Reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or the previous reporting period. When a Contracting Officer rejects a report, the Contractor shall submit a revised report within 30 days of receiving the notice of report rejection.
(B) If a subcontracting plan has been added to the contract pursuant to 19.702(a)(1)(iii) or 19.301-2(e) , the Contractor's achievements must be reported in the report on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.
(2) SSR . (i) Reports submitted under individual subcontracting plans .
(B) The report may be submitted on a corporate, company or subdivision (e.g., plant or division operating as a separate profit center) basis, unless otherwise directed by the agency .
(C) If the Contractor and/or a subcontractor is performing work for more than one executive agency , a separate report shall be submitted to each executive agency covering only that agency 's contracts, provided at least one of that agency 's contracts is over the applicable threshold specified in FAR 19.702(a) , and the contract and contains a subcontracting plan. For DoD, a consolidated report shall be submitted for all contracts awarded by military departments/agencies and/or subcontracts awarded by DoD prime contractors.
(D) The report shall be submitted annually by October 30, for the twelve month period ending September 30. When a Contracting Officer rejects an SSR, the Contractor is required to submit a revised SSR within 30 days of receiving the notice of report rejection.
(F) The authority to acknowledge or reject SSRs in the eSRS, including SSRs submitted by subcontractors with subcontracting plans, resides with the Government agency awarding the prime contracts unless stated otherwise in the contract.
(ii) Reports submitted under a commercial plan .
(B) The report shall be submitted annually, within 30 days after the end of the Government's fiscal year.
Alternate IV (SEP 2021). As prescribed in 19.708(b)(1)(iv) , substitute the following paragraphs (c) and (d) for paragraphs (c) and (d) of the basic clause:
(1) The Contractor, upon request by the Contracting Officer, shall submit and negotiate a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. If the Contractor is submitting an individual subcontracting plan , the plan shall separately address subcontracting with small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). The subcontracting plan shall be incorporated into the contract. The subcontracting plan shall be negotiated within the time specified by the Contracting Officer. The subcontracting plan does not apply retroactively.
(i) The prime Contractor may accept a subcontractor 's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran -owned small business, or a women-owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract .
(d) The Contractor's subcontracting plan shall include the following:
(1) Separate goals, expressed in terms of total dollars subcontracted and as a percentage of total planned subcontracting dollars, for the use of small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns as subcontractors. For individual subcontracting plans, and if required by the Contracting Officer, goals shall also be expressed in terms of percentage of total contract dollars , in addition to the goals expressed as a percentage of total subcontract dollars. The Contractor shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs. In accordance with 43 U.S.C. 1626 -
(C) The ANC or Indian tribe shall give a copy of the written designation to the Contracting Officer, the Contractor, and the subcontractors in between the prime Contractor and the ANC or Indian tribe within 30 days of the date of the subcontract award.
(i) Total dollars planned to be subcontracted for an individual subcontracting plan ; or the Contractor's total projected sales, expressed in dollars, and the total value of projected subcontracts to support the sales for a commercial plan , including all indirect costs, with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation; interest ; income taxes ; property taxes ; lease payments ; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions;
(5) A description of the method used to identify potential sources for solicitation purposes (e.g., existing company source lists, SAM , veterans service organizations, the National Minority Purchasing Council Vendor Information Service, the Research and Information Division of the Minority Business Development Agency in the Department of Commerce , or small, HUBZone, small disadvantaged, and women-owned small business trade associations). The Contractor may rely on the information contained in SAM as an accurate representation of a concern's size and ownership characteristics for the purposes of maintaining a small, veteran-owned small, service-disabled veteran -owned small, HUBZone small, small disadvantaged, and women-owned small business source list. Use of SAM as its source list does not relieve a firm of its responsibilities (e.g., outreach, assistance, counseling, or publicizing subcontracting opportunities) in this clause.
(6) A statement as to whether or not the Contractor included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with -
(7) The name of the individual employed by the Contractor who will administer the Contractor's subcontracting program, and a description of the duties of the individual .
(8) A description of the efforts the Contractor will make to assure that small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns have an equitable opportunity to compete for subcontracts .
(9) Assurances that the Contractor will include the clause of this contract entitled “Utilization of Small Business Concerns” in all subcontracts that offer further subcontracting opportunities, and that the Contractor will require all subcontractors (except small business concerns) that receive subcontracts in excess of the applicable threshold specified in FAR 19.702(a) on the date of subcontract award, with further subcontracting possibilities to adopt a subcontracting plan that complies with the requirements of this clause.
(10) Assurances that the Contractor will -
(ii) Submit periodic reports so that the Government can determine the extent of compliance by the Contractor with the subcontracting plan;
(iii) After November 30, 2017, include subcontracting data for each order when reporting subcontracting achievements for an indefinite-delivery, indefinite-quantity contract with an individual subcontracting plan where the contract is intended for use by multiple agencies;
(vi) Provide its prime contract number, its unique entity identifier , and the email address of the Contractor's official responsible for acknowledging receipt of or rejecting the ISRs, to all first -tier subcontractors with subcontracting plans so they can enter this information into the eSRS when submitting their ISRs; and
(11) A description of the types of records that will be maintained concerning procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of the Contractor's efforts to locate small business, veteran-owned small business, service-disabled veteran -owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns and award subcontracts to them. The records shall include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated):
(vi) On a contract-by-contract basis, records to support award data submitted by the Contractor to the Government, including the name, address, and business size of each subcontractor . Contractors having commercial plans need not comply with this requirement.
(12) Assurances that the Contractor will make a good faith effort to acquire articles, equipment , supplies , services, or materials , or obtain the performance of construction work from the small business concerns that it used in preparing the proposal for the modification, in the same or greater scope, amount, and quality used in preparing and submitting the modification proposal. Responding to a request for a quote does not constitute use in preparing a proposal. The Contractor used a small business concern in preparing the proposal for a modification if -
(i) The Contractor identifies the small business concern as a subcontractor in the proposal or associated small business subcontracting plan, to furnish certain supplies or perform a portion of the subcontract ; or
(ii) The Contractor used the small business concern 's pricing or cost information or technical expertise in preparing the proposal, where there is written evidence of an intent or understanding that the small business concern will be awarded a subcontract for the related work when the modification is executed.
(14) Assurances that the Contractor will not prohibit a subcontractor from discussing with the contracting officer any material matter pertaining to the payment to or utilization of a subcontractor .
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Federal Acquisition Regulation: Good Faith in Small Business Subcontracting
A Rule by the Defense Department , the General Services Administration , and the National Aeronautics and Space Administration on 08/11/2021
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FOR FURTHER INFORMATION CONTACT:
Supplementary information:, i. background, ii. discussion and analysis, a. summary of significant changes from the proposed rule, b. analysis of public comments, 1. clarify applicability to subcontracts for commercial items and commercially available off-the-shelf (cots) items, 2. material breach, a. far language broader than sba language, b. recommended language to be added to final rule, 3. clarifications, a. ensure consistency between far 52.219-16 and proposed far 19.705-7(b)(2), b. clarify the intent of the proposed language at far 19.705-7(b)(2)(vi), c. clarify intent of far 19.705-7(b)(2)(vii), d. clarify applicability to contracts at or below the simplified acquisition threshold, e. clarify intent of far 19.705-7(b)(1)(v), 4. outside the scope of this rule, iii. applicability to contracts at or below the simplified acquisition threshold (sat) and for commercial items, including commercially available off-the-shelf (cots) items, a. applicability to contracts at or below the sat, b. applicability to contracts for the acquisition of commercial items, c. applicability to contracts for the acquisition of cots items, iv. expected impact of the rule, v. executive orders 12866 and 13563, vi. congressional review act, vii. regulatory flexibility act, viii. paperwork reduction act, list of subjects in 48 cfr parts 19 , 42 , and 52, part 19—small business programs, part 42—contract administration and audit services, part 52—solicitation provisions and contract clauses, contract terms and conditions required to implement statutes or executive orders—commercial items (sep 2021), small business subcontracting plan (sep 2021), liquidated damages—subcontracting plan (sep 2021), enhanced content - submit public comment.
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Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Final rule.
DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation to implement a section of the National Defense Authorization Act for Fiscal Year 2017, which requires examples of failure to make good faith efforts to comply with a small business subcontracting plan.
Effective September 10, 2021.
Ms. Dana Bowman, Procurement Analyst, at 202-803-3188, or by email at [email protected] , for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755 or [email protected] . Please cite FAC 2021-07, FAR Case 2019-004.
DoD, GSA, and NASA published a proposed rule on June 3, 2020, at 85 FR 34155 , to implement section 1821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (section 1821(c) of Pub. L. 114-328 ; 15 U.S.C. 637 note ). Section 1821 requires the Small Business Administration (SBA) to amend its regulations to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. SBA issued a final rule at 84 FR 65647 , dated November 29, 2019, to implement section 1821 of the NDAA for FY 2017. In its final rule, SBA amended 13 CFR 125.3(d)(3) to provide guidance on evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan and a list of examples of activities reflective of a failure to make a good faith effort.
Additionally, SBA revised 13 CFR 125.3(c)(1)(iv) to require that prime contractors with commercial subcontracting plans include indirect costs in their subcontracting goals. Other than small business concerns that have a commercial subcontracting plan report on performance through a summary subcontract report (SSR). Prior to the publication of its final rule, SBA's regulations required that contractors using a commercial subcontracting plan must include all indirect costs in their SSRs, but did not require these contractors to include indirect costs in their subcontracting goals, which led to inconsistencies when comparing the data reported in the SSR to the goals in the commercial subcontracting plan.
Small business subcontracting plans are required from large prime contractors when a contract is expected to exceed $750,000 ($1.5 million for construction) and has subcontracting possibilities. FAR 19.704 lists the elements of the plan, which include the contractor's goals for subcontracting to small business concerns and a description of the efforts the contractor will make to ensure that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns have an equitable opportunity to compete for subcontracts. Failure to make a good faith effort to comply with the plan may result in the assessment of liquidated damages per FAR 52.219-16, Liquidated Damages—Subcontracting Plan.
This final FAR rule requires that all indirect costs, with certain exceptions, are included in commercial plans and SSRs.
FAR 19.705-7 contains examples of a good faith effort, and examples of a failure to make a good faith effort.
Four respondents submitted public comments in response to the proposed rule.
The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments received and any changes made to the rule as a result of the public comments are provided as follows:
There are no changes made to the final rule.
Comment: One respondent commented that the rule should clarify that the “good faith” requirement is not applicable to subcontracts for commercial and COTS items under prime contracts. The respondent commented that the proposed rule does not address FAR 52.219-9(j), which states that subcontracting plans are not required from subcontractors when the prime contract contains the clause at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, or when the subcontractor provides a commercial item subject to the clause at 52.244-6, Subcontracts for Commercial Items, under a prime contract.
Response: This rule does not revise the conditions for when a subcontracting plan is required. If a subcontracting plan is not required, then the examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan are not applicable. No changes were made to the final rule as a result of this comment.
Comment: One respondent stated that the proposed FAR language at 19.705-7(d) is much broader than the SBA final rule and is unclear on whether “material breach” refers to the subcontracting plan or a breach of the contract itself.
Response: FAR 19.705-5(a)(5) requires that the subcontracting plan become a “material part of the contract upon award.” The final rule text at FAR 19.705-7(d), similar to the SBA final rule, cites FAR 52.219-16, Liquidated Damages—Subcontracting Plan, which provides the corrective actions available to all Federal Government contracting officers when a contractor fails to make a good faith effort to comply with the subcontracting plan, while also giving consideration to other Federal contracting regulations. In this context, a failure to make a good faith effort to comply with a subcontracting plan is a material breach, sufficient for the assessment of liquidated damages, and also for other remedies the Government may have. No changes were made to the final rule as a result of this comment. Start Printed Page 44250
Comment: One respondent requested the proposed FAR language at 19.705-7(d) include language to indicate that the contractor has an opportunity to rebut and appeal before a determination of noncompliance is rendered and provided recommended text.
Response: The clause at FAR 52.219-16, Liquidated Damages—Subcontracting Plan, which is cited in proposed FAR text 19.705-7(d), specifically 52.219-16(c), allows the contractor an opportunity to demonstrate what good faith efforts have been made and to discuss the matter, before the contracting officer's final decision. No changes were made to the final rule as a result of this comment.
Comment: One respondent recommended that to remain consistent, the proposed language at FAR 19.705-7(b)(2) should either include the language contained in 52.219-16 or include references to the intent of 52.219-16, as the examples provided at FAR 19.705-7(b)(2) may occur without willful or intentional behavior. The respondent also recommended that intent and examples should be read together providing that an occurrence of the examples without intent would not constitute a violation. Specifically, failure to make a good faith effort must meet the “willful or intentional” standard. The respondent also provided various reasons why the FAR should make it clear that an occurrence of the examples without intent would not constitute a violation.
Response: This final rule is implementing current SBA regulation. SBA's language at 13 CFR 125.3(d)(3) provides guidance on evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan. This language parallels the language in SBA's rule providing contracting officers with examples to consider, in the context of the contractor's total effort, as possible indicators of a failure to make a good faith effort. SBA's rule does not reference the “willful and intentional” language. The FAR text will not be revised to incorporate the requested language as the “willful and intentional” language already appears in the definition of “failure to make a good faith effort to comply with the subcontracting plan” at both FAR 19.701 and in the clause at FAR 52.219-16. No changes were made to the final rule as a result of this comment.
Comment: One respondent stated FAR 19.705-7(b)(2)(vi), as written, could be misinterpreted to hold a lower-tier contractor to the terms of a prime contractor's contract with the Government and recommended a revision to provide the intent of the text is to ensure a contractor pays its small business subcontractors in accordance with the terms of their contract with the small business.
Response: The current text states, “Failure to pay small business subcontractors in accordance with the terms of the contract with the prime contractor;” and provides that the intent pertains to the subcontractor's contract with the prime contractor. The final rule FAR text will not be revised to include the recommended text.
Comment: One respondent stated that the language at FAR 19.705-7(b)(2)(vii) should be revised to expressly require prime contractors to attend training as a remedy to any performance review findings. The respondent further stated that this is necessary given that a failure to attend the training offered by the Government could be perceived as a failure to make a good faith effort. The respondent provided recommended revisions to 19.705-7(b)(2)(vii).
Response: The respondent's interpretation of the language at FAR 19.705-7(b)(2)(vii) is correct. If a contractor does not either correct substantiated findings or participate in subcontracting plan management training offered by the Government, it could be perceived by the contracting officer as a failure to make a good faith effort. This is not all inclusive of failure to make a good faith effort, but is one of many instances and examples used to show a lack of good faith effort on behalf of the prime contractor. Additionally, the contracting officer has the choice of requiring or recommending other corrective remedies as deemed necessary. The respondent's recommended language is more restrictive by suggesting “and” instead of “or” as written in the SBA rule. The final rule FAR text will not be revised to include the recommended text.
Comment: One respondent stated that the preamble to the proposed rule indicates that the FAR Council is considering expanding the scope of the rule to include contracts at or below the simplified acquisition threshold (SAT) and recommended that the final FAR rule under this case should specify that it does not apply to contracts at or below the SAT. The respondent further stated that contracts at or below the SAT must be exempt from any policy or regulatory requirements pertaining to Small Business Plans.
Response: Section 8(d) of the Small Business Act ( 15 U.S.C. 637(d) ) requires subcontracting plans only for acquisitions valued above $750,000 ($1.5 million for construction contracts). As stated in section III of this preamble, the requirements of section 1821 of the NDAA for FY 2017 ( Pub. L. 114-328 ; 15 U.S.C 637 note ) do not apply to contracts at or below the SAT.
Comment: One respondent stated that the language at FAR 19.705-7(b)(1)(v) does not make clear how a contracting officer would make a determination that a contractor has “negotiated in good faith with interested small business.” The respondent also states that it is not clear how a contractor would negotiate with a small business that is merely interested in participating as a subcontractor.
Response: The language at FAR 19.705-7(b)(1)(v) is broadly written, as the intent is not to restrict or limit the contracting officer's authority or ability to determine the prime contractor's effort to negotiate in good faith. No changes were made to the FAR final rule as a result of this comment.
Comment: One respondent had no issue with the proposed changes and clarifications in the language (FAR text) and agreed that the requirements should be consistent. However, the respondent disagreed with commercial subcontracting plans allowing large businesses to “capture and be credited for small dollars spent” that have nothing to do with the specific awarded Federal contract. The respondent recommended a maximum cap proposed at 0.5 percent to the large business and that any remaining credit or subcontracting expenditure allowed be with the small business directly involved and subcontracted to the Start Printed Page 44251 specific awarded Federal contract. The respondent further reiterated the original intent of the subcontracting law was to encourage large business primes to work and subcontract with small businesses in support of the Federal contract awarded and not to receive credit for unrelated work. Another respondent acknowledged the importance of prime contractors making a good faith effort to comply with SBA's small business subcontracting plan. The respondent further stated that the country is in the midst of a deadly pandemic and offered additional political commentary irrelevant to the subject FAR case.
Response: The comments are outside the scope of this rule. The intent of this rule is to provide guidance on evaluating whether a prime contractor made a good faith effort to comply with its small business subcontracting plan and to provide a list of examples of activities reflective of a failure to make a good faith effort. Additionally, this rule is amending the FAR to require that all indirect costs, minus certain exceptions, are included in both commercial plans and summary subcontract reports.
This rule implements a statutory requirement to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. The Federal Acquisition Regulatory Council (FAR Council) does not intend to apply the requirements of section 1821 of the NDAA for FY 2017 ( Pub. L. 114-328 ; 15 U.S.C 637 note ) to contracts at or below the SAT, but intends to apply those requirements to contracts for the acquisition of commercial items, including COTS items. The clauses at FAR 52.219-9 and 52.219-16 are revised by this rule.
Pursuant to 41 U.S.C. 1905 , a provision of law is not applicable to acquisitions at or below the SAT unless the law (i) contains criminal or civil penalties; (ii) specifically refers to 41 U.S.C. 1905 and states that the law applies to acquisitions at or below the SAT; or (iii) the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT. If none of these conditions are met, the FAR is required to include the statutory requirement(s) on a list of provisions of law that are inapplicable to acquisitions at or below the SAT.
The purpose of this rule is to implement section 1821 of the NDAA for FY 2017. Section 1821 requires SBA to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan.
The FAR Council does not intend to apply this rule to acquisitions at or below the SAT.
Pursuant to 41 U.S.C. 1906 , acquisitions of commercial items (other than acquisitions of COTS items, which are addressed in 41 U.S.C. 1907 ) are exempt from a provision of law unless the law (i) contains criminal or civil penalties; (ii) specifically refers to 41 U.S.C. 1906 and states that the law applies to acquisitions of commercial items; or (iii) the FAR Council makes a written determination and finding that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of commercial items from the provision of law. If none of these conditions are met, the FAR is required to include the statutory requirement(s) on a list of provisions of law that are inapplicable to the acquisition of commercial items.
The purpose of this rule is to implement section 1821 of the NDAA for FY 2017 and SBA's implementing regulations. Section 1821 requires SBA to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. Both the FAR and SBA's regulations require contractors with small business subcontracting plans—including commercial plans—to make a good faith effort to comply with the plans. SBA's final rule did not exempt the acquisition of commercial items.
Section 1821 furthers the Administration's goal of supporting small business. It advances the interests of small business subcontractors by promoting good faith efforts by large prime contractors to find and use small business concerns as subcontractors, thereby providing valuable opportunities for small business concerns.
For these reasons, it is in the best interest of the Federal Government to apply the requirements of this rule to the acquisition of commercial items.
Pursuant to 41 U.S.C. 1907 , acquisitions of COTS items will be exempt from a provision of law unless the law (i) contains criminal or civil penalties; (ii) specifically refers to 41 U.S.C. 1907 and states that the law applies to acquisitions of COTS items; (iii) concerns authorities or responsibilities under the Small Business Act ( 15 U.S.C. 644 ) or bid protest procedures developed under the authority of 31 U.S.C. 3551 et seq., 10 U.S.C. 2305(e) and (f) , or 41 U.S.C. 3706 and 3707 ; or (iv) the Administrator for Federal Procurement Policy makes a written determination and finding that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of COTS items from the provision of law. If none of these conditions are met, the FAR is required to include the statutory requirement(s) on a list of provisions of law that are inapplicable to the acquisition of COTS items.
The purpose of this rule is to implement section 1821 of the NDAA for FY 2017 and SBA's implementing regulations. Section 1821 requires SBA to provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. Both the FAR and SBA's regulations require contractors with small business subcontracting plans—including commercial plans—to make a good faith effort to comply with the plans. SBA's final rule did not exempt the acquisition of COTS items.
For these reasons, it is in the best interest of the Federal Government to apply the requirements of this rule to the acquisition of COTS items.
This rule provides examples of activities that contracting officers may consider when evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan. The contracting officers also have consistent and uniform examples to identify and hold large prime contractors accountable for failing to make a good faith effort to Start Printed Page 44252 comply with their subcontracting plans. Encouraging large prime contractors to meet their subcontracting goals may have a positive economic impact on any small business entity that wishes to participate in Federal procurement as a subcontractor.
The final rule also requires prime contractors with commercial subcontracting plans to include indirect costs, with certain exceptions, in their subcontracting goals. This will ensure that the data reported in the summary subcontract report is consistent with the goals in the commercial subcontracting plan.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
As required by the Congressional Review Act ( 5 U.S.C. 801-808 ) before an interim or final rule takes effect, DoD, GSA, and NASA will send the rule and the “Submission of Federal Rules Under the Congressional Review Act” form to each House of the Congress and to the Comptroller General of the United States. A major rule cannot take effect until 60 days after it is published in the Federal Register . The Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget has determined that this is not a major rule under 5 U.S.C. 804 .
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601-612 . The FRFA is summarized as follows:
The objective of this final rule is to implement section 1821 of the NDAA for FY 2017 and SBA's implementing regulations, which provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. SBA amended 13 CFR 125.3(d)(3) to provide guidance on evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan and a list of examples of activities reflective of a failure to make a good faith effort.
Additionally, SBA amended 13 CFR 125.3(c)(1)(iv) to require that large prime contractors with commercial subcontracting plans include indirect costs in the commercial subcontracting plan goals. Large prime contractors that have a commercial subcontracting plan report on performance through a Summary Subcontract Report (SSR) in the Electronic Subcontracting Reporting System (eSRS). The FAR currently requires—as SBA's regulations required prior to publication of SBA's final rule—that a contractor using a commercial subcontracting plan include all indirect costs in its SSR. However, these regulations did not require contractors to include indirect costs in their commercial subcontracting plan goals, which leads to inconsistencies when comparing the data reported in the SSR to the goals in the commercial subcontracting plan.
There were no significant issues raised by the public comments in response to the initial regulatory flexibility analysis.
This rule may have a positive economic impact on any small entity that wishes to participate in Federal procurement as a subcontractor.
DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities. This rule provides guidance to the contracting officer on evaluating whether the prime contractor made a good faith effort to comply with its small business subcontracting plan and a list of examples of activities reflective of a failure to make a good faith effort.
By providing examples of a failure to make a good faith effort to comply with small business subcontracting plans, the FAR will enable contracting officers to determine more easily whether large prime contractors have made a good faith effort to comply with their subcontracting plans and to hold large prime contractors accountable for failing to make a good faith effort to comply with their subcontracting plans. More diligence in developing and meeting subcontracting goals on the part of large prime contractors could have a positive impact of giving small business concerns more opportunities to subcontract on Federal contracts.
Data from the Federal Procurement Data System for fiscal years 2018 through 2020 indicate that there were 7,656 entities with 30,414 new awards that required subcontracting plans. Of the 30,414 new awards, 18 percent or 5,399 required commercial subcontracting plans. Additionally, 31 percent or 2,318 of the 7,656 unique awardees required commercial subcontracting plans. According to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS), there are 19,596 unique entities who are subcontractors. Approximately 80 percent of the entities registered in the System for Award Management are small entities. Therefore, we estimate that 80 percent (15,677) of the subcontractors in FSRS are small entities. These small entities may benefit from this rule.
This final rule requires a large prime contractor with a commercial subcontracting plan to include indirect costs in its subcontracting goals. The benefit of requiring that indirect costs be included in subcontracting goals in commercial subcontracting plans is that it will increase the small business subcontracting goal and thus, increase the amount of funds the prime contractor will subcontract to small business concerns, providing more opportunities for subcontract awards to small business concerns.
This final rule does not include any new reporting, recordkeeping, or other compliance requirements for small entities.
There are no known significant alternative approaches that would accomplish the stated objectives of the applicable statute.
Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.
The Paperwork Reduction Act ( 44 U.S.C. 3501-3521 ) applies to this rule; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 9000-0007, Subcontracting Plans.
- Government procurement
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 19 , 42 , and 52 as set forth below:
1. The authority citation for 48 CFR parts 19 , 42 , and 52 continues to read as follows:
Authority: 40 U.S.C. 121(c) ; 10 U.S.C. chapter 137; and 51 U.S.C. 20113 .
2. Amend section 19.704 by—
a. In paragraph (a)(6) removing the phrase “subcontracting goals” and adding the phrase “subcontracting goals (for commercial plans, see paragraph (d) of this section)” in its place;
b. Revising paragraph (d) introductory text; and
c. In paragraph (d)(4) removing the phrase “one SSR” and adding the phrase “one SSR that includes all indirect costs, except as described in paragraph (d) of this section,” in its place. Start Printed Page 44253
The revision reads as follows:
(d) A commercial plan (as defined in 19.701) is the preferred type of subcontracting plan for contractors furnishing commercial items. The subcontracting goals established for a commercial plan shall include all indirect costs with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. Once a contractor's commercial plan has been approved, the Government shall not require another subcontracting plan from the same contractor while the plan remains in effect, as long as the product or service being provided by the contractor continues to meet the definition of a commercial item. The contractor shall—
3. In section 19.705-4 amend paragraph (c), in the fourth sentence, by removing the phrase “faith effort” and adding the phrase “faith effort (see 19.705-7)” in its place.
4. Amend section 19.705-6 by revising paragraphs (g)(1), (h), and (i) to read as follows:
(1) Assess whether the prime contractor made a good faith effort to comply with its small business subcontracting plan. See 19.705-7(b) for more information on the determination of good faith effort.
(h) Initiate action to assess liquidated damages in accordance with 19.705-7 upon a recommendation by the administrative contracting officer, if one is assigned, or receipt of other reliable evidence to indicate that assessing liquidated damages is warranted.
(i) Take action to enforce the terms of the contract upon receipt of a notice from the contract administration office under 19.706(f).
5. Amend section 19.705-7 by—
a. Revising the section heading;
b. In paragraph (a)—
i. Adding a paragraph heading;
ii. Removing the phrase “small disadvantaged business” and adding the phrase “small disadvantaged business,” in its place;
c. Revising paragraphs (b), (c), (d), and (e);
d. Adding a paragraph heading to the introductory text of paragraph (f);
e. Removing paragraph (g); and
f. Redesignating paragraph (h) as paragraph (f)(5).
The revisions and additions read as follows:
(a) General. * * *
(b) Determination of good faith effort. (1) In determining whether a contractor failed to make a good faith effort to comply with its subcontracting plan, a contracting officer must look to the totality of the contractor's actions, consistent with the information and assurances provided in its plan. The fact that the contractor failed to meet its subcontracting goals does not, in and of itself, constitute a failure to make a good faith effort (see 19.701). For example, notwithstanding a contractor's diligent effort to identify and solicit offers from any of the small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, factors such as unavailability of anticipated sources or unreasonable prices may frustrate achievement of the contractor's subcontracting goals. The contracting officer may consider any of the following, though not all inclusive, to be indicators of a good faith effort:
(i) Breaking out work to be subcontracted into economically feasible units, as appropriate, to facilitate small business participation.
(ii) Conducting market research to identify potential small business subcontractors through all reasonable means, such as searching SAM, posting notices or solicitations on SBA's SUBNet, participating in business matchmaking events, and attending preproposal conferences.
(iii) Soliciting small business concerns as early in the acquisition process as practicable to allow them sufficient time to submit a timely offer for the subcontract.
(iv) Providing interested small businesses with adequate and timely information about plans, specifications, and requirements for performance of the prime contract to assist them in submitting a timely offer for the subcontract.
(v) Negotiating in good faith with interested small businesses.
(vi) Directing small businesses that need additional assistance to SBA.
(vii) Assisting interested small businesses in obtaining bonding, lines of credit, required insurance, necessary equipment, supplies, materials, or services.
(viii) Utilizing the available services of small business associations; local, state, and Federal small business assistance offices; and other organizations.
(ix) Participating in a formal mentor-protégé program with one or more small business protégés that results in developmental assistance to the protégés.
(x) Although failing to meet the subcontracting goal in one socioeconomic category, exceeding the goal by an equal or greater amount in one or more of the other categories.
(xi) Fulfilling all of the requirements of the subcontracting plan.
(2) When considered in the context of the contractor's total effort in accordance with its plan, the contracting officer may consider any of the following, though not all inclusive, to be indicators of a failure to make a good faith effort:
(i) Failure to attempt through market research to identify, contact, solicit, or consider for contract award small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concerns, through all reasonable means including outreach, industry days, or the use of Federal systems such as SBA's Dynamic Small Business Search or SUBNet systems.
(ii) Failure to designate and maintain a company official to administer the subcontracting program and monitor and enforce compliance with the plan.
(iii) Failure to submit an acceptable ISR, or the SSR, using the eSRS, or as provided in agency regulations, by the report due dates specified in 52.219-9, Small Business Subcontracting Plan.
(iv) Failure to maintain records or otherwise demonstrate procedures adopted to comply with the plan including subcontracting flowdown requirements.
(v) Adoption of company policies or documented procedures that have as their objectives the frustration of the objectives of the plan.
(vi) Failure to pay small business subcontractors in accordance with the Start Printed Page 44254 terms of the contract with the prime contractor.
(vii) Failure to correct substantiated findings from Federal subcontracting compliance reviews or participate in subcontracting plan management training offered by the Government.
(viii) Failure to provide the contracting officer with a written explanation if the contractor fails to acquire articles, equipment, supplies, services, or materials or obtain the performance of construction work as described in 19.704(a)(12).
(ix) Falsifying records of subcontract awards to small business concerns.
(c) Documentation of good faith effort. If, at completion of the basic contract or any option, or in the case of a commercial plan, at the close of the fiscal year for which the plan is applicable, a contractor has failed to comply with the requirements of its subcontracting plan, which includes meeting its subcontracting goals, the contracting officer shall review all available information for an indication that the contractor has not made a good faith effort to comply with the plan. If no such indication is found, the contracting officer shall document the file accordingly.
(d) Notice of failure to make a good faith effort. If the contracting officer decides in accordance with paragraph (b) of this section that the contractor failed to make a good faith effort to comply with its subcontracting plan, the contracting officer shall give the contractor written notice in accordance with 52.219-16, Liquidated Damages—Subcontracting Plan, specifying the material breach, which may be included in the contractor's past performance information, advising the contractor of the possibility that the contractor may have to pay to the Government liquidated damages, and providing a period of 15 working days (or longer period as necessary) within which to respond. The notice shall give the contractor an opportunity to demonstrate what good faith efforts have been made before the contracting officer issues the final decision and shall further state that failure of the contractor to respond may be taken as an admission that no valid explanation exists.
(e) Payment of liquidated damages. (1) If, after consideration of all the pertinent data, the contracting officer finds that the contractor failed to make a good faith effort to comply with its subcontracting plan, the contracting officer shall issue a final decision to the contractor to that effect and require the payment of liquidated damages in an amount stated. The contracting officer's final decision shall state that the contractor has the right to appeal under the clause in the contract entitled Disputes. Calculations and procedures shall be in accordance with 52.219-16, Liquidated Damages—Subcontracting Plan.
(2) The amount of damages attributable to the contractor's failure to comply shall be an amount equal to the actual dollar amount by which the contractor failed to achieve each subcontracting goal. For calculations for commercial plans see paragraph (f) of this section.
(3) Liquidated damages shall be in addition to any other remedies that the Government may have.
(f) Commercial plans. * * *
6. In section 19.706 amend paragraph (f) by removing the phrase “subcontracting plan” and adding the phrase “subcontracting plan (see 19.705-7(b) for more information on the determination of good faith effort)” in its place.
7. Amend section 42.1501 by redesignating paragraphs (a)(5) thru (a)(7) as paragraphs (a)(6) thru (a)(8) and adding a new paragraph (a)(5) to read as follows:
(5) Complying with the requirements of the small business subcontracting plan (see 19.705-7(b));
8. Amend section 52.212-5 by revising the date of the clause and paragraphs (b)(17)(i), (b)(17)(v), and (b)(20) to read as follows:
__(17)(i) 52.219-9, Small Business Subcontracting Plan (SEP 2021) ( 15 U.S.C. 637(d)(4) ).
__(v) Alternate IV (SEP 2021) of 52.219-9.
__(20) 52.219-16, Liquidated Damages—Subcontracting Plan (SEP 2021) ( 15 U.S.C. 637(d)(4)(F)(i) ).
9. Amend section 52.219-9 by—
a. Revising the date of the clause;
b. In paragraph (d)(2)(i) removing the word “subcontracts” and adding the phrase “subcontracts, including all indirect costs except as described in paragraph (g) of this clause,” in its place;
c. Adding a new fifth sentence to paragraph (g);
d. Revising the date of Alternate IV, and paragraph (d)(2)(i) of Alternate IV.
The revised and added text reads as follows:
(g) * * * A Contractor authorized to use a commercial subcontracting plan shall include in its subcontracting goals and in its SSR all indirect costs, with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. * * *
Alternate IV (SEP 2021). * * *
(i) Total dollars planned to be subcontracted for an individual subcontracting plan; or the Contractor's total projected sales, expressed in dollars, and the total value of projected subcontracts to support the sales for a commercial plan, including all indirect costs, with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and Start Printed Page 44255 other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions;
10. Amend 52.219-16 by—
a. Revising the date of the clause; and
b. In paragraph (b) in the second sentence removing the phrase “plan, established” and adding “plan (see 19.705-7), established” in its place.
[ FR Doc. 2021-16366 Filed 8-10-21; 8:45 am]
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52.219-9 / Alt II
Far 52.219-9 small business subcontracting plan. alt ii (nov 2016) (current).
As prescribed in 19.708(b),
(1) Insert the clause at 52.219-9, Small Business Subcontracting Plan, in solicitations and contracts that offer subcontracting possibilities, are expected to exceed $750,000 ($1.5 million for construction of any public facility), and are required to include the clause at 52.219-8, Utilization of Small Business Concerns, unless the acquisition is set aside or is to be accomplished under the 8(a) program. When-
(i) Contracting by sealed bidding rather than by negotiation, the contracting officer shall use the clause with its Alternate I;
(ii) Contracting by negotiation, and subcontracting plans are required with initial proposals as provided for in 19.705-2(d), the contracting officer shall use the clause with its Alternate II;
(iii) The contract action will not be reported in the Federal Procurement Data System pursuant to 4.606(c)(5), or (c)(6), the contracting officer shall use the clause with its Alternate III; or
(iv) Incorporating a subcontracting plan due to a modification as provided for in 19.702(a)(1)(iii), the contracting officer shall use the clause with its Alternate IV.
Small Business Subcontracting Plan (Sep 2021) Alternate II (Nov 2016)
Alternate II (Nov 2016). As prescribed in 19.708(b)(1)(ii), substitute the following paragraph (c)(1) for paragraph (c)(1) of the basic clause:
(c)(1) Proposals submitted in response to this solicitation shall include a subcontracting plan that separately addresses subcontracting with small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. If the Offeror is submitting an individual subcontracting plan, the plan must separately address subcontracting with small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be negotiated within the time specified by the Contracting Officer. Failure to submit and negotiate a subcontracting plan shall make the Offeror ineligible for award of a contract.
(j) Subcontracting plans are not required from subcontractors when the prime contract contains the clause at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders-Commercial Items, or when the subcontractor provides a commercial item subject to the clause at 52.244-6, Subcontracts for Commercial Items, under a prime contract.
(k) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled “Utilization Of Small Business Concerns;” or (2) an approved plan required by this clause, shall be a material breach of the contract and may be considered in any past performance evaluation of the Contractor.
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Description
The federal government has detailed regulations requiring contractors to treat small businesses fairly and provide maximum opportunity for their participation in federal contract work ( FAR 19.7 – The Small Business Subcontracting Program ).
For certain federal contracts, the sponsor will require a Small Business Subcontracting Plan (SBSP). This plan outlines specific goals for subcontracting to various types of small businesses and details the process for reaching those goals and reporting progress. Types of small business include:
- Small business
- Veteran-owned small business
- Service-disabled veteran-owned small business
- HUBZone small business
- Women-owned small business
Federal law requires a subcontracting plan if the value of contract exceeds a set dollar amount—currently $750,000. This amount is known as the “simplified acquisition threshold. 1 ”
For more details, visit...
FAR 19.702 – Statutory Requirements
FAR 52.219-8 – Utilization of Small Business Concerns
FAR 52.219-9 – Small Business Subcontracting Plan
1 The simplified acquisition threshold relevant to the SBSP is defined in the Federal Acquisition Regulations (FAR)
how do i....
...create a Small Business Subcontracting Plan (SBSP) when required by my contract?
- Step 1: If the sponsor or SPA Award Negotiator notifies you that your contract needs a SBSP, review your contract to understand the reporting requirements (i.e. FAR 52.219-8 and 52.219-9 ). SPA will assist when it is time to report.
- Step 2: Develop your SBSP. The Award Negotiator will obtain a SBSP template for you from the sponsor. For assistance completing the SBSP template, the department/PI should contact the Office of Procurement Diversity at [email protected] .
- Step 3: Sign and submit your SBSP to the sponsor and send a final copy to the Award Negotiator at [email protected] . Sending the finalized SBSP will complete the award agreement and allow SPA to move forward with award execution.
For assistance and/or questions in completing the SBSP:
Office of Procurement Diversity
Shauna Clayborn, Supplier Diversity Coordinator
[email protected]
For questions about expense tracking and reporting:
Sponsored Programs Administration (SPA)
Charletta Little, Coordinator, Audit and Compliance
[email protected]
To comply with federal law (FAR subpart 19.7), all federally sponsored contracts in excess of $750,000 require implementation of a subcontracting plan with established goals for expenditures to small businesses.
Contact the Office of Procurement Diversity (OPD) at [email protected]
The PI/Department is responsible for managing and tracking expenditures as outlined in their SBSP. Accurate expenditures are necessary for future reporting obligations.
If the PI fails to submit a plan, they may be ineligible for the award.
The sponsor may determine that the PI and team have not made good faith efforts to procure small businesses. The University of Illinois could be held liable for fines and be required to return/refund the full amount of the contract.
It is important to formulate a realistic SBSP and execute its budgeting details. There are potential monetary penalties for not meeting goals (see FAR 19.702 ). Moreover, non-compliance issues, such as not meeting goals set in the SBSP are documented by federal agencies and could affect all future funding applicants at the University.
The fact that goods and services from a small business vendor may cost more is not considered by the government to be an acceptable excuse for not using them, unless the cost is prohibitive.
Contact the sponsor and work with them to submit a revised plan. Once complete, send the revised plan to your assigned Award Negotiator via [email protected]
In many cases, an amended plan will be required that includes prior and future supplier diversity goals.
The SPA Audit and Compliance team, with assistance from the department/PI. Audit and Compliance compiles and submits a semi-annual Individual Subcontracting Report (ISR), due in April and October, as well as an annual Summary Subcontract Report (SSR), also due in October.
The data is pulled from a combination of Banner and department tracking systems.
SPA will receive an e-mail confirming whether the report is accepted or rejected. If accepted, the report is complete and requires no further action until the next reporting period. If rejected, SPA will contact the department for assistance in resolving the rejection.
- Quality goods and services to meet the needs of the University
- Potential cost savings through competition
- Support for small and local businesses
- Creating jobs in the community
- Ensuring fairness
Additional Resources
Related documents and resources.
- Purchasing Vendor Information Form (OBFS)
- Small Business Administration (SBA), Dynamic Small Business Search Database (DSBS)
- Illinois CMS Business Enterprise Program - BEP/VBP Certification Portal
- Illinois Procurement Gateway (IPG) - Registered Vendor Directory
Related FAQs
- How do I create a small business subcontracting plan (SBSP) when required by my contract?
- Why is the SBSP required?
- How do I find a certified small business?
- Once awarded, who is responsible for tracking and managing small business subcontracting expenditures?
- What if the PI fails to submit a SBSP within the time limit prescribed by the contracting officer?
- What if the PI does not meet the spend goals detailed in the SBSP?
- What if the original goals on the SBSP will not be met?
- What if an amendment increases the award dollar amount?
- Who completes the required Small Business Subcontracting Reports?
- Where is the report data pulled from? (SBSP)
- What happens after the report is submitted? (SBSP)
- What are some potential benefits of participating in the Small Business Subcontracting Program?
- Documents & Resources
- Frequently Asked Questions (FAQs)
IMAGES
VIDEO
COMMENTS
Commercial plan means a subcontracting plan (including goals) that covers the offeror's fiscal year and that applies to the entire production of
(15) Assurances that the offeror will pay its small business subcontractors on time and in accordance with the terms and conditions of the subcontract, and
When determining the need for a subcontracting plan, the contracting officer shall consider the cumulative dollar value of the portion(s) or category(ies) of
(e) A contract may not have more than one subcontracting plan. However, a contracting officer may establish separate subcontracting goals for each order under
Commercial plan means a subcontracting plan (including goals) that covers the offeror's fiscal year and that applies to the entire production of commercial
Small business subcontracting plans are required from large prime contractors when a contract is expected to exceed $750,000 ($1.5 million for
52.219–9 Small business subcon- tracting plan. As prescribed in 19.708(b), insert the following clause: SMALL BUSINESS SUBCONTRACTING PLAN (JAN.
FAR 52.219-9 Small Business Subcontracting Plan. Alt II (Nov 2016) (Current). Prescription. As prescribed in 19.708(
The federal government has detailed regulations requiring contractors to treat small businesses fairly and provide maximum opportunity for their participation
Some federal contracts require a subcontracting plan to outsource work to a small business subcontractor. Contracting officers can include specific