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                            Subpart 19.7 - The Small Business Subcontracting Program
        
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FAC Number: 2024-03 Effective Date: 02/23/2024
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Subpart19.019.119.219.319.419.519.619.719.819.1319.1419.15
Section19.70119.70219.70319.70419.70519.70619.70719.708
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Subpart 19.7 - The Small Business Subcontracting ProgramSubpart 19.7 - The Small Business Subcontracting Program    **Parent topic:**  Part 19 - Small Business Programs19.701 Definitions.       As used in this subpart-          *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 performance of commercial services sold by either the entire company or a portion thereof (*e.g.,* division, plant, or product line).          *Electronic Subcontracting Reporting System (eSRS)* means the Governmentwide, electronic, web-based system for small business subcontracting program reporting.          *Failure to make a good faith effort to comply with the subcontracting plan* means willful or intentional failure to perform in accordance with the requirements of the subcontracting plan, or willful or intentional action to frustrate the plan.          *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   25U. 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 Government prime contractor or subcontractor calling for supplies and/or services required for performance of the contract, contract modification, 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.19.702 Statutory requirements.       Any             contractor receiving a contract with a value greater than the             simplified acquisition threshold must agree in the contract that             small business, veteran-owned small business (VOSB),             service-disabled veteran-owned small business (SDVOSB), HUBZone             small business, small disadvantaged business (SDB), and women-owned             small business (WOSB) concerns will have the maximum practicable             opportunity to participate in contract performance consistent with             its efficient performance. It is further the policy of the United             States that its prime contractors establish procedures to ensure the             timely payment of amounts due pursuant to the terms of their             subcontracts with small business, VOSB concerns, SDVOSB concerns,             HUBZone small business concerns, SDB concerns, and WOSB             concerns.                                       (a)                                                         (1) Except as stated in paragraph (b) of this section, section 8(d) of the Small Business Act (  15 U.S.C. 637( d)) imposes the following requirements regarding subcontracting with small businesses and small business subcontracting plans:                                                                           (i) In negotiated acquisitions, each solicitation of offers to perform a contract that is expected to exceed $750,000 ($1.5 million for construction) and that has subcontracting possibilities, shall require the apparently successful offeror to submit an acceptable subcontracting plan. If the apparently successful offeror fails to negotiate a subcontracting plan acceptable to the contracting officer within the time limit prescribed by the contracting officer, the offeror will be ineligible for award. For a multiple-award contract with more than one North American Industry Classification System (NAICS) code, see paragraph (a)(2)(i) of this section.                                                                              (ii) In sealed bidding acquisitions, each invitation for bids to perform a contract that is expected to exceed $750,000 ($1.5 million for construction) and that has subcontracting possibilities, shall require the bidder selected for award to submit a subcontracting plan. If the selected bidder fails to submit a plan within the time limit prescribed by the contracting officer, the bidder will be ineligible for award. For a multiple-award contract with more than one NAICS code, see paragraph (a)(2)(i) of this section.                                                                              (iii) Each contract modification that causes the value of a contract without a subcontracting plan to exceed $750,000 ($1.5 million for construction), shall require the contractor to submit a subcontracting plan for the contract, if the contracting officer determines that subcontracting opportunities exist. For a multiple-award contract with more than one NAICS code, see paragraph (a)(2)(ii) of this section.                                                                                                           (2)                                                                           (i) For a multiple-award contract with more than one NAICS code, the solicitation referenced in paragraphs (a)(1)(i) and (ii) of this section shall require the apparently successful offeror to submit an acceptable subcontracting plan for either the distinct portion(s) or category(ies) of their proposal for which the offeror is other than small or for the entirety of their proposal, at the offeror's discretion. 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 the offeror's proposal for which the offeror is other than small.                                                                              (ii) For a multiple-award contract with more than one NAICS code, the modification referenced in paragraph (a)(1)(iii) of this section shall require the contractor to submit an acceptable subcontracting plan for either the distinct portion(s) or category(ies) of the contract for which the contractor is other than small or for the entirety of their contract, at the contractor's discretion. 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 the contract for which the contractor is other than small.                                                                                                                            (b) Subcontracting plans (see paragraphs (a)(1) and (2) of this section) are not required–                                                         (1) From small business concerns;                                                            (2) For personal services contracts;                                                            (3) For contracts or contract modifications that will be performed entirely outside of the United States and its outlying areas; or                                                            (4) For modifications that are within the scope of the contract and the contract does not contain the clause at  52.219-8, Utilization of Small Business Concerns.                                                                             (c) As stated in   15 U.S.C. 637(d)(9), any contractor or subcontractor failing to comply in good faith with the requirements of the subcontracting plan is in material breach of its contract. Further,   15 U.S.C. 637(d)(4)(F) directs that a contractor’s failure to make a good faith effort to comply with the requirements of the subcontracting plan shall result in the imposition of liquidated damages.                                          (d) As authorized by   15 U.S.C. 637(d)(12), certain costs incurred by a mentor firm in providing developmental assistance to a protégé firm under the Department of Defense Pilot Mentor-Protégé Program, may be credited as if they were subcontract awards to a protégé firm for the purpose of determining whether the mentor firm attains the applicable goals under any subcontracting plan entered into with any executive agency. However, the mentor-protégé agreement must have been approved by the Director, Small Business Programs of the cognizant DoD military department or defense agency, before developmental assistance costs may be credited against subcontract goals. A list of approved agreements may be obtained at                         https://business.defense.gov/Programs/Mentor-Protege-Program/.19.703 Eligibility requirements for participating in the program.       (a) 						            Except as provided in paragraph (c) of this section, to be eligible as a subcontractor under the program, a concern must represent itself as 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.                                                         (1) 								                To represent itself as 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, a concern must meet the appropriate definition (see  2.101 and  19.001). For subcontracting purposes, a concern is small if it does not exceed the size standard for the NAICS code that the prime contractor determines best describes the product or service being acquired by the subcontract.                                                            (2)                                                                           (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, HUBZone small business, or a women-owned small business, if the subcontractor represents that the size and socioeconomic status representation with its offer are current, accurate, and complete as of the date of the offer for the subcontracts; or                                                                              (ii) The prime contractor may accept a subcontractor's representation of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone 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 prime 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, 126.900, 127.700, and 128.600, a prime contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor's size or socioeconomic status.                                                                                                                            (b) 						            The contractor, the contracting officer, or any other interested party can challenge a subcontractor's size status representation by filing a protest, in accordance with 13 CFR 121.1001 through 121.1008.                                          (c)                                                         (1) 								                In accordance with   43 U.S.C. 1626, the following procedures apply:                                                                           (i) 										                    Subcontracts awarded to an ANC or Indian tribe shall be counted towards the subcontracting goals for small business and small disadvantaged business (SDB) concerns, regardless of the size or Small Business Administration certification status of the ANC or Indian tribe.                                                                              (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 contractor acting in good faith may rely on the written representation of an ANC or an Indian tribe as to the status of the ANC or Indian tribe unless an interested party challenges its status or the contracting officer has independent reason to question its status. In the event of a challenge of a representation of an ANC or Indian tribe, the interested parties shall follow the procedures at  26.103(b) through (e).                                                                             (d)                   Protests challenging the socioeconomic status of a HUBZone small business concern must be filed in accordance with   13 CFR 126.801.19.704 Subcontracting plan requirements.       (a) Each subcontracting plan required under  19.301-2(e) and  19.702(a)(1)(i), (ii), and (iii) shall include-                                                         (1) Separate percentage goals for using small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes) and women-owned small business concerns as subcontractors;                                                            (2) A statement of the total dollars planned to be subcontracted and a statement of the total dollars planned to be subcontracted to small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes) and women-owned small business concerns, as a percentage of total subcontract dollars. For individual subcontracting plans only, a contracting officer may require the goals referenced in paragraph (a)(1) of this section to be calculated as a percentage of total contract dollars, in addition to the goals established as a percentage of total subcontract dollars;                                                            (3) A description of the principal types of supplies and services to be subcontracted and an identification of types of supplies or services planned for subcontracting to small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes), and women-owned small business concerns;                                                            (4) A description of the method used to develop the subcontracting goals;                                                            (5) A description of the method used to identify potential sources for solicitation purposes;                                                            (6) A statement as to whether or not the offeror included indirect costs in establishing subcontracting goals (for commercial plans, see paragraph (d) of this section), and a description of the method used to determine the proportionate share of indirect costs to be incurred with small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes), and women-owned small business concerns;                                                            (7) The name of an 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 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;                                                            (9) Assurances that the offeror will include the clause at  52.219-8, Utilization of Small Business Concerns (see  19.708(a)), 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 $750,000 ($1.5 million for construction) to adopt a plan that complies with the requirements of the clause at  52.219-9, Small Business Subcontracting Plan (see  19.708(b));                                                            (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 the Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS) (  http://www.esrs.gov), following the instructions in the eSRS.                                                                                             (A) The ISR 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 an ISR, the contractor is required to submit a revised ISR within 30 days of receiving the notice of the ISR rejection.                                                                                                (B) The SSR shall be submitted annually by October 30 for the twelve-month period ending September 30. When an SSR is rejected, the contractor is required to submit a revised SSR within 30 days of receiving the notice of SSR rejection;                                                                                                                                         (v) Ensure that its subcontractors with subcontracting plans agree to submit the ISR and/or the SSR using the eSRS;                                                                              (vi) Provide its prime contract number, its unique entity identifier, and the e-mail 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 e-mail 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 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 to award subcontracts to them;                                                            (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 the offeror 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. An 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 contract; 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 (a)(12) of this section. This written explanation will 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; and                                                            (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 notify the contracting officer if the offeror pays a reduced or an untimely payment to a small business subcontractor (see  52.242-5).                                                                             (b) Contractors may establish, on a plant or division-wide basis, a master plan (see  19.701) that contains all the elements required by the clause at  52.219-9, Small Business Subcontracting Plan, except goals. Master plans shall be effective for a 3-year period after approval by the contracting officer; however, it is incumbent upon contractors to maintain and update master plans. Changes required to update master plans are not effective until approved by the contracting officer. A master plan, when incorporated in an individual plan, shall apply to that contract throughout the life of the contract.                                          (c) For multiyear contracts or contracts containing options, the cumulative value of the basic contract and all options is considered in determining whether a subcontracting plan is necessary. If a subcontracting plan is necessary and the offeror is submitting an individual subcontracting plan, the individual subcontracting plan shall contain all the elements required by paragraph (a) of this section and shall contain separate statements and goals based on total subcontract dollars for the basic contract and for each option.                                          (d) A commercial plan (as defined in  19.701) is the preferred type of subcontracting plan for contractors furnishing commercial products and commercial services. 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 product or commercial service. The contractor shall—                                                         (1) Submit the commercial plan to either the first contracting officer awarding a contract subject to the plan during the contractor’s fiscal year, or, if the contractor has ongoing contracts with commercial plans, to the contracting officer responsible for the contract with the latest completion date. The contracting officer shall negotiate the commercial plan for the Government. The approved commercial plan shall remain in effect during the contractor’s fiscal year for all Government contracts in effect during that period;                                                            (2) Submit a new commercial plan, 30 working days before the end of the Contractor’s fiscal year, to the contracting officer responsible for the uncompleted Government contract with the latest completion date. The contractor must provide to each contracting officer responsible for an ongoing contract subject to the plan, the identity of the contracting officer that will be negotiating the new plan;                                                            (3) When the new commercial plan is approved, provide a copy of the approved plan to each contracting officer responsible for an ongoing contract that is subject to the plan; and                                                            (4) Comply with the reporting requirements stated in paragraph (a)(10) of this section by submitting one SSR that includes all indirect costs, except as described in paragraph (d) of this section, in eSRS, for all contracts covered by its commercial plan. This report will be acknowledged or rejected in eSRS by the contracting officer who approved the plan. The report shall be submitted within 30 days after the end of the Government’s fiscal year.19.705 Responsibilities of the contracting officer under the subcontracting assistance program.    19.705-1 General.       (a) 						            The contracting officer may encourage the development of increased subcontracting opportunities in negotiated acquisition by providing monetary incentives such as payments based on actual subcontracting achievement or award-fee contracting (see the clause at  52.219-10, Incentive Subcontracting Program, and  19.708(c)). When using any contractual incentive provision based upon rewarding the contractor monetarily for exceeding goals in the subcontracting plan, the contracting officer must ensure that (a) the goals are realistic and (b) any rewards for exceeding the goals are commensurate with the efforts the contractor would not have otherwise expended. Incentive provisions should normally be negotiated after reaching final agreement with the contractor on the subcontracting plan.                                          (b)                                                         (1) 								                Except where a contractor has a commercial plan, the contracting officer shall require a subcontracting plan for each indefinite-delivery, indefinite-quantity contract (including task or delivery order contracts, FSS, GWACs, and MACs), when the estimated value of the contract meets the subcontracting plan thresholds at  19.702(a) and small business subcontracting opportunities exist.                                                            (2) 								                Contracting officers placing orders may establish small business subcontracting goals for each order. Establishing goals shall not be in the form of a new subcontracting plan as a contract may not have more than one plan ( 19.705-2(e)).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.19.705-3 Preparing the solicitation.       The contracting officer shall provide the Small Business Administration's (SBA’s) procurement center representative (or, if a procurement center representative is not assigned, see  19.402(a)) a reasonable period of time to review any solicitation requiring submission of a subcontracting plan and to submit advisory findings before the solicitation is issued.19.705-4 Reviewing the subcontracting plan.       The contracting officer shall review the subcontracting plan for adequacy, ensuring that the required information, goals, and assurances are included (see  19.704).                                       (a) No detailed standards apply to every subcontracting plan. Instead, the contracting officer shall consider each plan in terms of the circumstances of the particular acquisition, including-                                                         (1) Previous involvement of small business concerns as prime contractors or subcontractors in similar acquisitions;                                                            (2) Proven methods of involving small business concerns as subcontractors in similar acquisitions; and                                                            (3) The relative success of methods the contractor intends to use to meet the goals and requirements of the plan, as evidenced by records maintained by contractors.                                                                             (b) If, under a sealed bid solicitation, a bidder submits a plan that does not cover each of the 15 required elements (see  19.704), the contracting officer shall advise the bidder of the deficiency and request submission of a revised plan by a specific date. If the bidder does not submit a plan that incorporates the required elements within the time allotted, the bidder shall be ineligible for award. If the plan, although responsive, evidences the bidder’s intention not to comply with its obligations under the clause at  52.219-8, Utilization of Small Business Concerns, the contracting officer may find the bidder nonresponsible.                                          (c) In negotiated acquisitions, the contracting officer shall determine whether the plan is acceptable based on the negotiation of each of the 15 elements of the plan (see  19.704). Subcontracting goals should be set at a level that the parties reasonably expect can result from the offeror expending good faith efforts to use small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business subcontractors to the maximum practicable extent. The contracting officer shall take particular care to ensure that the offeror has not submitted unreasonably low goals to minimize exposure to liquidated damages and to avoid the administrative burden of substantiating good faith efforts. Additionally, particular attention should be paid to the identification of steps that, if taken, would be considered a good faith effort (see  19.705-7). No goal should be negotiated upward if it is apparent that a higher goal will significantly increase the Government’s cost or seriously impede the attainment of acquisition objectives. An incentive subcontracting clause (see  52.219-10, Incentive Subcontracting Program), may be used when additional and unique contract effort, such as providing technical assistance, could significantly increase subcontract awards to small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, or women-owned small business concerns.                                          (d) In determining the acceptability of a proposed subcontracting plan, the contracting officer should take the following actions:                                                         (1) Obtain information available from the cognizant contract administration office, as provided for in  19.706(a), and evaluate the offeror’s past performance in awarding subcontracts for the same or similar products or services to 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 information is not available on a specific type of product or service, evaluate the offeror’s overall past performance and consider the performance of other contractors on similar efforts.                                                            (2) In accordance with   15 U.S.C.637(d)(4)(F)(iii), ensure that the goals offered are attainable in relation to-                                                                           (i) The subcontracting opportunities available to the contractor, commensurate with the efficient and economical performance of the contract;                                                                              (ii) The pool of eligible subcontractors available to fulfill the subcontracting opportunities; and                                                                              (iii) The actual performance of such contractor in fulfilling the subcontracting goals specified in prior plans.                                                                                                           (3) Ensure that the subcontracting goals are consistent with the offeror’s certified cost or pricing data or data other than certified cost or pricing data.                                                            (4) Evaluate the offeror’s make-or-buy policy or program to ensure that it does not conflict with the offeror’s proposed subcontracting plan and is in the Government’s interest. If the contract involves products or services that are particularly specialized or not generally available in the commercial market, consider the offeror’s current capacity to perform the work and the possibility of reduced subcontracting opportunities.                                                            (5) Evaluate subcontracting potential, considering the offeror’s make-or-buy policies or programs, the nature of the supplies or services to be subcontracted, the known availability 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 the geographical area where the work will be performed, and the potential contractor’s long-standing contractual relationship with its suppliers.                                                            (6) Advise the offeror of available sources of information on 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, as well as any specific concerns known to be potential subcontractors. If the offeror’s proposed goals are questionable, the contracting officer must emphasize that the information should be used to develop realistic and acceptable goals.                                                            (7) Obtain advice and recommendations from the SBA procurement center representative (or, if a procurement center representative is not assigned, see  19.402(a)) and the agency small business specialist.19.705-5 Awards involving subcontracting plans.       (a) 						            In making an award that requires a subcontracting plan, the contracting officer shall be responsible for the following:                                                         (1) 								                Consider the contractor’s compliance with the subcontracting plans submitted on previous contracts as a factor in determining contractor responsibility.                                                            (2) 								                Assure that a subcontracting plan was submitted when required.                                                            (3) 								                Notify the SBA procurement center representative (or, if a procurement center representative is not assigned, see  19.402(a)) of the opportunity to review the proposed contract (including the plan and supporting documentation). The notice shall be issued in sufficient time to provide the representative a reasonable time to review the material and submit advisory recommendations to the contracting officer. Failure of the representative to respond in a reasonable period of time shall not delay contract award.                                                            (4) 								                Determine any fee that may be payable if an incentive is used in conjunction with the subcontracting plan.                                                            (5) 								                Ensure that an acceptable plan is incorporated into and made a material part of the contract.                                                                             (b) 						            Letter contracts and similar undefinitized instruments, which would otherwise meet the requirements of  19.702(a)(1)(i) and (ii), shall contain at least a preliminary basic plan addressing the requirements of  19.704 and in such cases require the negotiation of the final plan within 90 days after award or before definitization, whichever occurs first.19.705-6 Postaward responsibilities of the contracting officer.       After a contract or contract modification containing a subcontracting plan is awarded or an existing subcontracting plan is amended, the contracting officer shall do the following:                                       (a) Notify the SBA of the award by sending a copy of the award document to the Area Director, Office of Government Contracting, in the SBA area office where the contract will be performed.                                          (b) Forward a copy of each commercial plan and any associated approvals to the Area Director, Office of Government Contracting, in the SBA area office where the contractor’s headquarters is located.                                          (c) Give to the SBA procurement center representative (or, if a procurement center representative is not assigned, see  19.402(a)) a copy of-                                                         (1) Any subcontracting plan submitted in response to a sealed bid solicitation; and                                                            (2) The final negotiated subcontracting plan that was incorporated into a negotiated contract or contract modification.                                                                             (d) Notify the SBA procurement center representative (or, if a procurement center representative is not assigned, see  19.402(a)) of the opportunity to review subcontracting plans in connection with contract modifications.                                          (e) Forward a copy of each plan, or a determination that there is no requirement for a subcontracting plan, to the cognizant contract administration office.                                          (f) Monitor the prime contractor's compliance with its subcontracting plan, to include the following:                                                         (1) Ensure that subcontracting reports are submitted into the eSRS within 30 days after the report ending date (*e.g.*, by October 30 th for the fiscal year ended September 30 th).                                                            (2) Review ISRs, and where applicable, SSRs, in eSRS within 60 days of the report ending date (*e.g.*, by November 30 th for a report submitted for the fiscal year ended September 30 th).                                                            (3) Either acknowledge receipt of or reject the reports in accordance with  subpart  19.7,  52.219-9, Small Business Subcontracting Plan, and the eSRS instructions (  www.esrs.gov).                                                                           (i) The authority to acknowledge or reject SSRs for commercial plans resides with the contracting officer who approved the commercial plan.                                                                              (ii) If a report is rejected, the contracting officer must provide an explanation for the rejection to allow the prime contractor the opportunity to respond specifically to identified deficiencies.                                                                                                                            (g) Evaluate the prime contractor's compliance with its subcontracting plan, to include the following:                                                         (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.                                                            (2) Assess the prime contractor's written explanation concerning the prime contractor's failure to use a small business concern in the performance of the contract in the same scope, amount, and quality used in preparing and submitting the bid or proposal, if applicable.                                                                             (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).                                          (j) Acknowledge receipt of or reject the ISR and the SSR in the eSRS. Acknowledging receipt does not mean acceptance or approval of the report. The report shall be rejected if it is not adequately completed, for instance, if there are errors, omissions, or incomplete data. Failure to meet the goals of the subcontracting plan is not a valid reason for rejecting the report.19.705-7 Compliance with the subcontracting plan.       (a)                   *General.*                    Maximum practicable utilization 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 in Government contracts is a matter of national interest with both social and economic benefits. When a contractor fails to make a good faith effort to comply with a subcontracting plan, these objectives are not achieved, and   15 U.S.C.637(d)(4)(F) directs that liquidated damages shall be paid by the contractor.                                          (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 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.*                    With respect to commercial plans approved under the clause at  52.219-9, Small Business Subcontracting Plan, the contracting officer that approved the plan shall-                                                         (1) Perform the functions of the contracting officer under this subsection on behalf of all agencies with contracts covered by the commercial plan;                                                            (2) Determine whether or not the goals in the commercial plan were achieved and, if they were not achieved, review all available information for an indication that the contractor has not made a good faith effort to comply with the plan, and document the results of the review;                                                            (3) If a determination is made to assess liquidated damages, in order to calculate and assess the amount of damages, the contracting officer shall ask the contractor to provide-                                                                           (i) Contract numbers for the Government contracts subject to the plan;                                                                              (ii) The total Government sales during the contractor’s fiscal year; and                                                                              (iii) The amount of payments made under the Government contracts subject to that plan that contributed to the contractor’s total sales during the contractor’s fiscal year; and                                                                                                           (4) When appropriate, assess liquidated damages on the Government’s behalf, based on the pro rata share of subcontracting attributable to the Government contracts. For example: The contractor’s total actual sales were $50 million and its actual subcontracting was $20 million. The Government’s total payments under contracts subject to the plan contributing to the contractor’s total sales were $5 million, which accounted for 10 percent of the contractor’s total sales. Therefore, the pro rata share of subcontracting attributable to the Government contracts would be 10 percent of $20 million, or $2 million. To continue the example, if the contractor failed to achieve its small business goal by 1 percent, the liquidated damages would be calculated as 1 percent of $2 million, or $20,000. The contracting officer shall make similar calculations for each category of small business where the contractor failed to achieve its goal and the sum of the dollars for all of the categories equals the amount of the liquidated damages to be assessed. A copy of the contracting officer’s final decision assessing liquidated damages shall be provided to other contracting officers with contracts subject to the commercial plan.                                                            (5)                         Every contracting officer with a contract that is subject to a commercial plan shall include in the contract file a copy of the approved plan and a copy of the final decision assessing liquidating damages, if applicable.19.706 Responsibilities of the cognizant administrative contracting officer.       The administrative contracting officer is responsible for assisting in evaluating subcontracting plans, and for monitoring, evaluating, and documenting contractor performance under the clause prescribed in  19.708(b) and any subcontracting plan included in the contract. The contract administration office shall provide the necessary information and advice to support the contracting officer, as appropriate, by furnishing-                                       (a) Documentation on the contractor’s performance and compliance with subcontracting plans under previous contracts;                                          (b) Information on the extent to which the contractor is meeting the plan’s goals for subcontracting with eligible small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns;                                          (c) Information on whether the contractor’s efforts to ensure the participation 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 are in accordance with its subcontracting plan;                                          (d) Information on whether the contractor is requiring its subcontractors to adopt similar subcontracting plans;                                          (e) Immediate notice if, during performance, the contractor is failing to meet its commitments under the clause prescribed in  19.708(b) or the subcontracting plan;                                          (f) Immediate notice and rationale if, during performance, the contractor is failing to comply in good faith with the subcontracting plan (see  19.705-7(b) for more information on the determination of good faith effort); and                                          (g) Immediate notice that performance under a contract is complete, that the goals were or were not met, and, if not met, whether there is any indication of a lack of a good faith effort to comply with the subcontracting plan.19.707 The Small Business Administration’s role in carrying out the program.       (a) 						            Under the program, the SBA may-                                                         (1) 								                Assist both Government agencies and contractors in carrying out their responsibilities with regard to subcontracting plans;                                                            (2) 								                Review (within 5 working days) any solicitation that meets the dollar threshold in  19.702(a)(1)(i) or (ii) before the solicitation is issued;                                                            (3) 								                Review (within 5 working days) before execution any negotiated contractual document requiring a subcontracting plan, including the plan itself, and submit recommendations to the contracting officer, which shall be advisory in nature; and                                                            (4) 								                Evaluate compliance with subcontracting plans, either on a contract-by-contract basis, or, in the case of contractors having multiple contracts, on an aggregate basis.                                                                             (b) 						            The SBA is not authorized to-                                                         (1) 								                Prescribe the extent to which any contractor or subcontractor shall subcontract,                                                            (2) 								                Specify concerns to which subcontracts will be awarded, or                                                            (3) 								                Exercise any authority regarding the administration of individual prime contracts or subcontracts.19.708 Contract clauses.       (a) 						             Insert the clause at  52.219-8, Utilization of Small Business Concerns, in solicitations and contracts when the contract amount is expected to exceed the simplified acquisition threshold unless-                                                         (1) 								                 A personal services contract is contemplated (see  37.104); or                                                            (2) 								                 The contract, together with all of its subcontracts, will be performed entirely outside of the United States and its outlying areas.                                                                             (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.                                                                                                           (2) 								                 Insert the clause at  52.219-16, Liquidated Damages-Subcontracting Plan, in all solicitations and contracts containing the clause at  52.219-9, Small Business Subcontracting Plan, or the clause with its Alternate I, II, III, or IV.                                                                             (c)                                                         (1) 								                 The contracting officer may, when contracting by negotiation, insert in solicitations and contracts a clause substantially the same as the clause at  52.219-10, Incentive Subcontracting Program, when a subcontracting plan is required (see  19.702), and inclusion of a monetary incentive is, in the judgment of the contracting officer, necessary to increase subcontracting opportunities 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, and is commensurate with the efficient and economical performance of the contract; unless the conditions in paragraph (c)(3) of this section are applicable. The contracting officer may vary the terms of the clause as specified in paragraph (c)(2) of this section.                                                            (2) 								                 Various approaches may be used in the development 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’ subcontracting incentives. They can take many forms, from a fully quantified schedule of payments based on actual subcontract achievement to an award-fee approach employing subjective evaluation criteria (see paragraph (c)(3) of this section). The incentive should not reward the contractor for results other than those that are attributable to the contractor’s efforts under the incentive subcontracting program.                                                            (3) 								                 As specified in paragraph (c)(2) of this section, the contracting officer may include small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business subcontracting as one of the factors to be considered in determining the award fee in a cost-plus-award-fee contract; in such cases, however, the contracting officer shall not use the clause at  52.219-10, Incentive Subcontracting Program.
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