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), servicedisabled 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/.

Parent topic: Subpart 19.7 - The Small Business Subcontracting Program