[Federal Register Volume 63, Number 119 (Monday, June 22, 1998)]
[Rules and Regulations]
[Pages 34064-34072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16114]



[[Page 34064]]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 11, 19, 52, and 53

[FAC 97-05; FAR Cases 89-042 and 97-300; Item III]
RINs 9000-AD20 and 9000-AH53


Federal Acquisition Regulation; Liquidated Damages

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed and interim rules adopted as final with changes.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed to convert the proposed and 
interim rules to final with changes. This final rule amends the Federal 
Acquisition Regulation (FAR) to clarify policy on liquidated damages 
and commercial subcontracting plans and to implement OFPP Policy Letter 
95-1, Subcontracting Plans for Companies Supplying Commercial Items. 
The interim rule published as FAR case 89-042 at 54 FR 30708, July 21, 
1989, has been merged with this final rule. This regulatory action was 
not subject to Office of Management and Budget review under Executive 
Order 12866, dated September 30, 1993, and is not a major rule under 5 
U.S.C. 804.

EFFECTIVE DATE: August 21, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Victoria Moss, Procurement Analyst, at (202) 501-
4764. Please cite FAC 97-05, FAR case 97-300.

SUPPLEMENTARY INFORMATION:

A. Background

    An interim rule, under FAR Case 89-042 (Liquidated Damages), was 
published on July 21, 1989 (54 FR 30708), to require a prime contractor 
to pay liquidated damages upon a finding of a lack of good faith effort 
to meet small business subcontracting goals. The rule implemented 
Section 304 of the Business Opportunity Development Reform Act of 1988, 
Pub. L. 100-656. The interim rule is hereby adopted as final with 
changes and merged with this final rule.
    A proposed rule containing revisions to the interim rule was 
published on April 11, 1997 (62 FR 17960). The revisions in the 
proposed rule resulted from the public comments received on the interim 
rule, and from the requirements of OFPP Policy Letter 95-1, 
Subcontracting Plans for Companies Supplying Commercial Items.
    Eight sources submitted comments in response to the proposed rule. 
All comments were considered in developing this final rule.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because small business concerns 
are exempt from subcontracting plan requirements.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 11, 19, 52, and 53

    Government procurement.

    Dated: June 11, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

Interim Rule Adopted as Final with Changes

    Accordingly, the interim rule published as FAR Case 89-042 amending 
48 CFR Parts 19 and 52, which was published at 54 FR 30708, July 21, 
1989, is hereby adopted as final and merged with this final rule with 
the following changes:
    1. The authority citation for 48 CFR Parts 11, 19, 52, and 53 
continues to read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 11--DESCRIBING AGENCY NEEDS

    2. Section 11.501 is revised to read as follows:


11.501  General.

    This subpart provides policies and procedures for the use of 
liquidated damages clauses in solicitations and contracts for supplies, 
services, and construction, except for the Liquidated Damages--
Subcontracting Plan clause at 52.219-16, which may be applied pursuant 
to 19.705-7.

PART 19--SMALL BUSINESS PROGRAMS

    3. Section 19.701 is revised to read as follows:


19.701  Definitions.

    Commercial plan means a subcontracting plan (including goals) that 
covers the offeror's fiscal year and that applies to the entire 
production of commercial items sold by either the entire company or a 
portion thereof (e.g., division, plant, or product line).
    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.
    Individual contract 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 plan means a subcontracting plan that contains all the 
required elements of an individual contract plan, except goals, and may 
be incorporated into individual contract plans, provided the master 
plan has been approved.
    Small business subcontractor means any concern that--
    (a) In connection with subcontracts of $10,000 or less, has a 
number of employees, including its affiliates, that does not exceed 500 
persons; and
    (b) In connection with subcontracts exceeding $10,000, has a number 
of employees or average annual receipts, including its affiliates, that 
does not exceed the size standard under 19.102 for the product or 
service it is providing on the subcontract.
    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.
    4. Section 19.702 is amended by revising paragraph (a) introductory 
text,

[[Page 34065]]

the first sentences of (a)(1) and (a)(2); and paragraph (b)(4) to read 
as follows:


19.702  Statutory requirements.

* * * * *
    (a) 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:
    (1) In negotiated acquisitions, each solicitation of offers to 
perform a contract or contract modification, that individually is 
expected to exceed $500,000 ($1,000,000 for construction) and that has 
subcontracting possibilities, shall require the apparently successful 
offeror to submit an acceptable subcontracting plan. * * *
    (2) In sealed bidding acquisitions, each invitation for bids to 
perform a contract or contract modification, that individually is 
expected to exceed $500,000 ($1,000,000 for construction) and that has 
subcontracting possibilities, shall require the bidder selected for 
award to submit a subcontracting plan. * * *
    (b) * * *
    (4) For modifications to contracts within the general scope of the 
contract that do not contain the clause at 52.219-8, Utilization of 
Small, Small Disadvantaged and Women-Owned Small Business Concerns (or 
equivalent prior clauses, e.g., contracts awarded before the enactment 
of Pub. L. 95-507).
* * * * *
    5. Section 19.703 is amended in paragraph (a)(2) by removing ``13 
CFR 124.601--124.610'' and inserting in its place ``13 CFR 124.601 
through 124.610''; and in paragraph (b) by revising the first sentence 
to read as follows:


19.703  Eligibility requirements for participating in the program.

* * * * *
    (b) A contractor acting in good faith may rely on the written 
representation of its subcontractor regarding the subcontractor's 
status as a small business concern, a small disadvantaged business 
concern, or a women-owned small business concern. * * *
    6. Section 19.704 is amended--
    (a) By redesignating paragraphs (a)(2) through (a)(6) as (a)(7) 
through (a)(11), respectively, and adding new paragraphs (a)(2) through 
(a)(6);
    (b) In newly designated (a)(8) by removing the word ``will'' the 
second time it appears;
    (c) By revising newly designated paragraphs (a)(9), 10) and (11), 
the first sentence of paragraph (b), and (c); and
    (d) By adding paragraph (d). The revised and added text reads as 
follows:


19.704  Subcontracting plan requirements.

    (a) * * *
    (2) A statement of the total dollars planned to be subcontracted 
and a statement of the total dollars planned to be subcontracted to 
small, small disadvantaged and 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 small, small disadvantaged 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, and a description of the 
method used to determine the proportionate share of indirect costs to 
be incurred with small, small disadvantaged and women-owned small 
business concerns;
* * * * *
    (9) Assurances that the offeror will include the clause at 52.219-
8, Utilization of Small, Small Disadvantaged and Women-Owned 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 $500,000 ($1,000,000 for construction) to 
adopt a plan that complies with the requirements of the clause at 
52.219-9, Small, Small Disadvantaged and Women-Owned 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) Submit Standard Form (SF) 294, Subcontracting Report for 
Individual Contracts, and SF 295, Summary Subcontract Report, following 
the instructions on the forms or as provided in agency regulations; and
    (iv) Ensure that its subcontractors agree to submit SF 294 and SF 
295; and
    (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, small disadvantaged and women-
owned small business concerns and to award subcontracts to them.
    (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, Small Disadvantaged and Women-Owned Small 
Business Subcontracting Plan, except goals. * * *
    (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 (see 19.705-
2(a)). If a plan is necessary and the offeror is submitting an 
individual contract plan, the plan shall contain all the elements 
required by paragraph (a) of this section and shall contain separate 
statements and goals 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 items. 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; and
    (2) Submit a new commercial plan, 30 working days before the end of 
the 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. When the new commercial 
plan is approved, the contractor shall provide a copy of the approved 
plan to each contracting officer responsible for an ongoing contract 
that is subject to the plan.


19.705-1  [Amended]

    7. Section 19.705-1 is amended in the first sentence by removing 
``award fee'' and inserting ``award-fee'' in its place.

[[Page 34066]]

    8. Section 19.705-4 is amended--
    (a) By revising the first and second sentences of paragraph (b);
    (b) By revising paragraph (c);
    (c) By revising paragraph (d)(1); and
    (d) By redesignating paragraphs (d)(3) through (d)(6) as (d)(4) 
through (d)(7), respectively, and adding a new paragraph (d)(3); and by 
revising newly designated (d)(5). The new and revised text reads as 
follows:


19.705-4  Reviewing the subcontracting plan.

* * * * *
    (b) If, under a sealed bid solicitation, a bidder submits a plan 
that does not cover each of the 11 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. * * *
    (c) In negotiated acquisitions, the contracting officer shall 
determine whether the plan is acceptable based on the negotiation of 
each of the 11 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, small 
disadvantaged, 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. 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, small disadvantaged or women-owned small 
businesses.
    (d) * * *
    (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, small disadvantaged 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.
* * * * *
    (3) Ensure that the subcontracting goals are consistent with the 
offeror's cost or pricing data or information other than cost or 
pricing data.
* * * * *
    (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, small 
disadvantaged 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.
* * * * *
    9. Section 19.705-6 is amended by revising the introductory text 
and paragraphs (b) and (g) to read as follows:


19.705-6  Postaward responsibilities of the contracting officer.

    After a contract or contract modification containing a 
subcontracting plan is awarded, the contracting officer who approved 
the plan is responsible for the following:
* * * * *
    (b) Forwarding a copy of each commercial plan and any associated 
approvals to the Assistant Regional Administrator for Procurement 
Assistance in the SBA region where the contractor's headquarters is 
located.
* * * * *
    (g) Taking action to enforce the terms of the contract upon receipt 
of a notice under 19.706(f).
    10. Section 19.705-7 is amended by revising paragraphs (b) and (c); 
the last sentence of paragraph (d) and paragraph (f); and by adding 
paragraph (h) to read as follows:


19.705-7  Liquidated damages.

* * * * *
    (b) 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.
    (c) 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 meet 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. 
If the contracting officer decides in accordance with paragraph (d) of 
this subsection 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 specifying the failure, 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.
    (d) * * * However, when considered in the context of the 
contractor's total effort in accordance with its plan, the following, 
though not all inclusive, may be considered as indicators of a failure 
to make a good faith effort: a failure to attempt to identify, contact, 
solicit, or consider for contract award small, small disadvantaged or 
women-owned small business concerns; a failure to designate and 
maintain a company official to administer the subcontracting program 
and monitor and enforce compliance with the plan; a failure to submit 
Standard Form (SF) 294, Subcontracting Report for Individual Contracts, 
or SF 295, Summary Subcontract Report, in accordance with the 
instructions on the forms or as provided in agency regulations; a 
failure to maintain records or otherwise demonstrate procedures adopted 
to comply with the plan; or the adoption of company policies or 
procedures that have as their objectives the frustration of the 
objectives of the plan.
* * * * *
    (f) With respect to commercial plans approved under the clause at 
52.219-9, Small, Small Disadvantaged and Women-Owned 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

[[Page 34067]]

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.
* * * * *
    (h) 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.
    11. Section 19.706 is amended in paragraph (a) by removing the 
paragraph designation ``(a)''; by removing paragraph (b); by 
redesignating (a)(1) through (a)(6) as (a) through (f), respectively; 
in newly designated (e) by removing ``and'' at the end; in newly 
designated (f) by removing the period at the end and inserting ``; 
and''; and by adding (g) to read as follows:


19.706  Responsibilities of the cognizant administrative contracting 
officer.

* * * * *
    (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.
    12. Section 19.708 is amended by revising paragraph (b)(2); in the 
first sentence of (c)(1) by removing ``(see 19.702(a)(1))'' and 
inserting in its place ``(see 19.702)''; and in the second sentence of 
(c)(2) by removing ``award fee'' and inserting in its place ``award-
fee''. The revised text reads as follows:


19.708  Solicitation provisions and contract clauses.

* * * * *
    (b) ** * *
    (2) The contracting officer shall insert the clause at 52.219-16, 
Liquidated Damages--Subcontracting Plan, in all solicitations and 
contracts containing the clause at 52.219-9, Small, Small Disadvantaged 
and Women-Owned Small Business Subcontracting Plan, or the clause with 
its Alternate I or II.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    13. Section 52.219-9 is amended by revising the clause date and 
paragraphs (b), (d)(2)(i), (d)(9), (d)(10), the first sentence of 
(d)(11) introductory text, and the second sentence of (d)(11)(vi); in 
the second sentence of (e)(1) by revising ``contractor's'' to read 
``Contractor's''; and by revising (f) introductory text and (g). The 
revised text reads as follows:


52.219-9  Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan.

* * * * *

SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED SMALL BUSINESS 
SUBCONTRACTING PLAN (AUG 1998)

* * * * *
    (b) Definitions. As used in this clause--
    Commercial item means a product or service that satisfies the 
definition of commercial item in section 2.101 of the Federal 
Acquisition Regulation.
    Commercial plan means a subcontracting plan (including goals) 
that covers the offeror's fiscal year and that applies to the entire 
production of commercial items sold by either the entire company or 
a portion thereof (e.g., division, plant, or product line).
    Individual contract 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 plan means a subcontracting plan that contains all the 
required elements of an individual contract plan, except goals, and 
may be incorporated into individual contract plans, provided the 
master plan has been approved.
    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.
* * * * *
    (d) * * *
    (2) * * *
    (i) Total dollars planned to be subcontracted for an individual 
contract plan; or the offeror's total projected sales, expressed in 
dollars, and the total value of projected subcontracts to support 
the sales for a commercial plan;
* * * * *
    (9) Assurances that the offeror will include the clause in this 
contract entitled ``Utilization of Small, Small Disadvantaged and 
Women-Owned 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 $500,000 ($1,000,000 for 
construction of any public facility) 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) Submit Standard Form (SF) 294, Subcontracting Report for 
Individual Contracts, and/or SF 295, Summary Subcontract Report, 
following the instructions on the forms or as provided in agency 
regulations; and
    (iv) Ensure that its subcontractors agree to submit SF 294 and 
SF 295.
    (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, small disadvantaged and women-owned small business concerns 
and award subcontracts to them. * * *
* * * * *
    (vi) * * * Contractors having commercial plans need not comply 
with this requirement.
* * * * *
    (f) A master 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

[[Page 34068]]

required of the offeror by this clause; provided--
* * * * *
    (g) A commercial plan is the preferred type of subcontracting 
plan for contractors furnishing commercial items. 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. Commercial plans are also preferred for 
subcontractors that provide commercial items under a prime contract, 
whether or not the prime contractor is supplying a commercial item.
* * * * *

(End of clause)

* * * * *
    14. Section 52.219-16 is amended by revising the clause date, 
paragraph (b), the first sentence of (c), and paragraph
    (d) to read as follows:


52.219-16  Liquidated Damages--Subcontracting Plan.

* * * * *

LIQUIDATED DAMAGES--SUBCONTRACTING PLAN (AUG 1998)

* * * * *
    (b) Performance shall be measured by applying the percentage 
goals to the total actual subcontracting dollars or, if a commercial 
plan is involved, to the pro rata share of actual subcontracting 
dollars attributable to Government contracts covered by the 
commercial plan. If, at contract completion or, in the case of a 
commercial plan, at the close of the fiscal year for which the plan 
is applicable, the Contractor has failed to meet its subcontracting 
goals and the Contracting Officer decides in accordance with 
paragraph (c) of this clause that the Contractor failed to make a 
good faith effort to comply with its subcontracting plan, 
established in accordance with the clause in this contract entitled 
``Small, Small Disadvantaged and Women-Owned Small Business 
Subcontracting Plan,'' the Contractor shall pay the Government 
liquidated damages in an amount stated. The amount of probable 
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 subcontract goal.
    (c) Before the Contracting Officer makes a final decision that 
the Contractor has failed to make such good faith effort, the 
Contracting Officer shall give the Contractor written notice 
specifying the failure and permitting the Contractor to demonstrate 
what good faith efforts have been made and to discuss the matter. * 
* *
    (d) With respect to commercial plans, the Contracting Officer 
who approved the plan will perform the functions of the Contracting 
Officer under this clause on behalf of all agencies with contracts 
covered by the commercial plan.
* * * * *

(End of clause)

PART 53--FORMS


53.219  [Amended]

    15. Section 53.219 is amended in paragraphs (a) and (b) by removing 
``(REV. 10/96)'' and inserting ``(Rev. 8/98)'', and by revising the 
citation ``19.704(a)(5)'' to read ``19.704(a)(10)''
    16. Section 53.301-294 is revised to read as follows:

53.301-294  Standard Form 294, Subcontracting Report for Individual 
Contracts.

BILLING CODE 6820-EP-P

[[Page 34069]]

[GRAPHIC] [TIFF OMITTED] TR22JN98.011



[[Page 34070]]

[GRAPHIC] [TIFF OMITTED] TR22JN98.012


    17. Section 53.301-295 is revised to read as follows:

[[Page 34071]]

53.301-295  Standard Form 295, Subcontract Report.
[GRAPHIC] [TIFF OMITTED] TR22JN98.013


[[Page 34072]]

[GRAPHIC] [TIFF OMITTED] TR22JN98.014



[FR Doc. 98-16114 Filed 6-19-98; 8:45 am]
BILLING CODE 6820-EP-C