34064 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

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.

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 employeremployee 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,
Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations 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 womenowned 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.
34066 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

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 longstanding 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
Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations 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 ‘‘awardfee’’. 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 womenowned 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 divisionwide 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
34068 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

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
Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations 34069
34070 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

17. Section 53.301–295 is revised to read as follows:
Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations 34071

53.301–295 Standard Form 295, Subcontract Report.
34072 Federal Register / Vol. 63, No. 119 / Monday, June 22, 1998 /Rules and Regulations

[FR Doc. 98–16114 Filed 6–19–98; 8:45 am]

BILLING CODE 6820–EP–C