226 
rial and services (including clerical and stenographic services) as the Admin-
istrator considers appropriate. 
(d) VOLUNTEERS DEEMED TO BE FEDERAL EMPLOYEES FOR FEDERAL 
TORT CLAIMS PURPOSES.—A volunteer, while carrying out an activity 
under this section, shall be deemed to be a Federal employee for purposes 
of chapter 171 of title 28. 
(e) VOLUNTEERS DEEMED TO BE CIVIL EMPLOYEES FOR WORK INJURY 
COMPENSATION PURPOSES.—A volunteer, while carrying out an activity 
under this section, shall, for purposes of subchapter I of chapter 81 of title 
5 (relative to compensation to Federal employees for work injuries), be 
deemed to be a civil employee of the United States within the meaning of 
the term ‘‘employee’’ as defined in section 8101 of title 5, and that sub-
chapter shall apply except that in computing compensation benefits for dis-
ability or death, the monthly pay of a volunteer shall be deemed to be that 
received under the entrance salary for a grade GS–11 employee. 
(f) REIMBURSEMENT OF VOLUNTEERS.— 
(1) IN GENERAL.—The Administrator may reimburse a volunteer 
carrying out an activity under this section for— 
(A) all necessary out-of-pocket expenses incident to the volun-
teer’s provision of services under this subtitle, or in connection 
with attendance at a meeting sponsored by SBA; 
(B) the cost of malpractice insurance, as the Administrator 
shall determine, in accordance with regulations that the Adminis-
trator shall prescribe; and 
(C) travel expenses (including per diem in lieu of subsistence) 
as authorized by section 5703 of title 5 for individuals serving 
without pay, while the volunteer is carrying out such an activity 
away from the volunteer’s home or regular place of business. 
(2) TREATMENT OF PAYMENTS.—Notwithstanding any other provi-
sion of law, no payment for supportive services or reimbursement of 
out-of-pocket expenses made to a volunteer serving under this section 
shall be subject to any tax or charge or be treated as wages or com-
pensation for the purposes of unemployment, disability, retirement, 
public assistance, or similar benefit payments, or minimum wage laws. 
(g) LIMITATION ON PROVISION OF SERVICES TO PERSONS WITH A DE-
LINQUENT LOAN.—A volunteer carrying out an activity under this section 
shall not provide any service to a person with a loan under this subtitle that 
is delinquent except on a specific request for assistance signed by the person 
in connection with the delinquency. 
(h) GRANTS FOR BUSINESS COUNSELING AND ASSISTANCE.— 
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(1) IN GENERAL.—In carrying out this section, the Administrator 
may make a grant to, or enter into a contract or cooperative agreement 
with, a public or private institution of higher education for the estab-
lishment and operation of a small business institute, which shall be 
used to provide business counseling and assistance to small business 
concerns through the activities of students enrolled at the institution. 
(2) EDUCATIONAL CREDITS.—A student engaged in an activity fund-
ed under paragraph (1) shall be entitled to receive educational credit 
for the activity. 
(i) PAYMENT
OF EXPENSES
IN JUDICIAL
OR ADMINISTRATIVE PRO-
CEEDINGS.—Notwithstanding any other provision of law and in accordance 
with regulations that the Administrator shall prescribe, in a judicial or ad-
ministrative proceeding arising directly out of the performance of an activity 
under this section to which a volunteer is made a party, the Administrator 
may employ counsel and pay counsel fees, court costs, bail, and other ex-
penses incidental to the defense of the volunteer. 
§ 241104. Inventory of productive facilities 
(a) IN GENERAL.—The Administrator shall— 
(1) make a complete inventory of all productive facilities of small 
business concerns; or 
(2) arrange for such an inventory to be made by any other govern-
mental agency that has the facilities. 
(b) INFORMATION FROM STATE AGENCIES.—In making an inventory 
under subsection (a), the Administrator or other governmental agency may 
request an appropriate agency of a State to furnish an inventory of the pro-
ductive facilities of small business concerns in the State if such an inventory 
is available or in prospect. 
§ 241105. Utilization of productive capacity 
The Administrator shall— 
(1) coordinate and ascertain the means by which the productive ca-
pacity of small business concerns can be most effectively utilized; and 
(2) consult and cooperate with officers of the Government having 
procurement or property disposal powers, in order to utilize the poten-
tial productive capacity of plants operated by small business concerns. 
§ 241106. Subcontracting to small business concerns 
The Administrator shall— 
(1) obtain information concerning methods and practices that Gov-
ernment prime contractors utilize in letting subcontracts; and 
(2) take action to encourage the letting of subcontracts by prime 
contractors to small business concerns at prices and on terms and con-
ditions that are fair and equitable. 
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§ 241107. Size certification 
(a) IN GENERAL.—The Administrator shall determine within any indus-
try the concerns that qualify as a small business concern for purposes of 
this subtitle. 
(b) ISSUANCE OF CERTIFICATE.—When requested to do so, the Adminis-
trator shall issue a certificate certifying a concern as a small business con-
cern in accordance with the criteria stated in section 101103 of this title. 
(c) REVOCATION OF CERTIFICATE.—A certificate issued under subsection 
(b) shall be subject to revocation when the concern covered by the certificate 
ceases to qualify as a small business concern. 
(d) CONCLUSIVE DETERMINATION.—An officer of the Government having 
procurement or lending power, or engaging in the disposal of Federal prop-
erty or allocating materials or supplies, or promulgating regulations affect-
ing the distribution of materials or supplies, shall accept as conclusive the 
Administrator’s determination whether a concern qualifies as a small busi-
ness concern. 
§ 241108. Responsibility certification 
(a) DEFINITIONS.—In this section: 
(1) CONTRACTING
OFFICER.—The term ‘‘contracting officer’’ 
means— 
(A) a contracting officer; and 
(B) any other officer engaged in the sale and disposal of Fed-
eral property. 
(2) RESPONSIBILITY.—The term ‘‘responsibility’’ includes capability, 
competency, capacity, credit, integrity, perseverance, and tenacity. 
(b) CERTIFICATION.—The Administrator shall certify to a contracting of-
ficer with respect to all elements of the responsibility of a small business 
concern or group of small business concerns to receive and perform a spe-
cific Government contract. 
(c) NO PRECLUSION FROM AWARD OF CONTRACT WITHOUT REFERRAL 
TO THE ADMINISTRATOR.—A contracting officer may not, for any reason 
relating to an element of responsibility as determined under subsection (b), 
preclude a small business concern or group of small business concerns from 
being awarded a contract without referring the matter for a final disposition 
to the Administrator. 
(d) CONCLUSIVE DETERMINATION.—A contracting officer shall— 
(1) accept as conclusive a certification made under subsection (b) as 
to the specific Government contract with respect to which the certifi-
cation is made; and 
(2) let the contract to the small business concern or group of small 
business concerns without requiring the small business concern or 
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229 
group of small business concerns to meet any other requirement of re-
sponsibility or eligibility. 
(e) NO EXEMPTION.—The Administrator may not establish an exemption 
from referral or notification or refuse to accept a referral or notification 
from a contracting officer made under subsection (c), but nothing in this 
section requires the processing of an application for certification if the small 
business concern to which the referral pertains declines to have the applica-
tion processed. 
§ 241109. Information pertaining to Federal procurement or 
production 
The Administrator shall obtain from any Federal agency engaged in pro-
curement or in the financing of procurement or production such reports con-
cerning the letting of contracts and subcontracts and the making of loans 
to business concerns as the Administrator considers pertinent in carrying 
out the functions of the Administrator under this subtitle and subtitle I. 
§ 241110. Information pertaining to disposal of Federal 
property 
The Administrator shall obtain from any Federal agency engaged in the 
disposal of Federal property such reports concerning the solicitation of bids, 
time of sale, or otherwise as the Administrator considers pertinent in car-
rying out the functions of the Administrator under this subtitle and subtitle 
I. 
§ 241111. Information pertaining to supplies of materials 
The Administrator shall obtain from suppliers of materials information 
pertaining to the method of filling orders for materials, and the bases for 
allocating their supplies of materials, when it appears that a small business 
concern is unable to obtain material from its normal sources. 
§ 241112. Fair proportions of business for small business 
concerns 
The Administrator shall make studies and recommendations to the appro-
priate Federal agencies to ensure that— 
(1) a fair proportion of the total purchases and contracts for prop-
erty and services for the Government is placed with small business con-
cerns; 
(2) a fair proportion of Government contracts for research and devel-
opment is placed with small business concerns; 
(3) a fair proportion of the total sales of Government property is 
made to small business concerns; and 
(4) a fair and equitable share of materials, supplies, and equipment 
is available to small business concerns. 
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230 
§ 241113. Fair and reasonable treatment of small business 
concerns 
The Administrator shall consult and cooperate with all Federal agencies 
for the purpose of ensuring that small business concerns receive fair and 
reasonable treatment from Federal agencies. 
§ 241114. Information and assistance pertaining to federally 
aided urban renewal projects 
The Administrator shall provide at the earliest practicable time such in-
formation and assistance as are appropriate (including information con-
cerning eligibility for loans under section 221103 of this title) to local public 
agencies (as defined in section 110(h) of the Housing Act of 1949 (42 
U.S.C. 1460(h))) and to small business concerns to be displaced by federally 
aided urban renewal projects in order to assist the small business concerns 
in reestablishing operations. 
§ 241115. Dissemination of information by the Administrator 
(a) IN GENERAL.—The Administrator shall disseminate, without regard 
to section 3204 of title 39, information, in such form as the Administrator 
considers appropriate, to public agencies, private organizations, and the gen-
eral public. 
(b) INFORMATION ON FEDERAL PROCUREMENT PRACTICES.—The Ad-
ministrator shall, for each fiscal year— 
(1) collect information concerning the procurement practices and 
procedures of each Federal agency having procurement authority; 
(2) publish and disseminate the information to contracting officers 
in all Federal agencies; and 
(3) make the information available to any small business concern 
that requests the information. 
§ 241116. Availability of information from Federal agencies 
(a) REQUESTS FOR INFORMATION.—For any contract to be let by any 
Federal agency, the Federal agency shall provide to any small business con-
cern, on request by the small business concern— 
(1) a copy of bid sets and specifications with respect to the contract; 
(2) the name and telephone number of an employee of the Federal 
agency to answer questions with respect to the contract; and 
(3) adequate citations to each major Federal law (including a regula-
tion) with which the small business concern must comply in performing 
the contract. 
(b) EXEMPT CONTRACTS.—Subsection (a) does not apply to a contract 
(or subcontract) that— 
(1) will be performed entirely outside the United States; or 
(2) is for services that are personal in nature. 
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231 
§ 241117. Adjustment of regulations and programs to the 
needs of small business concerns 
The Administrator shall— 
(1) make studies of matters materially affecting the competitive 
strength of small business concerns and of the effect on small business 
concerns of Federal laws (including regulations) and programs; and 
(2) make recommendations to Federal agencies as appropriate for 
the adjustment of regulations and programs to the needs of small busi-
ness concerns. 
§ 241118. Outreach programs for disabled veterans, vet-
erans, and reservists 
(a) IN GENERAL.—The Administrator shall make grants to, and enter 
into contracts and cooperative agreements with, educational institutions, pri-
vate businesses, veterans’ nonprofit community-based organizations, and 
Federal agencies and State and local agencies for the establishment and im-
plementation of outreach programs for disabled veterans, veterans, and re-
servists. 
(b) INCREASE IN NUMBER OF VETERANS BUSINESS OUTREACH CEN-
TERS.—The Administrator shall use the authority under subsection (a) to 
ensure that the number of veterans business outreach centers throughout 
the United States increases by the number that the Administrator considers 
appropriate, based on need, for each fiscal year. 
§ 241119. Consolidation of contract requirements 
(a) DECISIONS REGARDING CONSOLIDATION OF CONTRACT REQUIRE-
MENTS.—The head of a Federal agency shall ensure that the decisions made 
by the Federal agency regarding consolidation of contract requirements of 
the Federal agency are made with a view to providing small business con-
cerns with appropriate opportunities to participate as prime contractors and 
subcontractors in the procurements of the Federal agency. 
(b) LIMITATION ON USE OF ACQUISITION STRATEGIES INVOLVING CON-
SOLIDATION.— 
(1) IN GENERAL.—The head of a Federal agency shall not carry out 
an acquisition strategy that includes a consolidation of contract re-
quirements of the Federal agency with a total value of more than 
$2,000,000 unless the senior procurement executive or Chief Acquisi-
tion Officer for the Federal agency, before carrying out the acquisition 
strategy— 
(A) conducts market research; 
(B) identifies any alternative contracting approaches that would 
involve a lesser degree of consolidation of contract requirements; 
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232 
(C) makes a written determination that the consolidation of con-
tract requirements is necessary and justified; 
(D) identifies any negative impact by the acquisition strategy on 
contracting with small business concerns; and 
(E) ensures that steps will be taken to include small business 
concerns in the acquisition strategy. 
(2) DETERMINATION THAT CONSOLIDATION IS NECESSARY AND JUS-
TIFIED.— 
(A) IN GENERAL.—A senior procurement executive or Chief Ac-
quisition Officer may determine that an acquisition strategy in-
volving a consolidation of contract requirements is necessary and 
justified for the purposes of paragraph (1)(C) if the benefits of the 
acquisition strategy substantially exceed the benefits of each of the 
possible alternative contracting approaches identified under para-
graph (1)(B). 
(B) SAVINGS IN ADMINISTRATIVE OR PERSONNEL COSTS.—For 
purposes of subparagraph (A), savings in administrative or per-
sonnel costs alone do not constitute a sufficient justification for 
a consolidation of contract requirements in a procurement unless 
the expected total amount of the cost savings, as determined by 
the senior procurement executive or Chief Acquisition Officer, is 
expected to be substantial in relation to the total cost of the pro-
curement. 
(C) NOTICE.—Not later than 7 days after making a determina-
tion that an acquisition strategy involving a consolidation of con-
tract requirements is necessary and justified under subparagraph 
(A), the senior procurement executive or Chief Acquisition Officer 
shall publish a notice on a public website that the determination 
has been made. Any solicitation for a procurement related to the 
acquisition strategy shall not be published earlier than 7 days 
after the notice is published. With the publication of the solicita-
tion, the senior procurement executive or Chief Acquisition Officer 
shall publish a justification for the determination, which shall in-
clude the information in subparagraphs (A) through (E) of para-
graph (1). 
(3) BENEFITS TO BE CONSIDERED.—The benefits considered for the 
purposes of paragraphs (1) and (2) may include— 
(A) cost; and 
(B) regardless of whether quantifiable in dollar amounts— 
(i) quality; 
(ii) acquisition cycle; 
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(iii) terms and conditions; and 
(iv) any other benefit. 
Chapter 243—Subcontracting Provisions 
Sec. 
243101.
Opportunity to participate in performance of contracts. 
243102.
Notice of provisions relating to contracts awarded pursuant to the negotiated method 
of procurement. 
243103.
Subcontracting plans. 
243104.
Incentives. 
243105.
Liquidated damages. 
243106.
Payment of subcontractors. 
243107.
Subcontracting misrepresentations. 
243108.
Material breach. 
243109.
Pilot program providing past performance ratings for other small business sub-
contractors. 
243110.
Effect of chapter. 
§ 243101. Opportunity to participate in performance of con-
tracts 
(a) IN GENERAL.—The clause stated in subsection (c) shall be included 
in all contracts let by a Federal agency except a contract described in sub-
section (b). 
(b) EXCEPTED CONTRACTS.—The clause stated in subsection (c) need not 
be included in— 
(1) a contract that does not exceed the simplified acquisition thresh-
old; 
(2) a contract (including all subcontracts under the contract) that 
will be performed entirely outside the United States; or 
(3) a contract for a service that is personal in nature. 
(c) REQUIRED CLAUSE.—The clause required by subsection (a) is as fol-
lows: 
‘‘(1) DEFINITIONS.— 
‘‘(A) IN GENERAL.—As used in this contract, each of the terms 
‘qualified HUBZone small business concern’, ‘small business con-
cern’, ‘small business concern owned and controlled by service-dis-
abled veterans’, ‘small business concern owned and controlled by 
socially and economically disadvantaged individuals’, ‘small busi-
ness concern owned and controlled by veterans’, and ‘small busi-
ness concern owned and controlled by women’ has the meaning 
given the term in section 101102 of title 57, United States Code. 
‘‘(B) ADDITIONAL TERM EFFECTIVE WITH JOINT ISSUANCE OF 
IMPLEMENTING REGULATIONS.—Effective on the date on which 
the Administrator of the Small Business Administration and the 
Secretary of Veterans Affairs jointly issue implementing regula-
tions described in section 1832(e) of the National Defense Author-
ization Act for Fiscal Year 2017 (Public Law 114–328, 130 Stat. 
2660), the term ‘small business concern owned and controlled by 
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234 
service-disabled veterans’ has the meaning given the term in sec-
tion 101102 of title 57, United States Code. 
‘‘(C) PRESUMPTION.—For purposes of applying the definition of 
‘small business concern owned and controlled by socially and eco-
nomically disadvantaged individuals’, the contractor shall presume 
that socially and economically disadvantaged individuals include 
Black Americans, Hispanic Americans, Native Americans, Asian 
Pacific Americans, and other minorities, or any other individual 
found to be disadvantaged by the United States Small Business 
Administration. 
‘‘(2) POLICY.—It is the policy of the United States that qualified 
HUBZone small business concerns, small business concerns owned and 
controlled by service-disabled veterans, small business concerns owned 
and controlled by socially and economically disadvantaged individuals, 
small business concerns owned and controlled by veterans, small busi-
ness concerns owned and controlled by women, and other small busi-
ness concerns shall have the maximum practicable opportunity to par-
ticipate in the performance of contracts let by any Federal agency, in-
cluding contracts and subcontracts for subsystems, assemblies, compo-
nents, and related services for major systems. 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 qualified HUBZone small business concerns, 
small business concerns owned and controlled by service-disabled vet-
erans, small business concerns owned and controlled by socially and 
economically disadvantaged individuals, small business concerns owned 
and controlled by veterans, small business concerns owned and con-
trolled by women, and other small business concerns. 
‘‘(3) AGREEMENT.—The contractor agrees— 
‘‘(A) to carry out the policy stated in paragraph (2) in the 
awarding of subcontracts to the fullest extent consistent with the 
efficient performance of this contract; and 
‘‘(B) to cooperate in any studies or surveys that may be con-
ducted by the United States Small Business Administration or the 
awarding agency of the United States as necessary to determine 
the extent of the contractor’s compliance with this clause. 
‘‘(4) RELIANCE
ON
WRITTEN
REPRESENTATION.—The contractor, 
acting in good faith, may rely on a written representation by a subcon-
tractor regarding its status as a qualified HUBZone small business 
concern, small business concern owned and controlled by service-dis-
abled veterans, small business concern owned and controlled by socially 
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235 
and economically disadvantaged individuals, small business concern 
owned and controlled by veterans, small business concern owned and 
controlled by women, or other small business concern.’’ 
§ 243102. Notice of provisions relating to contracts awarded 
pursuant to the negotiated method of procurement 
(a) REQUIRED CLAUSE.—A solicitation of an offer for a contract de-
scribed in subsection (b) shall contain a clause notifying potential offering 
companies of the provisions of this chapter relating to contracts awarded 
pursuant to the negotiated method of procurement. 
(b) CONTRACTS.—A contract referred to in subsection (a) is a contract 
let by a Federal agency that— 
(1) is to be awarded pursuant to the negotiated method of procure-
ment; and 
(2) may exceed— 
(A) $1,000,000, in the case of a contract for the construction 
of a public facility; or 
(B) $500,000, in the case of any other contract. 
§ 243103. Subcontracting plans 
(a) DEFINITIONS.—In this section: 
(1) BIDDER.—The term ‘‘bidder’’ does not include a bidder that is 
a small business concern. 
(2) OFFEROR.—The term ‘‘offeror’’ does not include an offeror that 
is a small business concern. 
(b) NEGOTIATED PROCUREMENTS.— 
(1) NEGOTIATION.—Before the award of any contract described in 
paragraph (2), or any amendment or modification to such a contract, 
the apparent successful offeror shall negotiate with the procurement 
authority a subcontracting plan that incorporates the information pre-
scribed in subsection (d). 
(2) CONTRACTS.—A contract referred to in paragraph (1) is a con-
tract let by a Federal agency that— 
(A) is to be (or was) awarded pursuant to the negotiated meth-
od of procurement; 
(B) is required to include the clause stated in section 243101 
of this title; 
(C) may exceed— 
(i) $1,000,000, in the case of a contract for the construc-
tion of a public facility; or 
(ii) $500,000, in the case of any other contract; and 
(D) offers a subcontracting possibility. 
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(3) INCLUSION IN CONTRACT.—The subcontracting plan shall be in-
cluded in and made a material part of the contract. 
(4) FAILURE TO NEGOTIATE SUBCONTRACTING PLAN.—If, within the 
time prescribed in regulations of the procuring agency, the apparent 
successful offeror fails to negotiate the subcontracting plan required by 
paragraph (1), the offeror shall be ineligible to be awarded the con-
tract. 
(5) PRIOR
COMPLIANCE
A
FACTOR
IN
DETERMINING
RESPONSI-
BILITY.—Prior compliance of the offeror with other subcontracting 
plans under this subsection shall be considered by a procuring agency 
in determining the responsibility of the offeror for the award of the 
contract. 
(6) MAXIMUM OPPORTUNITY.—No contract shall be awarded to any 
offeror unless the procuring agency determines that the subcontracting 
plan to be negotiated by the offeror under paragraph (2) provides the 
maximum practicable opportunity for qualified HUBZone small busi-
ness concerns, small business concerns owned and controlled by service- 
disabled veterans, small business concerns owned and controlled by so-
cially and economically disadvantaged individuals, small business con-
cerns owned and controlled by veterans, small business concerns owned 
and controlled by women, and other small business concerns, to partici-
pate in the performance of the contract. 
(c) ADVERTISED PROCUREMENTS.— 
(1) REQUIRED CLAUSE.—A solicitation of a bid for a contract de-
scribed in paragraph (2), or any amendment or modification to such 
a contract, shall contain a clause requiring any bidder that is selected 
to be awarded a contract to submit to the procuring agency a subcon-
tracting plan that incorporates the information prescribed in subsection 
(d). 
(2) CONTRACTS.—A contract referred to in paragraph (1) is a con-
tract let by a Federal agency that— 
(A) is to be awarded pursuant to the formal advertising method 
of procurement; 
(B) is required to contain the clause stated in section 243101 
of this title; 
(C) may exceed— 
(i) $1,000,000, in the case of a contract for the construc-
tion of a public facility; or 
(ii) $500,000, in the case of any other contract; and 
(D) offers a subcontracting possibility. 
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(3) INCLUSION IN CONTRACT.—The subcontracting plan of the bid-
der awarded the contract shall be included in and made a material part 
of the contract. 
(4) FAILURE TO SUBMIT SUBCONTRACTING PLAN.—If, within the 
time prescribed in regulations of the procuring agency, the bidder se-
lected to be awarded the contract fails to submit the subcontracting 
plan required by paragraph (1), the bidder shall become ineligible to 
be awarded the contract. 
(5) PRIOR
COMPLIANCE
A
FACTOR
IN
DETERMINING
RESPONSI-
BILITY.—Prior compliance of the bidder with other subcontracting 
plans under this subsection shall be considered by the procuring agency 
in determining the responsibility of the bidder for the award of the con-
tract. 
(d) CONTENTS OF SUBCONTRACTING PLAN.—A subcontracting plan shall 
include— 
(1) percentage goals for the utilization as subcontractors of qualified 
HUBZone small business concerns, small business concerns owned and 
controlled by service-disabled veterans, small business concerns owned 
and controlled by socially and economically disadvantaged individuals, 
small business concerns owned and controlled by veterans, small busi-
ness concerns owned and controlled by women, and other small busi-
ness concerns; 
(2) the name of an individual within the employ of the offeror or 
bidder who will administer the subcontracting program of the offeror 
or bidder and a description of the duties of that individual; 
(3) a description of the efforts that the offeror or bidder will take 
to ensure that qualified HUBZone small business concerns, small busi-
ness concerns owned and controlled by service-disabled veterans, small 
business concerns owned and controlled by socially and economically 
disadvantaged individuals, small business concerns owned and con-
trolled by veterans, small business concerns owned and controlled by 
women, and other small business concerns will have an equitable oppor-
tunity to compete for subcontracts; 
(4) assurances that the offeror or bidder will— 
(A) include the clause required by section 243101 of this title 
in all subcontracts that offer further subcontracting opportunities; 
and 
(B) require all subcontractors (except small business concerns) 
that receive subcontracts in excess of $1,000,000 in the case of 
a contract for the construction of a public facility, or in excess of 
$500,000 in the case of any other contract, to adopt a subcon-
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tracting plan similar to the subcontracting plan required under 
subsection (b) or (c); 
(5)(A) assurances that the offeror or bidder will submit such periodic 
reports and cooperate in any studies or surveys as may be required by 
the procuring agency or the Administrator to determine the extent of 
compliance by the offeror or bidder with the subcontracting plan; and 
(B) assurances at a minimum that the offeror or bidder, and all sub-
contractors required to maintain subcontracting plans pursuant to this 
subsection, will— 
(i) review and approve subcontracting plans submitted by their 
subcontractors; 
(ii) monitor subcontractor compliance with their approved sub-
contracting plans; 
(iii) ensure that subcontracting reports are submitted by their 
subcontractors when required; 
(iv) acknowledge receipt of their subcontractors’ reports; 
(v) compare the performance of their subcontractors to subcon-
tracting plans and goals; and 
(vi) discuss performance with subcontractors when necessary to 
ensure that their subcontractors make a good faith effort to com-
ply with their subcontracting plans; 
(6) a recitation of— 
(A) the types of records that the successful offeror or bidder will 
maintain to demonstrate procedures that are adopted to comply 
with the requirements and goals set forth in the subcontracting 
plan, including the establishment of source lists of qualified 
HUBZone small business concerns, small business concerns owned 
and controlled by service-disabled veterans, small business con-
cerns owned and controlled by socially and economically disadvan-
taged individuals, small business concerns owned and controlled by 
veterans, small business concerns owned and controlled by women, 
and other small business concerns; and 
(B) efforts to identify and award subcontracts to small business 
concerns; 
(7) a recitation of the types of records that the successful offeror or 
bidder will maintain to demonstrate procedures that have been adopted 
to ensure that subcontractors at any tier comply with the requirements 
and goals set forth in the plan established in accordance with para-
graph (4)(B), including— 
(A) the establishment of source lists of qualified HUBZone 
small business concerns, small business concerns owned and con-
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239 
trolled by service-disabled veterans, small business concerns owned 
and controlled by socially and economically disadvantaged individ-
uals, small business concerns owned and controlled by veterans, 
small business concerns owned and controlled by women, and other 
small business concerns; and 
(B) efforts to identify and award subcontracts to small business 
concerns; and 
(8) a representation that the offeror or bidder will— 
(A) make a good faith effort to acquire articles, equipment, sup-
plies, services, or materials or obtain the performance of construc-
tion work from the small business concerns used in preparing and 
submitting to the contracting agency the bid or proposal, in the 
same amount and quality used in preparing and submitting the 
bid or proposal; and 
(B) provide to the contracting officer a written explanation if 
the offeror or bidder fails to acquire articles, equipment, supplies, 
services, or materials or obtain the performance of construction 
work as described in subparagraph (A). 
(e) NOTIFICATION OF INTENTION TO IDENTIFY SMALL BUSINESS CON-
CERN AS POTENTIAL SUBCONTRACTOR.— 
(1) DEFINITION OF COVERED CONTRACT.—In this subsection, the 
term ‘‘covered contract’’ means a contract relating to which a prime 
contractor is required to develop a subcontracting plan under this sec-
tion. 
(2) NOTIFICATION.—An offeror for a covered contract that intends 
to identify a small business concern as a potential subcontractor in a 
bid or proposal for the contract, or in a plan submitted under this sec-
tion in connection with the covered contract, shall notify the small busi-
ness concern before making the identification. 
(f) ATTAINMENT OF GOALS.— 
(1) ATTAINABILITY OF GOALS.—A Federal agency shall ensure that 
the goals offered by an apparent successful bidder or offeror are attain-
able in relation to— 
(A) the subcontracting opportunities available to the contractor, 
commensurate with the efficient and economical performance of 
the contract; 
(B) the pool of eligible subcontractors available to fulfill the 
subcontracting opportunities; and 
(C) the actual performance of the contractor in fulfilling the 
subcontracting goals specified in prior subcontracting plans. 
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240 
(2) CREDIT FOR DEVELOPMENT ASSISTANCE.—For purposes of de-
termining the attainment of a subcontract utilization goal under a sub-
contracting plan entered into with an executive agency under sub-
section (b) or (c), a mentor firm that provides development assistance 
to a prote´ge´ firm under the pilot Mentor-Prote´ge´ Program established 
pursuant to section 831 of the National Defense Authorization Act for 
Fiscal Year 1991 (Public Law 101–510; 10 U.S.C. 2302 note) shall 
be granted credit for the assistance in accordance with subsection (g) 
of that section. 
(g) BUNDLED CONTRACTS.—The following factors shall be designated by 
a Federal agency as significant factors for purposes of evaluating offers for 
a bundled contract if the head of the Federal agency determines that the 
contract offers a significant opportunity for subcontracting: 
(1) A factor that is based on the rate provided under the subcon-
tracting plan for small business participation in the performance of the 
contract. 
(2) For the evaluation of past performance of an offeror, a factor 
that is based on the extent to which the offeror attained applicable 
goals for small business participation in the performance of contracts. 
(h) COMPLIANCE ASSISTANCE.—The Administrator may— 
(1) assist Federal agencies and businesses in complying with their 
responsibilities under this section, including the formulation of subcon-
tracting plans; 
(2)(A) review any solicitation for any contract to be let under sub-
section (b) or (c) to determine the maximum practicable opportunity 
for qualified HUBZone small business concerns, small business con-
cerns owned and controlled by service-disabled veterans, small business 
concerns owned and controlled by socially and economically disadvan-
taged individuals, small business concerns owned and controlled by vet-
erans, small business concerns owned and controlled by women, and 
other small business concerns to participate as subcontractors in the 
performance of any contract resulting from any solicitation; and 
(B) submit findings, which shall be advisory in nature, to the pro-
curing agency; and 
(3) evaluate compliance with subcontracting plans as a supplement 
to evaluation by the contracting agency— 
(A) on a contract-by-contract basis; or 
(B) in the case of a contractor having multiple contracts, on an 
aggregate basis. 
(i) COLLECTION, REPORTING, AND REVIEW OF DATA.—The head of a 
contracting agency shall ensure that— 
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241 
(1) the contracting agency collects and reports data on the extent 
to which contractors of the agency meet the goals and objectives set 
forth in subcontracting plans submitted under this section; and 
(2) the contracting agency periodically reviews data collected and re-
ported under paragraph (1) for the purpose of ensuring that contrac-
tors of the agency comply in good faith with the requirements of this 
section and subcontracting plans submitted by the contractors under 
this section. 
(j) FRAUDULENT OR BAD FAITH ACTIVITY REPORTING MECHANISM.— 
The Administrator shall establish a reporting mechanism that allows a sub-
contractor or potential subcontractor to report fraudulent activity or bad 
faith by a contractor with respect to a subcontracting plan submitted under 
this section. 
(k) CREDIT FOR CERTAIN SUBCONTRACTORS.— 
(1) IN GENERAL.—For purposes of determining whether a prime 
contractor has attained the percentage goals specified in subsection 
(d)— 
(A) if the subcontracting goals pertain only to a single contract 
with the executive agency, the prime contractor shall receive credit 
for small business concerns performing as subcontractors at any 
tier pursuant to the subcontracting plans required under sub-
section (d)(4)(B) in an amount equal to the dollar value of work 
awarded to those small business concerns; and 
(B) if the subcontracting goals pertain to more than 1 contract 
with 1 or more executive agencies, or to 1 contract with more than 
1 executive agency, the prime contractor may count only first tier 
subcontractors that are small business concerns. 
(2) EFFECT
OF
SUBSECTION.—Nothing in this subsection abro-
gates— 
(A) the responsibility of a prime contractor to make a good-faith 
effort to achieve the first tier small business subcontracting goals 
negotiated under subsection (d)(1); or 
(B) the requirement for subcontractors with further opportuni-
ties for subcontracting to make a good-faith effort to achieve the 
goals established under subsection (d)(4)(B). 
(l) ELECTRONIC SUBCONTRACTING REPORTING SYSTEM.—The Adminis-
trator shall take such actions as are necessary to ensure that the electronic 
subcontracting reporting system established by the Administrator to carry 
out the requirement of subsection (d)(5) is able to identify entities that fail 
to submit required reports. 
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242 
§ 243104. Incentives 
Notwithstanding any other provision of law, a Federal agency, to encour-
age subcontracting opportunities for qualified HUBZone small business con-
cerns, small business concerns owned and controlled by service-disabled vet-
erans, small business concerns owned and controlled by socially and eco-
nomically disadvantaged individuals, small business concerns owned and 
controlled by veterans, small business concerns owned and controlled by 
women, and other small business concerns, may provide such incentives as 
the Federal agency considers appropriate to encourage such subcontracting 
opportunities as are commensurate with the efficient and economical per-
formance of a contract that is let pursuant to the negotiated method of pro-
curement. 
§ 243105. Liquidated damages 
(a) REQUIRED CLAUSE.— 
(1) IN GENERAL.—A contract subject to subsection (b) or (c) of sec-
tion 243103 of this title shall contain a clause for the payment of liq-
uidated damages on a finding that a prime contractor has failed to 
make a good faith effort to comply with the requirements imposed on 
the contractor by this chapter. 
(2) INCLUSION IN FEDERAL ACQUISITION REGULATION.—The clause 
required by paragraph (1) shall be made part of the Federal Acquisi-
tion Regulation. 
(b) DEMONSTRATION OF GOOD FAITH EFFORT.—A contractor shall be 
afforded an opportunity to demonstrate a good faith effort regarding com-
pliance prior to the contracting officer’s final decision regarding the imposi-
tion of damages and the amount of damages under subsection (a). 
(c) DISPUTE RESOLUTION.—The final decision of a contracting officer re-
garding the contractor’s obligation to pay damages under subsection (a) or 
the amount of damages shall be subject to chapter 71 of title 41. 
§ 243106. Payment of subcontractors 
(a) DEFINITION
OF COVERED CONTRACT.—In this section, the term 
‘‘covered contract’’ means a contract relating to which a prime contractor 
is required to develop a subcontracting plan under section 243103 of this 
title. 
(b) NOTICE.— 
(1) IN GENERAL.—A prime contractor for a covered contract shall 
notify in writing the contracting officer for the covered contract if— 
(A) the prime contractor pays a reduced price to a subcon-
tractor for a good or service on completion of the responsibilities 
of the subcontractor; or 
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243 
(B) the payment to a subcontractor is more than 90 days past 
due for a good or service provided for the covered contract for 
which the Federal agency has paid the prime contractor. 
(2) CONTENTS.—A prime contractor shall include in a notice under 
paragraph (1) the reason for the reduction in a payment to or failure 
to pay a subcontractor. 
(c) PERFORMANCE EVALUATION.—In evaluating the performance of a 
prime contractor, the contracting officer for a covered contract shall take 
into consideration an unjustified failure by the prime contractor to make a 
full or timely payment to a subcontractor. 
(d) CONTROL OF FUNDS.—If the contracting officer for a covered con-
tract determines that a prime contractor has a history of unjustified failures 
to make full and timely payment to 1 or more subcontractors, the con-
tracting officer shall record the identity of the contractor in accordance with 
the regulations promulgated under subsection (e). 
(e) REGULATIONS.—The Federal Acquisition Regulatory Council shall 
amend the Federal Acquisition Regulation to— 
(1) describe the circumstances under which a contractor may be de-
termined to have a history of unjustified failures to make full and time-
ly payment to 1 or more subcontractors; 
(2) establish a process for contracting officers to record the identity 
of a contractor described in paragraph (1); and 
(3) require the identity of a contractor described in paragraph (1) 
to be incorporated in, and made publicly available through, the Federal 
Awardee Performance and Integrity Information System, or any suc-
cessor to the System. 
§ 243107. Subcontracting misrepresentations 
The Administrator, in consultation with the Administrator for Federal 
Procurement Policy, shall promulgate regulations relating to, and the Fed-
eral Acquisition Regulatory Council shall amend the Federal Acquisition 
Regulation to establish a policy on, subcontracting compliance relating to 
small business concerns, including— 
(1) assignment of compliance responsibilities between contracting of-
fices, small business offices, and program offices; and 
(2) periodic oversight and review activities. 
§ 243108. Material breach 
The failure of a contractor or subcontractor to comply in good faith 
with— 
(1) the clause required under section 243101 of this title; 
(2) a subcontracting plan required of the contractor under section 
243103 of this title to be included in its contract or subcontract; or 
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(3) assurances provided under section 243103(d)(5)(A) of this title, 
shall be a material breach of the contract or subcontract and may be consid-
ered in any past performance evaluation of the contactor. 
§ 243109. Pilot program providing past performance ratings 
for other small business subcontractors 
(a) DEFINITION OF APPROPRIATE OFFICIAL.—In this section, the term 
‘‘appropriate official’’ means— 
(1) a commercial market representative; 
(2) another individual designated by the senior official appointed by 
the Administrator with responsibilities under divisions F, G, and H of 
subtitle II of this title; or 
(3) the Office of Small and Disadvantaged Business Utilization of 
a Federal agency, if the head of the Federal agency and the Adminis-
trator agree. 
(b) ESTABLISHMENT.—The Administrator shall establish a pilot program 
for a small business concern without a past performance rating as a prime 
contractor performing as a first tier subcontractor for a covered contract 
(as defined in section 243106(a) of this title) to request a past performance 
rating in the system used by the Federal Government to monitor or record 
contractor past performance. 
(c) APPLICATION.—A small business concern described in subsection (b) 
shall submit an application to the appropriate official for a past perform-
ance rating no later than 270 days after the small business concern com-
pleted the work for which it seeks a past performance rating or 180 days 
after the prime contractor completes work on the covered contract, which-
ever is earlier. Such application shall include written evidence of the past 
performance factors for which the small business concern seeks a rating and 
a suggested rating. 
(d) DETERMINATION.— 
(1) IN GENERAL.—The appropriate official shall submit the applica-
tion from the small business concern to the Office of Small and Dis-
advantaged Business Utilization for the covered contract and to the 
prime contractor for review. The Office of Small and Disadvantaged 
Business Utilization and the prime contractor shall, not later than 30 
days after receipt of the application, submit to the appropriate official 
a response regarding the application. 
(2) AGREEMENT ON RATING.—If the Office of Small and Disadvan-
taged Business Utilization and the prime contractor agree on a past 
performance rating, or if either the Office of Small and Disadvantaged 
Business Utilization or the prime contractor fail to respond and the re-
sponding person agrees with the rating of the applicant small business 
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