place of the subcontractor listed in the original bid
or proposal, except with the consent of the con-
tracting officer for good cause.
(2) EXAMPLES OF GOOD CAUSE.—Good cause
under paragraph (1) shall include the following:
(A) Failure of the subcontractor to execute
a written contract after a reasonable period if
such written contract, based upon the terms,
conditions, plans, and specifications of the con-
tract and the terms of the subcontractor’s bid
or proposal, is presented to the subcontractor
by the contractor.
(B) Bankruptcy of the subcontractor.
(C) The death or physical disability of the
subcontractor, if the subcontractor is an indi-
vidual.
(D) Dissolution of the subcontractor, if the
subcontractor is a corporation or partnership.
(E) Failure of a subcontractor to meet the
surety bond requirements specified by the bid-
der as a condition of the subcontractor to per-
form on the contract, if awarded to the bidder.
(F) The subcontractor is ineligible to per-
form on the subcontract because the subcon-
tractor is suspended, debarred, or otherwise in-
eligible to perform.
(G) A series of failures by the subcon-
tractor to perform in accordance with the speci-
fication, terms, and conditions of its sub-
contract 
resulting 
in 
the 
withholding 
of
amounts requested by the subcontractor in ac-
cordance with section 3905 of title 31, United
States Code, and the regulations implementing
such section.
(H) Failure of the subcontractor to comply
with a requirement of law applicable to the sub-
contractor.
(I) Failure or refusal of the subcontractor
to perform the subcontract.
(3) REQUESTS FOR SUBSTITUTION.—A request
of a contractor for a substitution of a listed subcon-
tractor shall be submitted in writing to the con-
tracting officer and shall include the reasons for the
request. The contractor shall provide a copy of its
request for substitution to the listed subcontractor
by any means that provides written third-party
verification of delivery to the last known address of
the subcontractor. A subcontractor who has been so
notified shall have five working days within which to
submit written objections to the substitution to the
contracting officer. Failure to file such written ob-
jections shall constitute the consent of the listed
subcontractor to the substitution.
(c) LIMITATION
ON ASSIGNMENT, TRANSFER, OR
SUBSTITUTION.—
(1) LIMITATION
ON
ASSIGNMENT
OR
TRANS-
FER.—No contractor shall permit any subcontract to
be voluntarily assigned or transferred or to be per-
formed by any entity other than the subcontractor
listed in the bid or proposal without the consent of
the contracting officer. Consent of the contracting
officer to a contractor for a substitution shall—
(A) be promptly made in writing; and
(B) be included in the contract file.
(2) LIMITATION ON SUBSTITUTION.—No con-
tractor that listed itself for a portion of the work
under the contract shall subcontract any portion of
the work for which it listed itself, unless authorized
by the contracting officer to substitute one or more
subcontractors to perform such work.
(d) IMPOSITION OF LIQUIDATED DAMAGES.—
(1) IN GENERAL.—(A) A contractor shall be
subject to payment of liquidated damages if, without
obtaining the approval of the contracting officer, the
contractor—
(i) replaces a listed subcontractor for a
contract with an executive agency; or
(ii) awards a subcontract to a subcon-
tractor to perform work which the contractor
had identified as work to be performed directly
by the contractor.
(B) A subcontractor shall also be subject to the
payment of liquidated damages if the subcontractor
is determined to have knowingly participated in the
failure of the contractor to comply with the regu-
latory provisions relating to the substitution of a
listed subcontractor.
(2) AMOUNT OF DAMAGES TO BE IMPOSED.—
The amount of liquidated damages imposed under
this subsection shall be equal to the greater of—
(A) 10 percent of the amount of the bid by
the listed subcontractor;
(B) the difference between the amount of
the bid by the listed subcontractor and the
amount of the bid by the substituted subcon-
tractor; or
(C) the difference between the amount of
the bid by a substituted subcontractor and the
dollar value specified by the contractor for the
work for which the contractor had listed for its
own performance.
(e) GROUNDS FOR SUSPENSION OR DEBARMENT.—
The imposition of liquidated damages on a contractor or
subcontractor for failure to comply with the procedures
for the substitution of subcontractors on 2 contracts with-
in a 3-year period shall be deemed to be adequate evidence
of the commission of an offense indicating a lack of busi-
ness integrity or business honesty that seriously and di-
rectly affects the present responsibility of a Government
contractor within the meaning of part 9.4 of the Federal
Acquisition Regulation (Debarment, Suspension, and Eli-
gibility) (49 CFR 9.4).
(f) MODIFICATION OF FEDERAL ACQUISITION REGU-
LATION.—The Administrator for Federal Procurement
Policy shall ensure that the Federal Acquisition Regula-
tion is modified, in accordance with section 25 of the Of-
fice of Federal Procurement Policy Act (41 U.S.C. 421),
to carry out the requirements of this Act.
SEC. 5. DEFINITIONS.
In this Act—
(1) the term ‘‘contractor’’ means an entity that
contracts with an executive agency for the procure-