small business plan exemptions

FAC Number: 2025-01 Effective Date: 11/12/2024

19.704 Subcontracting plan requirements.

(a) Each subcontracting plan required under 19.301-2 (e) and 19.702 (a)(1)(i), (ii), and (iii) shall include-

(1) Separate percentage goals for using small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes) and women-owned small business concerns as subcontractors;

(2) A statement of the total dollars planned to be subcontracted and a statement of the total dollars planned to be subcontracted to small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes) and women-owned small business concerns , as a percentage of total subcontract dollars. For individual subcontracting plans only, a contracting officer may require the goals referenced in paragraph (a)(1) of this section to be calculated as a percentage of total contract dollars , in addition to the goals established as a percentage of total subcontract dollars;

(3) A description of the principal types of supplies and services to be subcontracted and an identification of types of supplies or services planned for subcontracting to small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes), 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 (for commercial plans, see paragraph (d) of this section), and a description of the method used to determine the proportionate share of indirect costs to be incurred with small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes), and women-owned small business concerns ;

(7) The name of an individual employed by the offeror who will administer the offeror ’s subcontracting program, and a description of the duties of the individual;

(8) A description of the efforts the offeror will make to ensure that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns have an equitable opportunity to compete for subcontracts ;

(9) Assurances that the offeror will include the clause at 52.219-8 , Utilization of 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 $750,000 ($1.5 million for construction ) to adopt a plan that complies with the requirements of the clause at 52.219-9 , 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) After November 30, 2017, include subcontracting data for each order when reporting subcontracting achievements for indefinite-delivery, indefinite-quantity contracts with individual subcontracting plans where the contract is intended for use by multiple agencies;

(iv) Submit the Individual Subcontract Report (ISR), and the Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS ) ( http://www.esrs.gov ), following the instructions in the eSRS.

(A) The ISR shall be submitted semi-annually during contract performance for the periods ending March 31 and September 30. A report is also required for each contract within 30 days of contract completion. Reports are due 30 days after the close of each reporting period, unless otherwise directed by the contracting officer . Reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or the previous reporting period. When a contracting officer rejects an ISR, the contractor is required to submit a revised ISR within 30 days of receiving the notice of the ISR rejection.

(B) The SSR shall be submitted annually by October 30 for the twelve-month period ending September 30. When an SSR is rejected, the contractor is required to submit a revised SSR within 30 days of receiving the notice of SSR rejection;

(v) Ensure that its subcontractors with subcontracting plans agree to submit the ISR and/or the SSR using the eSRS;

(vi) Provide its prime contract number, its unique entity identifier , and the e-mail address of the offeror ’s official responsible for acknowledging receipt of or rejecting the ISRs to all first-tier subcontractors with subcontracting plans so they can enter this information into the eSRS when submitting their ISRs; and

(vii) Require that each subcontractor with a subcontracting plan provide the prime contract number, its own unique entity identifier , and the e-mail address of the subcontractor’s official responsible for acknowledging receipt of or rejecting the ISRs, to its subcontractors with subcontracting plans;

(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 business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns and to award subcontracts to them;

(12) Assurances that the offeror will make a good faith effort to acquire articles, equipment, supplies , services, or materials, or obtain the performance of construction work from the small business concerns that the offeror used in preparing the bid or proposal, in the same or greater scope, amount, and quality used in preparing and submitting the bid or proposal. Responding to a request for a quote does not constitute use in preparing a bid or proposal. An offeror used a small business concern in preparing the bid or proposal if–

(i) The offeror identifies the small business concern as a subcontractor in the bid or proposal or associated small business subcontracting plan, to furnish certain supplies or perform a portion of the contract; or

(ii) The offeror used the small business concern 's pricing or cost information or technical expertise in preparing the bid or proposal, where there is written evidence of an intent or understanding that the small business concern will be awarded a subcontract for the related work if the offeror is awarded the contract;

(13) Assurances that the contractor will provide the contracting officer with a written explanation if the contractor fails to acquire articles, equipment, supplies , services or materials or obtain the performance of construction work as described in (a)(12) of this section. This written explanation will be submitted to the contracting officer within 30 days of contract completion;

(14) Assurances that the contractor will not prohibit a subcontractor from discussing with the contracting officer any material matter pertaining to payment to or utilization of a subcontractor; and

(15) Assurances that the offeror will pay its small business subcontractors on time and in accordance with the terms and conditions of the subcontract , and notify the contracting officer if the offeror pays a reduced or an untimely payment to a small business subcontractor (see 52.242-5 ).

(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 Business Subcontracting Plan, except goals. Master plans shall be effective for a 3-year period after approval by the contracting officer ; however, it is incumbent upon contractors to maintain and update master plans. Changes required to update master plans are not effective until approved by the contracting officer . A master plan, when incorporated in an individual plan, shall apply to that contract throughout the life of the contract.

(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. If a subcontracting plan is necessary and the offeror is submitting an individual subcontracting plan , the individual subcontracting plan shall contain all the elements required by paragraph (a) of this section and shall contain separate statements and goals based on total subcontract dollars 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 products and commercial services . The subcontracting goals established for a commercial plan shall include all indirect costs with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation ; interest; income taxes; property taxes; lease payments; bank fees; fines, claims , and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. Once a contractor's commercial plan has been approved, the Government shall not require another subcontracting plan from the same contractor while the plan remains in effect, as long as the product or service being provided by the contractor continues to meet the definition of a commercial product or commercial service . 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;

(2) Submit a new commercial plan, 30 working days before the end of the Contractor’s 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;

(3) When the new commercial plan is approved, provide a copy of the approved plan to each contracting officer responsible for an ongoing contract that is subject to the plan; and

(4) Comply with the reporting requirements stated in paragraph (a)(10) of this section by submitting one SSR that includes all indirect costs , except as described in paragraph (d) of this section, in eSRS, for all contracts covered by its commercial plan. This report will be acknowledged or rejected in eSRS by the contracting officer who approved the plan. The report shall be submitted within 30 days after the end of the Government’s fiscal year.

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Government Small Business Subcontracting Plan

Is your bid subcontracted out what is a small business participation plan.

The answer to these questions can make the difference in getting a high proposal evaluation score and a low one.

A Small Business Participation Plan is the percentage (%) of work an Agency requires must be completed by a small business.  In other words, how much a small business must participate.  The reason for this is to involve small businesses in contracts and eliminate a Prime Contractor from being a “middle man.” Some agencies have chosen to name the requirement “small business participation plan” or ” small business utilization plans” since subcontracting plans were initially put in place for large businesses that compete in full and open bidding requirements.

What is a Small Business Subcontracting Plan?

 The biggest difference between the two is the reason for each.

A Small Business Participation Plan allows an Agency to contract directly with small businesses and sets a percentage goal based on a contracts total dollar value.  Whereas, a Small Business Subcontracting Plan sets a goal based on the amount of money a prime contractor subcontracts to small business subcontractors in order to allow small businesses to take on larger projects.

           Although it is true that a small business participation/utilization plan only sets forth goals, each prime contractor now has a legal obligation (through the expressed terms of the prime contract) to demonstrate a good faith effort to seek out qualified subcontractors in the various socio-economic categories ( service disabled veteran-owned ,  HUBZone ,  government contracting small business disadvantage plan requirements , Woman-owned, and Veteran-owned).

Some companies may argue that the prime contractor should not be held to a standard where the government’s requirements are only goals. This argument will not stand when courts look at what if anything is subcontracted.

Government Oversight of Small Business Subcontracting Plans — a Continuing Problem

  Oversight has been an ongoing problem throughout the United States. FAR 52.219-9 small business subcontracting plan requires government contracts awarded to over $650,000 (over $1.5 million for the construction of a public facility) to have a mandatory subcontracting plan included in the prime contract. However, companies submitting federal bids offer the minimum pass through work to small businesses.

• After the government awards the contract, many federal agencies do not diligently follow up on the prime contractor’s compliance requirement.
• Recently, large prime contractors have been scrutinized and given  show-cause  letters  for not complying with their subcontracting plans in good faith.

The Problem:  Large businesses that bid on full and open government contracts have no problem submitting plans. However, when the bid is awarded, most large prime contractors know that government agencies genuinely do not follow up or enforce the statutory requirements for subcontracting plans.

As stated in 15 USC 637 (d)(8), any contractor or subcontractor failing to comply in good faith with the requirements of the subcontracting plan is in material breach of its contract. Further, 15 USC 637 (d)(4)(F) directs that a contractor’s failure to make a good faith effort to comply with the requirements of the subcontracting plan shall result in the imposition of liquidated damages. It is clear that prime contractors have an affirmative responsibility to comply with laws.

Under FAR 19.705-2, the contracting officer must take individual actions to determine whether a proposed contract requires subcontracting plans.

Reporting Requirements 15 USC 637 and FAR 52.219

To amplify the legal obligation, primes have to submit reports to support their progress (SF 294 and 295) in addition to other reports showing their interaction with small businesses. Good faith must be present, or the prime contractor runs the risk of breaching the contract.

• As stated in  15 USC 637 (d)(8) and FAR 19.7,  any contractor or subcontractor failing to comply in good faith with the requirements of the subcontracting plan is in material breach of its contract.
• Further, 15 USC 637 directs that a contractor’s failure to make a good faith effort to comply with the requirements of the subcontracting plan shall result in the imposition of liquidated damages.

Is the named company not subcontracted?

Legal Rights for Government Small Business Subcontracting Plan Under FAR 19.7: Revisiting the lack of  privity of contract  excuse from government agencies, one has to ask what rights the small subcontractor has. Given the language of federal statutes and Federal Acquisition Regulations (FAR Part 19.7), it appears that subcontractors are third party beneficiaries to the terms of the prime contract.

• Regulations for government small business subcontracting plans tend to give rise to the contracting officer’s legal obligation to enforce the terms of the contract.
• More specifically, to ensure that large prime contractors do no just ‘blow off’ their responsibility to pass on work to small businesses.
• Companies should realize that their compliance with a small business subcontracting plan is measured in future government bids.

For small businesses affected, having a  government contracts lawyer  t hat understands the underlying principles of subcontracting plans can be the difference between getting work or not.

Common Issues faced by Small Businesses with Subcontracts and Subcontracting Plans: Losing Bids

  The first hurdle is the burden of submission itself.  Government bids have increased the requirement to submit small business subcontracting plans under FAR 19.7 and FAR 52.219 or what is now supplemented with the small business participation plan requirements. Despite already being a small business, there is a huge concern as to why small businesses should still have to submit participation plans.

Why Even Have the Small Business Subcontracting Plan Rule FAR 52.219?

The short answer is that the RFP requirement is difficult to challenge in a pre-award bid protest. The remaining focus may be to challenge how the contracting agency actually evaluation your bid submission per the solicitation requirements.

Both GAO and the Court of Federal Claims are filled with cases where several companies have lost bids because there was no strategy or thought put into the response when the solicitation gave the minimum criteria for either a Small Business Participation Plan or Subcontracting Plan

• Small Businesses sometimes do not quite understand how it benefits them as a prime contractor
• Although the agency drafts its own contracting requirements, both contractors and federal contracting personnel still struggle to understand the unique difference between the two plans.
• Separate from the Small Business Participation Plan, large businesses contractors must also submit a Plan (Individual Contract Plan) as required by FAR 52.219-9.

Understanding Subcontract Management in Government Contracting

As a practical matter, your responsibility for taking charge and managing your subcontractors start at the bidding stage. Allegations up front can cause the SBA or agency to dig deeper into the original subcontracted agreements and make adverse legal conclusions. Subcontract management in government contracting is an initial matter. However, it also continues through the performance stages of the contract.

Do you understand how the SBA’s similarly situated small business rules play into the subcontracting requirement?

The Subcontracting plan Program is based on  Public Law 95-507   that was passed in 1978 to ensure that large prime contractors further the goal of increasing participation of small businesses in federal procurement.

The reason is to ensure that some of the federal contracting dollars are passed down to small businesses that are service disabled veteran owned small business companies, SBA HUBZone, small disadvantaged requirements, Woman-owned small business, and Veteran-owned requirements.

Many solicitations now require contractors to submit the plans with their proposals. However, many bidders do not put enough emphasis on their plans. As a result, they receive a lower technical score. If the government states that it will evaluate your subcontracting plan, you want to make sure that you put as much emphasis on it just like any other solicitation evaluation requirements.

Small Business Subcontracting Plan Exemptions

Small business subcontracting plans are not required from subcontractors when the prime contract contains the clause at FAR 52.212–5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, or when the subcontractor provides a commercial item subject to the clause at FAR 52.244–6, Subcontracts for Commercial Items, under a prime contract.

Other subcontracting plan exemptions include Small businesses Personal services contracts; Contract performed outside the US; Modifications that do not contain the clause at FAR 52.219-8, Utilization of Small Business Concerns.

Do You have to Respond Even Though You Are a Small Business?

The short answer is yes. When the government states in the solicitation that it wants to see more contracts subcontracted to small businesses, this is a very serious requirement. The government has the ability to state what it wants. However, if you see something that violates procurement law or develops valid challenges to the stated solicitation requirements, then you should seek help from legal counsel.

Federal agencies’ small business goals are based on congressional guidelines. The original intent was to put large businesses on notice that although there is no privity of contract between the government and your subcontractor, the terms and conditions of the prime contract would essentially get around the requirement.

A question arises as to whether your proposed subcontracting plan covers the entire contract period, option periods or in some way deficient. These are concerns that you should address during the initial bidding stage.

What if You Cannot Find Small Businesses to Perform the Work?

The reality is that not all prime contractors can find small businesses in the locale to perform work under the solicitation requirements. What do you do? One common suggestion would be to state the relevant reasons in your bid as to why you could not realistically submit a subcontracting plan that covers a specific group or groups. Just only saying that you will not be able to meet the requirement can potential penalize you in the evaluation scores.

As a bidder, you should focus on a few things.

• First, seek out credible small businesses that can actually perform the work. Fighting the solicitation requirement has proven not to work in the courts.
• Second, make sure that you do not fall short of the solicitation’s proposed goal requirements. If you fall short, the government may rate you lower (if subcontracting plans are part of the evaluation criteria.
• Third, make sure that you identify the percentage of work and of the contract for each subcategory (e.g. SDVOSB,  HUBZone   etc.) and how much of the overall contract cost will be passed on to your small business subcontractors.

Be aware of the new SBA rules regarding  small business subcontracting and limitations .

Contracting Officer Enforcement Authority Under FAR 19.7 and 15 USC 637

The Contracting Officer has the statutory power to enforce small business participation plans under FAR 19.7 and 15 USC 637. If, after consideration of all the pertinent data, the contracting officer finds that the contractor failed to make a good faith effort to comply with its subcontracting plan, the contracting officer shall issue a final decision to the contractor to that effect and require the payment of liquidated damages in an amount stated.

SBA Responsibility for Small Business Participation Plans Under FAR

Does the SBA have authority and responsibility to participate in the oversight of your small business participation plans or small business subcontracting under FAR 52.219?  Of course, it does.  Under FAR Part 19.707. Although the rules state that the SBA “may” act, there should be an inclination to show that it will act. See information about  SBA 8a small business plan .

GAO Reports:  The Government Accounting Office  ( GAO ) has submitted  reports  addressing this very problem. In fact, it made stern recommendations to at least two agencies to implement more oversight into their government contract subcontracting goal plan obligations.

For immediate help with your small business subcontracting plans, please call us at 1-866-601-5518.

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52.219-9 / Alt I

Far 52.219-9 small business subcontracting plan. alt i (nov 2016) (current).

As prescribed in 19.708(b), 

1) Insert the clause at 52.219-9, Small Business Subcontracting Plan, in solicitations and contracts that offer subcontracting possibilities, are expected to exceed $750,000 ($1.5 million for construction of any public facility), and are required to include the clause at 52.219-8, Utilization of Small Business Concerns, unless the acquisition is set aside or is to be accomplished under the 8(a) program. When-

  (i) Contracting by sealed bidding rather than by negotiation, the contracting officer shall use the clause with its Alternate I;

  (ii) Contracting by negotiation, and subcontracting plans are required with initial proposals as provided for in 19.705-2(d), the contracting officer shall use the clause with its Alternate II;

  (iii) The contract action will not be reported in the Federal Procurement Data System pursuant to 4.606(c)(5), or (c)(6), the contracting officer shall use the clause with its Alternate III; or

  (iv) Incorporating a subcontracting plan due to a modification as provided for in 19.702(a)(1)(iii), the contracting officer shall use the clause with its Alternate IV.

(2) Insert the clause at 52.219-16, Liquidated Damages-Subcontracting Plan, in all solicitations and contracts containing the clause at 52.219-9, Small Business Subcontracting Plan, or the clause with its Alternate I, II, III, or IV.  

Small Business Subcontracting Plan (Sep 2023) Alternate I (Nov 2016)     

      (a) This clause does not apply to small business concerns.

      (b) Definitions . As used in this clause—

      Alaska Native Corporation ( ANC ) means any Regional Corporation, Village Corporation, Urban Corporation, or Group Corporation organized under the laws of the State of Alaska in accordance with the Alaska Native Claims Settlement Act, as amended ( 43 U.S.C. 1601 , et seq. ) and which is considered a minority and economically disadvantaged concern under the criteria at 43 U.S.C. 1626(e)(1) . This definition also includes ANC direct and indirect subsidiary corporations, joint ventures, and partnerships that meet the requirements of 43 U.S.C. 1626(e)(2) .

      Commercial plan means a subcontracting plan (including goals) that covers the offeror ’s fiscal year and that applies to the entire production of commercial products and commercial services sold by either the entire company or a portion thereof ( e.g., division, plant, or product line).

      Commercial product means a product that satisfies the definition of “ commercial product ” in Federal Acquisition Regulation (FAR) 2.101 .

      Commercial service means a service that satisfies the definition of “ commercial service ” in FAR 2.101 .

      Electronic Subcontracting Reporting System (eSRS ) means the Governmentwide, electronic, web-based system for small business subcontracting program reporting. The eSRS is located at http://www.esrs.gov .

      Indian tribe means any Indian tribe , band, group, pueblo, or community, including native villages and native groups (including corporations organized by Kenai, Juneau, Sitka, and Kodiak) as defined in the Alaska Native Claims Settlement Act ( 43 U.S.C. 1601 et seq.), that is recognized by the Federal Government as eligible for services from the Bureau of Indian Affairs in accordance with 25 U.S.C. 1452(c) . This definition also includes Indian-owned economic enterprises that meet the requirements of 25 U.S.C. 1452(e) .

      Individual subcontracting 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 subcontracting plan means a subcontracting plan that contains all the required elements of an individual subcontracting plan , except goals, and may be incorporated into individual subcontracting plans , provided the master subcontracting plan has been approved.

      Reduced payment means a payment that is for less than the amount agreed upon in a subcontract in accordance with its terms and conditions, for supplies and services for which the Government has paid the prime contractor.

      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 .

      Total contract dollars means the final anticipated dollar value, including the dollar value of all options .

      Untimely payment means a payment to a subcontractor that is more than 90 days past due under the terms and conditions of a subcontract for supplies and services for which the Government has paid the prime contractor.

      (c)(1) The apparent low bidder, upon request by the  Contracting Officer ,  shall  submit a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran-owned small business, service-disabled veteran-owned small business,  HUBZone  small business, small disadvantaged business, and  women-owned small business concerns . If the bidder is submitting an  individual subcontracting plan , the plan  must  separately address subcontracting with small business, veteran-owned small business, service-disabled veteran-owned small business,  HUBZone  small business, small disadvantaged business, and  women-owned small business concerns , with a separate part for the basic contract and separate parts for each  option  (if any). The plan  shall  be included in and made a part of the resultant contract. The subcontracting plan  shall  be submitted within the time specified by the  Contracting Officer . Failure to submit the subcontracting plan  shall  make the bidder  ineligible  for the award of a contract.

           (2)(i) The Contractor may accept a subcontractor's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, or a women-owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract .

                (ii) The Contractor may accept a subcontractor's representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, or a women-owned small business in the System for Award Management (SAM ) if–

                     (A) The subcontractor is registered in SAM ; and

                     (B) The subcontractor represents that the size and socioeconomic status representations made in SAM are current, accurate and complete as of the date of the offer for the subcontract .

                (iii) The Contractor may not require the use of SAM for the purposes of representing size or socioeconomic status in connection with a subcontract .

                (iv) In accordance with 13 CFR 121.411, 126.900, 127.700. and 128.600, a contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor's size or socioeconomic status.

      (d) The Offeror ’s subcontracting plan shall include the following:

           (1) Separate goals, expressed in terms of total dollars subcontracted, and as a percentage of total planned subcontracting dollars, for the use of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns as subcontractors. For individual subcontracting plans , and if required by the Contracting Officer , goals shall also be expressed in terms of percentage of total contract dollars , in addition to the goals expressed as a percentage of total subcontract dollars. The Offeror shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs . In accordance with 43 U.S.C. 1626 :

                (i) Subcontracts awarded to an ANC or Indian tribe shall be counted towards the subcontracting goals for small business and small disadvantaged business concerns , regardless of the size or Small Business Administration certification status of the ANC or Indian tribe ; and

                (ii) Where one or more subcontractors are in the subcontract tier between the prime Contractor and the ANC or Indian tribe , the ANC or Indian tribe shall designate the appropriate Contractor(s) to count the subcontract towards its small business and small disadvantaged business subcontracting goals.

                     (A) In most cases, the appropriate Contractor is the Contractor that awarded the subcontract to the ANC or Indian tribe .

                     (B) If the ANC or Indian tribe designates more than one Contractor to count the subcontract toward its goals, the ANC or Indian tribe shall designate only a portion of the total subcontract award to each Contractor. The sum of the amounts designated to various Contractors cannot exceed the total value of the subcontract .

                     (C) The ANC or Indian tribe shall give a copy of the written designation to the Contracting Officer , the prime Contractor, and the subcontractors in between the prime Contractor and the ANC or Indian tribe within 30 days of the date of the subcontract award.

                     (D) If the Contracting Officer does not receive a copy of the ANC ’s or the Indian tribe ’s written designation within 30 days of the subcontract award, the Contractor that awarded the subcontract to the ANC or Indian tribe will be considered the designated Contractor.

           (2) A statement of–

                (i) Total dollars planned to be subcontracted for an individual subcontracting plan ; or the Offeror 's total projected sales, expressed in dollars, and the total value of projected subcontracts , including all indirect costs except as described in paragraph (g) of this clause, to support the sales for a commercial plan;

                (ii) Total dollars planned to be subcontracted to small business concerns (including ANC and Indian tribes );

                (iii) Total dollars planned to be subcontracted to veteran-owned small business concerns ;

                (iv) Total dollars planned to be subcontracted to service-disabled veteran-owned small business;

                (v) Total dollars planned to be subcontracted to HUBZone small business concerns;

                (vi) Total dollars planned to be subcontracted to small disadvantaged business concerns (including ANCs and Indian tribes ); and

                (vii) Total dollars planned to be subcontracted to 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-

                (i) Small business concerns;

                (ii) Veteran-owned small business concerns ;

                (iii) Service-disabled veteran-owned small business concerns ;

                (iv) HUBZone small business concerns;

                (v) Small disadvantaged business concerns ; and

                (vi) Women-owned small business concerns .

           (4) A description of the method used to develop the subcontracting goals in paragraph (d)(1) of this clause.

           (5) A description of the method used to identify potential sources for solicitation purposes ( e.g. , existing company source lists, SAM , veterans service organizations, the National Minority Purchasing Council Vendor Information Service, the Research and Information Division of the Minority Business Development Agency in the Department of Commerce, or small, HUBZone , small disadvantaged, and women-owned small business trade associations). A firm may rely on the information contained in SAM as an accurate representation of a concern's size and ownership characteristics for the purposes of maintaining a small, veteran-owned small, service-disabled veteran-owned small, HUBZone small, small disadvantaged, and women-owned small business source list. Use of SAM as its source list does not relieve a firm of its responsibilities ( e.g. , outreach, assistance, counseling, or publicizing subcontracting opportunities) in this clause.

           (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–

                (i) Small business concerns (including ANC and Indian tribes );

                (v) Small disadvantaged business concerns (including ANC and Indian tribes ); and

           (7) The name of the individual employed by the Offeror who will administer the Offeror 's subcontracting program, and a description of the duties of the individual.

           (8) A description of the efforts the Offeror will make to assure that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns have an equitable opportunity to compete for subcontracts .

           (9) Assurances that the Offeror will include the clause of this contract entitled "Utilization of 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 the applicable threshold specified in FAR 19.702 (a) on the date of subcontract award, with further subcontracting possibilities 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) After November 30, 2017, include subcontracting data for each order when reporting subcontracting achievements for indefinite-delivery, indefinite-quantity contracts with individual subcontracting plans where the contract is intended for use by multiple agencies;

                (iv) Submit the Individual Subcontract Report (ISR) and/or the Summary Subcontract Report (SSR), in accordance with paragraph (l) of this clause using the Electronic Subcontracting Reporting System (eSRS ) at http://www.esrs.gov . The reports shall provide information on subcontract awards to small business concerns (including ANCs and Indian tribes that are not small businesses), veteran-owned small business concerns , service-disabled veteran-owned small business concerns , HUBZone small business concerns, small disadvantaged business concerns (including ANCs and Indian tribes that have not been certified by the Small Business Administration as small disadvantaged businesses), women-owned small business concerns , and for NASA only, Historically Black Colleges and Universities and Minority Institutions . Reporting shall be in accordance with this clause, or as provided in agency regulations;

                (v) Ensure that its subcontractors with subcontracting plans agree to submit the ISR and/or the SSR using eSRS ;

                (vi) Provide its prime contract number, its unique entity identifier , and the e-mail address of the Offeror ’s official responsible for acknowledging receipt of or rejecting the ISRs, to all first-tier subcontractors with subcontracting plans so they can enter this information into the eSRS when submitting their ISRs; and

                (vii) Require that each subcontractor with a subcontracting plan provide the prime contract number, its own unique entity identifier , and the e-mail address of the subcontractor’s official responsible for acknowledging receipt of or rejecting the ISRs, to its subcontractors with subcontracting plans.

           (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 business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns and award subcontracts to them. The records shall include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated):

                (i) Source lists ( e.g., SAM ), guides, and other data that identify small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns .

                (ii) Organizations contacted in an attempt to locate sources that are small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concerns .

                (iii) Records on each subcontract solicitation resulting in an award of more than the simplified acquisition threshold , as defined in FAR 2.101 on the date of subcontract award, indicating-

                     (A) Whether small business concerns were solicited and, if not, why not;

                     (B) Whether veteran-owned small business concerns were solicited and, if not, why not;

                     (C) Whether service-disabled veteran-owned small business concerns were solicited and, if not, why not;

                     (D) Whether HUBZone small business concerns were solicited and, if not, why not;

                     (E) Whether small disadvantaged business concerns were solicited and, if not, why not;

                     (F) Whether women-owned small business concerns were solicited and, if not, why not; and

                     (G) If applicable, the reason award was not made to a small business concern.

                (iv) Records of any outreach efforts to contact-

                     (A) Trade associations;

                     (B) Business development organizations;

                     (C) Conferences and trade fairs to locate small, HUBZone small, small disadvantaged, service-disabled veteran-owned, and women-owned small business sources; and

                     (D) Veterans service organizations.

                (v) Records of internal guidance and encouragement provided to buyers through-

                     (A) Workshops, seminars, training, etc.; and

                     (B) Monitoring performance to evaluate compliance with the program’s requirements.

                (vi) On a contract-by-contract basis, records to support award data submitted by the offeror to the Government, including the name, address, and business size of each subcontractor. Contractors having commercial plans need not comply with this requirement.

           (12) Assurances that the Offeror will make a good faith effort to acquire articles, equipment, supplies , services, or materials, or obtain the performance of construction work from the small business concerns that it used in preparing the bid or proposal, in the same or greater scope, amount, and quality used in preparing and submitting the bid or proposal. Responding to a request for a quote does not constitute use in preparing a bid or proposal. The Offeror used a small business concern in preparing the bid or proposal if–

                (i) The Offeror identifies the small business concern as a subcontractor in the bid or proposal or associated small business subcontracting plan, to furnish certain supplies or perform a portion of the subcontract ; or

                (ii) The Offeror used the small business concern's pricing or cost information or technical expertise in preparing the bid or proposal, where there is written evidence of an intent or understanding that the small business concern will be awarded a subcontract for the related work if the Offeror is awarded the contract.

           (13) Assurances that the Contractor will provide the Contracting Officer with a written explanation if the Contractor fails to acquire articles, equipment, supplies , services or materials or obtain the performance of construction work as described in (d)(12) of this clause. This written explanation must be submitted to the Contracting Officer within 30 days of contract completion.

           (14) Assurances that the Contractor will not prohibit a subcontractor from discussing with the Contracting Officer any material matter pertaining to payment to or utilization of a subcontractor.

           (15) Assurances that the offeror will pay its small business subcontractors on time and in accordance with the terms and conditions of the underlying subcontract , and notify the contracting officer when the prime contractor makes either a reduced or an untimely payment to a small business subcontractor (see 52.242-5 ).

      (e) In order to effectively implement this plan to the extent consistent with efficient contract performance, the Contractor shall perform the following functions:

           (1) Assist small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns by arranging solicitations , time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation by such concerns. Where the Contractor’s lists of potential small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time.

           (2) Provide adequate and timely consideration of the potentialities of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns in all "make-or-buy" decisions.

           (3) Counsel and discuss subcontracting opportunities with representatives of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business firms.

           (4) Confirm that a subcontractor representing itself as a HUBZone small business concern is certified by SBA as a HUBZone small business concern by accessing SAM or by accessing the Dynamic Small Business Search (DSBS) at https://web.sba.gov/​pro-net/​search/​dsp_​dsbs.cfm .

           (5) Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small, veteran-owned small business, HUBZone small, small disadvantaged, or women-owned small business for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the Contractor’s subcontracting plan.

           (6) For all competitive subcontracts over the simplified acquisition threshold , as defined in FAR 2.101 on the date of subcontract award, in which a small business concern received a small business preference, upon determination of the successful subcontract offeror , prior to award of the subcontract the Contractor must inform each unsuccessful small business subcontract offeror in writing of the name and location of the apparent successful offeror and if the successful subcontract offeror is a small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concern .

           (7) Assign each subcontract the NAICS code and corresponding size standard that best describes the principal purpose of the subcontract .

      (f) A master subcontracting 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 required of the Offeror by this clause; provided-

           (1) The master subcontracting plan has been approved;

           (2) The Offeror ensures that the master subcontracting plan is updated as necessary and provides copies of the approved master subcontracting plan , including evidence of its approval, to the Contracting Officer ; and

           (3) Goals and any deviations from the master subcontracting plan deemed necessary by the Contracting Officer to satisfy the requirements of this contract are set forth in the individual subcontracting plan .

      (g) A commercial plan is the preferred type of subcontracting plan for contractors furnishing commercial products and commercial services . 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. Once the Contractor’s commercial plan has been approved, the Government will not require another subcontracting plan from the same Contractor while the plan remains in effect, as long as the product or service being provided by the Contractor continues to meet the definition of a commercial product or commercial service . A Contractor with a commercial plan shall comply with the reporting requirements stated in paragraph (d)(10) of this clause by submitting one SSR in eSRS for all contracts covered by its commercial plan. A Contractor authorized to use a commercial subcontracting plan shall include in its subcontracting goals and in its SSR all indirect costs , with the exception of those such as the following: Employee salaries and benefits; payments for petty cash; depreciation ; interest; income taxes; property taxes; lease payments; bank fees; fines, claims , and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. This report shall be acknowledged or rejected in eSRS by the Contracting Officer who approved the plan. This report shall be submitted within 30 days after the end of the Government’s fiscal year.

      (h) Prior compliance of the offeror with other such subcontracting plans under previous contracts will be considered by the Contracting Officer in determining the responsibility of the offeror for award of the contract.

      (i) A contract may have no more than one subcontracting plan. When a contract modification exceeds the subcontracting plan threshold in FAR 19.702 (a), or an option is exercised, the goals of the existing subcontracting plan shall be amended to reflect any new subcontracting opportunities. When the goals in a subcontracting plan are amended, these goal changes do not apply retroactively.

      (j) Subcontracting plans are not required from subcontractors when the prime contract contains the clause at FAR 52.212-5 , Contract Terms and Conditions Required to Implement Statutes or Executive Orders- Commercial Products and Commercial Services , or when the subcontractor provides a commercial product or commercial service subject to the clause at FAR 52.244-6 , Subcontracts for Commercial Products and Commercial Services , under a prime contract.

      (k) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled "Utilization Of Small Business Concerns;" or (2) an approved plan required by this clause, shall be a material breach of the contract and may be considered in any past performance evaluation of the Contractor.

      (l) The Contractor shall submit ISRs and SSRs using the web-based eSRS at http://www.esrs.gov . Purchases from a corporation, company, or subdivision that is an affiliate of the Contractor or subcontractor are not included in these reports. Subcontract awards by affiliates shall be treated as subcontract awards by the Contractor. Subcontract award data reported by the Contractor and subcontractors shall be limited to awards made to their immediate next-tier subcontractors. Credit cannot be taken for awards made to lower tier subcontractors, unless the Contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from an ANC or Indian tribe . Only subcontracts involving performance in the United States or its outlying areas should be included in these reports with the exception of subcontracts under a contract awarded by the State Department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the United States and its outlying areas .

           (1) ISR . This report is not required for commercial plans. The report is required for each contract containing an individual subcontracting plan .

                (i) The report shall be submitted semi-annually during contract performance for the periods ending March 31 and September 30. A report is also required for each contract within 30 days of contract completion. Reports are due 30 days after the close of each reporting period, unless otherwise directed by the Contracting Officer . Reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or the previous reporting period. When the Contracting Officer rejects an ISR, the Contractor shall submit a corrected report within 30 days of receiving the notice of ISR rejection.

                (ii)(A) When a subcontracting plan contains separate goals for the basic contract and each option , as prescribed by FAR 19.704 (c), the dollar goal inserted on this report shall be the sum of the base period through the current option ; for example, for a report submitted after the second option is exercised, the dollar goal would be the sum of the goals for the basic contract, the first option , and the second option .

                     (B) If a subcontracting plan has been added to the contract pursuant to 19.702 a)(1)(iii) or 19.301-2 (e), the Contractor's achievements must be reported in the ISR on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.

                (iii) When a subcontracting plan includes indirect costs in the goals, these costs must be included in this report.

                (iv) The authority to acknowledge receipt or reject the ISR resides–

                     (A) In the case of the prime Contractor, with the Contracting Officer ; and

                     (B) In the case of a subcontract with a subcontracting plan, with the entity that awarded the subcontract .

           (2) SSR .

(i) Reports submitted under individual contract plans–

                     (A) This report encompasses all subcontracting under prime contracts and subcontracts with an executive agency , regardless of the dollar value of the subcontracts . This report also includes indirect costs on a prorated basis when the indirect costs are excluded from the subcontracting goals.

                     (B) The report may be submitted on a corporate, company or subdivision ( e.g. plant or division operating as a separate profit center) basis, unless otherwise directed by the agency.

                     (C) If the Contractor or a subcontractor is performing work for more than one executive agency , a separate report shall be submitted to each executive agency covering only that agency's contracts, provided at least one of that agency's contracts is over the applicable threshold specified in FAR 19.702 (a), and the contractand contains a subcontracting plan. For DoD, a consolidated report shall be submitted for all contracts awarded by military departments/agencies and/or subcontracts awarded by DoD prime contractors.

                     (D) The report shall be submitted annually by October 30 for the twelve month period ending September 30. When a Contracting Officer rejects an SSR, the Contractor shall submit a revised report within 30 days of receiving the notice of SSR rejection.

                     (E) Subcontract awards that are related to work for more than one executive agency shall be appropriately allocated.

                     (F) The authority to acknowledge or reject SSRs in eSRS , including SSRs submitted by subcontractors with subcontracting plans, resides with the Government agency awarding the prime contracts unless stated otherwise in the contract.

                (ii) Reports submitted under a commercial plan -

                     (A) The report shall include all subcontract awards under the commercial plan in effect during the Government's fiscal year and all indirect costs .

                     (B) The report shall be submitted annually, within thirty days after the end of the Government's fiscal year.

                     (C) If a Contractor has a commercial plan and is performing work for more than one executive agency , the Contractor shall specify the percentage of dollars attributable to each agency.

                     (D) The authority to acknowledge or reject SSRs for commercial plans resides with the Contracting Officer who approved the commercial plan.

(End of clause)  

  (j) Subcontracting plans are not required from subcontractors when the prime contract contains the clause at FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders- Commercial Products and Commercial Services , or when the subcontractor provides a commercial product or commercial service subject to the clause at FAR 52.244-6, Subcontracts for Commercial Products and Commercial Services , under a prime contract.

      (k) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled "Utilization Of Small Business Concerns;" or (2) an approved plan required by this clause, shall be a material breach of the contract and may be considered in any past performance evaluation of the Contractor.  

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