19.001 Definitions
Source: FAR 19.001 on acquisition.gov
Understanding and applying these definitions is critical for compliance with all small business program requirements under FAR Part 19.
Overview
FAR 19.001 provides key definitions used throughout Part 19, which governs Small Business Programs in federal contracting. Understanding these definitions is essential for both contracting officers and contractors to ensure proper application of small business regulations, eligibility, and compliance. The section clarifies what constitutes a "concern" (eligible business entity), "fair market price," "industry," and "similarly situated entity," each of which plays a critical role in determining small business status, subcontracting requirements, and competitive practices.
Key Rules
- Concern
- Defines eligible business entities for small business programs, emphasizing U.S. location and economic contribution.
- Fair Market Price
- Establishes that prices should reflect reasonable costs under normal competition, not just the lowest possible cost.
- Industry
- Relies on NAICS codes to group businesses for size and eligibility determinations.
- Similarly Situated Entity
- Specifies requirements for first-tier subcontractors to qualify as "similarly situated," impacting compliance with subcontracting limitations.
Responsibilities
- Contracting Officers: Must apply these definitions when determining eligibility, evaluating offers, and monitoring compliance with small business requirements.
- Contractors: Must understand and accurately represent their status and that of their subcontractors according to these definitions.
- Agencies: Ensure consistent application of definitions in all small business program actions and reporting.
Practical Implications
- These definitions underpin eligibility for small business set-asides, subcontracting plans, and compliance with limitations on subcontracting.
- Misinterpretation can lead to ineligibility, contract disputes, or compliance violations.
- Contractors should regularly review these definitions, especially when forming teams or selecting subcontractors.
As used in this part-
Concern means any business entity organized for profit (even if its ownership is in the hands of a nonprofit entity) with a place of business located in the United States or its outlying areas and that makes a significant contribution to the U.S. economy through payment of taxes and/or use of American products, material and/or labor, etc. "Concern" includes but is not limited to an individual, partnership, corporation, joint venture, association, or cooperative. For more information, see 13 CFR 121.105.
Fair market price means a price based on reasonable costs under normal competitive conditions and not on lowest possible cost (see 19.202-6).
Industry means all concerns primarily engaged in similar lines of activity, as listed and described in the North American Industry Classification System (NAICS) manual.
Similarly situated entity means a first-tier subcontractor, including an independent contractor, that—
(1)Has the same small business program status as that which qualified the prime contractor for the award (e.g., for a small business set-aside contract, any small business concern, without regard to socioeconomic status); and
(2)Is considered small for the size standard under the NAICS code the prime contractor assigned to the subcontract.