19.705-1 General
Source: FAR 19.705-1 on acquisition.gov
Contracting officers must require and manage realistic subcontracting plans and may use monetary incentives to encourage contractors to exceed small business goals, but only one plan per contract is allowed.
Overview
FAR 19.705-1 outlines general requirements and guidance for contracting officers regarding subcontracting plans and incentives in negotiated acquisitions. It emphasizes the use of monetary incentives to encourage contractors to exceed small business subcontracting goals and clarifies when subcontracting plans are required for indefinite-delivery, indefinite-quantity (IDIQ) contracts. The section also addresses the establishment of small business subcontracting goals at the order level without requiring multiple plans for a single contract.
Key Rules
- Monetary Incentives for Subcontracting
- Contracting officers may use monetary incentives, such as payments or award fees, to encourage contractors to exceed subcontracting goals, provided the goals are realistic and rewards are proportionate to extra effort.
- Requirement for Subcontracting Plans
- Subcontracting plans are required for each IDIQ contract (including FSS, GWACs, and MACs) that meets the threshold in 19.702(a) and where small business subcontracting opportunities exist, unless the contractor has a commercial plan.
- Order-Level Goals
- Contracting officers may set small business subcontracting goals for individual orders, but cannot require a new subcontracting plan for each order under the same contract.
Responsibilities
- Contracting Officers: Must ensure subcontracting goals are realistic, incentives are appropriate, and required plans are in place for eligible contracts. They may set order-level goals but cannot require multiple plans per contract.
- Contractors: Must comply with the approved subcontracting plan and strive to meet or exceed small business subcontracting goals.
- Agencies: Oversee compliance with subcontracting requirements and incentive provisions.
Practical Implications
- This section ensures that small business subcontracting opportunities are maximized in large negotiated acquisitions and IDIQ contracts. It prevents administrative burden by limiting contracts to a single plan and encourages contractors to exceed goals through appropriate incentives. Common pitfalls include unrealistic goals, disproportionate incentives, or improper plan requirements at the order level.
(a) The contracting officer may encourage the development of increased subcontracting opportunities in negotiated acquisition by providing monetary incentives such as payments based on actual subcontracting achievement or award-fee contracting (see the clause at 52.219-10, Incentive Subcontracting Program, and 19.708(c)). When using any contractual incentive provision based upon rewarding the contractor monetarily for exceeding goals in the subcontracting plan, the contracting officer must ensure that (a) the goals are realistic and (b) any rewards for exceeding the goals are commensurate with the efforts the contractor would not have otherwise expended. Incentive provisions should normally be negotiated after reaching final agreement with the contractor on the subcontracting plan.
(b)
(1) Except where a contractor has a commercial plan, the contracting officer shall require a subcontracting plan for each indefinite-delivery, indefinite-quantity contract (including task or delivery order contracts, FSS, GWACs, and MACs), when the estimated value of the contract meets the subcontracting plan thresholds at 19.702(a) and small business subcontracting opportunities exist.
(2) Contracting officers placing orders may establish small business subcontracting goals for each order. Establishing goals shall not be in the form of a new subcontracting plan as a contract may not have more than one plan (19.705-2(e)).