19.705-7
Compliance with the subcontracting plan
Contractors must make a documented good faith effort to meet small business subcontracting goals or risk liquidated damages and negative past performance ratings.
Overview
FAR 19.705-7 outlines the requirements and procedures for ensuring contractor compliance with subcontracting plans, specifically regarding the utilization of small business concerns as subcontractors. The regulation emphasizes the national interest in maximizing small business participation and details the process for determining whether a contractor has made a good faith effort to meet subcontracting goals. It also establishes the consequences for noncompliance, including the assessment of liquidated damages, and provides guidance for both individual and commercial subcontracting plans.
Key Rules
- Good Faith Effort Determination
- Contracting officers must evaluate the totality of a contractor's actions to determine if a good faith effort was made to comply with the subcontracting plan, considering both positive and negative indicators.
- Indicators of Good Faith and Failure
- Examples of good faith include breaking out work, conducting market research, early solicitation, and assisting small businesses. Failure indicators include lack of outreach, not submitting required reports, and falsifying records.
- Documentation and Notification
- Contracting officers must document findings and provide written notice to contractors if a good faith effort is not demonstrated, allowing a response period before final decisions.
- Liquidated Damages
- Contractors failing to make a good faith effort may be required to pay liquidated damages equal to the shortfall in subcontracting goals, with specific calculation methods for commercial plans.
- Commercial Plan Oversight
- The contracting officer who approved a commercial plan is responsible for compliance oversight and damage assessment for all contracts covered by the plan.
Responsibilities
- Contracting Officers: Evaluate contractor efforts, document compliance, issue notices, assess liquidated damages, and maintain records for commercial plans.
- Contractors: Make good faith efforts to meet subcontracting goals, maintain records, submit required reports, and respond to notices of noncompliance.
- Agencies: Oversee compliance, provide training, and ensure proper documentation and enforcement of subcontracting plans.
Practical Implications
- This section ensures accountability in meeting small business subcontracting goals, providing clear standards for compliance and consequences for failure. Contractors must be proactive in outreach and documentation, while contracting officers must diligently assess and enforce compliance. Common pitfalls include inadequate market research, poor recordkeeping, and failure to submit required reports.