19.708 Contract clauses
Source: FAR 19.708 on acquisition.gov
FAR 19.708 mandates specific clauses to promote small business participation in federal contracts, with requirements based on contract value, type, and performance location.
Overview
FAR 19.708 outlines the mandatory and optional contract clauses that must be included in solicitations and contracts to support the Small Business Subcontracting Program. It specifies when to insert clauses related to the utilization of small business concerns, subcontracting plans, liquidated damages, and incentive programs, depending on contract value, type, and performance location. The section ensures that contractors and contracting officers are aware of their obligations to promote small business participation in federal contracting and subcontracting.
Key Rules
- Utilization of Small Business Concerns (52.219-8)
- Must be included in contracts exceeding the simplified acquisition threshold, except for personal services contracts or contracts performed entirely outside the U.S. and its outlying areas.
- Small Business Subcontracting Plan (52.219-9)
- Required for contracts with subcontracting possibilities, expected to exceed $900,000 ($2 million for construction), and not set aside or under 8(a), with specific alternates based on acquisition method and reporting requirements.
- Liquidated Damages—Subcontracting Plan (52.219-16)
- Inserted in all contracts containing the Small Business Subcontracting Plan clause or its alternates.
- Incentive Subcontracting Program (52.219-10)
- May be included in negotiated contracts requiring a subcontracting plan if a monetary incentive is deemed necessary, with flexibility in incentive structure, but not used if small business subcontracting is an award fee factor in cost-plus-award-fee contracts.
Responsibilities
- Contracting Officers: Ensure correct clauses and alternates are included based on contract type, value, and performance location; determine when incentives are appropriate.
- Contractors: Comply with all clause requirements, including developing and executing subcontracting plans and meeting reporting and performance obligations.
- Agencies: Oversee compliance, monitor subcontracting performance, and enforce liquidated damages if necessary.
Practical Implications
This section ensures small business participation is embedded in federal contracts through enforceable clauses. Contractors must be vigilant about which clauses apply to their contracts and understand the implications of each, especially regarding subcontracting plans and incentives. Failure to comply can result in penalties, including liquidated damages, and may affect future contracting opportunities.
(a) Insert the clause at 52.219-8, Utilization of Small Business Concerns, in solicitations and contracts when the contract amount is expected to exceed the simplified acquisition threshold unless-
(1) A personal services contract is contemplated (see 37.104); or
(2) The contract, together with all of its subcontracts, will be performed entirely outside of the United States and its outlying areas.
(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 $900,000 ($2 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.
(c)
(1) The contracting officer may, when contracting by negotiation, insert in solicitations and contracts a clause substantially the same as the clause at 52.219-10, Incentive Subcontracting Program, when a subcontracting plan is required (see 19.702), and inclusion of a monetary incentive is, in the judgment of the contracting officer, necessary to increase subcontracting opportunities for 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 is commensurate with the efficient and economical performance of the contract; unless the conditions in paragraph (c)(3) of this section are applicable. The contracting officer may vary the terms of the clause as specified in paragraph (c)(2) of this section.
(2) Various approaches may be used in the development 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’ subcontracting incentives. They can take many forms, from a fully quantified schedule of payments based on actual subcontract achievement to an award-fee approach employing subjective evaluation criteria (see paragraph (c)(3) of this section). The incentive should not reward the contractor for results other than those that are attributable to the contractor’s efforts under the incentive subcontracting program.
(3) As specified in paragraph (c)(2) of this section, the contracting officer may include small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business subcontracting as one of the factors to be considered in determining the award fee in a cost-plus-award-fee contract; in such cases, however, the contracting officer shall not use the clause at 52.219-10, Incentive Subcontracting Program.