Contract clauses
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.