Incentive Subcontracting Program
This clause rewards contractors with a financial incentive for exceeding small business subcontracting goals, but only when the excess is due to their proactive efforts and subject to Contracting Officer approval.
Overview
FAR 52.219-10, Incentive Subcontracting Program, establishes a contractual incentive for prime contractors to exceed their small business subcontracting goals. Contractors who surpass the specific percentage goals for various small business categories (including veteran-owned, service-disabled veteran-owned, HUBZone, small disadvantaged, and women-owned small businesses) as outlined in their subcontracting plan may receive a financial incentive. The incentive is a percentage (between 0 and 10%, as determined by the Contracting Officer) of the dollars spent above each goal, provided the excess is attributable to the contractor's efforts. The clause also clarifies that for cost-plus-fixed-fee contracts, total fees (fixed plus incentive) cannot exceed regulatory limits. The Contracting Officer has sole discretion to determine whether the contractor's actions merit the incentive, and not all overages will qualify (e.g., those due to cost overruns or undisclosed subcontracts).