52.219-10 Incentive Subcontracting Program
Source: FAR 52.219-10 on acquisition.gov
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).
As prescribed in 19.708(c)(1), insert the following clause:
Incentive Subcontracting Program (Oct 2014)
(a) Of the total dollars it plans to spend under subcontracts, the Contractor has committed itself in its subcontracting plan to try to award certain percentages to small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns, respectively.
(b) If the Contractor exceeds its subcontracting goals 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 in performing this contract, it will receive ______ [Contracting Officer to insert the appropriate number between 0 and 10] percent of the dollars in excess of each goal in the plan, unless the Contracting Officer determines that the excess was not due to the Contractor’s efforts (e.g.,a subcontractor cost overrun caused the actual subcontract amount to exceed that estimated in the subcontracting plan, or the award of subcontracts that had been planned but had not been disclosed in the subcontracting plan during contract negotiations). Determinations made under this paragraph are unilateral decisions made solely at the discretion of the Government.
(c) If this is a cost-plus-fixed-fee contract, the sum of the fixed fee and the incentive fee earned under this contract may not exceed the limitations in 15.404-4 of the Federal Acquisition Regulation.
(End of clause)