52.219-16
Liquidated Damages-Subcontracting Plan
Contractors who do not make a good faith effort to meet their small business subcontracting goals may face significant liquidated damages and other government remedies.
Overview
FAR 52.219-16, Liquidated Damages-Subcontracting Plan, establishes the consequences for contractors who fail to make a good faith effort to comply with their approved small business subcontracting plans. The clause defines what constitutes a failure, outlines how performance is measured, and details the process for assessing and collecting liquidated damages if goals are not met due to lack of good faith effort. It also provides contractors with an opportunity to respond before a final decision is made and clarifies the right to appeal and the applicability of additional remedies.
Key Rules
- Definition of Failure to Make Good Faith Effort
- Willful or intentional failure to comply with the subcontracting plan, or actions intended to frustrate the plan, are considered failures.
- Measurement and Assessment of Damages
- Performance is measured against subcontracting goals; if unmet due to lack of good faith, liquidated damages equal to the shortfall are assessed.
- Notice and Opportunity to Respond
- Contractors must be given written notice and a chance to demonstrate good faith efforts before damages are finalized.
- Commercial Plans
- For commercial plans, the approving Contracting Officer acts on behalf of all covered agencies.
- Right of Appeal
- Contractors may appeal the Contracting Officer’s final decision under the Disputes clause.
- Additional Remedies
- Liquidated damages are in addition to any other remedies available to the Government.
Responsibilities
- Contracting Officers: Assess compliance, provide notice, consider contractor responses, issue final decisions, and enforce liquidated damages.
- Contractors: Make good faith efforts to meet subcontracting goals, respond to notices, and maintain documentation of efforts.
- Agencies: For commercial plans, coordinate through the approving Contracting Officer.
Practical Implications
- This clause enforces accountability for meeting small business subcontracting goals and deters willful noncompliance.
- Contractors must document and demonstrate good faith efforts to avoid penalties.
- Failure to respond to notices or provide evidence can result in significant financial penalties and additional government remedies.