52.219-8 Utilization of Small Business Concerns
Source: FAR 52.219-8 on acquisition.gov
Prime contractors must actively maximize subcontracting opportunities for covered small business categories, pay them timely, and verify HUBZone status while properly relying on—without mandating—subcontractor size and socioeconomic representations.
Overview
- FAR 52.219-8 requires prime contractors to provide small business concerns the maximum practicable opportunity to participate in Federal contract performance, including through subcontracts for major systems, subsystems, assemblies, components, and related services.
- The clause also emphasizes timely payment procedures for covered small business subcontractors and sets rules for relying on subcontractor size and socioeconomic representations.
Key Rules
- Covered Small Business Categories
- The clause defines and protects participation opportunities for small business, veteran-owned, service-disabled veteran-owned, HUBZone, small disadvantaged, and women-owned small business concerns. It incorporates current SBA certification and status rules, including SDVOSB certification in SAM and HUBZone designation in DSBS/SAM.
- Subcontracting Policy and Joint Ventures
- Contractors must carry out the Government’s policy by awarding subcontracts to the fullest extent consistent with efficient performance. Joint ventures may qualify as small businesses if all venturers are small, or under an approved SBA mentor-protégé arrangement if the protégé is small; HUBZone joint ventures must meet 13 CFR 126.616.
- Representations and Verification
- Contractors may generally rely on a subcontractor’s written or SAM-based size/status representations unless there is reason to question them, but may not require use of SAM for subcontract representations. Contractors must specifically verify HUBZone certification through SAM or DSBS.
Responsibilities
- Contracting Officers: Include the clause when prescribed by FAR 19.708(a) and enforce small business utilization policy through prime contracts.
- Contractors: Maximize subcontracting opportunities for covered small business categories, establish timely payment procedures, cooperate with SBA/agency compliance reviews, and verify HUBZone status.
- Agencies: Support oversight, studies, and surveys to assess contractor compliance with the clause.
Practical Implications
- This clause is a foundational small business participation requirement for prime contractors, even when a separate subcontracting plan may also apply.
- Contractors should build intake, representation, and verification procedures into subcontract award workflows.
- Common pitfalls include failing to document reliance on representations, improperly requiring SAM, neglecting HUBZone verification, and lacking procedures for timely payment to small business subcontractors.
As prescribed in 19.708(a), insert the following clause:
Utilization of Small Business Concerns (Jan 2025)
(a) Definitions. As used in this contract—
HUBZone small business concern means a small business concern that meets the requirements described in https://www.ecfr.gov/current/title-13/section-126.200" target="_blank">13 CFR 126.200, certified by the Small Business Administration (SBA) and designated by SBA as a HUBZone small business concern in the Dynamic Small Business Search (DSBS) and SAM.
Service-disabled veteran-owned small business (SDVOSB) concern means a small business concern—
(1)
(i) Not less than 51 percent of which is owned and controlled by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service-disabled veterans; and
(ii) The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran; or
(2) A small business concern eligible under the SDVOSB Program in accordance with 13 CFR part 128 (see subpart 19.14).
(3) Service-disabled veteran, as used in this definition, means a veteran, as defined in http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section101&num=0&edition=prelim" target="_blank">38 U.S.C.101(2), with a disability that is service-connected, as defined in http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section101&num=0&edition=prelim" target="_blank">38 U.S.C.101(16), and who is registered in the Beneficiary Identification and Records Locator Subsystem, or successor system that is maintained by the Department of Veterans Affairs’ Veterans Benefits Administration, as a service-disabled veteran.
Service-disabled veteran-owned small business (SDVOSB) concern eligible under the SDVOSB Program means an SDVOSB concern that—
(1) Effective January 1, 2024, is designated in the System for Award Management (SAM) as certified by the Small Business Administration (SBA) in accordance with 13 CFR 128.300; or
(2) Has represented that it is an SDVOSB concern in SAM and submitted a complete application for certification to SBA on or before December 31, 2023.
Service-disabled veteran-owned small business (SDVOSB) Program means a program that authorizes contracting officers to limit competition, including award on a sole-source basis, to SDVOSB concerns eligible under the SDVOSB Program.
Small business concern means a concern, including its affiliates, that is independently owned and operated, not dominant in its field of operation and qualified as a small business under the criteria and size standards in https://www.ecfr.gov/current/title-13/part-121" target="_blank">13 CFR part 121, including the size standard that corresponds to the NAICS code assigned to the contract or subcontract.
Small disadvantaged business concern, consistent with 13 CFR 124.1001, means a small business concern under the size standard applicable to the acquisition, that-
(1) Is at least 51 percent of which is owned and controlled (as defined at 13 CFR 124.105) by-
(i) One or more socially disadvantaged (as defined at 13 CFR 124.103) and economically disadvantaged (as defined at 13 CFR 124.104) individuals who are citizens of the United States; and
(ii) Each individual claiming economic disadvantage has a net worth not exceeding the threshold at 13 CFR 124.104(c)(2) after taking into account the applicable exclusions set forth at 13 CFR 124.104(c)(2); and
(2) The management and daily business operations of which are controlled (as defined at 13.CFR 124.106) by individuals, who meet the criteria in paragraphs (1)(i) and (ii) of this definition.
Veteran-owned small business concern means a small business concern-
(1) Not less than 51 percent of which is owned by one or more veterans (as defined at http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title38-section101&num=0&edition=prelim" target="_blank">38 U.S.C.101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and
(2) The management and daily business operations of which are controlled by one or more veterans.
Women-owned small business concern means a small business concern-
(1) That is at least 51 percent owned by one or more women, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and
(2) Whose management and daily business operations are controlled by one or more women.
(b) It is the policy of the United States that small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns shall have the maximum practicable opportunity to participate in performing contracts let by any Federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns.
(c)
(1) A joint venture qualifies as a small business concern if—
(i) Each party to the joint venture qualifies as small under the size standard for the solicitation; or
(ii) The protégé is small under the size standard for the solicitation in a joint venture comprised of a mentor and protégé with an approved mentor-protégé agreement under a SBA mentor-protégé program. (See 13 CFR 125.9(d).)”; and
(2) A joint venture qualifies as a HUBZone small business concern if it complies with the requirements in https://www.ecfr.gov/current/title-13/section-126.616#p-126.616(a)" target="_blank">13 CFR 126.616(a) through https://www.ecfr.gov/current/title-13/section-126.616#p-126.616(c)" target="_blank">(c).
(d) The Contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with efficient contract performance. The Contractor further agrees to cooperate in any studies or surveys as may be conducted by the United States Small Business Administration or the awarding agency of the United States as may be necessary to determine the extent of the Contractor's compliance with this clause.
(e)
(1) Unless the Contractor has reason to question the representation, it may accept a subcontractor's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, or a women-owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract.
(2) Unless the Contractor has reason to question the representation, it may accept a subcontractor's representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran-owned small business, service-disabled veteran-owned small business, or a women-owned small business in the System for Award Management (SAM) if—
(i) The subcontractor is registered in SAM; and
(ii) The subcontractor represents that the size and socioeconomic status representations made in SAM are current, accurate and complete as of the date of the offer for the subcontract.
(3) The Contractor may not require the use of SAM for the purposes of representing size or socioeconomic status in connection with a subcontract.
(4) In accordance with 13 CFR 121.411, 126.900, 127.700, and 128.600, a contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor's size or socioeconomic status.
(5) The Contractor shall confirm that a subcontractor representing itself as a HUBZone small business concern is certified by SBA as a HUBZone small business concern by accessing SAM or by accessing DSBS at https://web.sba.gov/pro-net/search/dsp_dsbs.cfm" target="_blank">https://web.sba.gov/pro-net/search/dsp_dsbs.cfm. If the subcontractor is a joint venture, the Contractor shall confirm that at least one party to the joint venture is certified by SBA as a HUBZone small business concern. The Contractor may confirm the representation by accessing SAM.
(End of clause)