Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015-D013), 15996-16000 [2018-07730]

Download as PDF 15996 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Rules and Regulations IV. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Offthe-Shelf Items This rule does not create any new provisions or clauses nor impact any existing provisions or clauses. Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 207—ACQUISITION PLANNING 207.170 V. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. VI. Executive Order 13771 This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because the rule relates to agency organization, management, or personnel. VII. Regulatory Flexibility Act Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 41 U.S.C. 1707(a)(1) (see section III. of this preamble), the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared. VIII. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). List of Subjects in 48 CFR Parts 207, 210, and 219 daltland on DSKBBV9HB2PROD with RULES 1. The authority citation for parts 207, 210, and 219 continues to read as follows: ■ [Removed and Reserved] 207.170–1 ■ 3. Remove section 207.170–1. 207.170–2 ■ [Removed] 4. Remove section 207.170–2. 207.170–3 ■ [Removed] [Removed] 5. Remove section 207.170–3. 16:22 Apr 12, 2018 Jkt 244001 [Docket DARS–2016–0027] Defense Federal Acquisition Regulation Supplement: Temporary Extension of Test Program for Comprehensive Small Business Subcontracting Plans (DFARS Case 2015–D013) Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. AGENCY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement sections of the National Defense Authorization Acts for Fiscal Years 2015, 2016, and 2017 to provide revisions to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. DATES: Effective April 13, 2018. FOR FURTHER INFORMATION CONTACT: Ms. Jennifer Johnson, telephone 571–372– 6100. SUPPLEMENTARY INFORMATION: SUMMARY: PART 210—MARKET RESEARCH 6. Amend section 210.001 by revising paragraph (a) to read as follows: ■ 210.001 Policy. (a) In addition to the requirements of FAR 10.001(a), agencies shall— (i) Conduct market research appropriate to the circumstances before issuing a solicitation with tiered evaluation of offers (section 816 of Pub. L. 109–163); and (ii) Use the results of market research to determine whether the criteria in FAR part 19 are met for setting aside the acquisition for small business or, for a task or delivery order, whether there are a sufficient number of qualified small business concerns available to justify limiting competition under the terms of the contract. If the contracting officer cannot determine whether the criteria are met, the contracting officer shall include a written explanation in the contract file as to why such a determination could not be made (section 816 of Pub. L. 109–163). * * * * * PART 219—SMALL BUSINESS PROGRAMS 219.201 [Amended] [FR Doc. 2018–07732 Filed 4–12–18; 8:45 am] BILLING CODE 5001–06–P Therefore, 48 CFR part 207, 210, and 219 are amended as follows: VerDate Sep<11>2014 48 CFR Parts 211, 215, 219, 242, and 252 RIN 0750–AJ00 2. Remove and reserve section 207.170. 7. Amend section 219.201 in paragraph (c)(11)(A) by removing ‘‘(see 207.170)’’ and adding ‘‘(see FAR 7.107)’’ in its place. Jennifer Lee Hawes, Regulatory Control Officer, Defense Acquisition Regulations System. Defense Acquisition Regulations System ■ ■ Government procurement. DEPARTMENT OF DEFENSE PO 00000 Frm 00052 Fmt 4700 Sfmt 4700 I. Background DoD published a proposed rule in the Federal Register at 81 FR 65606 on September 23, 2016, to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113–291) and section 872 of the NDAA for FY 2016 (Pub. L. 114–92), to revise the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (‘‘the Test Program’’). Section 821 of the NDAA for FY 2015 provides for contractors participating in the Test Program to report, on a semiannual basis, specific information related to their comprehensive subcontracting plans. This information is expected to assist in determining if Test Program participants have achieved cost savings while enhancing opportunities for small businesses. In addition, section 821— • Repeals section 402 of Public Law 101–574, which suspended liquidated damages under comprehensive small business subcontracting plans; • Requires consideration, as part of the past performance evaluation of an offeror, of any failure to make a good E:\FR\FM\13APR1.SGM 13APR1 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Rules and Regulations faith effort to comply with its comprehensive subcontracting plan; • Extends the Test Program from December 14, 2014, through December 31, 2017; • Increases the threshold for participation in the Test Program from $5 million to $100 million; and • Prohibits negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year. Section 872 of the NDAA for FY 2016 removes the prohibition on negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year. This final rule also implements section 826 of the NDAA for FY 2017 (Pub. L. 114–328), which further extends the Test Program through December 31, 2027. II. Discussion and Analysis One respondent submitted a public comment in response to the proposed rule. DoD reviewed the public comment in the development of the final rule. A. Summary of Significant Changes From the Proposed Rule There are no changes made to the final rule as a result of the public comment; however, other conforming changes are made. B. Analysis of Public Comment Comment: The respondent urged DoD to state in its regulations that any civilian injured through exposure to toxic substances at a military installation would be considered a service-disabled veteran for purposes of eligibility for DoD programs. Response: The comment is outside the scope of this case. daltland on DSKBBV9HB2PROD with RULES C. Other Changes From the Proposed Rule The text at DFARS 219.702–70(f) is revised to reflect the expiration date for the Test Program of December 31, 2027, to implement section 826 of the NDAA for FY 2017. References in DFARS clause 252.219–7004 to the ‘‘Data Universal Numbering System (DUNS) number’’ are revised to read ‘‘unique entity identifier’’. Paragraph headers are added at DFARS 219.702–70(a) and 252.219–7004(b) and (e). VerDate Sep<11>2014 16:22 Apr 12, 2018 Jkt 244001 III. Applicability to Contracts at or Below the Simplified Acquisition Threshold and for Commercial Items, Including Commercially Available Offthe-Shelf Items This rule applies the requirements of section 821 of the NDAA for FY 2015 to contracts for the acquisition of commercial items, including commercially available off-the-shelf (COTS) items. The rule is not applicable to the contracts at or below the simplified acquisition threshold. Accordingly, the Director, DPAP, has signed a determination and finding to apply this rule to contracts for the acquisition of commercial items, including COTS items, for DFARS clauses 252.219–7003, Small Business Subcontracting Plan (DoD Contracts), and 252.219–7004, Small Business Subcontracting Plan (Test Program). IV. Expected Cost Savings This final rule amends the DFARS to implement section 821 of the NDAA for FY 2015, section 872 of the NDAA for FY 2016, and section 826 of NDAA for FY 2017, all of which provide revisions to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. Section 826 extended the Test Program through December 31, 2027. Customarily, an individual small business subcontracting plan is required to be negotiated by large business firms for each contract above $700,000. Under the Test Program, participants negotiate a comprehensive subcontracting plan (CSP) to cover all applicable contacts, in lieu of providing a separate plan for each individual contract. To be eligible for the Test Program, the program participants are required to be accepted into the program and to have at least three DoD contracts during the preceding year with an aggregate value of at least $100 million. There are currently nine large business firms that are currently participating in the Test Program. The CSPs for these nine large businesses cover approximately 8,000 contracts. This rule revises DFARS clause 252.219–7004, Small Business Subcontracting Plan (Test Program), to require the nine Test Program participants to report, on a semiannual basis, specific information related to their CSPs. This information is expected to assist DoD in determining if the participants have achieved cost savings while enhancing opportunities for small businesses. Contracting officers conduct compliance reviews each year; and, if it is determined that the contractor failed to make a good faith effort to comply PO 00000 Frm 00053 Fmt 4700 Sfmt 4700 15997 with the CSPs, the contracting officer may assess liquidated damages. Any failure to meet negotiated goals will also be considered as part of the evaluation of the participant firm’s past performance. However, very few, if any, failures are expected in the Test Program. Over the next 10 years, significant cost savings are expected to accrue to the public and the Government through use of CSPs by greatly reducing administrative burdens, while also advancing the interests of small business subcontractors. Use of CSPs may also foster an environment that provides visibility to a firm of its overall subcontracting program, thereby potentially providing greater opportunities to ensure equitable consideration on an enterprise-wide basis for business opportunities for all its subcontractors. DoD has performed a regulatory cost analysis on this rule. The following is a summary of the estimated public annualized cost savings in millions, calculated in 2016 dollars at a 7-percent discount rate in perpetuity: Annualized at 7% .............................. Present Value at 7% .......................... $2.1 29.8 To access the full Regulatory Cost Analysis for this rule, go to the Federal eRulemaking Portal at www.regulations.gov, search for ‘‘DFARS Case 2015–D013,’’ click ‘‘Open Docket,’’ and view ‘‘Supporting Documents.’’ V. Executive Orders 12866 and 13563 Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget, Office of Information and Regulatory Affairs, has determined that this is not a significant regulatory action as defined under section 3(f) of E.O. 12866 and, therefore, was not subject to review under section 6(b). This rule is not a major rule under 5 U.S.C. 804(2). VI. Executive Order 13771 This final rule is considered to be an E.O. 13771 deregulatory action. Details on the estimated cost savings can be found in section IV. of this preamble. E:\FR\FM\13APR1.SGM 13APR1 15998 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Rules and Regulations VII. Regulatory Flexibility Act A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows: DoD is issuing a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113–291), section 872 of the NDAA for FY 2016 (Pub. L. 114–92), and section 826 of the NDAA for FY 2017 (Pub. L. 114–328). Section 821 of the NDAA for FY 2015 provides several changes to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program), including new reporting and eligibility requirements, an extension of the Test Program, and authority to assess liquidated damages. Section 872 of the NDAA for FY 2016 removes one of the eligibility requirements. Section 826 of the NDAA for FY 2017 extends the Test Program through December 31, 2027. The objectives of this rule are to collect data to assist in assessing the successes or shortcomings of the Test Program and to provide the means to hold Test Program participants accountable for failure to make a good faith effort to comply with their comprehensive subcontracting plans. There were no issues raised by the public in response to the initial regulatory flexibility analysis provided in the proposed rule. The rule will not apply to small entities. Therefore, the rule does not impose any reporting or recordkeeping requirements on any small entities. DoD has not identified any alternatives that are consistent with the stated objectives of the applicable statutes. However, DoD notes that the rule may have a positive economic impact on small entities because the rule encourages Test Program participants to make a good faith effort to comply with their comprehensive subcontracting plans. daltland on DSKBBV9HB2PROD with RULES VIII. Paperwork Reduction Act The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35), because the rule does not impose a collection of information on ten or more members of the public. VerDate Sep<11>2014 16:22 Apr 12, 2018 Jkt 244001 List of Subjects in 48 CFR Parts 211, 215, 219, 242, and 252 Government procurement. Jennifer Lee Hawes, Regulatory Control Officer, Defense Acquisition Regulations System. Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are amended as follows: ■ 1. The authority citation for parts 211, 215, 219, 242, and 252 continues to read as follows: Authority: 41 U.S.C. 1303 and 48 CFR chapter 1. PART 211—DESCRIBING AGENCY NEEDS 2. Add section 211.500 to subpart 211.5 to read as follows: ■ 211.500 Scope. This subpart and FAR subpart 11.5 do not apply to liquidated damages for comprehensive subcontracting plans under the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. See 219.702–70 for coverage of liquidated damages for comprehensive subcontracting plans. PART 215—CONTRACTING BY NEGOTIATION 3. Amend section 215.305(a)(2) by— a. Designating the text as paragraph (a)(2)(A); and ■ b. Adding paragraph (a)(2)(B). The addition reads as follows: ■ ■ 215.305 Proposal evaluation. (a)(2) * * * (B) Contracting officers shall consider an offeror’s failure to make a good faith effort to comply with its comprehensive subcontracting plan under the Test Program described at 219.702–70 as part of the evaluation of the past performance. PART 219—SMALL BUSINESS PROGRAMS 219.702 [Redesignated as 219.702–70] 4. Redesignate section 219.702 as 219.702–70; and revise it to read as follows: ■ 219.702–70 Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. (a) Test Program. In accordance with 15 U.S.C. 637 note, DoD has established a test program to determine whether comprehensive subcontracting plans on a corporate, division, or plant-wide basis will reduce administrative burdens while enhancing subcontracting opportunities for small PO 00000 Frm 00054 Fmt 4700 Sfmt 4700 and small disadvantaged business concerns. This program is referred to as the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program). (b) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million. (c) Comprehensive subcontracting plans. (1) The Defense Contract Management Agency will designate the contracting officer who shall negotiate and approve comprehensive subcontracting plans with eligible participants on an annual basis. (2) Test Program participants use their comprehensive subcontracting plans, in lieu of individual subcontracting plans, when performing any DoD contract or subcontract that requires a subcontracting plan. (d) Assessment. The contracting officer designated to manage the comprehensive subcontracting plan shall conduct a compliance review during the fiscal year after the close of the fiscal year for which the plan is applicable. The contracting officer shall compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the comprehensive subcontracting plan. (1) If the contractor has failed to meet its approved subcontracting goal(s), the contracting officer shall give the contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, permitting the contractor to demonstrate what good faith efforts have been made, and providing a period of 15 working days (or longer period at the contracting officer’s discretion) within which to respond. The contracting officer may take the contractor’s failure to respond to the notice as an admission that no valid explanation exists. (2) The contracting officer shall review all available information to determine whether the contractor has failed to make a good faith effort to comply with the plan. (3) If, after consideration of all relevant information, the contracting officer determines that the contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the contracting officer shall issue a final decision. The contracting officer’s final decision shall include the right of the contractor to appeal under the Disputes clause. The contracting officer shall distribute a E:\FR\FM\13APR1.SGM 13APR1 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Rules and Regulations copy of the final decision to all cognizant contracting officers for the contracts covered under the plan. (e) Liquidated damages. The amount of liquidated damages shall be the amount of anticipated damages sustained by the Government, including but not limited to additional expenses of administration, reporting, and contract monitoring, and shall be identified in the comprehensive subcontracting plan. Liquidated damages shall be in addition to any other remedies the Government may have. (f) Expiration date. The Test Program expires on December 31, 2017. ■ 5. Amend section 219.708 by— ■ a. Revising paragraph (b)(1)(B); ■ b. Revising paragraph (b)(2); and ■ c. Removing from paragraph (c)(1) ‘‘test program described in 219.702’’ and adding ‘‘Test Program described in 219.702–70’’ in its place. The revisions read as follows: 219.708 Contract clauses. (b)(1) * * * (B) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702–70, including contracts using FAR part 12 procedures for the acquisition of commercial items, use the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219–7003, Small Business Subcontracting Plan (DoD Contracts), FAR 52.219–9, Small Business Subcontracting Plan, and FAR 52.219– 16, Liquidated Damages— Subcontracting Plan. (2) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702–70, do not use the clause at FAR 52.219–16, Liquidated Damages—Subcontracting Plan. * * * * * PART 242—CONTRACT ADMINISTRATION AND AUDIT SERVICES 6. Add subpart 242.15 to read as follows: ■ daltland on DSKBBV9HB2PROD with RULES Subpart 242.15—Contractor Performance Information Sec. 242.1502 Policy. Subpart 242.15—Contractor Performance Information 242.1502 Policy. (g) Past performance evaluations in the Contractor Performance Assessment Reporting System shall include an assessment of the contractor’s VerDate Sep<11>2014 16:22 Apr 12, 2018 Jkt 244001 performance against, and efforts to achieve, the goals identified in its comprehensive small business subcontracting plan when the contract contains the clause at 252.219–7004, Small Business Subcontracting Plan (Test Program). PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 7. Amend section 252.219–7003 by— a. Revising the section heading and introductory text; ■ b. Removing the clause date of ‘‘(MAR 2016)’’ and adding ‘‘(APR 2018)’’ in its place; ■ c. Adding paragraph (g); and ■ d. In Alternate I— ■ i. Revising the introductory text; ■ ii. Removing the clause date of ‘‘(MAR 2016)’’ and adding ‘‘(APR 2018)’’ in its place; and ■ iii. Adding paragraph (g). The revision and additions read as follows: ■ ■ 252.219–7003 Small Business Subcontracting Plan (DoD Contracts). Basic. As prescribed in 219.708(b)(1)(A) and (b)(1)(A)(1), use the following clause: * * * * * (g) Include the clause at 252.219– 7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702–70, where the subcontract is expected to exceed $700,000 ($1.5 million for construction of any public facility) and to have further subcontracting opportunities. * * * * * Alternate I. As prescribed in 219.708(b)(1)(A) and (b)(1)(A)(2), use the following clause, which uses a different paragraph (f) than the basic clause. * * * * * (g) Include the clause at 252.219– 7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702–70, where the subcontract is expected to exceed $700,000 ($1.5 million for construction of any public facility) and to have further subcontracting opportunities. * * * * * ■ 8. Revise section 252.219–7004 to read as follows: 252.219–7004 Small business subcontracting plan (Test Program). As prescribed in 219.708(b)(1)(B), use the following clause: PO 00000 Frm 00055 Fmt 4700 Sfmt 4700 15999 Small Business Subcontracting Plan (Test Program) (APR 2018) (a) Definitions. As used in this clause— Covered small business concern means a small business concern, veteran-owned small business concern, service-disabled veteran-owned small business concern, HUBZone small business concern, women-owned small business concern, or small disadvantaged business concern, as these terms are defined in FAR 2.101. Electronic Subcontracting Reporting System (eSRS) means the Governmentwide, electronic, web-based system for small business subcontracting program reporting. The eSRS is located at http://www.esrs.gov. Failure to make a good faith effort to comply with a comprehensive subcontracting plan means a willful or intentional failure to perform in accordance with the requirements of the Contractor’s approved comprehensive subcontracting plan or willful or intentional action to frustrate the plan. Subcontract means any agreement (other than one involving an employeremployee relationship) entered into by a Federal Government prime Contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract. (b) Test Program. The Contractor’s comprehensive small business subcontracting plan and its successors, which are authorized by and approved under the Test Program of 15 U.S.C. 637 note, as amended, shall be included in and made a part of this contract. Upon expulsion from the Test Program or expiration of the Test Program, the Contractor shall negotiate an individual subcontracting plan for all future contracts that meet the requirements of 15 U.S.C. 637(d). (c) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million. (d) Reports. (1) The Contractor shall report semiannually for the 6-month periods ending March 31 and September 30, the information in paragraphs (d)(1)(i) through (v) of this section within 30 days after the end of the reporting period. Submit the report at https://www.esrs.gov. (i) A list of contracts covered under its comprehensive small business subcontracting plan, to include the Commercial and Government Entity E:\FR\FM\13APR1.SGM 13APR1 daltland on DSKBBV9HB2PROD with RULES 16000 Federal Register / Vol. 83, No. 72 / Friday, April 13, 2018 / Rules and Regulations (CAGE) code and unique entity identifier. (ii) The amount of first-tier subcontract dollars awarded during the 6-month period covered by the report to covered small business concerns, with the information set forth separately by— (A) North American Industrial Classification System (NAICS) code; (B) Major defense acquisition program, as defined in 10 U.S.C. 2430(a); (C) Contract number, if the contract is for maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization, or modification of supplies, systems, or equipment, and the total value of the contract, including options, exceeds $100 million; and (D) Military department. (iii) Total number of subcontracts active under the Test Program that would have otherwise required a subcontracting plan. (iv) Costs incurred in negotiating, complying with, and reporting on its comprehensive subcontracting plan. (v) Costs avoided through the use of a comprehensive subcontracting plan. (2) The Contractor shall— (i) Ensure that subcontractors with subcontracting plans agree to submit an Individual Subcontract Report (ISR) and/or Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS). (ii) Provide its contract number, its unique entity identifier, and the email address of the Contractor’s official responsible for acknowledging or rejecting the ISR to all first-tier subcontractors, who will be required to submit ISRs, so they can enter this information into the eSRS when submitting their reports. (iii) Require that each subcontractor with a subcontracting plan provide the prime contract number, its own unique entity identifier, and the email address of the subcontractor’s official responsible for acknowledging or rejecting the ISRs to its subcontractors with subcontracting plans who will be required to submit ISRs. (iv) Acknowledge receipt or reject all ISRs submitted by its subcontractors using eSRS. (3) The Contractor shall submit SSRs using eSRS at http://www.esrs.gov. The reports shall provide information on subcontract awards to small business concerns, veteran-owned small business concerns, service-disabled veteranowned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns. Purchases from a corporation, VerDate Sep<11>2014 16:22 Apr 12, 2018 Jkt 244001 company, or subdivision that is an affiliate of the prime Contractor or subcontractor are not included in these reports. Subcontract award data reported by prime contractors and subcontractors shall be limited to awards made to their immediate nexttier subcontractors. Credit cannot be taken for awards made to lower-tier subcontractors unless the Contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from a member firm of the Alaska Native— Corporations or an Indian tribe. Only subcontracts involving performance in the U.S. or its outlying areas should be included in these reports. (i) This report may be submitted on a corporate, company, or subdivision (e.g., plant or division operating as a separate profit center) basis, as negotiated in the comprehensive subcontracting plan with the Defense Contract Management Agency. (ii) This report encompasses all subcontracting under prime contracts and subcontracts with the Department of Defense, regardless of the dollar value of the subcontracts, and is based on the negotiated comprehensive subcontracting plan. (iii) The report shall be submitted semiannually for the six months ending March 31 and the twelve months ending September 30. Reports are due 30 days after the close of each reporting period. (iv) The authority to acknowledge receipt of or reject the SSR resides with the Defense Contract Management Agency. (e) Failure to comply. The failure of the Contractor or subcontractor to comply in good faith with the clause of this contract entitled ‘‘Utilization of Small Business Concerns,’’ or an approved plan required by this clause, shall be a material breach of the contract. (f) Liquidated damages. The Contracting Officer designated to manage the comprehensive subcontracting plan will exercise the functions of the Contracting Officer, as identified in paragraphs (f)(1) through (4) of this clause, on behalf of all DoD departments and agencies that awarded contracts covered by the Contractor’s comprehensive subcontracting plan. (1) To determine the need for liquidated damages, the Contracting Officer will conduct a compliance review during the fiscal year after the close of the fiscal year for which the plan is applicable. The Contracting Officer will compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the plan. PO 00000 Frm 00056 Fmt 4700 Sfmt 9990 (2) If the Contractor has failed to meet its approved subcontracting goal(s), the Contracting Officer will provide the Contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, and permitting the Contractor to demonstrate what good faith efforts have been made. The Contracting Officer may take the Contractor’s failure to respond to the notice within 15 working days (or longer period at the Contracting Officer’s discretion) as an admission that no valid explanation exists. (3) If, after consideration of all relevant information, the Contracting Officer determines that the Contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the Contracting Officer will issue a final decision to the Contractor to that effect and require the Contractor to pay liquidated damages to the Government in the amount identified in the comprehensive subcontracting plan. (4) The Contractor shall have the right of appeal under the clause in this contract entitled ‘‘Disputes’’ from any final decision of the Contracting Officer. (g) Subcontracts. The Contractor shall include in subcontracts that offer subcontracting opportunities, are expected to exceed $700,000 ($1.5 million for construction of any public facility), and are required to include the clause at 52.219–8, Utilization of Small Business Concerns, the clauses at— (1) FAR 52.219–9, Small Business Subcontracting Plan, and 252.219–7003, Small Business Subcontracting Plan (DoD Contracts)—Basic; (2) FAR 52.219–9, Small Business Subcontracting Plan, with its Alternate III, and 252.219–7003, Small Business Subcontracting Plan (DoD Contracts)— Alternate I, to allow for submission of SF 294s in lieu of ISRs; or (3) 252.219–7004, Small Business Subcontracting Plan (Test Program), in subcontracts with subcontractors that participate in the Test Program described in DFARS 219.702–70. (End of clause) [FR Doc. 2018–07730 Filed 4–12–18; 8:45 am] BILLING CODE 5001–06–P E:\FR\FM\13APR1.SGM 13APR1

Agencies

[Federal Register Volume 83, Number 72 (Friday, April 13, 2018)]
[Rules and Regulations]
[Pages 15996-16000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-07730]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211, 215, 219, 242, and 252

[Docket DARS-2016-0027]
RIN 0750-AJ00


Defense Federal Acquisition Regulation Supplement: Temporary 
Extension of Test Program for Comprehensive Small Business 
Subcontracting Plans (DFARS Case 2015-D013)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement sections of the 
National Defense Authorization Acts for Fiscal Years 2015, 2016, and 
2017 to provide revisions to the Test Program for Negotiation of 
Comprehensive Small Business Subcontracting Plans.

DATES: Effective April 13, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Jennifer Johnson, telephone 571-
372-6100.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 81 FR 
65606 on September 23, 2016, to implement section 821 of the National 
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 
113-291) and section 872 of the NDAA for FY 2016 (Pub. L. 114-92), to 
revise the Test Program for Negotiation of Comprehensive Small Business 
Subcontracting Plans (``the Test Program'').
    Section 821 of the NDAA for FY 2015 provides for contractors 
participating in the Test Program to report, on a semiannual basis, 
specific information related to their comprehensive subcontracting 
plans. This information is expected to assist in determining if Test 
Program participants have achieved cost savings while enhancing 
opportunities for small businesses.
    In addition, section 821--
     Repeals section 402 of Public Law 101-574, which suspended 
liquidated damages under comprehensive small business subcontracting 
plans;
     Requires consideration, as part of the past performance 
evaluation of an offeror, of any failure to make a good

[[Page 15997]]

faith effort to comply with its comprehensive subcontracting plan;
     Extends the Test Program from December 14, 2014, through 
December 31, 2017;
     Increases the threshold for participation in the Test 
Program from $5 million to $100 million; and
     Prohibits negotiation of comprehensive subcontracting 
plans with contractors who failed to meet the subcontracting goals of 
their comprehensive subcontracting plan for the prior fiscal year.
    Section 872 of the NDAA for FY 2016 removes the prohibition on 
negotiation of comprehensive subcontracting plans with contractors who 
failed to meet the subcontracting goals of their comprehensive 
subcontracting plan for the prior fiscal year.
    This final rule also implements section 826 of the NDAA for FY 2017 
(Pub. L. 114-328), which further extends the Test Program through 
December 31, 2027.

II. Discussion and Analysis

    One respondent submitted a public comment in response to the 
proposed rule. DoD reviewed the public comment in the development of 
the final rule.

A. Summary of Significant Changes From the Proposed Rule

    There are no changes made to the final rule as a result of the 
public comment; however, other conforming changes are made.

B. Analysis of Public Comment

    Comment: The respondent urged DoD to state in its regulations that 
any civilian injured through exposure to toxic substances at a military 
installation would be considered a service-disabled veteran for 
purposes of eligibility for DoD programs.
    Response: The comment is outside the scope of this case.

C. Other Changes From the Proposed Rule

    The text at DFARS 219.702-70(f) is revised to reflect the 
expiration date for the Test Program of December 31, 2027, to implement 
section 826 of the NDAA for FY 2017. References in DFARS clause 
252.219-7004 to the ``Data Universal Numbering System (DUNS) number'' 
are revised to read ``unique entity identifier''. Paragraph headers are 
added at DFARS 219.702-70(a) and 252.219-7004(b) and (e).

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule applies the requirements of section 821 of the NDAA for 
FY 2015 to contracts for the acquisition of commercial items, including 
commercially available off-the-shelf (COTS) items. The rule is not 
applicable to the contracts at or below the simplified acquisition 
threshold. Accordingly, the Director, DPAP, has signed a determination 
and finding to apply this rule to contracts for the acquisition of 
commercial items, including COTS items, for DFARS clauses 252.219-7003, 
Small Business Subcontracting Plan (DoD Contracts), and 252.219-7004, 
Small Business Subcontracting Plan (Test Program).

IV. Expected Cost Savings

    This final rule amends the DFARS to implement section 821 of the 
NDAA for FY 2015, section 872 of the NDAA for FY 2016, and section 826 
of NDAA for FY 2017, all of which provide revisions to the Test Program 
for Negotiation of Comprehensive Small Business Subcontracting Plans. 
Section 826 extended the Test Program through December 31, 2027.
    Customarily, an individual small business subcontracting plan is 
required to be negotiated by large business firms for each contract 
above $700,000. Under the Test Program, participants negotiate a 
comprehensive subcontracting plan (CSP) to cover all applicable 
contacts, in lieu of providing a separate plan for each individual 
contract. To be eligible for the Test Program, the program participants 
are required to be accepted into the program and to have at least three 
DoD contracts during the preceding year with an aggregate value of at 
least $100 million. There are currently nine large business firms that 
are currently participating in the Test Program. The CSPs for these 
nine large businesses cover approximately 8,000 contracts.
    This rule revises DFARS clause 252.219-7004, Small Business 
Subcontracting Plan (Test Program), to require the nine Test Program 
participants to report, on a semiannual basis, specific information 
related to their CSPs. This information is expected to assist DoD in 
determining if the participants have achieved cost savings while 
enhancing opportunities for small businesses. Contracting officers 
conduct compliance reviews each year; and, if it is determined that the 
contractor failed to make a good faith effort to comply with the CSPs, 
the contracting officer may assess liquidated damages. Any failure to 
meet negotiated goals will also be considered as part of the evaluation 
of the participant firm's past performance. However, very few, if any, 
failures are expected in the Test Program.
    Over the next 10 years, significant cost savings are expected to 
accrue to the public and the Government through use of CSPs by greatly 
reducing administrative burdens, while also advancing the interests of 
small business subcontractors. Use of CSPs may also foster an 
environment that provides visibility to a firm of its overall 
subcontracting program, thereby potentially providing greater 
opportunities to ensure equitable consideration on an enterprise-wide 
basis for business opportunities for all its subcontractors.
    DoD has performed a regulatory cost analysis on this rule. The 
following is a summary of the estimated public annualized cost savings 
in millions, calculated in 2016 dollars at a 7-percent discount rate in 
perpetuity:

 
 
 
Annualized at 7%................................................    $2.1
Present Value at 7%.............................................    29.8
 

    To access the full Regulatory Cost Analysis for this rule, go to 
the Federal eRulemaking Portal at www.regulations.gov, search for 
``DFARS Case 2015-D013,'' click ``Open Docket,'' and view ``Supporting 
Documents.''

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
The Office of Management and Budget, Office of Information and 
Regulatory Affairs, has determined that this is not a significant 
regulatory action as defined under section 3(f) of E.O. 12866 and, 
therefore, was not subject to review under section 6(b). This rule is 
not a major rule under 5 U.S.C. 804(2).

VI. Executive Order 13771

    This final rule is considered to be an E.O. 13771 deregulatory 
action. Details on the estimated cost savings can be found in section 
IV. of this preamble.

[[Page 15998]]

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    DoD is issuing a final rule to amend the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement section 821 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 
(Pub. L. 113-291), section 872 of the NDAA for FY 2016 (Pub. L. 114-
92), and section 826 of the NDAA for FY 2017 (Pub. L. 114-328). Section 
821 of the NDAA for FY 2015 provides several changes to the Test 
Program for Negotiation of Comprehensive Small Business Subcontracting 
Plans (Test Program), including new reporting and eligibility 
requirements, an extension of the Test Program, and authority to assess 
liquidated damages. Section 872 of the NDAA for FY 2016 removes one of 
the eligibility requirements. Section 826 of the NDAA for FY 2017 
extends the Test Program through December 31, 2027. The objectives of 
this rule are to collect data to assist in assessing the successes or 
shortcomings of the Test Program and to provide the means to hold Test 
Program participants accountable for failure to make a good faith 
effort to comply with their comprehensive subcontracting plans.
    There were no issues raised by the public in response to the 
initial regulatory flexibility analysis provided in the proposed rule.
    The rule will not apply to small entities. Therefore, the rule does 
not impose any reporting or recordkeeping requirements on any small 
entities.
    DoD has not identified any alternatives that are consistent with 
the stated objectives of the applicable statutes. However, DoD notes 
that the rule may have a positive economic impact on small entities 
because the rule encourages Test Program participants to make a good 
faith effort to comply with their comprehensive subcontracting plans.

VIII. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35), because the rule 
does not impose a collection of information on ten or more members of 
the public.

List of Subjects in 48 CFR Parts 211, 215, 219, 242, and 252

    Government procurement.

Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are amended as 
follows:

0
1. The authority citation for parts 211, 215, 219, 242, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

PART 211--DESCRIBING AGENCY NEEDS

0
2. Add section 211.500 to subpart 211.5 to read as follows:


211.500  Scope.

    This subpart and FAR subpart 11.5 do not apply to liquidated 
damages for comprehensive subcontracting plans under the Test Program 
for Negotiation of Comprehensive Small Business Subcontracting Plans. 
See 219.702-70 for coverage of liquidated damages for comprehensive 
subcontracting plans.

PART 215--CONTRACTING BY NEGOTIATION

0
3. Amend section 215.305(a)(2) by--
0
a. Designating the text as paragraph (a)(2)(A); and
0
b. Adding paragraph (a)(2)(B).
    The addition reads as follows:


215.305  Proposal evaluation.

    (a)(2) * * *
    (B) Contracting officers shall consider an offeror's failure to 
make a good faith effort to comply with its comprehensive 
subcontracting plan under the Test Program described at 219.702-70 as 
part of the evaluation of the past performance.

PART 219--SMALL BUSINESS PROGRAMS


219.702  [Redesignated as 219.702-70]

0
4. Redesignate section 219.702 as 219.702-70; and revise it to read as 
follows:


219.702-70  Statutory requirements for the Test Program for Negotiation 
of Comprehensive Small Business Subcontracting Plans.

    (a) Test Program. In accordance with 15 U.S.C. 637 note, DoD has 
established a test program to determine whether comprehensive 
subcontracting plans on a corporate, division, or plant-wide basis will 
reduce administrative burdens while enhancing subcontracting 
opportunities for small and small disadvantaged business concerns. This 
program is referred to as the Test Program for Negotiation of 
Comprehensive Small Business Subcontracting Plans (Test Program).
    (b) Eligibility requirements. To become and remain eligible to 
participate in the Test Program, a business concern is required to have 
furnished supplies or services (including construction) under at least 
three DoD contracts during the preceding fiscal year, having an 
aggregate value of at least $100 million.
    (c) Comprehensive subcontracting plans. (1) The Defense Contract 
Management Agency will designate the contracting officer who shall 
negotiate and approve comprehensive subcontracting plans with eligible 
participants on an annual basis.
    (2) Test Program participants use their comprehensive 
subcontracting plans, in lieu of individual subcontracting plans, when 
performing any DoD contract or subcontract that requires a 
subcontracting plan.
    (d) Assessment. The contracting officer designated to manage the 
comprehensive subcontracting plan shall conduct a compliance review 
during the fiscal year after the close of the fiscal year for which the 
plan is applicable. The contracting officer shall compare the approved 
percentage or dollar goals to the total, actual subcontracting dollars 
covered by the comprehensive subcontracting plan.
    (1) If the contractor has failed to meet its approved 
subcontracting goal(s), the contracting officer shall give the 
contractor written notice specifying the failure, advising of the 
potential for assessment of liquidated damages, permitting the 
contractor to demonstrate what good faith efforts have been made, and 
providing a period of 15 working days (or longer period at the 
contracting officer's discretion) within which to respond. The 
contracting officer may take the contractor's failure to respond to the 
notice as an admission that no valid explanation exists.
    (2) The contracting officer shall review all available information 
to determine whether the contractor has failed to make a good faith 
effort to comply with the plan.
    (3) If, after consideration of all relevant information, the 
contracting officer determines that the contractor failed to make a 
good faith effort to comply with the comprehensive subcontracting plan, 
the contracting officer shall issue a final decision. The contracting 
officer's final decision shall include the right of the contractor to 
appeal under the Disputes clause. The contracting officer shall 
distribute a

[[Page 15999]]

copy of the final decision to all cognizant contracting officers for 
the contracts covered under the plan.
    (e) Liquidated damages. The amount of liquidated damages shall be 
the amount of anticipated damages sustained by the Government, 
including but not limited to additional expenses of administration, 
reporting, and contract monitoring, and shall be identified in the 
comprehensive subcontracting plan. Liquidated damages shall be in 
addition to any other remedies the Government may have.
    (f) Expiration date. The Test Program expires on December 31, 2017.

0
5. Amend section 219.708 by--
0
a. Revising paragraph (b)(1)(B);
0
b. Revising paragraph (b)(2); and
0
c. Removing from paragraph (c)(1) ``test program described in 219.702'' 
and adding ``Test Program described in 219.702-70'' in its place.
    The revisions read as follows:


219.708  Contract clauses.

    (b)(1) * * *
    (B) In contracts with contractors that have comprehensive 
subcontracting plans approved under the Test Program described in 
219.702-70, including contracts using FAR part 12 procedures for the 
acquisition of commercial items, use the clause at 252.219-7004, Small 
Business Subcontracting Plan (Test Program), instead of the clauses at 
252.219-7003, Small Business Subcontracting Plan (DoD Contracts), FAR 
52.219-9, Small Business Subcontracting Plan, and FAR 52.219-16, 
Liquidated Damages--Subcontracting Plan.
    (2) In contracts with contractors that have comprehensive 
subcontracting plans approved under the Test Program described in 
219.702-70, do not use the clause at FAR 52.219-16, Liquidated 
Damages--Subcontracting Plan.
* * * * *

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
6. Add subpart 242.15 to read as follows:
Subpart 242.15--Contractor Performance Information
Sec.
242.1502 Policy.

Subpart 242.15--Contractor Performance Information


242.1502  Policy.

    (g) Past performance evaluations in the Contractor Performance 
Assessment Reporting System shall include an assessment of the 
contractor's performance against, and efforts to achieve, the goals 
identified in its comprehensive small business subcontracting plan when 
the contract contains the clause at 252.219-7004, Small Business 
Subcontracting Plan (Test Program).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Amend section 252.219-7003 by--
0
a. Revising the section heading and introductory text;
0
b. Removing the clause date of ``(MAR 2016)'' and adding ``(APR 2018)'' 
in its place;
0
c. Adding paragraph (g); and
0
d. In Alternate I--
0
i. Revising the introductory text;
0
ii. Removing the clause date of ``(MAR 2016)'' and adding ``(APR 
2018)'' in its place; and
0
iii. Adding paragraph (g).
    The revision and additions read as follows:


252.219-7003  Small Business Subcontracting Plan (DoD Contracts).

    Basic. As prescribed in 219.708(b)(1)(A) and (b)(1)(A)(1), use the 
following clause:
* * * * *
    (g) Include the clause at 252.219-7004, Small Business 
Subcontracting Plan (Test Program), in subcontracts with subcontractors 
that participate in the Test Program described in DFARS 219.702-70, 
where the subcontract is expected to exceed $700,000 ($1.5 million for 
construction of any public facility) and to have further subcontracting 
opportunities.
* * * * *
    Alternate I. As prescribed in 219.708(b)(1)(A) and (b)(1)(A)(2), 
use the following clause, which uses a different paragraph (f) than the 
basic clause.
* * * * *
    (g) Include the clause at 252.219-7004, Small Business 
Subcontracting Plan (Test Program), in subcontracts with subcontractors 
that participate in the Test Program described in DFARS 219.702-70, 
where the subcontract is expected to exceed $700,000 ($1.5 million for 
construction of any public facility) and to have further subcontracting 
opportunities.
* * * * *

0
8. Revise section 252.219-7004 to read as follows:


252.219-7004  Small business subcontracting plan (Test Program).

    As prescribed in 219.708(b)(1)(B), use the following clause:

Small Business Subcontracting Plan (Test Program) (APR 2018)

    (a) Definitions. As used in this clause--
    Covered small business concern means a small business concern, 
veteran-owned small business concern, service-disabled veteran-owned 
small business concern, HUBZone small business concern, women-owned 
small business concern, or small disadvantaged business concern, as 
these terms are defined in FAR 2.101.
    Electronic Subcontracting Reporting System (eSRS) means the 
Governmentwide, electronic, web-based system for small business 
subcontracting program reporting. The eSRS is located at http://www.esrs.gov.
    Failure to make a good faith effort to comply with a comprehensive 
subcontracting plan means a willful or intentional failure to perform 
in accordance with the requirements of the Contractor's approved 
comprehensive subcontracting plan or willful or intentional action to 
frustrate the plan.
    Subcontract means any agreement (other than one involving an 
employer-employee relationship) entered into by a Federal Government 
prime Contractor or subcontractor calling for supplies or services 
required for performance of the contract or subcontract.
    (b) Test Program. The Contractor's comprehensive small business 
subcontracting plan and its successors, which are authorized by and 
approved under the Test Program of 15 U.S.C. 637 note, as amended, 
shall be included in and made a part of this contract. Upon expulsion 
from the Test Program or expiration of the Test Program, the Contractor 
shall negotiate an individual subcontracting plan for all future 
contracts that meet the requirements of 15 U.S.C. 637(d).
    (c) Eligibility requirements. To become and remain eligible to 
participate in the Test Program, a business concern is required to have 
furnished supplies or services (including construction) under at least 
three DoD contracts during the preceding fiscal year, having an 
aggregate value of at least $100 million.
    (d) Reports. (1) The Contractor shall report semiannually for the 
6-month periods ending March 31 and September 30, the information in 
paragraphs (d)(1)(i) through (v) of this section within 30 days after 
the end of the reporting period. Submit the report at https://www.esrs.gov.
    (i) A list of contracts covered under its comprehensive small 
business subcontracting plan, to include the Commercial and Government 
Entity

[[Page 16000]]

(CAGE) code and unique entity identifier.
    (ii) The amount of first-tier subcontract dollars awarded during 
the 6-month period covered by the report to covered small business 
concerns, with the information set forth separately by--
    (A) North American Industrial Classification System (NAICS) code;
    (B) Major defense acquisition program, as defined in 10 U.S.C. 
2430(a);
    (C) Contract number, if the contract is for maintenance, overhaul, 
repair, servicing, rehabilitation, salvage, modernization, or 
modification of supplies, systems, or equipment, and the total value of 
the contract, including options, exceeds $100 million; and
    (D) Military department.
    (iii) Total number of subcontracts active under the Test Program 
that would have otherwise required a subcontracting plan.
    (iv) Costs incurred in negotiating, complying with, and reporting 
on its comprehensive subcontracting plan.
    (v) Costs avoided through the use of a comprehensive subcontracting 
plan.
    (2) The Contractor shall--
    (i) Ensure that subcontractors with subcontracting plans agree to 
submit an Individual Subcontract Report (ISR) and/or Summary 
Subcontract Report (SSR) using the Electronic Subcontracting Reporting 
System (eSRS).
    (ii) Provide its contract number, its unique entity identifier, and 
the email address of the Contractor's official responsible for 
acknowledging or rejecting the ISR to all first-tier subcontractors, 
who will be required to submit ISRs, so they can enter this information 
into the eSRS when submitting their reports.
    (iii) Require that each subcontractor with a subcontracting plan 
provide the prime contract number, its own unique entity identifier, 
and the email address of the subcontractor's official responsible for 
acknowledging or rejecting the ISRs to its subcontractors with 
subcontracting plans who will be required to submit ISRs.
    (iv) Acknowledge receipt or reject all ISRs submitted by its 
subcontractors using eSRS.
    (3) The Contractor shall submit SSRs using eSRS at http://www.esrs.gov. The reports shall provide information on subcontract 
awards to 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. Purchases from a corporation, 
company, or subdivision that is an affiliate of the prime Contractor or 
subcontractor are not included in these reports. Subcontract award data 
reported by prime contractors and subcontractors shall be limited to 
awards made to their immediate next-tier subcontractors. Credit cannot 
be taken for awards made to lower-tier subcontractors unless the 
Contractor or subcontractor has been designated to receive a small 
business or small disadvantaged business credit from a member firm of 
the Alaska Native--Corporations or an Indian tribe. Only subcontracts 
involving performance in the U.S. or its outlying areas should be 
included in these reports.
    (i) This report may be submitted on a corporate, company, or 
subdivision (e.g., plant or division operating as a separate profit 
center) basis, as negotiated in the comprehensive subcontracting plan 
with the Defense Contract Management Agency.
    (ii) This report encompasses all subcontracting under prime 
contracts and subcontracts with the Department of Defense, regardless 
of the dollar value of the subcontracts, and is based on the negotiated 
comprehensive subcontracting plan.
    (iii) The report shall be submitted semiannually for the six months 
ending March 31 and the twelve months ending September 30. Reports are 
due 30 days after the close of each reporting period.
    (iv) The authority to acknowledge receipt of or reject the SSR 
resides with the Defense Contract Management Agency.
    (e) Failure to comply. The failure of the Contractor or 
subcontractor to comply in good faith with the clause of this contract 
entitled ``Utilization of Small Business Concerns,'' or an approved 
plan required by this clause, shall be a material breach of the 
contract.
    (f) Liquidated damages. The Contracting Officer designated to 
manage the comprehensive subcontracting plan will exercise the 
functions of the Contracting Officer, as identified in paragraphs 
(f)(1) through (4) of this clause, on behalf of all DoD departments and 
agencies that awarded contracts covered by the Contractor's 
comprehensive subcontracting plan.
    (1) To determine the need for liquidated damages, the Contracting 
Officer will conduct a compliance review during the fiscal year after 
the close of the fiscal year for which the plan is applicable. The 
Contracting Officer will compare the approved percentage or dollar 
goals to the total, actual subcontracting dollars covered by the plan.
    (2) If the Contractor has failed to meet its approved 
subcontracting goal(s), the Contracting Officer will provide the 
Contractor written notice specifying the failure, advising of the 
potential for assessment of liquidated damages, and permitting the 
Contractor to demonstrate what good faith efforts have been made. The 
Contracting Officer may take the Contractor's failure to respond to the 
notice within 15 working days (or longer period at the Contracting 
Officer's discretion) as an admission that no valid explanation exists.
    (3) If, after consideration of all relevant information, the 
Contracting Officer determines that the Contractor failed to make a 
good faith effort to comply with the comprehensive subcontracting plan, 
the Contracting Officer will issue a final decision to the Contractor 
to that effect and require the Contractor to pay liquidated damages to 
the Government in the amount identified in the comprehensive 
subcontracting plan.
    (4) The Contractor shall have the right of appeal under the clause 
in this contract entitled ``Disputes'' from any final decision of the 
Contracting Officer.
    (g) Subcontracts. The Contractor shall include in subcontracts that 
offer subcontracting opportunities, are expected to exceed $700,000 
($1.5 million for construction of any public facility), and are 
required to include the clause at 52.219-8, Utilization of Small 
Business Concerns, the clauses at--
    (1) FAR 52.219-9, Small Business Subcontracting Plan, and 252.219-
7003, Small Business Subcontracting Plan (DoD Contracts)--Basic;
    (2) FAR 52.219-9, Small Business Subcontracting Plan, with its 
Alternate III, and 252.219-7003, Small Business Subcontracting Plan 
(DoD Contracts)--Alternate I, to allow for submission of SF 294s in 
lieu of ISRs; or
    (3) 252.219-7004, Small Business Subcontracting Plan (Test 
Program), in subcontracts with subcontractors that participate in the 
Test Program described in DFARS 219.702-70.
(End of clause)
[FR Doc. 2018-07730 Filed 4-12-18; 8:45 am]
BILLING CODE 5001-06-P