Federal Acquisition Regulation: Good Faith in Small Business Subcontracting, 34155-34159 [2020-10511]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 85, Number 107 (Wednesday, June 3, 2020)]
[Proposed Rules]
[Pages 34155-34159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10511]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 19, 42, and 52

[FAR Case 2019-004, Docket No. FAR-2019-0030, Sequence No. 1]
RIN 9000-AN87


Federal Acquisition Regulation: Good Faith in Small Business 
Subcontracting

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal 
Acquisition Regulation (FAR) to implement a section of the National 
Defense Authorization Act for Fiscal Year 2017, which requires examples 
of failure to make good faith efforts to comply with a small business 
subcontracting plan.

DATES: Interested parties should submit written comments at the address 
shown below on or before August 3, 2020 to be considered in the 
formation of the final rule.

ADDRESSES: Submit comments in response to FAR Case 2019-004 to https://www.regulations.gov. Submit comments via the Federal eRulemaking portal 
by searching for ``FAR Case 2019-004''. Select the link ``Comment Now'' 
that corresponds with FAR Case 2019-004. Follow the instructions 
provided at the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``FAR Case 2019-004'' on your attached 
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR 
FURTHER INFORMATION CONTACT section of this document for alternate 
instructions.
    Instructions: Please submit comments only and cite FAR Case 2019-
004 in all correspondence related to this case. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting.

FOR FURTHER INFORMATION CONTACT: Ms. Malissa Jones, Procurement 
Analyst, at (703)605-2815, or by email at [email protected], for 
clarification of content. For information pertaining to status or 
publication schedules, contact the Regulatory Secretariat Division at 
202-501-4755 or [email protected]. Please cite FAR Case 2019-004.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA are proposing to amend the FAR to implement 
section 1821 of the National Defense Authorization Act (NDAA) for 
Fiscal Year (FY) 2017 (15 U.S.C 637 note, Pub. L. 114-328). Section 
1821 requires the Small Business Administration (SBA) to amend its 
regulations to provide examples of activities that would be considered 
a failure to make a good faith effort to comply with a small business 
subcontracting plan. SBA issued a rule at 84 FR 65647, November 29, 
2019, to implement section 1821 of the NDAA for FY 2017. In its rule, 
SBA amends 13 CFR 125.3(d)(3) to provide guidance on evaluating whether 
the prime contractor made a good faith effort to comply with its small 
business subcontracting plan and a list of examples of activities 
reflective of a failure to make a good faith effort.
    Additionally, SBA revised 13 CFR 125.3(c)(1)(iv) to require that 
prime contractors with commercial subcontracting plans include indirect 
costs in their subcontracting goals. Other than small business concerns 
that have a commercial subcontracting plan report on performance 
through a summary subcontract report (SSR). SBA's regulations currently 
require that contractors using a commercial subcontracting plan must 
include indirect costs in their SSRs, but do not require these 
contractors to include indirect costs in their subcontracting goals, 
which leads to inconsistencies when comparing the data reported in the 
SSR to the goals in the commercial subcontracting plan.
    Small business subcontracting plans are required from large prime 
contractors when a contract is expected to exceed $700,000 ($1.5 
million for construction) and has subcontracting possibilities. FAR 
19.704 lists the elements of the plan, which include the contractor's 
goals for subcontracting to small business concerns and a description 
of the efforts the contractor will make to ensure that small business, 
veteran-owned small business, service-disabled veteran-owned small 
business, HUBZone small business, small disadvantaged business, and 
women-owned small business concerns have an equitable opportunity to 
compete for subcontracts. Failure to make a good faith effort to comply 
with the plan may result in the assessment of liquidated damages per 
FAR 52.219-16, Liquidated Damages--Subcontracting Plan.

II. Discussion and Analysis

    The proposed changes to the FAR are summarized in the following 
paragraphs.

A. Inclusion of Indirect Costs in Commercial Plans

    Section 19.704, Subcontracting plan requirements, and the clause at 
52.219-9, Small Business Subcontracting Plan, are amended to require 
that all indirect costs, with certain exceptions, are included in 
commercial plans and SSRs.

B. Compliance With the Subcontracting Plan

    Section 19.705-7, Liquidated damages, is renamed ``Compliance with 
the subcontracting plan'' and is reorganized, with paragraph headings

[[Page 34156]]

added to make this section easier to read and understand. This section 
includes examples of a good faith effort, and examples of a failure to 
make a good faith effort to comply with the subcontracting plan, 
including SBA's examples at 13 CFR 125.3(d). References to the examples 
in 19.705-7 are added in other sections in subparts 19.7 and 42.15. A 
reference to SBA's examples at 13 CFR 125.3(d), now located at FAR 
19.705-7, is added in the clause at 52.219-16.

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

    This rule proposes to implement a statutory requirement to provide 
examples of activities that would be considered a failure to make a 
good faith effort to comply with a small business subcontracting plan. 
Because section 8(d) of the Small Business Act (15 U.S.C. 637(d)) 
requires subcontracting plans only for acquisitions valued above 
$700,000 ($1.5 million for construction contracts), the requirements of 
section 1821 of the NDAA for FY 2017 (15 U.S.C 637 note, Pub. L. 114-
328) would not apply to contracts at or below the SAT. The FAR Council 
intends to apply the requirements of section 1821 to contracts for the 
acquisition of commercial items. Revisions to the clauses at FAR 
52.219-9 and 52.219-16 are proposed by this rule. Discussion of these 
preliminary determinations is set forth below. The FAR Council will 
consider public feedback before making a final determination on the 
scope of the final rule.

A. Applicability to Contracts for the Acquisition of Commercial Items

    Pursuant to 41 U.S.C. 1906, acquisitions of commercial items (other 
than acquisitions of COTS items, which are addressed in 41 U.S.C. 1907) 
are exempt from a provision of law unless the law (i) contains criminal 
or civil penalties; (ii) specifically refers to 41 U.S.C. 1906 and 
states that the law applies to acquisitions of commercial items; or 
(iii) the FAR Council makes a written determination and finding that it 
would not be in the best interest of the Federal Government to exempt 
contracts for the procurement of commercial items from the provision of 
law. If none of these conditions are met, the FAR is required to 
include the statutory requirement(s) on a list of provisions of law 
that are inapplicable to the acquisition of commercial items.
    The purpose of this rule is to implement section 1821 of the NDAA 
for FY 2017 and SBA's implementing regulations. Section 1821 requires 
SBA to provide examples of activities that would be considered a 
failure to make a good faith effort to comply with a small business 
subcontracting plan. Both the FAR and SBA's regulations require 
contractors with small business subcontracting plans, including 
commercial plans, to make a good faith effort to comply with the plans. 
SBA's rule did not exempt the acquisition of commercial items.
    Section 1821 furthers the Administration's goal of supporting small 
business. It advances the interests of small business subcontractors by 
promoting good faith efforts by large prime contractors to find and use 
small business concerns as subcontractors, thereby providing valuable 
opportunities for small business concerns.
    For these reasons, it is in the best interest of the Federal 
Government to apply the requirements of this rule to the acquisition of 
commercial items.

B. Applicability to Contracts for the Acquisition of COTS Items

    Pursuant to 41 U.S.C. 1907, acquisitions of COTS items will be 
exempt from a provision of law unless the law (i) contains criminal or 
civil penalties; (ii) specifically refers to 41 U.S.C. 1907 and states 
that the law applies to acquisitions of COTS items; (iii) concerns 
authorities or responsibilities under the Small Business Act (15 U.S.C. 
644) or bid protest procedures developed under the authority of 31 
U.S.C. 3551 et seq., 10 U.S.C. 2305(e) and (f), or 41 U.S.C. 3706 and 
3707; or (iv) the Administrator for Federal Procurement Policy makes a 
written determination and finding that it would not be in the best 
interest of the Federal Government to exempt contracts for the 
procurement of COTS items from the provision of law. If none of these 
conditions are met, the FAR is required to include the statutory 
requirement(s) on a list of provisions of law that are inapplicable to 
the acquisition of COTS items.
    The purpose of this rule is to implement section 1821 of the NDAA 
for FY 2017 and SBA's implementing regulations. Section 1821 requires 
SBA to provide examples of activities that would be considered a 
failure to make a good faith effort to comply with a small business 
subcontracting plan. Both the FAR and SBA's regulations require 
contractors with small business subcontracting plans, including 
commercial plans, to make a good faith effort to comply with the plans. 
SBA's rule did not exempt the acquisition of COTS items.
    Section 1821 furthers the Administration's goal of supporting small 
business. It advances the interests of small business subcontractors by 
promoting good faith efforts by large prime contractors to find and use 
small business concerns as subcontractors, thereby providing valuable 
opportunities for small business concerns.
    For these reasons, it is in the best interest of the Federal 
Government to apply the requirements of this rule to the acquisition of 
COTS items.

IV. 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.

V. Executive Order 13771

    This proposed rule is not expected to be subject to E.O. 13771, 
Reducing Regulation and controlling Regulatory Costs, because this rule 
is not a significant regulatory action under E.O. 12866.

VI. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this proposed rule to have a 
significant economic impact on a substantial number of small entities 
within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et 
seq. However, an initial regulatory flexibility analysis (IRFA) has 
been performed and is summarized as follows:

    DoD, GSA, and NASA are proposing to amend the FAR to implement 
section 1821 of the NDAA for FY 2017 (Pub. L. 114-328). Section 1821 
amends the Small Business Act (15 U.S.C 637 note), to require SBA to 
provide examples of activities that would be considered a failure to 
make a good faith effort to comply with the goals and other elements 
in small business subcontracting plans. Additionally, SBA clarified 
in its regulations that large prime contractors with commercial 
subcontracting plans must

[[Page 34157]]

include indirect costs in the commercial subcontracting plan goals.
    The objective of this proposed rule is to implement section 1821 
of the NDAA for FY 2017 and SBA's implementing regulations, which 
provide examples of activities that would be considered a failure to 
make a good faith effort to comply with a small business 
subcontracting plan. SBA has amended 13 CFR 125.3(d)(3) to provide 
guidance on evaluating whether the prime contractor made a good 
faith effort to comply with its small business subcontracting plan 
and a list of examples of activities reflective of a failure to make 
a good faith effort.
    Additionally, SBA has revised 13 CFR 125.3(c)(1)(iv) to require 
that large prime contractors with commercial subcontracting plans 
include indirect costs in the commercial subcontracting plan goals. 
Large prime contractors that have a commercial subcontracting plan 
report on performance through a SSR in the Electronic Subcontracting 
Reporting System (eSRS). SBA's regulations and the FAR currently 
require that a contractor using a commercial subcontracting plan 
include indirect costs in its SSR. However, these regulations do not 
require contractors to include indirect costs in their commercial 
subcontracting plan goals, which leads to inconsistencies when 
comparing the data reported in the SSR to the goals in the 
commercial subcontracting plan.
    This rule may have a positive economic impact on any small 
business entity that wishes to participate in Federal procurement as 
a subcontractor. By providing examples of a failure to make a good 
faith effort to comply with small business subcontracting plans, 
contracting officers can determine more easily whether large prime 
contractors have made a good faith effort to comply with their 
subcontracting plans and hold large prime contractors accountable 
for failing to make a good faith effort to comply with their 
subcontracting plans. More diligence in developing and meeting 
subcontracting goals on the part of large prime contractors could 
have a positive impact of giving small business concerns more 
opportunity to subcontract on Federal contracts. Data from the 
Federal Procurement Data System indicate that in FY 2018 there were 
2,397 entities with 15,758 awards that required small business 
subcontracting plans. According to the Federal Funding 
Accountability and Transparency Act Subaward Reporting System 
(FSRS), there are 19,596 unique entities who are subcontractors. 
Approximately 80 percent of the entities registered in the System 
for Award Management are small entities. Therefore, we estimate that 
80 percent (15,677) of the subcontractors in FSRS are small 
entities. These small entities may benefit from this rule.
    This proposed rule will require a large prime contractor with a 
commercial subcontracting plan to include indirect costs in its 
subcontracting goals. The benefit of requiring that indirect costs 
be included in subcontracting goals in commercial subcontracting 
plans is that it will increase the small business subcontracting 
goal and thus increase the amount of funds the prime contractor will 
subcontract to small business concerns, providing more opportunities 
for subcontract awards to small business concerns.
    This proposed rule does not include any new reporting, 
recordkeeping or other compliance requirements for small entities.
    This proposed rule does not duplicate, overlap, or conflict with 
any other Federal rules.
    There are no known significant alternative approaches that would 
accomplish the stated objectives of the applicable statute.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the SBA. A copy of the IRFA 
may be obtained from the Regulatory Secretariat Division. DoD, GSA, and 
NASA invite comments from small business concerns and other interested 
parties on the expected impact of this rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by this rule 
in accordance with 5 U.S.C. 610. Interested parties must submit 
comments separately and should cite 5 U.S.C. 610 (FAR case 2019-004) in 
correspondence.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this 
rule; however, these changes to the FAR do not impose additional 
information collection requirements to the paperwork burden previously 
approved under OMB Control Number 9000-0007, Subcontracting Plans.

List of Subjects in 48 CFR Parts 19, 42, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-Wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-Wide Policy.

    Therefore, for the reasons listed in the preamble, DoD, GSA, and 
NASA are proposing to amend 48 CFR parts 19, 42, and 52 to read as 
follows:

0
1. The authority citation for 48 CFR parts 19, 42, and 52 continues to 
read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 19--SMALL BUSINESS PROGRAMS

0
2. Amend section 19.704 by--
0
a. Removing from paragraph (a)(6) ``subcontracting goals'' and adding 
``subcontracting goals (for commercial plans, see paragraph (d) of this 
section)'' in its place;
0
b. Revising the introductory text of paragraph (d); and
0
c. Removing from paragraph (d)(4) ``one SSR'' and adding ``one SSR that 
includes all indirect costs, except as described in paragraph (d) of 
this section,'' in its place.
    The revision reads as follows:


19.704   Subcontracting plan requirements.

* * * * *
    (d) A commercial plan (as defined in 19.701) is the preferred type 
of subcontracting plan for contractors furnishing commercial items. The 
subcontracting goals established for a commercial plan shall include 
all indirect costs with the exception of those such as the following: 
Employee salaries and benefits; payments for petty cash; depreciation; 
interest; income taxes; property taxes; lease payments; bank fees; 
fines, claims, and dues; original equipment manufacturer relationships 
during warranty periods (negotiated up front with the product); 
utilities and other services purchased from a municipality or an entity 
solely authorized by the municipality to provide those services in a 
particular geographical region; and philanthropic contributions. Once a 
contractor's commercial plan has been approved, the Government shall 
not require another subcontracting plan from the same contractor while 
the plan remains in effect, as long as the product or service being 
provided by the contractor continues to meet the definition of a 
commercial item. The contractor shall--
* * * * *


19.705-4  [Amended]

0
3. Amend section 19.705-4 by removing from paragraph (c), in the fourth 
sentence, ``faith effort'' and adding ``faith effort (see 19.705-7)''.
0
4. Amend section 19.705-6 by revising paragraphs (g)(1), (h), and (i) 
to read as follows:


19.705-6   Postaward responsibilities of the contracting officer.

* * * * *
    (g) * * *
    (1) Assess whether the prime contractor made a good faith effort to 
comply with its small business subcontracting plan. See 19.705-7(b) for 
more information on the determination of good faith effort.
* * * * *
    (h) Initiate action to assess liquidated damages in accordance with 
19.705-7 upon a recommendation by the administrative contracting 
officer, if one is assigned, or receipt of other reliable evidence to 
indicate that assessing liquidated damages is warranted.

[[Page 34158]]

    (i) Take action to enforce the terms of the contract upon receipt 
of a notice from the contract administration office under 19.706(f).
* * * * *
0
5. Amend section 19.705-7 by--
0
 a. Revising the section heading;
0
 b. Adding a paragraph heading to paragraph (a);
0
 c. Removing from paragraph (a) ``small disadvantaged business'' and 
adding ``small disadvantaged business,'' in its place;
0
d. Revising paragraphs (b), (c), (d), and (e);
0
 e. Adding a paragraph heading to the introductory text of paragraph 
(f);
0
 f. Removing paragraph (g); and
0
 g. Redesignating paragraph (h) as paragraph (f)(5).
    The revisions and additions read as follows:


19.705-7   Compliance with the subcontracting plan.

    (a) General. * * *
    (b) Determination of good faith effort. (1) In determining whether 
a contractor failed to make a good faith effort to comply with its 
subcontracting plan, a contracting officer must look to the totality of 
the contractor's actions, consistent with the information and 
assurances provided in its plan. The fact that the contractor failed to 
meet its subcontracting goals does not, in and of itself, constitute a 
failure to make a good faith effort (see 19.701). For example, 
notwithstanding a contractor's diligent effort to identify and solicit 
offers from any of the small business, veteran-owned small business, 
service-disabled veteran-owned small business, HUBZone small business, 
small disadvantaged business, and women-owned small business concerns, 
factors such as unavailability of anticipated sources or unreasonable 
prices may frustrate achievement of the contractor's subcontracting 
goals. The contracting officer may consider any of the following, 
though not all inclusive, to be indicators of a good faith effort:
    (i) Breaking out work to be subcontracted into economically 
feasible units, as appropriate, to facilitate small business 
participation.
    (ii) Conducting market research to identify potential small 
business subcontractors through all reasonable means, such as searching 
SAM, posting notices or solicitations on SBA's SUBNet, participating in 
business matchmaking events, and attending preproposal conferences.
    (iii) Soliciting small business concerns as early in the 
acquisition process as practicable to allow them sufficient time to 
submit a timely offer for the subcontract.
    (iv) Providing interested small businesses with adequate and timely 
information about plans, specifications, and requirements for 
performance of the prime contract to assist them in submitting a timely 
offer for the subcontract.
    (v) Negotiating in good faith with interested small businesses.
    (vi) Directing small businesses that need additional assistance to 
SBA.
    (vii) Assisting interested small businesses in obtaining bonding, 
lines of credit, required insurance, necessary equipment, supplies, 
materials, or services.
    (viii) Utilizing the available services of small business 
associations; local, state, and Federal small business assistance 
offices; and other organizations.
    (ix) Participating in a formal mentor-prot[eacute]g[eacute] program 
with one or more small-business prot[eacute]g[eacute]s that results in 
developmental assistance to the prot[eacute]g[eacute]s.
    (x) Although failing to meet the subcontracting goal in one 
socioeconomic category, exceeding the goal by an equal or greater 
amount in one or more of the other categories.
    (xi) Fulfilling all of the requirements of the subcontracting plan.
    (2) When considered in the context of the contractor's total effort 
in accordance with its plan, the contracting officer may consider any 
of the following, though not all inclusive, to be indicators of a 
failure to make a good faith effort:
    (i) Failure to attempt through market research to identify, 
contact, solicit, or consider for contract award small business, 
veteran-owned small business, service-disabled veteran-owned small 
business, HUBZone small business, small disadvantaged business, or 
women-owned small business concerns, through all reasonable means 
including outreach, industry days, or the use of Federal systems such 
as SBA's Dynamic Small Business Search or SUBNet systems.
    (ii) Failure to designate and maintain a company official to 
administer the subcontracting program and monitor and enforce 
compliance with the plan.
    (iii) Failure to submit an acceptable ISR, or the SSR, using the 
eSRS, or as provided in agency regulations, by the report due dates 
specified in 52.219-9, Small Business Subcontracting Plan.
    (iv) Failure to maintain records or otherwise demonstrate 
procedures adopted to comply with the plan including subcontracting 
flowdown requirements.
    (v) Adoption of company policies or documented procedures that have 
as their objectives the frustration of the objectives of the plan.
    (vi) Failure to pay small business subcontractors in accordance 
with the terms of the contract with the prime contractor;
    (vii) Failure to correct substantiated findings from Federal 
subcontracting compliance reviews or participate in subcontracting plan 
management training offered by the Government;
    (viii) Failure to provide the contracting officer with a written 
explanation if the contractor fails to acquire articles, equipment, 
supplies, services, or materials or obtain the performance of 
construction work as described in 19.704(a)(12).
    (ix) Falsifying records of subcontract awards to small business 
concerns.
    (c) Documentation of good faith effort. If, at completion of the 
basic contract or any option, or in the case of a commercial plan, at 
the close of the fiscal year for which the plan is applicable, a 
contractor has failed to comply with the requirements of its 
subcontracting plan, which includes meeting its subcontracting goals, 
the contracting officer shall review all available information for an 
indication that the contractor has not made a good faith effort to 
comply with the plan. If no such indication is found, the contracting 
officer shall document the file accordingly.
    (d) Notice of failure to make a good faith effort. If the 
contracting officer decides in accordance with paragraph (b) of this 
section that the contractor failed to make a good faith effort to 
comply with its subcontracting plan, the contracting officer shall give 
the contractor written notice in accordance with 52.219-16, Liquidated 
Damages--Subcontracting Plan, specifying the material breach, which may 
be included in the contractor's past performance information, advising 
the contractor of the possibility that the contractor may have to pay 
to the Government liquidated damages, and providing a period of 15 
working days (or longer period as necessary) within which to respond. 
The notice shall give the contractor an opportunity to demonstrate what 
good faith efforts have been made before the contracting officer issues 
the final decision, and shall further state that failure of the 
contractor to respond may be taken as an admission that no valid 
explanation exists.
    (e) Payment of liquidated damages. (1) If, after consideration of 
all the pertinent data, the contracting officer finds that the 
contractor failed to make

[[Page 34159]]

a good faith effort to comply with its subcontracting plan, the 
contracting officer shall issue a final decision to the contractor to 
that effect and require the payment of liquidated damages in an amount 
stated. The contracting officer's final decision shall state that the 
contractor has the right to appeal under the clause in the contract 
entitled Disputes. Calculations and procedures shall be in accordance 
with 52.219-16, Liquidated Damages--Subcontracting Plan.
    (2) The amount of damages attributable to the contractor's failure 
to comply shall be an amount equal to the actual dollar amount by which 
the contractor failed to achieve each subcontracting goal. For 
calculations for commercial plans see paragraph (f) of this section.
    (3) Liquidated damages shall be in addition to any other remedies 
that the Government may have.
    (f) Commercial plans. * * *


19.706   [Amended]

0
 6. Amend section 19.706 by removing from paragraph (f) 
``subcontracting plan'' and adding ``subcontracting plan (see 19.705-
7(b) for more information on the determination of good faith effort)''.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
7. Amend section 42.1501 by redesignating paragraphs (a)(5) thru (a)(7) 
as paragraphs (a)(6) thru (a)(8) and adding new paragraph (a)(5) to 
read as follows:


42.1501   General.

    (a) * * *
    (5) Complying with the requirements of the small business 
subcontracting plan (see 19.705-7(b));
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Amend section 52.212-5 by revising the date of the clause and 
paragraphs (b)(17)(i), (b)(17)(v), and (b)(20) to read as follows:


52.212-5   Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (DATE)

* * * * *
    (b) * * *
    __(17)(i) 52.219-9, Small Business Subcontracting Plan (DATE) 
(15 U.S.C. 637(d)(4)).
* * * * *
    __(v) Alternate IV (DATE) of 52.219-9.
* * * * *
    __(20) 52.219-16, Liquidated Damages--Subcontracting Plan (DATE) 
(15 U.S.C. 637(d)(4)(F)(i)).
* * * * *
0
9. Amend section 52.219-9 by--
0
 a. Revising the date of the clause;
0
 b. Removing from paragraph (d)(2)(i) ``subcontracts'' and adding 
``subcontracts, including all indirect costs except as described in 
paragraph (g) of this clause,'' in its place;
0
 c. Adding a new fifth sentence to paragraph (g);
0
 d. Amending alternate IV by revising the date of the clause and 
paragraph (d)(2)(i).
    The revisions and additions read as follows:


52.219-9   Small Business Subcontracting Plan.

* * * * *

Small Business Subcontracting Plan (DATE)

* * * * *
    (g) * * * A Contractor authorized to use a commercial 
subcontracting plan shall include in its subcontracting goals and in 
its SSR all indirect costs, with the exception of those such as the 
following: Employee salaries and benefits; payments for petty cash; 
depreciation; interest; income taxes; property taxes; lease 
payments; bank fees; fines, claims, and dues; original equipment 
manufacturer relationships during warranty periods (negotiated up 
front with the product); utilities and other services purchased from 
a municipality or an entity solely authorized by the municipality to 
provide those services in a particular geographical region; and 
philanthropic contributions. * * *
* * * * *
    Alternate IV (DATE). * * *
    (d) * * *
    (2) * * *
    (i) Total dollars planned to be subcontracted for an individual 
subcontracting plan; or the Offeror's total projected sales, 
expressed in dollars, and the total value of projected subcontracts 
to support the sales for a commercial plan, including all indirect 
costs, with the exception of those such as the following: Employee 
salaries and benefits; payments for petty cash; depreciation; 
interest; income taxes; property taxes; lease payments; bank fees; 
fines, claims, and dues; original equipment manufacturer 
relationships during warranty periods (negotiated up front with the 
product); utilities and other services purchased from a municipality 
or an entity solely authorized by the municipality to provide those 
services in a particular geographical region; and philanthropic 
contributions;
* * * * *
0
10. Amend 52.219-16 by revising the date of the clause and removing 
from paragraph (b) ``plan, established'' and adding ``plan (see 19.705-
7), established'' in its place.
    The revision reads as follows:


52.219-16   Liquidated Damages--Subcontracting Plan.

* * * * *

Liquidated Damages--Subcontracting Plan (DATE)

* * * * *
[FR Doc. 2020-10511 Filed 6-2-20; 8:45 am]
 BILLING CODE 6820-EP-P