[Federal Register Volume 59, Number 146 (Monday, August 1, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-18401] [[Page Unknown]] [Federal Register: August 1, 1994] ======================================================================= ----------------------------------------------------------------------- GENERAL SERVICES ADMINISTRATION 48 CFR Parts 519 and 552 [APD 2800.12A, CHGE 55] RIN 3090-AF06 General Services Administration Acquisition Regulation; Small Business Subcontracting Program AGENCY: Office of Acquisition Policy, GSA. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The General Services Administration Acquisition Regulation (GSAR) is amended to revise Subpart 519.7 of the General Services Administration Acquisition Regulation. The revision incorporates a class deviation from the FAR clause at 52.219-9, Small Business and Small Disadvantaged Business Subcontracting Plan, and at 52.219-16, Liquidated Damages--Small Business Subcontracting Plan. The General Services Administration (GSA) has made a determination to deviate from the FAR clause at 52.219-9 on a class basis by adding a requirement that a goal be established for women-owned small business concerns when an individual contract plan is involved, and by referring to women- owned small business as well as small and small disadvantaged business concerns throughout the clause. The class deviation to FAR 52.219-16 makes minor wording changes to make the language conform to the clause as modified by the class deviation and to limit the provisions for calculating the amount of damages to the goals for small and small disadvantaged businesses as provided in the Small Business Act. The revision also expresses GSA's expectation that offerors under GSA procurements, in submitting required subcontracting plans, will do more than merely restate minimum plan requirements. Subcontracting plans should demonstrate creativity and innovation in small, small disadvantaged, and women-owned small business concerns in subcontracting opportunities and an understanding of the requirement that these concerns be afforded the maximum practicable opportunity to perform as subcontractors in the offeror's procurements. In certain negotiated solicitations, the subcontracting plan will be negotiated with price and any technical and management proposal required by the solicitation. In sealed bid solicitations, target goals may be stated by GSA in the solicitation. The revision also deletes various sections in Subpart 519.7 because they concern nonregulatory material, makes editorial changes in Subpart 519.8, and incorporates the class deviations in Subpart 570.2. EFFECTIVE DATE: August 1, 1994. FOR FURTHER INFORMATION CONTACT: Paul Linfield, Office of GSA Acquisition Policy, (202) 501-1224. SUPPLEMENTARY INFORMATION: A. Public Comments A notice of proposed rulemaking was published in the Federal Register on January 14, 1994 (59 FR 2345). Fifteen public comments and comments received from GSA activities were considered in formulating this final rule. Fourteen of the public comments viewed the proposed rule favorably; three expressed concerns that demonstrated a need for further clarification. The significant issues and concerns raised during the comment period are summarized below. Thirteen organizations recommended that offerors be required to submit a detailed written summary of the projects on which the offeror was responsible for meeting or exceeding minority/women business enterprise subcontracting goals and that the contracting officer's evaluation of the offeror's proposal be weighted based on the offeror's subcontracting plan. Neither recommendation is incorporated in the regulation issued today. The provisions at GSAR 552.219-73 and 552.219-74 require a description of the offeror's subcontracting strategies and significant achievements. This requirement permits an offeror to describe occasions where it met or exceeded subcontracting goals without any presumption that only when the goals are met or exceeded is the achievement significant. Subcontracting goals may not be achieved for reasons that often are beyond the control of the offeror; e.g., changes in the economy or excessive pricing. For this reason GSA believes ``significant achievements'' should consider more than whether subcontracting goals were met. The final rule also leaves to the discretion of the contracting officer the determination of whether or not to use the subcontracting plan as a weighted evaluation factor or subfactor. The type of procurement and the number of large versus small business concerns anticipated to compete for the award may influence that decision. One comment suggested that for each project the GSA should set aside an amount to aid the large business in offsetting the additional cost in assisting small, small disadvantaged, and women-owned small business concerns. This suggestion is not addressed in this regulation; GSA is examining alternatives for future implementation that may involve the use of incentives, however. One organization stated that use of the subcontracting plan as an evaluation factor or subfactor ``should not be weighted greater than any other evaluation factor and should not be used to eliminate, by itself, a contractor from a negotiated procurement.'' This concern is not addressed in this regulation. However, contemporaneous with the development of this regulation, the GSA developed internal guidance for its contracting officers to assist them in carrying out their responsibilities. This internal guidance will advise the contracting officer to be flexible and not establish arbitrary criteria. The same organization also raised concerns with the use of the term, ``aggressive,'' in GSAR 552.219-72, the phrase, ``consistent with efficient contract performance,'' used in GSAR 552.219-73, and the types of information the contracting officer will review and/or consider in determining the acceptability of a subcontracting plan (par. (c) of GSAR 552.219-73 and 552.219-74). The GSA agrees that the term, ``aggressive,'' may be interpreted inappropriately, and has substituted the more appropriate phrase, ``creative and innovative,'' in the final rule. Additionally, the commenting organization believes the regulation should contain examples of what constitutes ``consistent with efficient contract performance.'' The GSA believes further clarification is unnecessary as its regulation is consistent with policies and expectations in Federal Acquisition Regulation (FAR) clauses 52.219-8, Utilization of Small Business Concerns and Small Disadvantaged Business Concerns, and 52.219-13, Utilization of Women-Owned Small Businesses. Also, Pub. L. 95-507 does not require that prime contractors subcontract a portion of the work, but instead expresses the policy and expectation that small and small disadvantaged businesses are afforded the maximum practicable opportunity to perform that portion of the work that is subcontracted. Another statute expresses similar policy and expectations for women-owned small businesses. These policies are reflected in the FAR clauses 52.219-8 and 52.219-13 that use the phrase, ``consistent with efficient contract performance.'' This phrase, used in GSAR 552.219-73, has the same meaning as in the established FAR clauses. The provision merely reinforces current policies and expectations and is intended to assure that contractors give serious consideration to small, small disadvantaged, and women- owned small business concerns for the portion of work that is subcontracted. Three other issues raised by this organization were: (1) ``previous goals and achievements of contractors in the same industry'' (GSAR 552.219-73(c)(2) and 552.219-74(c)(2)) do not take geographical differences into consideration; (2) consideration of information solely from ``local preference programs and other advocacy groups'' (GSAR 552.219-73(c)(3) and 552.219-74(c)(3)) will increase goals to unrealistic and unobtainable levels; and (3) contracting officers, in reviewing a contractor's description of its strategies and historical performance in placing subcontracts (GSAR 552.219-73(c)(4) and 552.219- 74(c)(4)) may penalize a contractor that has not focused on subcontracting programs in the past. The GSA agrees that geographical differences are an important factor to consider. In its internal guidance, previously alluded to, it recognizes geographical diversity and the availability and location of potential contractors as a factor that may be considered in establishing target goals or developing a negotiation strategy. The GSA agrees that reliance solely on ``local preference programs and other advocacy groups'' would be inappropriate. Both the regulation and the GSA internal guidance clearly establish that the contracting officer's determination as to the acceptability of a subcontracting plan requires the evaluation of multiple sources of information and not the arbitrary application of specific factors or formulas. The GSA also does not believe it is unreasonable to reward a contractor who has focused on its subcontracting program in the past. This regulation provides a basis to recognize their contributions in furthering national policy. Two changes were made to subparagraph (c)(4) in both GSAR 552.219-73 and 552.219-74; the phrase, ``when applicable,'' was deleted. A sentence also was added to clarify that an offeror could describe its strategies and historical performance in terms of its commercial as well as its previous Government contracts. This sentence was added to ensure that contractors that may not have previously held a Government contract requiring a subcontracting plan were not evaluated adversely. One company submitted comments disagreeing with the proposed regulation because the changes ``do not seem practical for Commercial Products producers. . . .'' Specifically, this company stated that it did not have the ability to source specific components of a particular final product for a particular contracted item and, consequently, would be unable to negotiate a subcontracting plan covering any particular item that would be sold on that contract. A better approach, this company suggests, ``would be to maintain or increase percentage goals based on total company (offeror's) purchases from all suppliers.'' Commercial products subcontracting plans were developed to address the issues this company raises. As contrasted with an individual contract plan developed for a specific contract that has goals based on a company's planned subcontracting and purchasing to support performance of that specific contract, a commercial products subcontracting plan describes subcontracting that relates to the company's production generally; i.e., for both its commercial and non- commercial products; rather than solely to the item purchased under the Government contract. The regulation issued today does not affect the ability of a company to offer a commercial products plan, nor does it direct offerors to particular sources for subcontracting. The GSA understands that contractors may have long established sources for specific components and the regulation does not suggest that these be altered. To clarify this matter, a sentence was added to paragraph (a) in both GSAR 552.219-73 and 552.219-74 that states that an offeror can satisfy the GSA's expectations with a commercial products plan where the offeror's commitment to providing maximum practicable subcontracting opportunities to small, small disadvantaged, and women-owned small business concerns is demonstrated through the subcontracting relating to its production generally; i.e., for both its commercial and Government business. The company also suggested that subparagraph (c)(3) in GSAR 552.219-74 be removed. It believes that the plan and goals stated should be the responsibility of the U.S. Small Business Administration (SBA), be evaluated by the SBA, and not be evaluated by outside advocacy groups. This suggestion was not adopted. While the SBA is afforded an opportunity to review the subcontracting plan, determining its acceptability remains a responsibility of the contracting officer. Subparagraph (c)(3) merely informs potential offerors that the contracting officer will consider, among other types of information, information and potential sources obtained from the SBA and other advocacy groups in determining whether the subcontracting plan is reasonable and the goals realistic. The SBA submitted comments supporting the proposed rule. It offered several suggestions that were not incorporated in this final rule. The SBA stated that it supported GSAR 552.219-74. It interpreted this provision to require the subcontracting plan at the time of bid submittal in sealed bidding. This interpretation is incorrect. The requirement for the subcontracting plan with the initial offer applies only in certain GSA negotiated procurements (GSAR 519.705-2). In sealed bidding, the traditional practice of requiring the subcontracting plan only from the apparent low bidder is continued. The SBA also suggested adding a subparagraph (c)(5) to both GSAR 552.219-73 and 552.219-74 that would provide for obtaining comments and recommendations from the SBA procurement center representative (SBA PCR) prior to approval of the subcontracting plan. The GSA internal guidance already provides procedures for obtaining the comments and recommendations of the SBA PCR. The GSA does not believe adding the suggested paragraph (c)(5) provides any benefit to potential offerors. The SBA also expressed concern with the exception provided in GSAR 519.705-2 for not requiring the subcontracting plan with the initial offer for those acquisitions offering minimal subcontracting opportunities. It suggested substituting the word ``no'' for ``minimal.'' The GSA again believes the SBA has misinterpreted the regulation. The GSA believes it would be unnecessarily burdensome to require subcontracting plans from all offerors when the contracting officer can determine from the nature of the procurement that subcontracting opportunities will be minimal. Under such a circumstance, using the subcontracting plan as a discriminating factor or subfactor in evaluating proposals would not be beneficial. The regulation cannot change the statutory requirement for the apparently successful offeror to submit an acceptable subcontracting plan prior to award. B. Executive Order 12866 This rule was not submitted to the Office of Management and Budget (OMB) for review because the rule is not a significant regulatory action as defined in Executive Order 12866, Regulatory Planning and Review, and, therefore, was not required to be submitted. C. Regulatory Flexibility Act Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the GSA certifies that the proposed rule will not have significant impact on a substantial number of small entities, since the revised subcontracting plan requirements in the regulation do not apply to small business concerns. Accordingly, a regulatory flexibility analysis was not prepared. D. Paperwork Reduction Act The clause at 552.219-9, Small Business Subcontracting Plan, contains an information collection requirement. The clause incorporates into the GSAR an approved deviation to the FAR clause at 52.219-9 which has been approved by OMB under Section 3504(h) of the Paperwork Reduction Act and assigned OMB Control Number 9000-0006. The GSA deviation which adds women-owned small business does not add to the information collection requirements already provided for in the FAR. FAR clause 52.219-13, Utilization of Women-Owned Small Businesses, already encourages use of women-owned small businesses in subcontracting and the Standard Form 295, Summary Subcontract Report, already provides a vehicle for reporting on subcontracting with women- owned small business. The provision at 552.219-73 contains an information collection requirement that has been approved by OMB under Section 3504(h) of the Paperwork Reduction Act and assigned OMB Control Number 3090-0252. The title of the information collection is ``GSAR 552.219-73 Preparation, Submission, and Negotiation of Subcontracting Plans.'' The provision requires all offerors, other than small business concerns, responding to a negotiated solicitation to submit a subcontracting plan with their respective offers so that a plan can be negotiated concurrently with other parts of the proposal. The respondents are potential GSA contractors. The contracting officer will use the information to evaluate whether GSA's expectation that subcontracting opportunities exist for small, small disadvantaged and women-owned small business is reasonable under the circumstances; negotiate goals consistent with statutory requirements and acquisition objectives; and expedite the award process. The estimated annual burden for this additional collection is 14,690 hours. This is based on an estimated burden per response of 11.3 hours, a proposed frequency of one response per respondent, and an estimated number of likely respondents of 1,300. Any comments concerning the accuracy of the burden may be directed to the Director, Office of GSA Acquisition Policy (VP), 18th & F Sts., NW., Room 4006, Washington, DC 20405 and to the Office of Information and Regulatory Affairs of OMB, Attention Desk Officer for GSA, Washington, DC 20503. List of Subjects in 48 CFR Parts 519 and 552 Government procurement. Accordingly, 48 CFR Parts 519 and 552 are amended to read as follows: 1. The authority citation for 48 CFR Parts 519 and 552 continues to read as follows: Authority: 40 U.S.C. 486(c). PART 519--SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS 519.701, 519.702, 519.704 [Removed] 2. Sections 519.701, 519.702, and 519.704 are removed. 3. Section 519.705-2 is revised to read as follows: 519.705-2 Determining the need for a subcontracting plan. The requirement at FAR 19.702(a)(1) for submission of a subcontracting plan by only the apparently successful offeror does not apply to GSA negotiated solicitations when the contract is expected to exceed $500,000 ($1,000,000 for construction) and the contract will be awarded on the basis of an evaluation of technical and/or management proposals and cost or price proposals using source selection procedures. Except for acquisitions-- (1) Of leasehold interests in real property using expedited procedures, (2) Of commercial products, or (3) Offering minimal subcontracting opportunities such acquisitions shall require submission of a subcontracting plan with the initial offer by all offerors that are not small business concerns. 519.705-4, 519.705-5, 519.705-6, 519.706, 519.706-70 [Removed] 4. Sections 519.705-4, 519.705-5, 519.705-6, 519.706, and 519.706- 70 are removed. 5. Section 519.708 is revised to read as follows: 519.708 Solicitation provisions and contract clauses. (a) The contracting officer shall insert the clause at 552.219-9, Small Business Subcontracting Plan, or its Alternate I in solicitations and contracts instead of the FAR clause at 52.219-9 or its alternate. (b) The contracting officer shall insert the clause at 552.219-16, Liquidated Damages--Small Business Subcontracting Plan, in solicitations and contracts instead of the FAR clause at 52.219-16. (c) The contracting officer shall insert the provision at 552.219- 72, Notice to Offerors of Subcontracting Plan Requirements, on the cover page of the solicitation if the solicitation includes the clause at 552.219-9, Small Business Subcontracting Plan. The provision does not apply to acquisitions of leasehold interests in real property using expedited procedures. (d) The contracting officer shall insert the provision at 552.219- 73, Preparation, Submission, and Negotiation of Subcontracting Plans, in negotiated solicitations if the solicitation includes the clause at 552.219-9, Small Business Subcontracting Plan, and the contract will be awarded on the basis of an evaluation of technical and/or management proposals and cost or price proposals using source selection procedures. The provision does not apply to: (1) Acquisitions of leasehold interests in real property using expedited procedures, (2) Solicitations for commercial products, or (3) Solicitations where, in the judgment of the contracting officer, subcontracting opportunities are minimal. (e) The contracting officer shall insert the provision at 552.219- 74, Goals for Subcontracting Plan, in sealed bid solicitations if the solicitation includes the clause at 552.219-9, Small Business Subcontracting Plan. The basic provision should be used when the contracting officer is able to realistically establish target goals. Alternate I should be used in sealed bid solicitations when the contracting officer cannot establish realistic target goals and in negotiated solicitations that include the clause at 552.219-9 but do not include the provision at 552.219-73. 519.770, 519.770-1, 519.770-3 [Removed] 6. Sections 519.770, 519.770-1, and 519.770-3 are removed. 7. Section 519.803-70 is revised to read as follows: 519.803-70 Contracting officer evaluation of recommendations for 8(a) set-asides. If the Director of Small and Disadvantaged Business Utilization (AU) or the SBTA recommends that a procurement be set aside for award under the 8(a) program and the contracting officer disagrees, the contracting officer shall discuss the matter with the official that made the recommendation before making a decision. If the contracting officer decides not to award the contract under the 8(a) program as recommended, the reasons for the decision must be documented for the record as required by FAR 19.202 and a copy of the documentation must be forwarded to AU within 10 working days of the contracting officer's decision. PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 8. Sections 552.219-9 and 552.219-16 are added to read as follows: 552.219-9 Small business subcontracting plan. As prescribed in 519.708(a), insert the following clause SMALL BUSINESS SUBCONTRACTING PLAN (JUNE 1994) (DEVIATION FAR 52.219-9) (a) This clause does not apply to small business concerns. (b) Commercial product, as used in this clause, means a product in regular production that is sold in substantial quantities to the general public and/or industry at established catalog or market prices. It also means a product which, in the opinion of the Contracting Officer, differs only insignificantly from the Contractor's commercial product. Subcontract, as used in this clause, 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. (c) The offeror, upon request by the Contracting Officer, shall submit and negotiate a subcontracting plan, where applicable, which separately addresses subcontracting with small business concerns, with small disadvantaged business concerns, and with women-owned small business concerns. If the offeror is submitting an individual contact plan, the plan must separately address subcontracting with small business concerns, with small disadvantaged business concerns, and with women-owned small business concerns with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be negotiated within the time specified by the Contracting Officer. Failure to submit and negotiate the subcontracting plan shall make the offeror ineligible for award of a contract. (d) The offeror's subcontracting plan shall include the following: (1) Goals, expressed in terms of percentages of total planned subcontracting dollars, for the use of small business concerns, small disadvantaged business concerns and, if an individual contract plan is involved, women-owned small business concerns as subcontractors. The offeror shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs. (2) A statement of-- (i) Total dollars planned to be subcontracted; (ii) Total dollars planned to be subcontracted to small business concerns; (iii) Total dollars planned to be subcontracted to small disadvantaged business concerns; and (iv) Total dollars planned to be subcontracted to women-owned small business concerns, if an individual contract plan is involved. (3) A description of the principal types of supplies and services to be subcontracted, and an identification of the types planned for subcontracting to (i) small business concerns, (ii) small disadvantaged business concerns, and (iii) women-owned small business concerns. (4) A description of the method used to develop the subcontracting goals in (1) above. (5) A description of the method used to identify potential sources for solicitation purposes (e.g., existing company source lists, the Procurement Automated Source System (PASS) of the Small Business Administration, the National Minority Purchasing Council Vendor Information Service, the Research and Information Division of the Minority Business Development Agency in the Department of Commerce, or small, small disadvantaged, and women-owned small business concerns trade associations). (6) A statement as to whether or not the offeror included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with (i) small business concerns, (ii) small disadvantaged business concerns, and if an individual contract plan is involved, (iii) women-owned small business concerns. (7) The name of the individual employed by the offeror who will administer the offeror's subcontracting program, and a description of the duties of the individual. (8) A description of the efforts the offeror will make to assure that small business concerns, small disadvantaged business concerns, and women-owned small business concerns have an equitable opportunity to compete for subcontracts. (9) Assurances that the offeror will include the clause in this contract entitled Utilization of Small Business Concerns and Small Disadvantaged Business Concerns in all subcontracts that offer further subcontracting opportunities, and that the offeror will require all subcontracts (except small business concerns) who receive subcontracts in excess of $500,000 ($1,000,000 for construction of any public facility), to adopt a plan similar to the plan agreed to by the offeror. (10) Assurances that the offeror will (i) cooperate in any studies or surveys as may be required, (ii) submit periodic reports in order to allow the Government to determine the extent of compliance by the offeror with the subcontracting plan, (iii) submit Standard Form (SF) 294, Subcontracting Report for Individual Contracts, and/or SF 295, Summary Subcontract Report, in accordance with the instructions on the forms, and (iv) ensure that its subcontractors agree to submit Standard Forms 294 and 295. (11) A recitation of the types of records the offeror will maintain to demonstrate procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of its efforts to locate small, small disadvantaged, and women-owned small business concerns and award subcontracts to them. The records shall include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated): (i) Source lists, guides, and other data that identify small, small disadvantaged, or women-owned small business concerns. (ii) Organizations contacted in an attempt to locate sources that are small, small disadvantaged, or women-owned small business concerns. (iii) Records on each subcontract solicitation resulting in an award of more than $100,000, indicating (A) whether small business concerns were solicited and if not, why not, (B) whether small disadvantaged business concerns were solicited and if not, why not, (C) whether women-owned small business concerns were solicited and if not, why not, and (D) if applicable, the reason award was not made to a small business concern. (iv) Records of any outreach efforts to contact (A) trade associations, (B) business development organizations, and (C) conferences and trade fairs to locate small, small disadvantaged, and women-owned small business sources. (v) Records of internal guidance and encouragement provided to buyers through (A) workshops, seminars, training, etc., and (B) monitoring performance to evaluate compliance with the program's requirements. (vi) On a contract-by-contract basis, records to support award data submitted by the offeror to the Government, including the name, address, and business size of each subcontractor. Contractors having company or division-wide annual plans need not comply with this requirement. (e) In order to effectively implement this plan to the extent consistent with efficient contract performance, the Contractor shall perform the following functions: (1) Assist small, small disadvantaged, and women-owned small business concerns by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation by such concerns. Where the Contractor's lists of potential small, small disadvantaged, and women-owned small business subcontractors are excessively long, reasonable efforts shall be made to give all such small business concerns an opportunity to compete over a period of time. (2) Provide adequate and timely consideration of the potentialities of small, small disadvantaged business, and women- owned small business concerns in all ``make-or-buy'' decisions. (3) Counsel and discuss subcontracting opportunities with representatives of small, small disadvantaged, and women-owned small business firms. (4) Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small business or small disadvantaged business for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the Contractor's subcontracting plan. (f) A master subcontracting plan on a plant or division-wide basis which contains all the elements required by (d) above, except goals, may be incorporated by reference as a part of the subcontracting plan required of the offeror by this clause; provided, (1) the master plan has been approved, (2) the offeror provides copies of the approved master plan and evidence of its approval to the Contracting Officer, and (3) goals and any deviations from the master plan deemed necessary by the Contracting Officer to satisfy the requirements of this contract are set forth in the individual subcontracting plan. (g) (1) If a commercial product is offered, the subcontracting plan required by this clause may relate to the offeror's production generally, for both commercial and noncommercial products, rather than solely to the Government contract. In these cases, the offeror shall, with the concurrence of the Contracting Officer, submit one company-wide or division-wide annual plan. (2) The annual plan shall be reviewed for approval by the agency awarding the offeror its first prime contract requiring a subcontracting plan during the fiscal year, or by an agency satisfactory to the Contracting Officer. (3) The approved plan shall remain in effect during the offeror's fiscal year for all of the offeror's commercial products. (h) Prior compliance of the offeror with other such subcontracting plans under previous contracts will be considered by the Contracting Officer in determining the responsibility of the offeror for award of the contract. (i) The failure of the Contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled Utilization of Small Business Concerns and Small Disadvantaged Business Concerns, or (2) an approved plan required by this clause, shall be a material breach of the contract. (End Clause) Alternate I (JUNE 1994) When contracting by sealed bidding rather than negotiation, substitute the following paragraph (c) for paragraph (c) of the basic clause: (c) The apparent low bidder, upon request by the Contracting Officer, shall submit a subcontracting plan, where applicable, which separately addresses subcontracting with small business concerns, with small disadvantaged business concerns, and with women-owned small business concerns. If the bidder is submitting an individual contract plan, the plan must separately address subcontracting with small business concerns, with small disadvantaged business concerns, and with women-owned small business with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract. The subcontracting plan shall be submitted within the time specified by the Contracting Officer. Failure to submit the subcontracting plan shall make the bidder ineligible for the award of a contract. 552.119 Liquidated damages--small business subcontracting plan. As prescribed in 519.708(b), insert the following clause: LIQUIDATED DAMAGES--SMALL BUSINESS SUBCONTRACTING PLAN (JUNE 1994) (DEVIATION FAR 52.219-16) (a) Failure to make a good faith effort to comply with the subcontracting plan, as used in this clause, means a willful or intentional failure to perform in accordance with the requirements of the subcontracting plan approved under the clause in this contract entitled Small Business Subcontracting Plan, or willful or intentional action to frustrate the plan. (b) If, at contract completion, or in the case of a commercial products plan, at the close of the fiscal year for which the plan is applicable, the Contractor has failed to meet its subcontracting goals and the Contracting Officer decides in accordance with paragraph (c) of this clause that the Contractor failed to make a good faith effort to comply with its subcontracting plan, established in accordance with the clause in this contract entitled Small Business Subcontracting Plan, the Contractor shall pay the Government liquidated damages in an amount stated. The amount of probable 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 small business and/or small disadvantaged business or, in the case of a commercial products plan, that portion of the dollar amount allocable to Government contracts by which the Contractor failed to achieve each subcontract goal. (c) Before the Contracting Officer makes a final decision that the Contractor has failed to make such good faith effort, the Contracting Officer shall give the Contractor written notice specifying the failure and permitting the Contractor to demonstrate what good faith efforts have been made. Failure to respond to the notice may be taken as an admission that no valid explanation exists. If, after consideration of all the pertinent data, the Contracting Officer finds that the Contractor failed to make a good faith effort to comply with the subcontracting plan, the Contracting Officer shall issue a final decision to that effect and require that the Contractor pay the Government liquidated damages as provided in paragraph (b) of this clause. (d) With respect to commercial products plans; i.e., company- wide or division-wide subcontracting plans approved under paragraph (g) of the clause in this contract entitled Small Business Subcontracting Plan, the Contracting Officer of the agency that originally approved the plan will exercise the functions of the Contracting Officer under this clause on behalf of all agencies that awarded contracts covered by that commercial products plan. (e) The Contractor shall have the right of appeal, under the clause in this contract entitled Disputes, from any final decision of the Contracting Officer. (f) Liquidated damages shall be in addition to any other remedies that the Government may have. (End of Clause) 9. Section 552.219-72 is revised to read as follows: 552.219-72 Notice to offerors of subcontracting plan requirements. As prescribed in 519.708(c), insert the following provision: NOTICE TO OFFERORS OF SUBCONTRACTING PLAN REQUIREMENTS (JUNE 1994) The General Services Administration (GSA) is committed to assuring that maximum practicable opportunity is provided to small, small disadvantaged, and women-owned small business concerns to participate in the performance of this contract consistent with its efficient performance. GSA expects any subcontracting plan submitted pursuant to 552.219-9, Small Business Subcontracting Plan, to reflect this commitment. Consequently, an offeror, other than a small business concern, before being awarded a contract exceeding $500,000 ($1,000,000 for construction) will be required to demonstrate that its subcontracting plan represents a creative and innovative program for involving small, small disadvantaged, and women-owned small business concerns as subcontractors in the performance of this contract. (End of Provision) 10. Section 552.219-73 is revised to read as follows: 552.219-73 Preparation, submission, and negotiation of subcontracting plans. As prescribed in 519.708(d), insert the following provision: PREPARATION, SUBMISSION, AND NEGOTIATION OF SUBCONTRACTING PLANS (JUNE 1994) (a) An offeror, other than a small business concern, submitting an offer that exceeds $500,000 ($1,000,000 for construction) shall submit a subcontracting plan with its initial offer. The subcontracting plan will be negotiated concurrently with price and any required technical and management proposals, unless the offeror submits a previously-approved commercial products plan. Maximum practicable utilization of small, small disadvantaged, and women- owned small business concerns as subcontractors is a matter of national interest with both social and economic benefits. It is the General Services Administration's (GSA's) expectation that an offeror's subcontracting plan will reflect a commitment to assuring that small, small disadvantaged, and women-owned small business concerns are provided the maximum practicable opportunity, consistent with efficient contract performance, to participate as subcontractors in the performance of the resulting contract. An offeror submitting a commercial products plan can reflect this commitment through subcontracting opportunities it provides that relate to the offeror's production generally; i.e., for both its commercial and Government business. (b) GSA believes that this potential contract provides significant opportunities for the use of small, small disadvantaged, and women-owned small business concerns as subcontractors. Consequently, in addressing the eleven elements described in 552.219-9(d) of the clause in this contract entitled Small Business Subcontracting Plan, the offeror shall demonstrate that its subcontracting plan represents a creative and innovative program for involving small, small disadvantaged, and women-owned small business concerns in performing the contract. The subcontracting plan shall include a description of the offeror's subcontracting strategies used in any previous contracts, significant achievements, and how this plan will build upon those earlier achievements. Additionally, the offeror shall demonstrate through its plan that it understands the small business subcontracting program's objectives, GSA's expectations, and is committed to taking those actions necessary to meet these goals or objectives. (c) In determining the acceptability of any subcontracting plan, the Contracting Officer will-- (1) Review the plan to verify that the offeror has demonstrated an understanding of the small business subcontracting program's objectives and GSA's expectations with respect to the program and has included all the information, goals, and assurances required by 552.219-9; (2) Consider previous goals and achievements of contractors in the same industry; (3) Consider information and potential sources obtained from agencies administering national and local preference programs and other advocacy groups in evaluating whether the goals stated in the plan adequately reflect the anticipated potential for subcontracting to small, small disadvantaged, and women-owned small business concerns; and (4) Review the offeror's description of its strategies, historical performance and significant achievements in placing subcontracts for the same or similar products or services with small, small disadvantaged, and women-owned small business concerns. the offeror's description can apply to commercial as well as previous Government contracts. (d) Failure to submit an acceptable subcontracting plan and/or correct deficiencies in a plan within the time specified by the Contracting Officer shall make the offeror ineligible for award. (End of Provision) 11. Section 552.219-74 is added to read as follows: 552.219-74 Goals for Subcontracting Plan. As prescribed in 519.708(e), insert the following provision: GOALS FOR SUBCONTRACTING PLAN (JUNE 1994) (a) Maximum practicable utilization of small, small disadvantaged, and women-owned small business concerns as subcontractors is a matter of national interest with both social and economic benefits. (1) The General Services Administration's (GSA's) commitment to ensuring that maximum practicable opportunity is provided to small, small disadvantaged, and women-owned small business concerns to participate as subcontractors in the performance of this contract, consistent with its efficient performance, must be reflected in the offeror's subcontracting plan submitted pursuant to the clause of this contract at 552.219-9, Small Business Subcontracting Plan. (2) In addressing the eleven elements described at 552.219-9(d), the offeror shall demonstrate that its subcontracting plan represents a creative and innovative program for involving small, small disadvantaged, and women-owned small business concerns in performing this contract. An offeror submitting a commercial products plan can demonstrate its commitment in providing maximum practicable opportunities through subcontracting opportunities it provides to small, small disadvantaged, and women-owned small business concerns that relate to the offeror's production generally; i.e., for both its commercial and Government business. (3) The subcontracting plan shall include a description of the offeror's subcontracting strategies used in previous contracts and significant achievements, with an explanation of how this plan will build upon those earlier achievements. Additionally, the offeror shall demonstrate through its plan that it understands the small business subcontracting program's objectives, GSA's expectations, and is committed to taking those actions necessary to meet these goals or objectives. (b) GSA believes that this contract provides significant opportunities for the use of small, small disadvantaged, and women- owned small business concerns as subcontractors. Accordingly, it is anticipated that an acceptable subcontracting plan will contain at least the following goals: Small Business________percent Small Disadvantaged Business ________percent Women-Owned Small Business ________percent Note: Target goals are expressed as a percentage of planned subcontracting dollars. (c) In determining the acceptability of any subcontracting plan, the Contracting Officer will-- (1) Review the plan to verify that the offeror has demonstrated an understanding of the small business subcontracting program's objectives and GSA's expectations with respect to the programs and has included all the information, goals, and assurances required by 552.219-9; (2) Consider previous goals and achievements of contractors in the same industry; (3) Consider information and potential sources obtained from agencies administering national and local preference programs and other advocacy groups in evaluating whether the goals stated in the plan adequately reflect the anticipated potential for subcontracting to small, small disadvantaged, and women-owned small business concerns; and (4) Review the offeror's description of its strategies, historical performance and significant achievements in placing subcontracts for the same or similar products or services with small, small disadvantaged, and women-owned small business concerns. The offeror's description can apply to commercial as well as previous Government contracts. (d) Failure to submit an acceptable subcontracting plan and/or contract deficiencies in a plan within the time specified by the Contracting Officer shall make the offeror ineligible for award. (End of Provision) Alternate I (JUNE 1994) The Contracting Officer, as prescribed in 519.708(e), shall delete paragraph (b) of the basic provision and redesignate paragraphs (c) and (d) as paragraphs (b) and (c). PART 570--ACQUISITION OF LEASEHOLD INTERESTS IN REAL PROPERTY 12. Section 570.203 is amended by revising paragraph (a)(8)(vi) to read as follows: 570.203 Solicitation for offers (SFO). (a) * * * (8) * * * (vi) All solicitations and contracts which exceed $500,000 must include the deviations to FAR clauses 52.219-9, Small Business and Small Disadvantaged Business Subcontracting Plan, and 52.219-16, Liquidated Damages--Small Business Subcontracting Plan (see 519.708 (a) and (b)). * * * * * Dated: July 19, 1994. Arthur E. Ronkovich, Acting Associate Administrator for Acquisition Policy. [FR Doc. 94-18401 Filed 7-29-94; 8:45 am] BILLING CODE 6820-61-M