[Federal Register Volume 81, Number 185 (Friday, September 23, 2016)]
[Proposed Rules]
[Pages 65606-65610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22573]


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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: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement a section of the National 
Defense Authorization Act for Fiscal Year 2015 and a section of the 
National Defense Authorization Act for Fiscal Year 2016, both of which 
provide revisions to the Test Program for Negotiation of Comprehensive 
Small Business Subcontracting Plans.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before November 22, 2016, to be 
considered in the formation of a final rule.

ADDRESSES: Submit comments identified by DFARS Case 2015-D013, using 
any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov. 
Search for ``DFARS Case 2015-D013.'' Select ``Comment Now'' and follow 
the instructions provided to submit a comment. Please include ``DFARS 
Case 2015-D013'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2015-D013 in 
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. 
Jennifer Johnson, OUSD (AT&L) DPAP/DARS, Room 3B941, 3060 Defense 
Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

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

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to revise the DFARS to implement section 821 of 
the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 
and section 872 of the NDAA for FY 2016, both of which revise the Test 
Program for Negotiation of Comprehensive Small Business Subcontracting 
Plans. Section 821 of the NDAA for FY 2015 provides for contractors 
participating in the Test Program to report, on a semiannual basis, the 
amount of first-tier subcontract dollars awarded; the total number of 
subcontracts active under the Test Program that would have otherwise 
required a subcontracting plan under 15 U.S.C. 637(d); costs incurred 
in negotiating, complying with, and reporting on comprehensive 
subcontracting plans; and costs avoided by adoption of a comprehensive 
subcontracting plan. 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 faith effort to 
comply with its comprehensive subcontracting plan;
     Extends the Test Program through December 31, 2017;
     Increases the threshold for participation in the Test 
Program from $5,000,000 to $100,000,000; 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.

II. Discussion and Analysis

    This rule proposes to amend DFARS subparts 211.5, 215.3, 219.7, 
242.15, and 252.2 as summarized in the following paragraphs:

A. Subpart 211.5, Liquidated Damages

    Section 211.500 is added to clarify that subpart 211.5 and Federal 
Acquisition Regulation (FAR) subpart 11.5 do not apply to liquidated 
damages for comprehensive subcontracting plans under the Test Program, 
and to include a reference to DFARS 219.702-70.

B. Subpart 215.3, Source Selection

    Section 215.305 is amended to require contracting officers to 
consider an offeror's failure to make a good faith effort to comply 
with its comprehensive subcontracting plan as part of the past 
performance evaluation.

C. Subpart 219.7, The Small Business Subcontracting Program

     Section 219.702-70, Statutory requirements for the Test 
Program for Negotiation of Comprehensive Small Business Subcontracting 
Plans, renumbers section 219.702 and incorporates new requirements 
stemming from section 821 of the NDAA for FY 2015.
    [cir] Paragraph (1) is renumbered as paragraph (a) and amended to 
include the title of the Test Program.
    [cir] Paragraph (2), which addressed the nonapplicability of 
liquidated damages, is deleted in its entirety.
    [cir] Paragraph (b) is added to provide the current requirements 
for participation in the Test Program. These requirements are expressly 
stated in 15 U.S.C. 637 note, as amended by section 821 of the NDAA for 
FY 2015 and section 872 of the NDAA for FY 2016. To participate in the 
Test Program, the contractor must have furnished to DoD, during the 
immediately preceding fiscal year under at least three contracts, 
supplies, services, or construction in the aggregate amount of at least 
$100 million.
    [cir] Paragraph (c) is added to describe the establishment and use 
of comprehensive subcontracting plans.
    [cir] Paragraph (d) is added to provide the process to determine 
the need to assess liquidated damages for failure to make a good faith 
effort to comply with the comprehensive subcontracting plan. Paragraph 
(e) is added to describe the calculation and application of liquidated 
damages. This rule sets forth the following methodology for assessing 
liquidated damages:
     The participant contractor shall be subject to the payment 
of liquidated damages if, after allowing the contractor

[[Page 65607]]

an opportunity to demonstrate that it has made a good faith effort to 
comply with its comprehensive subcontracting plan, the contracting 
officer makes a final decision that the contractor failed to make a 
good faith effort to comply with its plan.
     The amount of liquidated damages owed to the Government 
shall be the amount of anticipated damages sustained by the Government, 
including but not limited to additional expenses of administration, 
reporting, and contract monitoring.
    [cir] Paragraph (3) is renumbered as paragraph (f) and amended to 
revise the expiration date for the Test Program from December 31, 2014, 
to December 31, 2017.
     Section 219.708, Contract Clauses, is amended as follows:
    [cir] Paragraph (b)(1)(B) guidance on use of clause 252.219-7004 is 
updated and aligned with the revised flowdown instructions in paragraph 
(g) of the clause. A correction is made to the Code of Federal 
Regulations to remove the phrase ``and FAR 52.219-9, Small Business 
Subcontracting Plan(DoD Contracts),''. Paragraph (b)(1)(B)(2)(ii) is 
removed as the information is now contained at FAR 19.708(b)(1)(iii).
    [cir] Paragraph (b)(2), is amended to instruct contracting officers 
to use the clause at 252.219-7004, Small Business Subcontracting Plan 
(Test Program), in lieu of FAR 52.219-16, Liquidated Damages--
Subcontracting Plan.

D. Subpart 242.15, Contractor Performance Information

    Section 242.1502 is added to require that past performance 
evaluations include an assessment of the contractor's performance 
against, and efforts to achieve, the goals in its comprehensive 
subcontracting plan.

E. Subpart 252.2, Text of Provisions and Clauses

     Clause 252.219-7003, Small Business Subcontracting Plan 
(DoD Contracts), basic clause and its Alternate I, are amended to 
advise that contractors must insert (i.e., ``flow down'') the clause at 
252.219-7004, Small Business Subcontracting Plan (Test Program), to 
subcontractors who participate in the Test Program.
     Clause 252.219-7004, Small Business Subcontracting Plan 
(Test Program), is amended to incorporate new requirements stemming 
from section 821 of the NDAA for FY 2015.
    [cir] Paragraph (a) provides definitions for additional terms used 
in connection with the Test Program.
    [cir] Paragraph (c) is amended to advise participant contractors of 
the requirements for participation in the Test Program.
    [cir] Paragraph (d) is amended to include the reporting 
requirements for contractors with comprehensive subcontracting plans. 
The reports must present the data by North American Industry 
Classification System code, by major defense acquisition program, by 
contract (for certain contracts with a value exceeding $100,000,000), 
and by military department.
    [cir] Paragraph (f) is added to address liquidated damages under a 
comprehensive subcontracting plan.
    [cir] Paragraph (g) flowdown instructions are clarified and 
updated.

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

    This rule proposes to amend the clauses at DFARS 252.219-7003, 
Small Business Subcontracting Plan (DoD Contracts), and 252.219-7004, 
Small Business Subcontracting Plan (Test Program), in order to 
implement section 821 of the NDAA for FY 2015. The requirements of 
section 821 were enacted to promote utilization of small businesses and 
to determine the success of the Test Program at reducing administrative 
burdens while enhancing subcontracting opportunities for small 
businesses. Section 821 advances the interests of small business 
subcontractors by encouraging test program participants to comply with 
their comprehensive subcontracting plans.

A. Contracts at or Below the Simplified Acquisition Threshold

    41 U.S.C. 1905 governs the applicability of laws to contracts or 
subcontracts in amounts not greater than the simplified acquisition 
threshold (SAT). It is intended to limit the applicability of laws to 
such contracts or subcontracts. 41 U.S.C. 1905 provides that if a 
provision of law contains criminal or civil penalties, or if the FAR 
Council makes a written determination that it is not in the best 
interest of the Federal Government to exempt contracts or subcontracts 
at or below the SAT, the law will apply to them. The Director, Defense 
Procurement and Acquisition Policy (DPAP), is the appropriate authority 
to make comparable determinations for regulations to be published in 
the DFARS, which is part of the FAR system of regulations.

B. Contracts for the Acquisition of Commercial Items, Including 
Commercially Available Off the Shelf Items

    41 U.S.C. 1906 governs the applicability of laws to contracts for 
the acquisition of commercial items, and is intended to limit the 
applicability of laws to contracts for the acquisition of commercial 
items. 41 U.S.C. 1906 provides that if a provision of law contains 
criminal or civil penalties, or if the FAR Council makes a written 
determination that it is not in the best interest of the Federal 
Government to exempt commercial item contracts, the provision of law 
will apply to contracts for the acquisition of commercial items. 
Likewise, 41 U.S.C. 1907 governs the applicability of laws to 
commercially available off-the-shelf (COTS) items, with the 
Administrator for Federal Procurement Policy the decision authority to 
determine that it is in the best interest of the Government to apply a 
provision of law to acquisitions of COTS items in the FAR. The 
Director, DPAP, is the appropriate authority to make comparable 
determinations for regulations to be published in the DFARS, which is 
part of the FAR system of regulations.

C. Applicability Determination

    This proposed rule does not apply the requirements of section 821 
of the NDAA for FY 2015 to contracts at or below the SAT, but does 
apply the requirements of section 821 to contracts for the acquisition 
of commercial items, including COTS items, as defined at FAR 2.101.
    The prescriptions for these clauses currently require their use in 
solicitations and contracts for commercial items, including COTS items. 
This rule merely revises these clauses to implement the new 
requirements of section 821; consequently, exclusion of acquisitions of 
commercial and COTS items from these requirements would create 
confusion among contractors and the contracting workforce and would 
result in fewer subcontracting opportunities for small businesses. By 
applying the requirements of section 821 to acquisitions of commercial 
items, the burden on contractors is no greater than the burden on 
contractors who have other types of subcontracting plans. DoD will make 
the final determination with regard to application to commercial items 
after receipt and analysis of public comments.

[[Page 65608]]

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. Regulatory Flexibility Act

    DoD does 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., 
because small entities do not participate in the Test Program. However, 
an initial regulatory flexibility analysis has been performed and is 
summarized as follows:
    DoD is proposing 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) and section 872 of the NDAA for FY 2016 (Pub. L. 114-92). 
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.
    The objectives of this proposed 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. The authorizing legislation is section 821 of the 
NDAA for FY 2015 and section 872 of the NDAA for FY 2016.
    The rule will not apply to small entities. The rule, however, may 
have an indirect 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.
    The rule does not impose any reporting or recordkeeping 
requirements on small entities. There are new semiannual reporting 
requirements for Test Program participants who are, as a matter of 
eligibility for the program, other than small businesses.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules. There are no known, significant, alternative approaches 
to the rule that would meet the requirements of the applicable 
statutes.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD 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 such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2015-D013), in 
correspondence.

VI. 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 L. Hawes,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are proposed to 
be 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 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) 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

[[Page 65609]]

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 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, consisting of 242.1502, to read as follows:

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. In the basic clause--
0
i. Removing the clause date of ``(MAR 2016)'' and adding ``(DATE)'' in 
its place;
0
ii. Adding paragraph (g); and
0
b. In Alternate I--
0
i. Removing the clause date of ``(MAR 2016)'' and adding ``(DATE)'' in 
its place; and
0
ii. Adding paragraph (g).
    The additions read as follows.


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

* * * * *
    (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. * * *
* * * * *
    (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) (Date)

    (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) 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.

[[Page 65610]]

    (d) Reports. (1) The Contractor shall report semiannually for 
the six-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 (CAGE) code and Data Universal Numbering System 
(DUNS) number.
    (ii) The amount of first-tier subcontract dollars awarded during 
the six-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 DUNS number, 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 DUNS number, 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 semi-annually 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 or reject the SSR 
resides with the Defense Contract Management Agency.
    (e) 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), 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) 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--
    (1) FAR 52.219-9, Small Business Subcontracting Plan, and 
252.219-7003 Small Business Subcontracting Plan (DoD Contracts)--
Basic;
    (2) 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. 2016-22573 Filed 9-22-16; 8:45 am]
 BILLING CODE 5001-06-P