[Federal Register Volume 84, Number 123 (Wednesday, June 26, 2019)]
[Proposed Rules]
[Pages 30071-30081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12481]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 19, 42, and 52

[FAR Case 2018-003; Docket No. 2018-0005, Sequence No. 1]
RIN 9000-AN61


Federal Acquisition Regulation: Credit for Lower-Tier Small 
Business Subcontracting

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

ACTION: Proposed rule.

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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 2014 and regulatory changes 
made by the Small Business Administration (SBA).

DATES: Interested parties should submit written comments to the 
Regulatory Secretariat Division at one of the addresses shown below on 
or before August 26, 2019 to be considered in the formation of the 
final rule.

ADDRESSES: Submit comments in response to FAR Case 2018-003 by any of 
the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2018-003''. Select the link ``Comment Now'' that corresponds with ``FAR 
Case 2018-003''. Follow the instructions provided on the screen. Please 
include your name, company name (if any), and ``FAR Case 2018-003'' on 
your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), ATTN: Lois Mandell, 1800 F Street NW, 2nd 
Floor, Washington, DC 20405.
    Instructions: Please submit comments only and cite ``FAR Case 2018-
003'', in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal and/or business confidential 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. Marilyn Chambers, Procurement 
Analyst, at 202-285-7380 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite ``FAR Case 2018-
003''.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD, GSA, and NASA are proposing to revise the Federal Acquisition 
Regulation (FAR) to implement section 1614 of the National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2014 (Pub. L. 113-66), as 
implemented by the Small Business

[[Page 30072]]

Administration (SBA) in their final rule published in the Federal 
Register on December 23, 2016, at 81 FR 94246. SBA's final rule and 
section 1614 address credit for lower-tier small business 
subcontracting.
    Section 1614 of the NDAA for FY 2014 amended the Small Business Act 
to provide that, where a prime contractor has an individual 
subcontracting plan for a contract with a single executive agency, the 
prime contractor shall receive credit towards its subcontracting goals 
for awards made to small business concerns at any tier by 
subcontractors with individual subcontracting plans. In addition, 
section 1614 also provided new assurances for offerors to include in 
subcontracting plans. The new assurances relate to activities to be 
performed by the contractor to monitor the performance of 
subcontractors with regard to subcontracting plans, and by 
subcontractors to monitor the performance of their subcontractors with 
regard to subcontracting plans. Section 1614 requires the contractor to 
demonstrate procedures established to ensure subcontractors at all 
tiers comply with their subcontracting plans. Section 1614 also revised 
the definition of ``subcontract'' in the Small Business Act.
    SBA's final rule requires a prime contractor with an individual 
subcontracting plan to receive subcontracting credit for subcontracts 
awarded to small business concerns at any tier by subcontractors with 
individual subcontracting plans. Further, the changes require the prime 
contractor to have two sets of goals in its individual subcontracting 
plan: one set of goals includes the prime contractor's direct 
subcontract awards (i.e., the first-tier goals), while the second set 
of goals includes subcontracts awarded at any tier by other than small 
business subcontractors with individual subcontracting plans (i.e., 
lower-tier goals). The purpose of the lower-tier goals is to ensure 
maximum practicable opportunity for small business concerns at the 
prime contractor's first tier, as well as at all lower tiers, in the 
performance of the contract. This requirement to have two sets of 
subcontracting goals applies only to the prime contractor's individual 
subcontracting plan and does not apply to subcontractors' 
subcontracting plans.
    Per SBA's final rule, the prime contractor's performance under the 
individual subcontracting plan must be evaluated based on its combined 
performance under the first-tier and lower-tier goals. In addition, the 
final rule implemented the statutory requirements related to the new 
assurances and written statement to be included in subcontracting 
plans.
    The FAR currently requires other than small businesses with 
subcontracts valued over $700,000 ($1.5 million for construction) to 
have subcontracting plans and to report their subcontracting 
achievements in the Electronic Subcontracting Reporting System (eSRS). 
DoD, GSA, and NASA propose to use these existing subcontracting reports 
in eSRS as a way for the prime contractor to monitor subcontractors' 
achievements.

II. Discussion and Analysis

    A. The proposed changes to the FAR are summarized in the following 
paragraphs.
    1. Subpart 19.7, The Small Business Subcontracting Program. This 
subpart is amended to update the definition of subcontract and add 
definitions of first-tier and lower-tier subcontracts. The existing 
text at FAR 19.704 is reorganized to group together basic requirements 
for all subcontracting plans, special requirements for commercial 
plans, special requirements for individual subcontracting plans, and 
special requirements for master subcontracting plans. Existing text 
regarding the requirements for the current (i.e., first-tier) goals is 
revised for clarity, but the requirements are unchanged. Text is added 
concerning the new assurances related to monitoring the performance of 
subcontractors with regard to subcontracting plans, and the written 
statement regarding the contractor's records to demonstrate procedures 
adopted to ensure subcontractors at all tiers comply with their 
subcontracting plans. A new paragraph (d) entitled ``Special 
requirements for individual subcontracting plans'' is added to address 
existing and new requirements specific to individual plans. This 
paragraph covers existing requirements such as individual subcontract 
reports in eSRS, as well as the new requirements related to lower-tier 
goals.
    2. Subpart 42.15, Contractor Performance Information. This subpart 
is amended to include an additional element for the contracting officer 
to consider when assessing the contractor's combined performance under 
the first-tier and lower-tier subcontracting goals.
    3. Subpart 52.2, Text of Provisions and Clauses. This rule proposes 
to amend the following contract clauses:
     52.212-5, Contract Terms and Conditions Required to 
Implement Statutes or Executive Orders--Commercial Items, is amended to 
revise the dates of 52.219-9, Small Business Subcontracting Plan, and 
its Alternates.
     52.219-9, Small Business Subcontracting Plan, is amended 
to update the definition of subcontract, to add definitions of first-
tier and lower-tier subcontracts, to add the new assurances at 52.219-
9(d)(9), and to add a written statement at 52.219-9(d)(12) to be 
included in the subcontracting plan. Paragraphs (d)(1) and (2) of 
52.219-9 are combined for clarity. Further, this clause is amended to 
insert a new paragraph (e) applicable only to individual subcontracting 
plans that require the inclusion of separate goals for subcontracting 
at the lower tiers. The new paragraph addresses the requirement to have 
lower-tier goals; it also gives information on receiving credit toward 
those goals. In addition, a new paragraph (m) is added to provide 
guidance to contractors regarding when and how to include the clause in 
subcontracts. Conforming and editorial changes are made to the 
alternates for FAR 52.219-9.
    B. In addition to comments on the revisions described sections A. 
1. through 3. of this preamble, DoD, GSA, and NASA invite input on the 
following:
     To minimize public burden, the Government intends to use 
Individual Subcontract Reports (ISRs) submitted in eSRS by 
subcontractors with individual subcontracting plans to calculate a 
prime contractor's achievement for the lower-tier goals. Therefore, 
this proposed rule does not require any additional action by the prime 
contractor in eSRS to approve or acknowledge achievement for the lower-
tier goals. If the lower-tier subcontractors do not submit ISRs in 
eSRS, this could impact the prime contractor's achievement toward the 
lower-tier goals, which could impact the evaluation of the prime 
contractor's performance rating when their combined performance is 
assessed under the first-tier and lower-tier subcontracting goals under 
FAR subpart 42.15, Contractor Performance Information. This potential 
outcome is no different than what could happen under current 
regulation, as the FAR currently requires an assessment of the prime 
contractor's performance against, and efforts to achieve, the goals 
identified in the small business subcontracting plan when the contract 
includes the clause at 52.219-9.
    o Do prime contractors want or need to approve or acknowledge 
achievement for the lower-tier goals in eSRS?
    o If so, what is the benefit of such an approval or acknowledgement 
in eSRS?

[[Page 30073]]

    o If so, how much time should prime contractors have to approve or 
acknowledge the achievements?
     What non-proprietary data would prime contractors need to 
see in eSRS in order to monitor achievement for their lower-tier goals?
     Would a mandatory lower-tier goal inadvertently encourage 
more subcontracting at the first tier to other than small businesses, 
who would subcontract to small businesses, in order to meet the lower-
tier goal?
     What alternative processes or methodologies, permitting 
prime contractors to take credit for subcontracts awarded to small 
business at tiers below the first tier, would be more efficient for 
prime contractors to manage?

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

    DoD, GSA, and NASA do not intend to apply the requirements of 
section 1614 of the NDAA for FY 2014 to contracts at or below the 
simplified acquisition threshold (SAT), and except for the new 
definitions, do not intend to apply the requirements to contracts for 
the acquisition of commercial items, including commercially available 
off-the-shelf (COTS) items. The clause at FAR 52.219-9 is prescribed 
for use in solicitations and contracts that are expected to exceed 
$700,000 ($1.5 million for construction of any public facility); this 
threshold is above the SAT. The proposed revisions on lower-tier 
subcontract goals do not apply to contracts using FAR clause 52.212-5, 
which provides the statutory terms and conditions that apply to 
commercial items (see the proposed text at 52.219-9(e) and (m)).

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 an E.O. 13771 regulatory 
action, because this proposed rule is not significant 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., because the requirements of this rule apply to other than small 
entities. 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 1614 of the NDAA for FY 2014, as implemented in the SBA 
regulations on December 23, 2016 at 81 FR 94246. Section 1614 
requires prime contractors to receive small business subcontracting 
credit for subcontracts that their other than small business 
subcontractors award to small businesses, adds an assurance in 
subcontracting plans for approval and monitoring of subcontracting 
plans by the offeror and all subcontractors required to maintain 
subcontracting plans, and requires a written statement of the 
records the offeror will maintain to ensure compliance with the 
subcontracting plan at the lower tiers.
    The objectives of this proposed rule are to implement statutory 
requirements. The authorizing legislation for this action is section 
1614 of the NDAA for FY 2014.
    This rule may have a positive economic impact on any small 
business entity that wishes to participate in Federal procurement as 
a subcontractor. Small businesses may see increased opportunities to 
compete for subcontracts, as prime contractors encourage their 
first-tier subcontractors who are other than small to improve their 
performance in support of the prime contractor's lower-tier goals. 
This potential increase in opportunities may increase the overall 
number of subcontracts awarded to small businesses. 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 rule does not impose any new reporting, recordkeeping or 
other compliance requirements for small entities.
    This rule does not duplicate, overlap, or conflict with any 
other Federal rules.
    There are no known alternatives which 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 Small Business 
Administration. 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 the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2018-003), 
in correspondence.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) applies as this 
proposed rule contains information collection requirements. Office of 
Management and Budget control number 9000-0007, Subcontracting Plans, 
will be revised to reflect the additional burden imposed by the 
proposed rule.
    With this proposed rule, the public reporting burden for this 
collection is expected to increase from an average of 5 hours to 5.25 
hours per response for subcontracting plans with first-tier 
subcontracting goals. The increase of 0.25 hour per response is to 
account for the additional assurances the offeror or contractor must 
provide in the subcontracting plan.
    Plans that also require lower-tier subcontracting goals are 
estimated to take an additional 2 hours per response. The 2 hour 
estimate includes the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, 
completing and reviewing the collection of information, and 
establishing the lower-tier subcontracting goals through negotiations 
with the contracting officer.
    Based on this proposed rule, the revised annual reporting burden 
has been estimated as follows:
    Commercial plan:
Respondents 542
Responses per respondent 1
Total annual responses 542
Hours per response 5.25 hrs.
Response burden hours 2,846
    Individual plan:
Respondents 3,808
Responses per respondent 1
Total annual responses 3,808
Hours per response 5.25 hrs.
Response burden hours 19,992 hrs.
    Individual plan with lower-tier goals:
Respondents 2,970
Responses per respondent 1

[[Page 30074]]

Total annual responses 2,970
Hours per response 2 hrs.
Response burden hours 5,940 hrs.
    As part of this proposed rulemaking, the FAR Council is soliciting 
comments from the public in order to:
    Evaluate whether the proposed revisions to this collection of 
information are necessary for the proper performance of the functions 
of the FAR Council, including whether the information will have 
practical utility;
    Evaluate the accuracy of the FAR Council's estimate of the burden 
of the revised collection of information, including the validity of the 
methodology and assumptions used;
    Enhance the quality, utility, and clarity of the information to be 
collected; and
    Minimize the burden of the collection of information on those who 
are to respond, including through the use of appropriate collection 
techniques.
    Organizations and individuals desiring to submit comments on the 
information collection requirements associated with this rulemaking 
should submit comments not later than August 26, 2019 to: FAR Desk 
Officer, OMB, Room 10102, NEOB, Washington, DC 20503, and a copy to the 
General Services Administration, Regulatory Secretariat Division 
(MVCB). The copy to GSA can be submitted by either of the following 
methods:
     Federal eRulemaking Portal: This website provides the 
ability to type short comments directly into the comment field or 
attach a file for lengthier comments. Go to http://www.regulations.gov 
and follow the instructions on the site.
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), 1800 F Street NW, 2nd Floor, Washington, 
DC 20405. ATTN: Lois Mandell/IC 9000-0007, Subcontracting Plans.
    Instructions: All items submitted must cite Information Collection 
9000-0007, Subcontracting Plans. Comments received generally will be 
posted without change to http://www.regulations.gov, including any 
personal and/or business confidential 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).

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

    Government procurement.

    Dated: June 10, 2019.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.
    Therefore, DoD, GSA, and NASA are proposing to amend 48 CFR parts 
19, 42, and 52 as set forth below:

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 19.701 by adding in alphabetical order the definitions 
of ``First-tier subcontract'' and ``Lower-tier subcontract'' and 
revising the definition of ``Subcontract'' to read as follows:


19.701  Definitions.

* * * * *
    First-tier subcontract means any subcontract directly with the 
prime contractor.
* * * * *
    Lower-tier subcontract means any subcontract other than a 
subcontract directly with the prime contractor.
* * * * *
    Subcontract means a legally binding agreement--
    (1) Between a contractor, that is under contract to another party 
to perform work, and a third party (i.e., the subcontractor);
    (2) For the subcontractor to perform a part of the work that the 
contractor has undertaken; and
    (3) That is not an employer-employee relationship.
* * * * *
0
3. Revise section 19.704 to read as follows:


19.704   Subcontracting plan requirements.

    (a) General. When determining whether a subcontracting plan is 
necessary, consider the cumulative value of the basic contract and all 
options for multiyear contracts or contracts containing options.
    (b) Basic requirements. Each subcontracting plan under 19.301-2(e) 
and 19.702(a)(1), (2), and (3) shall include the following:
    (1) The total planned subcontracting dollars for the subcontracting 
plan.
    (2) Separate goals expressed as dollars and as a percentage of 
total planned subcontracting dollars for each of the following 
categories:
    (i) Small business concerns (including ANCs and Indian tribes).
    (ii) Veteran-owned small business concerns.
    (iii) Service-disabled veteran-owned small business concerns.
    (iv) HUBZone small business concerns.
    (v) Small disadvantaged business concerns (including ANCs and 
Indian tribes).
    (vi) Women-owned small business concerns.
    (3) A description of the principal types of supplies and services 
to be subcontracted and an identification of types of supplies or 
services planned for subcontracting to small business (including ANCs 
and Indian tribes), veteran-owned small business, service-disabled 
veteran-owned small business, HUBZone small business, small 
disadvantaged business (including ANCs and Indian tribes), and women-
owned small business concerns.
    (4) A description of the method used to develop the subcontracting 
goals.
    (5) A description of the method used to identify potential sources 
for solicitation purposes.
    (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 small business (including ANCs and Indian tribes), 
veteran-owned small business, service-disabled veteran-owned small 
business, HUBZone small business, small disadvantaged business 
(including ANCs and Indian tribes), and women-owned small business 
concerns.
    (7) The name of an 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 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.
    (9) Assurances that the offeror will include the clause at 52.219-
8, Utilization of Small Business Concerns (see 19.708(a)), in all 
subcontracts that offer further subcontracting opportunities, and that 
the offeror will require all subcontractors (except small business 
concerns) that receive subcontracts in excess of $700,000 ($1.5 million 
for construction) to adopt a plan that complies with the requirements 
of the clause at 52.219-9, Small Business Subcontracting Plan (see 
19.708(b)).
    (10) Assurances at a minimum that the offeror, and all 
subcontractors

[[Page 30075]]

required to maintain subcontracting plans, will--
    (i) Review and approve subcontracting plans submitted by their 
subcontractors;
    (ii) Monitor their subcontractors' compliance with their approved 
subcontracting plans;
    (iii) Ensure that subcontracting reports are submitted by their 
subcontractors when required;
    (iv) Acknowledge receipt of their subcontractors' reports;
    (v) Compare the performance of their subcontractors to their 
subcontracting plans and goals; and
    (vi) Discuss performance with their subcontractors when necessary 
to ensure their subcontractors make a good faith effort to comply with 
their subcontracting plans. See 13 CFR 125.3(d)(3) for examples of good 
faith effort.
    (11) Assurances that the offeror will do the following:
    (i) Cooperate in any studies or surveys as may be required.
    (ii) Submit periodic reports so that the Government can determine 
the extent of compliance by the offeror with the subcontracting plan.
    (iii) Submit the Summary Subcontract Report (SSR) using the 
Electronic Subcontracting Reporting System (eSRS) (https://www.esrs.gov), following the instructions in the eSRS. The SSR shall be 
submitted annually by October 30 for the twelve-month period ending 
September 30. When an SSR is rejected, the contractor is required to 
submit a revised SSR within 30 days of receiving the notice of SSR 
rejection.
    (iv) Ensure that its subcontractors with subcontracting plans agree 
to submit the SSR using the eSRS.
    (12) A description of the types of records that will be maintained 
concerning procedures adopted to comply with the requirements and goals 
in the plan, including establishing source lists; and a description of 
the offeror's efforts to locate small business, veteran-owned small 
business, service-disabled veteran-owned small business, HUBZone small 
business, small disadvantaged business, and women-owned small business 
concerns and to award subcontracts to them.
    (13) A written statement of the types of records the offeror will 
maintain to demonstrate procedures that have been adopted to ensure 
subcontractors at all tiers comply with the requirements and goals set 
forth in the subcontracting plan established in accordance with 
paragraph (b) of this section, including--
    (i) The establishment of source lists of 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;
    (ii) The efforts to identify and award subcontracts to such small 
business concerns; and
    (iii) The size or socioeconomic certifications or representations 
received in connection with each subcontract.
    (14) Assurances that the offeror will make a good faith effort to 
acquire articles, equipment, supplies, services, or materials, or 
obtain the performance of construction work from the small business 
concerns that the offeror used in preparing the bid or proposal, in the 
same or greater scope, amount, and quality used in preparing and 
submitting the bid or proposal. Responding to a request for a quote 
does not constitute use in preparing a bid or proposal. An offeror used 
a small business concern in preparing the bid or proposal if--
    (i) The offeror identifies the small business concern as a 
subcontractor in the bid or proposal or associated small business 
subcontracting plan, to furnish certain supplies or perform a portion 
of the contract; or
    (ii) The offeror used the small business concern's pricing or cost 
information or technical expertise in preparing the bid or proposal, 
where there is written evidence of an intent or understanding that the 
small business concern will be awarded a subcontract for the related 
work if the offeror is awarded the contract.
    (15) Assurances that the contractor will 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 paragraph (b)(14) of 
this section. This written explanation will be submitted to the 
contracting officer within 30 days of contract completion.
    (16) Assurances that the contractor will not prohibit a 
subcontractor from discussing with the contracting officer any material 
matter pertaining to payment to or utilization of a subcontractor.
    (17) Assurances that the contractor will pay its small business 
subcontractors on time and in accordance with the terms and conditions 
of the subcontract, and notify the contracting officer if the 
contractor pays a reduced or an untimely payment to a small business 
subcontractor (see 52.242-5).
    (c) Special requirements for commercial plans. A commercial plan 
(as defined in 19.701) is the preferred type of subcontracting plan for 
contractors furnishing commercial items. 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.
    (1) The commercial plan shall include the total projected sales, 
expressed in dollars.
    (2) Total planned subcontracting dollars (see paragraph (b)(1) of 
this section) is equal to the total value of projected subcontracts to 
support the sales for a commercial plan.
    (3) The contractor shall--
    (i) Submit the commercial plan to either the first contracting 
officer awarding a contract subject to the plan during the contractor's 
fiscal year, or, if the contractor has ongoing contracts with 
commercial plans, to the contracting officer responsible for the 
contract with the latest completion date. The contracting officer shall 
negotiate the commercial plan for the Government. The approved 
commercial plan shall remain in effect during the contractor's fiscal 
year for all Government contracts in effect during that period;
    (ii) Submit a new commercial plan, 30 working days before the end 
of the contractor's fiscal year, to the contracting officer responsible 
for the uncompleted Government contract with the latest completion 
date. The contractor must provide to each contracting officer 
responsible for an ongoing contract subject to the plan, the identity 
of the contracting officer that will be negotiating the new plan;
    (iii) When the new commercial plan is approved, provide a copy of 
the approved plan to each contracting officer responsible for an 
ongoing contract that is subject to the plan; and
    (iv) Comply with the reporting requirements stated in paragraph 
(b)(11) of this section by submitting one SSR in eSRS, for all 
contracts covered by its commercial plan. This report will be 
acknowledged or rejected in eSRS by the contracting officer who 
approved the plan. The report shall be submitted within 30 days after 
the end of the Government's fiscal year.
    (d) Special requirements for individual subcontracting plans. (1) 
Base and option periods. In addition to the elements required by 
paragraph (b) of this section, an individual

[[Page 30076]]

subcontracting plan shall contain separate statements and goals based 
on total subcontract dollars for the base period and for each option.
    (2) Lower-tier goals. (i) Additional separate goals shall be 
expressed as dollars and as a percentage of total planned 
subcontracting dollars for subcontracts at lower tiers awarded by other 
than small business subcontractors with individual subcontracting 
plans, for each of the categories in paragraph (b)(2) of this section.
    (ii) These goals are not required in individual subcontracting 
plans for--
    (A) Contracts intended for use by multiple executive agencies; or
    (B) Contracts that include the clause at 52.212-5, Contract Terms 
and Conditions Required to Implement Statutes or Executive Orders-
Commercial Items.
    (3) Percentage of total contract dollars. A contracting officer may 
require the goals referenced in paragraph (b)(2) of this section to be 
calculated as a percentage of total contract dollars, in addition to 
the goals established as a percentage of total planned subcontracting 
dollars.
    (4) Reporting in eSRS. The individual subcontracting plan shall 
include contractor assurances regarding the following:
    (i) Compliance with the reporting requirements stated in paragraph 
(b)(11) of this section by submission in eSRS of one SSR for each 
agency.
    (ii) Submission of the Individual Subcontract Report (ISR), using 
eSRS, semiannually during contract performance for the periods ending 
March 31 and September 30. A report is also required for each contract 
within 30 days of contract completion. Reports are due 30 days after 
the close of each reporting period, unless otherwise directed by the 
contracting officer. Reports are required when due, regardless of 
whether there has been any subcontracting activity since the inception 
of the contract or the previous reporting period. When a contracting 
officer rejects an ISR, the contractor is required to submit a revised 
ISR within 30 days of receiving the notice of the ISR rejection.
    (iii) Include subcontracting data for each order when reporting 
subcontracting achievements for indefinite-delivery, indefinite-
quantity contracts where the contract is intended for use by multiple 
agencies.
    (iv) Ensuring that its subcontractors with subcontracting plans 
agree to submit the ISR using the eSRS.
    (v) Providing its prime contract number, its unique entity 
identifier, and the email address of the offeror's official responsible 
for acknowledging receipt of or rejecting the ISRs to all first-tier 
subcontractors with subcontracting plans so they can enter this 
information into the eSRS when submitting their ISRs.
    (vi) Requiring that each subcontractor with a subcontracting plan 
provide the prime contract number, its own unique entity identifier, 
and the email address of the subcontractor's official responsible for 
acknowledging receipt of or rejecting the ISRs, to its subcontractors 
with subcontracting plans.
    (e) Special requirements for master subcontracting plans. 
Contractors may establish, on a plant or division-wide basis, a master 
subcontracting plan (see 19.701) that contains all the elements 
required by the clause at 52.219-9, Small Business Subcontracting Plan, 
except goals. Master subcontracting plans shall be effective for a 3-
year period after approval by the contracting officer; however, it is 
incumbent upon contractors to maintain and update master subcontracting 
plans. Changes required to update master subcontracting plans are not 
effective until approved by the contracting officer. A master 
subcontracting plan, when incorporated in an individual plan, shall 
apply to that contract throughout the life of the contract.


19.705-4   [Amended]

0
4. Amend section 19.705-4 by--
0
a. In paragraph (b) removing ``15''; and
0
b. In paragraph (c) removing ``the 15 elements'' and adding ``the 
required elements'' in its place.
0
5. Amend section 19.705-6 by revising paragraph (f)(2) to read as 
follows:


19.705-6   Postaward responsibilities of the contracting officer.

* * * * *
    (f) * * *
    (2) Review ISRs, SSRs, and where applicable, additional standard 
reports, in eSRS within 60 days of the report ending date (e.g., by 
November 30th for a report submitted for the fiscal year ended 
September 30th).
* * * * *

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

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


42.1501   General.

    (a) * * *
    (5) Good faith effort to comply with the requirements of the small 
business subcontracting plan (see 19.705-7(d)). See 13 CFR 125.3(d)(3) 
for examples of good faith effort;
* * * * *
0
7. Amend section 42.1503 by--
0
a. Revising paragraph (b)(2)(v); and
0
b. In the Table 42-2, under the heading ``Evaluation Ratings 
Definitions [For the small business subcontracting evaluation factor, 
when 52.219-9 is used]'' by--
0
 i. Removing from the entry for (a) Exceptional, in the first sentence 
of the ``Definition'' column, ``goals as negotiated'' and adding 
``goals as negotiated, including lower-tier goals as applicable'' in 
its place;
0
 ii. Removing from the entry for (b) Very Good, in the first sentence 
of the ``Definition'' column, ``goals as negotiated'' and adding 
``goals as negotiated, including lower-tier goals as applicable'' in 
its place;
0
 iii. Removing from the entry for (c) Satisfactory, in the first 
sentence of the ``Definition'' column, ``subcontracting goals'' and 
adding ``subcontracting goals, including lower-tier goals as 
applicable,'' in its place;
0
 iv. Removing from the entry for (d) Marginal, in the first sentence of 
the ``Definition'' column, ``plan elements'' and adding ``plan 
elements, including lower-tier goals as applicable,'' in its place; and
0
 v. Removing from the entry for (e) Unsatisfactory, in the first 
sentence of the ``Definition'' column, ``contract/order'' and adding 
``contract/order, including lower-tier goals as applicable,'' in its 
place.
    The revision reads as follows.


42.1503   Procedures.

* * * * *
    (b) * * *
    (2) * * *
    (v) Small business subcontracting, including--
    (A) For an individual subcontracting plan that includes lower-tier 
goals, the contractor's combined performance under the first-tier and 
lower-tier goals; and
    (B) Reduced or untimely payments to small business subcontractors 
when 19.702(a) requires a subcontracting plan (as applicable, see Table 
42-2).
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
8. Amend section 52.212-5 by--
0
 a. Revising the date of the clause;

[[Page 30077]]

0
b. Amending paragraph (b) by--
0
i. Removing from paragraph (b)(17)(i) ``(AUG 2018)'' and adding 
``([DATE])'' in its place;
0
ii. Removing from paragraph (b)(17)(ii) ``(NOV 2016)'' and adding 
``([DATE])'' in its place;
0
iii. Removing from paragraph (b)(17)(iii) ``(NOV 2016)'' and adding 
``([DATE])'' in its place;
0
iv. Removing from paragraph (b)(17)(iv) ``(NOV 2016)'' and adding 
``([DATE])'' in its place; and
0
v. Removing from paragraph (b)(17)(v) ``(AUG 2018)'' and adding 
``([DATE])'' in its place.
    The revisions 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])

* * * * *
0
9. Amend section 52.219-9 by--
0
 a. Revising the date of the clause;
0
 b. Adding in paragraph (b) in alphabetical order, the definitions 
``First-tier subcontract'' and ``Lower-tier subcontract'';
0
 c. Revising the definition ``Subcontract'';
0
d. Revising the third sentence of paragraph (c)(1);
0
 e. Revising paragraphs (d)(1) through (d)(9);
0
 f. In paragraph (d)(10)(iii) removing ``After November 30, 2017, 
include'' and adding ``Include'' in its place;
0
 g. In paragraph (d)(11) removing ``offeror's efforts'' and adding 
``Offeror's efforts'' in its place;
0
 h. In paragraph (d)(11)(vi) removing ``offeror'' and adding 
``Offeror'' in its place;
0
i. Redesignating paragraphs (d)(12) through (d)(15) as paragraphs 
(d)(13) through (d)(16);
0
 j. Adding a new paragraph (d)(12);
0
 k. In newly redesignated paragraph (d)(14) removing ``(d)(12)'' and 
adding ``(d)(13)'' in its place;
0
 l. Revising newly redesignated paragraph (d)(16);
0
m. Remove paragraph (j);
0
n. Redesignate paragraph (i) as paragraph (j);
0
o. Redesignate paragraphs (e) through (h) as paragraphs (f) through 
(i);
0
p. Add a new paragraph (e);
0
 q. In newly redesignated paragraph (f)(4) removing ``with 52.219-
8(d)(2)'' and adding ``with FAR 52.219-8(d)(5)'' in its place;
0
r. Revising newly redesignated paragraph (h);
0
s. In newly redesignated paragraph (i) removing ``offeror'' where it 
appears and adding ``Offeror'' in its places;
0
t. Revising the fifth sentence of the introductory paragraph of 
paragraph (l);
0
 u. In paragraph (l)(1)(ii)(A) removing ``as prescribed by FAR 
19.704(c)'' and adding ``(see paragraph (c)(1) of this clause)'' in its 
place;
0
 v. In paragraph (l)(1)(ii)(B) removing ``19.702(a)(3) or 19.301-2(e)'' 
and adding ``FAR 19.702(a)(3) or 19.301-2(e)'' in its place;
0
 w. In paragraph (l)(2)(ii)(B) removing ``within thirty days '' and 
adding ``within 30 days'' in its place;
0
 x. Adding a new paragraph (m);
0
 y. Revising the date of Alternate I and the third sentence of 
paragraph (c)(1);
0
 z. Revising the date of Alternate II and the third sentence of 
paragraph (c)(1);
0
 aa. Amending Alternate III by--
0
i. Revising the date of Alternate III;
0
ii. Removing from the introductory text ``(d)(10) and (l)'' and adding 
``(d)(10),(e), and (l)'' in their places;
0
iii. Adding and reserving paragraph (e);
0
iv. Revising the fifth sentence of the introductory paragraph of 
paragraph (l);
0
v. Removing from paragraph (l)(1)(ii)(A) ``as prescribed by FAR 
19.704(c)'' and adding ``(see paragraph (c)(1) of this clause) in its 
place; and
0
vi. Removing from paragraph (l)(1)(ii)(B) ``19.702(a)(3) or 19.301-
2(e)'' and adding ``FAR 19.702(a)(3) or 19.301-2(e)'' in its place; and
0
 bb. Amending Alternate IV by--
0
i. Revising the date of Alternate IV;
0
ii. Removing from the introductory text ``(c) and (d)'' and adding 
``(c), (d) and (e)'' in its place;
0
iii. Revising the third sentence of paragraph (c)(1);
0
iv. Revising paragraph (d); and
0
v. Adding a new paragraph (e).
    The revisions and additions read as follows:


52.219-9  Small Business Subcontracting Plan.

* * * * *

Small Business Subcontracting Plan ([DATE])

* * * * *
    (b) * * *
    First-tier subcontract means any subcontract directly with the 
prime contractor.
* * * * *
    Lower-tier subcontract means any subcontract other than a 
subcontract directly with the prime contractor.
* * * * *
    Subcontract means a legally binding agreement--
    (1) Between a contractor, that is under contract to another party 
to perform work, and a third party (i.e., the subcontractor);
    (2) For the subcontractor to perform a part of the work that the 
contractor has undertaken; and
    (3) That is not an employer-employee relationship.
* * * * *
    (c)(1) * * * The Contracting Officer will incorporate the 
subcontracting plan in the resultant contract.
* * * * *
    (d) * * *
    (1)(i) The total planned subcontracting dollars for an individual 
subcontracting plan; or total projected sales, expressed in dollars, 
and the total value of projected subcontracts to support the sales for 
a commercial plan.
    (ii) Separate goals, expressed as dollars and as a percentage of 
total planned subcontracting dollars, for each of the following 
categories:
    (A) Small business concerns (including ANCs and Indian tribes).
    (B) Veteran-owned small business concerns.
    (C) Service-disabled veteran-owned small business concerns.
    (D) HUBZone small business concerns.
    (E) Small disadvantaged business concerns (including ANCs and 
Indian tribes).
    (F) Women-owned small business concerns.
    (iii) For individual subcontracting plans, and if required by the 
Contracting Officer, goals shall also be expressed in terms of 
percentage of total contract dollars, in addition to the goals 
expressed as a percentage of total planned subcontracting dollars.
    (iv) All subcontracts that contribute to contract performance, and 
may include a proportionate share of products and services that are 
normally allocated as indirect costs.
    (v) In accordance with 43 U.S.C. 1626--
    (A) Subcontracts awarded to an ANC or Indian tribe shall be counted 
towards the subcontracting goals for small business and small 
disadvantaged business concerns, regardless of the size or Small 
Business Administration certification status of the ANC or Indian 
tribe; and
    (B) Where one or more subcontractors are in the subcontract tier 
between the prime Contractor and the ANC or Indian tribe, the ANC or 
Indian tribe shall designate the appropriate contractor(s) to count the 
subcontract towards its small business and small disadvantaged business 
subcontracting goals.
    (1) In most cases, the appropriate contractor is the contractor 
that awarded

[[Page 30078]]

the subcontract to the ANC or Indian tribe.
    (2) If the ANC or Indian tribe designates more than one contractor 
to count the subcontract toward its goals, the ANC or Indian tribe 
shall designate only a portion of the total subcontract award to each 
contractor. The sum of the amounts designated to various contractors 
cannot exceed the total value of the subcontract.
    (3) The ANC or Indian tribe shall give a copy of the written 
designation to the Contracting Officer, the prime Contractor, and the 
subcontractors in between the prime Contractor and the ANC or Indian 
tribe within 30 days of the date of the subcontract award.
    (4) If the Contracting Officer does not receive a copy of the ANC's 
or the Indian tribe's written designation within 30 days of the 
subcontract award, the contractor that awarded the subcontract to the 
ANC or Indian tribe will be considered the designated contractor.
    (2) 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) Veteran-owned small business concerns;
    (iii) Service-disabled veteran-owned small business concerns;
    (iv) HUBZone small business concerns;
    (v) Small disadvantaged business concerns; and
    (vi) Women-owned small business concerns.
    (3) A description of the method used to develop the subcontracting 
goals in paragraph (d)(1) of this clause.
    (4) A description of the method used to identify potential sources 
for solicitation purposes (e.g., existing company source lists, SAM, 
veterans service organizations, 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, HUBZone, small disadvantaged, and women-owned 
small business trade associations). A firm may rely on the information 
contained in SAM as an accurate representation of a concern's size and 
ownership characteristics for the purposes of maintaining a small, 
veteran-owned small, service-disabled veteran-owned small, HUBZone 
small, small disadvantaged, and women-owned small business source list. 
Use of SAM as its source list does not relieve a firm of its 
responsibilities (e.g., outreach, assistance, counseling, or 
publicizing subcontracting opportunities) in this clause.
    (5) 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 (including ANCs and Indian tribes);
    (ii) Veteran-owned small business concerns;
    (iii) Service-disabled veteran-owned small business concerns;
    (iv) HUBZone small business concerns;
    (v) Small disadvantaged business concerns (including ANCs and 
Indian tribes); and
    (vi) Women-owned small business concerns.
    (6) 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.
    (7) A description of the efforts the Offeror will make to assure 
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.
    (8) Assurances that the Offeror will include the clause of this 
contract entitled ``Utilization of Small Business Concerns'' in all 
subcontracts that offer further subcontracting opportunities, and that 
the Offeror will require all subcontractors (except small business 
concerns and when paragraph (m)(2) applies) that receive subcontracts 
in excess of $700,000 ($1.5 million for construction of any public 
facility) with further subcontracting possibilities to adopt a 
subcontracting plan that complies with the requirements of this clause.
    (9) Assurances at a minimum that the Offeror, and all 
subcontractors required to maintain subcontracting plans, will--
    (i) Review and approve subcontracting plans submitted by their 
subcontractors;
    (ii) Monitor their subcontractors' compliance with their approved 
subcontracting plans;
    (iii) Ensure that subcontracting reports are submitted by their 
subcontractors when required;
    (iv) Acknowledge receipt of their subcontractors' reports;
    (v) Compare the performance of their subcontractors to their 
subcontracting plans and goals; and
    (vi) Discuss performance with their subcontractors when necessary 
to ensure their subcontractors make a good faith effort to comply with 
their subcontracting plans; see 13 CFR 125.3(d)(3) for examples of good 
faith effort;
* * * * *
    (12) A written statement of the types of records the Offeror will 
maintain to demonstrate procedures that have been adopted to ensure 
subcontractors at all tiers comply with the requirements and goals set 
forth in the subcontracting plan established in accordance with this 
clause, including--
    (i) The establishment of source lists of 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;
    (ii) The efforts to identify and award subcontracts to such small 
business concerns; and
    (iii) The size or socioeconomic certifications or representations 
received in connection with each subcontract.
* * * * *
    (16) Assurances that the Contractor will pay its small business 
subcontractors on time and in accordance with the terms and conditions 
of the underlying subcontract, and notify the Contracting Officer when 
the prime Contractor makes either a reduced or an untimely payment to a 
small business subcontractor (see the clause at FAR 52.242-5).
    (e) The requirements of this paragraph (e) apply to an Offeror's 
individual subcontracting plan except for contracts intended for use by 
multiple executive agencies and contracts that include the clause at 
FAR 52.212-5, Contract Terms and Conditions Required to Implement 
Statutes or Executive Orders--Commercial Items.
    (1) The Offeror's subcontracting plan shall also include separate 
goals for subcontracts at lower tiers awarded by other than small 
business subcontractors with individual subcontracting plans--
    (i) Expressed as dollars and as a percentage of total planned 
subcontracting dollars (see paragraph (d)(1)(ii) of this clause), for 
each of the following categories:
    (A) Small business concerns (including ANCs and Indian tribes).
    (B) Veteran-owned small business concerns.
    (C) Service-disabled veteran-owned small business concerns.
    (D) HUBZone small business concerns.

[[Page 30079]]

    (E) Small disadvantaged business concerns (including ANCs and 
Indian tribes).
    (F) Women-owned small business concerns.
    (ii) If required by the Contracting Officer, goals shall also be 
expressed in terms of percentage of total contract dollars, in addition 
to the goals expressed as a percentage of total planned subcontracting 
dollars; and
    (iii) 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) The Contractor will receive credit towards the goals described 
in paragraph (e)(1) of this clause for achievements by subcontractors 
with individual subcontracting plans that are reported via the ISR and 
acknowledged in eSRS.
* * * * *
    (h) A commercial plan is the preferred type of subcontracting plan 
for contractors furnishing commercial items. The commercial plan shall 
relate to the Offeror's planned subcontracting generally, for both 
commercial and Government business, rather than solely to the 
Government contract. Once the Contractor's commercial plan has been 
approved, the Government will 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. A contractor with a 
commercial plan shall comply with the reporting requirements stated in 
paragraph (d)(10) of this clause by submitting one SSR in eSRS for all 
contracts covered by its commercial plan. The SSR shall be acknowledged 
or rejected in eSRS by the Contracting Officer who approved the 
commercial plan. The SSR shall be submitted within 30 days after the 
end of the Government's fiscal year.
* * * * *
    (l) * * * Subcontract award data shall not include 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 an ANC or Indian tribe. * * *
* * * * *
    (m) Subcontracts. (1) The Contractor shall include this clause, 
except for paragraph (e), in subcontracts that are required to have a 
subcontracting plan (but see paragraph (m)(2) of this clause). The 
Contractor shall not further alter this clause other than to identify 
the appropriate parties.
    (2) The Contractor shall not include this clause in subcontracts 
when--
    (i) The contract contains the clause at 52.212-5, Contract Terms 
and Conditions Required to Implement Statutes or Executive Orders--
Commercial Items; or
    (ii) A subcontractor provides a commercial item subject to the 
clause at FAR 52.244-6, Subcontracts for Commercial Items.
    Alternate I ([DATE]). * * *
* * * * *
    (c)(1) * * * The Contracting Officer will incorporate the 
subcontracting plan in the resultant contract. * * *
* * * * *
    Alternate II ([DATE]). * * *
* * * * *
    (c)(1) * * * The Contracting Officer will incorporate the 
subcontracting plan in the resultant contract. * * *
* * * * *
    Alternate III ([DATE]). * * *
* * * * *
    (e) Reserved.
* * * * *
    (l) * * * Subcontract award data shall not include 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 an ANC or Indian tribe. * * *
* * * * *
    Alternate IV ([DATE]). * * *
* * * * *
    (c)(1) * * * The Contracting Officer will incorporate the 
subcontracting plan into the contract. * * *
* * * * *
    (d) The Contractor's subcontracting plan shall include the 
following:
    (1)(i) The total planned subcontracting dollars for an individual 
subcontracting plan; or the Contractor's total projected sales, 
expressed in dollars, and the total value of projected subcontracts to 
support the sales for a commercial plan.
    (ii) Separate goals, expressed as dollars and as a percentage of 
total planned subcontracting dollars, for each of the following 
categories:
    (A) Small business concerns (including ANCs and Indian tribes).
    (B) Veteran-owned small business concerns.
    (C) Service-disabled veteran-owned small business concerns.
    (D) HUBZone small business concerns.
    (E) Small disadvantaged business concerns (including ANCs and 
Indian tribes).
    (F) Women-owned small business concerns.
    (iii) For individual subcontracting plans, and if required by the 
Contracting Officer, goals shall also be expressed in terms of 
percentage of total contract dollars, in addition to the goals 
expressed as a percentage of total planned subcontracting dollars.
    (iv) All subcontracts that contribute to contract performance, and 
may include a proportionate share of products and services that are 
normally allocated as indirect costs.
    (v) In accordance with 43 U.S.C. 1626--
    (A) Subcontracts awarded to an ANC or Indian tribe shall be counted 
towards the subcontracting goals for small business and small 
disadvantaged business concerns, regardless of the size or Small 
Business Administration certification status of the ANC or Indian 
tribe; and
    (B) Where one or more subcontractors are in the subcontract tier 
between the prime Contractor and the ANC or Indian tribe, the ANC or 
Indian tribe shall designate the appropriate contractor(s) to count the 
subcontract towards its small business and small disadvantaged business 
subcontracting goals.
    (1) In most cases, the appropriate contractor is the contractor 
that awarded the subcontract to the ANC or Indian tribe.
    (2) If the ANC or Indian tribe designates more than one contractor 
to count the subcontract toward its goals, the ANC or Indian tribe 
shall designate only a portion of the total subcontract award to each 
contractor. The sum of the amounts designated to various contractors 
cannot exceed the total value of the subcontract.
    (3) The ANC or Indian tribe shall give a copy of the written 
designation to the Contracting Officer, the prime Contractor, and the 
subcontractors in between the prime Contractor and the ANC or Indian 
tribe within 30 days of the date of the subcontract award.
    (4) If the Contracting Officer does not receive a copy of the ANC's 
or the Indian tribe's written designation within 30 days of the 
subcontract award, the Contractor that awarded the subcontract to the 
ANC or Indian tribe will be considered the designated Contractor.
    (2) 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) Veteran-owned small business concerns;
    (iii) Service-disabled veteran-owned small business concerns;

[[Page 30080]]

    (iv) HUBZone small business concerns;
    (v) Small disadvantaged business concerns; and
    (vi) Women-owned small business concerns.
    (3) A description of the method used to develop the subcontracting 
goals in paragraph (d)(1) of this clause.
    (4) A description of the method used to identify potential sources 
for solicitation purposes (e.g., existing company source lists, SAM, 
veterans service organizations, 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, HUBZone, small disadvantaged, and women-owned 
small business trade associations). The Contractor may rely on the 
information contained in SAM as an accurate representation of a 
concern's size and ownership characteristics for the purposes of 
maintaining a small, veteran-owned small, service-disabled veteran-
owned small, HUBZone small, small disadvantaged, and women-owned small 
business source list. Use of SAM as its source list does not relieve a 
firm of its responsibilities (e.g., outreach, assistance, counseling, 
or publicizing subcontracting opportunities) in this clause.
    (5) A statement as to whether or not the Contractor 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 (including ANCs and Indian tribes);
    (ii) Veteran-owned small business concerns;
    (iii) Service-disabled veteran-owned small business concerns;
    (iv) HUBZone small business concerns;
    (v) Small disadvantaged business concerns (including ANCs and 
Indian tribes); and
    (vi) Women-owned small business concerns.
    (6) The name of the individual employed by the Contractor who will 
administer the Contractor's subcontracting program, and a description 
of the duties of the individual.
    (7) A description of the efforts the Contractor will make to assure 
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.
    (8) Assurances that the Contractor will include the clause of this 
contract entitled ``Utilization of Small Business Concerns'' in all 
subcontracts that offer further subcontracting opportunities, and that 
the Contractor will require all subcontractors (except small business 
concerns and when paragraph (m)(2) applies) that receive subcontracts 
in excess of $700,000 ($1.5 million for construction of any public 
facility) with further subcontracting possibilities to adopt a 
subcontracting plan that complies with the requirements of this clause.
    (9) Assurances at a minimum that the Contractor, and all 
subcontractors required to maintain subcontracting plans, will--
    (i) Review and approve subcontracting plans submitted by their 
subcontractors;
    (ii) Monitor their subcontractors' compliance with their approved 
subcontracting plans;
    (iii) Ensure that subcontracting reports are submitted by 
subcontractors when required;
    (iv) Acknowledge receipt of their subcontractors' reports;
    (v) Compare the performance of their subcontractors to their 
subcontracting plans and goals; and
    (vi) Discuss performance with their subcontractors when necessary 
to ensure their subcontractors make a good faith effort to comply with 
their subcontracting plans; see 13 CFR 125.3(d)(3) for examples of good 
faith effort.
    (10) Assurances that the Contractor will--
    (i) Cooperate in any studies or surveys as may be required;
    (ii) Submit periodic reports so that the Government can determine 
the extent of compliance by the Contractor with the subcontracting 
plan;
    (iii) Include subcontracting data for each order when reporting 
subcontracting achievements for an indefinite-delivery, indefinite-
quantity contract with an individual subcontracting plan where the 
contract is intended for use by multiple agencies;
    (iv) Submit the Individual Subcontract Report (ISR) and/or the 
Summary Subcontract Report (SSR), in accordance with paragraph (l) of 
this clause using the Electronic Subcontracting Reporting System (eSRS) 
at https://www.esrs.gov. The reports shall provide information on 
subcontract awards to small business concerns (including ANCs and 
Indian tribes that are not small businesses), veteran-owned small 
business concerns, service-disabled veteran-owned small business 
concerns, HUBZone small business concerns, small disadvantaged business 
concerns (including ANCs and Indian tribes that have not been certified 
by SBA as small disadvantaged businesses), women-owned small business 
concerns, and for NASA only, Historically Black Colleges and 
Universities and Minority Institutions. Reporting shall be in 
accordance with this clause, or as provided in agency regulations;
    (v) Ensure that its subcontractors with subcontracting plans agree 
to submit the ISR and/or the SSR using eSRS;
    (vi) Provide its prime contract number, its unique entity 
identifier, and the email address of the Contractor's official 
responsible for acknowledging receipt of or rejecting the ISRs, to all 
first-tier subcontractors with subcontracting plans so they can enter 
this information into the eSRS when submitting their ISRs; and
    (vii) Require that each subcontractor with a subcontracting plan 
provide the prime contract number, its own unique entity identifier, 
and the email address of the subcontractor's official responsible for 
acknowledging receipt of or rejecting the ISRs, to its subcontractors 
with subcontracting plans.
    (11) A description of the types of records that will be maintained 
concerning procedures that have been adopted to comply with the 
requirements and goals in the plan, including establishing source 
lists; and a description of the Contractor's efforts to locate small 
business, veteran-owned small business, service-disabled veteran-owned 
small business, HUBZone small business, small disadvantaged business, 
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 (e.g., SAM), guides, and other data that identify 
small business, veteran-owned small business, service-disabled veteran-
owned small business, HUBZone small business, small disadvantaged 
business, and women-owned small business concerns.
    (ii) Organizations contacted in an attempt to locate sources that 
are small business, veteran-owned small business, service-disabled 
veteran-owned small business, HUBZone small business, small 
disadvantaged business, or women-owned small business concerns.
    (iii) Records on each subcontract solicitation resulting in an 
award of more than $150,000, indicating--

[[Page 30081]]

    (A) Whether small business concerns were solicited and, if not, why 
not;
    (B) Whether veteran-owned small business concerns were solicited 
and, if not, why not;
    (C) Whether service-disabled veteran-owned small business concerns 
were solicited and, if not, why not;
    (D) Whether HUBZone small business concerns were solicited and, if 
not, why not;
    (E) Whether small disadvantaged business concerns were solicited 
and, if not, why not;
    (F) Whether women-owned small business concerns were solicited and, 
if not, why not; and
    (G) 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;
    (C) Conferences and trade fairs to locate small, HUBZone small, 
small disadvantaged, service-disabled veteran-owned, and women-owned 
small business sources; and
    (D) Veterans service organizations.
    (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 Contractor to the Government, including the name, 
address, and business size of each subcontractor. Contractors having 
commercial plans need not comply with this requirement.
    (12) A written statement of the types of records the Contractor 
will maintain to demonstrate procedures which have been adopted to 
ensure subcontractors at all tiers comply with the requirements and 
goals set forth in the subcontracting plan established in accordance 
with this clause, including--
    (i) The establishment of source lists of 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;
    (ii) The efforts to identify and award subcontracts to such small 
business concerns; and
    (iii) The size or socioeconomic certifications or representations 
received in connection with each subcontract.
    (13) Assurances that the Contractor will make a good faith effort 
to acquire articles, equipment, supplies, services, or materials, or 
obtain the performance of construction work from the small business 
concerns that it used in preparing the proposal for the modification, 
in the same or greater scope, amount, and quality used in preparing and 
submitting the modification proposal. Responding to a request for a 
quote does not constitute use in preparing a proposal. The Contractor 
used a small business concern in preparing the proposal for a 
modification if--
    (i) The Contractor identifies the small business concern as a 
subcontractor in the proposal or associated small business 
subcontracting plan, to furnish certain supplies or perform a portion 
of the subcontract; or
    (ii) The Contractor used the small business concern's pricing or 
cost information or technical expertise in preparing the proposal, 
where there is written evidence of an intent or understanding that the 
small business concern will be awarded a subcontract for the related 
work when the modification is executed.
    (14) Assurances that the Contractor will 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 (d)(13) of this 
clause. This written explanation must be submitted to the Contracting 
Officer within 30 days of contract completion.
    (15) Assurances that the Contractor will not prohibit a 
subcontractor from discussing with the Contracting Officer any material 
matter pertaining to the payment to or utilization of a subcontractor.
    (16) Assurances that the Contractor will pay its small business 
subcontractors on time and in accordance with the terms and conditions 
of the underlying subcontract, and notify the Contracting Officer when 
the prime Contractor makes either a reduced or an untimely payment to a 
small business subcontractor (see the clause at FAR 52.242-5).
    (e) The requirements of this paragraph (e) apply to a Contractor's 
individual subcontracting plan except for contracts intended for use by 
multiple executive agencies and contracts that include the clause at 
FAR 52.212-5, Contract Terms and Conditions Required to Implement 
Statutes or Executive Orders--Commercial Items.
    (1) The Contractor's subcontracting plan shall also include 
separate goals for subcontracts at lower tiers awarded by other than 
small business subcontractors with individual subcontracting plans--
    (i) Expressed as dollars and as a percentage of total planned 
subcontracting dollars (see paragraph (d)(1)(ii) of this clause), for 
each of the following categories:
    (A) Small business concerns (including ANCs and Indian tribes).
    (B) Veteran-owned small business concerns.
    (C) Service-disabled veteran-owned small business concerns.
    (D) HUBZone small business concerns.
    (E) Small disadvantaged business concerns (including ANCs and 
Indian tribes).
    (F) Women-owned small business concerns.
    (ii) If required by the Contracting Officer, goals shall also be 
expressed in terms of percentage of total contract dollars, in addition 
to the goals expressed as a percentage of total planned subcontracting 
dollars.
    (iii) The Contractor 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) The Contractor will receive credit towards the goals described 
in paragraph (e)(1) of this clause for achievements by subcontractors 
with individual subcontracting plans that are reported via the ISR and 
acknowledged in eSRS.

[FR Doc. 2019-12481 Filed 6-25-19; 8:45 am]
BILLING CODE 6820-EP-P