FAR 19.7—Subpart 19.7

Definitions.

FAR 19.701 provides the core definitions used in the small business subcontracting subpart, and those definitions control how agencies, prime contractors, and subcontractors apply the subcontracting plan requirements. It covers the meanings of Alaska Native Corporation (ANC), Indian tribe, commercial plan, individual subcontracting plan, master subcontracting plan, eSRS, subcontract, total contract dollars, reduced payment, untimely payment, and failure to make a good faith effort to comply with a subcontracting plan. These definitions matter because they determine who qualifies for special socioeconomic treatment, what kind of subcontracting plan is required, how subcontracting performance is reported, and when payment problems or plan noncompliance become significant. In practice, the section sets the baseline for evaluating subcontracting obligations, measuring plan goals, and enforcing reporting and payment requirements. Contractors need these definitions to draft compliant plans and track performance correctly, while contracting officers need them to determine applicability, approve plans, and assess compliance. Because several terms incorporate statutory definitions outside the FAR, users must read this section together with the cited U.S. Code provisions when eligibility or status is in question.

Statutory requirements.

FAR 19.702 implements the Small Business Act’s statutory subcontracting requirements and explains when contractors must provide small business subcontracting plans. It covers the policy that prime contractors on larger contracts must give small business concerns, veteran-owned small business (VOSB), service-disabled veteran-owned small business (SDVOSB), HUBZone small business, small disadvantaged business (SDB), and women-owned small business (WOSB) concerns the maximum practicable opportunity to participate in performance, and it also requires timely payment to those subcontractors. The section then sets out when subcontracting plans are required in negotiated acquisitions, sealed bidding, and contract modifications, including special rules for multiple-award contracts with more than one NAICS code. It identifies the main exceptions where plans are not required, such as for small business prime contractors, personal services contracts, work performed entirely outside the United States and its outlying areas, and certain in-scope modifications when the contract lacks the small business clause. The section also explains the consequences of noncompliance, including material breach and liquidated damages for failure to make a good-faith effort to comply with a subcontracting plan. Finally, it addresses limited crediting rules for mentor-protégé arrangements, including certain DoD mentor-protégé developmental assistance costs and SBA-approved mentor-protégé training costs that may count toward subcontracting goals under specified conditions.

Eligibility requirements for participating in the program.

FAR 19.703 explains who is eligible to be counted as a subcontractor for federal subcontracting program purposes and how that eligibility is established, challenged, and documented. It covers the basic rule that a subcontractor must represent itself as a qualifying small business or socioeconomic category concern, including small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, or women-owned small business, and it ties those representations to the applicable SBA definitions and size standards. It also explains how a prime contractor may rely on a subcontractor’s written representations or SAM representations, when the prime may question those representations, and that the prime cannot force SAM as the only method of representation. The section further addresses protest procedures for challenging size status and special counting rules for Alaska Native Corporations and Indian tribes, including designation of which contractor gets subcontracting-goal credit and the timing for written designation. Finally, it points to the separate protest procedures for HUBZone socioeconomic status challenges. In practice, this section matters because it determines whether subcontract dollars can be credited toward subcontracting goals, what documentation a prime can rely on, and how disputes over status are handled.

Subcontracting plan requirements.

FAR 19.704 explains what must be included in a subcontracting plan when a contractor is required to submit one under FAR 19.301-2(e) and 19.702(a)(1)(i), (ii), or (iii). The section covers the required percentage goals for subcontracting with small business concerns and the socioeconomic categories specifically identified in the FAR: veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business, including Alaska Native Corporations (ANCs) and Indian tribes where applicable. It also requires dollar-based subcontracting projections, descriptions of the work to be subcontracted, the method used to develop goals and identify sources, treatment of indirect costs, designation of the subcontracting program administrator, and the contractor’s efforts to provide equitable subcontracting opportunities. In addition, it requires flowdown and reporting commitments, including the clause at 52.219-8, adoption of subcontracting plans by certain lower-tier subcontractors, and use of eSRS for ISR and SSR reporting. The section is designed to make subcontracting plans measurable, enforceable, and transparent so the Government can evaluate whether the contractor is making a good-faith effort to meet statutory subcontracting objectives. In practice, this section is critical because it turns a general commitment to small business participation into a detailed, auditable plan with specific goals, reporting obligations, and downstream compliance requirements.

Responsibilities of the contracting officer under the subcontracting assistance program.

Responsibilities of the cognizant administrative contracting officer.

FAR 19.706 explains the role of the cognizant administrative contracting officer (ACO) in supporting subcontracting plan oversight. It covers the ACO’s responsibility to help evaluate subcontracting plans and to monitor, evaluate, and document contractor performance under the subcontracting plan clause at FAR 19.708(b) and any subcontracting plan included in the contract. It also requires the contract administration office to provide the contracting officer with specific information and advice, including past performance documentation, progress toward subcontracting goals for eligible 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 whether the contractor’s efforts align with the plan. In addition, it addresses whether the contractor is requiring subcontractors to adopt similar plans, and it requires immediate notice when the contractor is missing commitments, failing to make a good-faith effort, or completing performance so the government can determine whether goals were met and whether any shortfall suggests lack of good faith. In practice, this section is about making subcontracting plan compliance a monitored, documented, and actionable part of contract administration rather than a paper-only requirement.

The Small Business Administration’s role in carrying out the program.

FAR 19.707 explains the Small Business Administration’s role in the subcontracting plan program and, just as importantly, its limits. It covers four affirmative SBA functions: helping agencies and contractors carry out subcontracting-plan responsibilities, reviewing certain solicitations before issuance, reviewing negotiated contractual documents and subcontracting plans before execution, and evaluating contractor compliance with subcontracting plans on either a contract-by-contract or aggregate basis. It also states three clear boundaries on SBA authority: SBA may not tell a contractor how much to subcontract, may not direct which concerns receive subcontracts, and may not take over administration of individual prime contracts or subcontracts. In practice, this section matters because it defines SBA as a review-and-advisory participant in the subcontracting plan process, not the contracting officer’s decision-maker or contract administrator. For contracting officers, it means SBA input may be required and should be considered, but the contracting officer retains procurement authority. For contractors, it means SBA may review their plans and performance, but SBA cannot micromanage subcontracting decisions beyond the statutory and regulatory framework.

Contract clauses.

FAR 19.708 tells contracting officers which small business subcontracting clauses must be included in solicitations and contracts, and when optional subcontracting incentive language may be used. It covers the mandatory use of the Utilization of Small Business Concerns clause at 52.219-8, the mandatory use of the Small Business Subcontracting Plan clause at 52.219-9 and its Alternates I through IV, and the mandatory use of the Liquidated Damages-Subcontracting Plan clause at 52.219-16 when a subcontracting plan clause is included. It also addresses when a contracting officer may add the Incentive Subcontracting Program clause at 52.219-10, including the special rule that the incentive clause may not be used when subcontracting performance is instead being evaluated as an award-fee factor in a cost-plus-award-fee contract. In practice, this section is the clause-selection roadmap for subcontracting policy compliance: it determines whether a contractor must make good-faith efforts to use small business concerns, whether a formal subcontracting plan is required, whether liquidated damages exposure applies, and whether a monetary incentive structure is appropriate to encourage subcontracting to small business categories.