19.702 Statutory requirements.
Any contractor receiving a contract for more than $10,000 shall
agree in the contract that small business concerns and small
disadvantaged business concerns shall have the maximum practicable
opportunity to participate in contract performance consistent
with its efficient performance. It is further the policy of the
United States that its prime contractors establish procedures to
ensure the timely payment of amounts due pursuant to the terms of
their subcontracts with small business concerns and small business
concerns owned and controlled by socially and economically
(a) Except as stated in paragraph (b) below, the Small Business
Act imposes the following requirements regarding subcontracting
with small businesses and small business subcontracting plans.
(1) In negotiated acquisitions, each solicitation of offers
to perform a contract or contract modification, which individually
is expected to exceed $500,000 ($1,000,000 for construction)
and that has subcontracting possibilities shall require the
apparently successful offeror to submit an acceptable
subcontracting plan. If the apparently successful offeror fails to
negotiate a subcontracting plan acceptable to the contracting officer
within the time limit prescribed by the contracting officer,
the offeror will be ineligible for award.
(2) In formally advertised acquisitions, each invitation
for bids to perform a contract or contract modification, which
individually is expected to exceed $500,000 ($1,000,000 for
construction) and that has subcontracting possibilities, shall require
the bidder selected for award to submit a subcontracting plan. If the
selected bidder fails to submit a plan within the time limit prescribed
by the contracting officer, the bidder will be ineligible for award.
(b) Subcontracting plans (see subparagraphs (a)(1) and (2)
above) are not required--
(1) From small business concerns;
(2) For personal services contracts;
(3) For contracts or contract modifications that will be
performed entirely outside of any State, territory, or possession
of the United States, the District of Columbia, and the
Commonwealth of Puerto Rico; or
(4) For modifications to contracts that do not contain
the clause at 52.219-8, Utilization of Small Business Concerns and
Small Disadvantaged Business Concerns (or equivalent prior DAR,
FPR, or NASA clauses) e.g., contracts awarded before Pub. L.
95-507 and which are within the scope of the contract.
(c) As stated in 15 U.S.C. 637(d)(8), any contractor or
subcontractor failing to comply in good faith with the requirements of
the subcontracting plan is in material breach of its contract.
Further, 15 U.S.C. 637(d)(4)(F) directs that a contractor's failure to
make a good faith effort to comply with the requirements of the
subcontracting plan shall result in the imposition of liquidated
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