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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Rules and Regulations
terms of the contract with the prime contractor.
vii Failure to correct substantiated findings from Federal subcontracting compliance reviews or participate in subcontracting plan management training offered by the Government.
viii Failure to 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 19.704a12.
ix Falsifying records of subcontract awards to small business concerns.
c Documentation of good faith effort.
If, at completion of the basic contract or any option, or in the case of a commercial plan, at the close of the fiscal year for which the plan is applicable, a contractor has failed to comply with the requirements of its subcontracting plan, which includes meeting its subcontracting goals, the contracting officer shall review all available information for an indication that the contractor has not made a good faith effort to comply with the plan. If no such indication is found, the contracting officer shall document the file accordingly.
d Notice of failure to make a good faith effort. If the contracting officer decides in accordance with paragraph b of this section that the contractor failed to make a good faith effort to comply with its subcontracting plan, the contracting officer shall give the contractor written notice in accordance with 52.21916, Liquidated Damages Subcontracting Plan, specifying the material breach, which may be included in the contractors past performance information, advising the contractor of the possibility that the contractor may have to pay to the Government liquidated damages, and providing a period of 15 working days or longer period as necessary within which to respond. The notice shall give the contractor an opportunity to demonstrate what good faith efforts have been made before the contracting officer issues the final decision and shall further state that failure of the contractor to respond may be taken as an admission that no valid explanation exists.
e Payment of liquidated damages.
1 If, after consideration of all the pertinent data, the contracting officer finds that the contractor failed to make a good faith effort to comply with its subcontracting plan, the contracting officer shall issue a final decision to the contractor to that effect and require the payment of liquidated damages in an amount stated. The contracting officers
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final decision shall state that the contractor has the right to appeal under the clause in the contract entitled Disputes. Calculations and procedures shall be in accordance with 52.21916, Liquidated DamagesSubcontracting Plan.
2 The amount of damages attributable to the contractors failure to comply shall be an amount equal to the actual dollar amount by which the contractor failed to achieve each subcontracting goal. For calculations for commercial plans see paragraph f of this section.
3 Liquidated damages shall be in addition to any other remedies that the Government may have.
f Commercial plans.
19.706

Amended
6. In section 19.706 amend paragraph f by removing the phrase subcontracting plan and adding the phrase subcontracting plan see 19.7057b for more information on the determination of good faith effort in its place.

PART 42CONTRACT
ADMINISTRATION AND AUDIT
SERVICES
7. Amend section 42.1501 by redesignating paragraphs a5 thru a7 as paragraphs a6 thru a8 and adding a new paragraph a5 to read as follows:

42.1501

General.

a
5 Complying with the requirements of the small business subcontracting plan see 19.7057b;

PART 52SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
8. Amend section 52.2125 by revising the date of the clause and paragraphs b17i, b17v, and b20 to read as follows:

52.2125 Contract Terms and Conditions Required to Implement Statutes or Executive OrdersCommercial Items.

Contract Terms and Conditions Required to Implement Statutes or Executive OrdersCommercial Items SEP 2021

b
ll17i 52.2199, Small Business Subcontracting Plan SEP 2021 15
U.S.C. 637d4.

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llv Alternate IV SEP 2021 of 52.2199.

ll20 52.21916, Liquidated DamagesSubcontracting Plan SEP
2021 15 U.S.C. 637d4Fi.

9. Amend section 52.2199 by a. Revising the date of the clause;
b. In paragraph d2i removing the word subcontracts and adding the phrase subcontracts, including all indirect costs except as described in paragraph g of this clause, in its place;
c. Adding a new fifth sentence to paragraph g;
d. Revising the date of Alternate IV, and paragraph d2i of Alternate IV.
The revised and added text reads as follows:
52.2199
Plan.

Small Business Subcontracting

Small Business Subcontracting Plan SEP 2021

g A Contractor authorized to use a commercial subcontracting plan shall include in its subcontracting goals and in its SSR all indirect costs, with the exception of those such as the following: Employee salaries and benefits; payments for petty cash;
depreciation; interest; income taxes;
property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods negotiated up front with the product; utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions.

Alternate IV SEP 2021.
d
2
i Total dollars planned to be subcontracted for an individual subcontracting plan; or the Contractors total projected sales, expressed in dollars, and the total value of projected subcontracts to support the sales for a commercial plan, including all indirect costs, with the exception of those such as the following: Employee salaries and benefits; payments for petty cash;
depreciation; interest; income taxes;
property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods negotiated up front with the product; utilities and
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