GENERAL SERVICES ADMINISTRATION ACQUISITION MANUAL (GSAM)

## Part 519—Small Business Programs

#### 519.001 Definitions.

“Enterprise development staff” means the group with responsibility for supporting small business outreach activities, developing contracting opportunities for small business, and similar activities. In Central Office, this is the Office of Enterprise Development (E). In Regions, this group may be a separate office (e.g., Office of Enterprise Development) or part of a broader office (e.g., Small Business Center or Program Support Division).

### Subpart 519.2—Policies

#### 519.201 General policy.

(a) The Associate Administrator of the Office of Enterprise Development (AAOED) is the Director of Small and Disadvantaged Business Utilization in GSA.

(b) The Office of Enterprise Development (E) appoints small business technical advisors (SBTAs) in writing after consultation with HCAs. Each Central Office Service and each Region has at least one SBTA. All references to SBTA in this part refer to the SBTA designated to support the particular contracting activity.

(c) The Associate Administrator of the Office of Enterprise Development is the official designated to determine whether, in order to achieve GSA’s goal for Small Disadvantaged Business (SDB) concerns, the use of the SDB mechanism in FAR 19.11 has resulted in an undue burden on non-SDB firms. The following procedures apply to making such a determination:

(1) You prepare the determination required by FAR 19.201(f)(1). Forward the determination through appropriate channels, including the SBTA, for signature by the HCA. The HCA will forward the determination to E for review.

(2) If the Associate Administrator of the Office of Enterprise Development makes an affirmative determination that the SDB mechanism results in an undue burden or is otherwise inappropriate, E will concur and forward the determination to the Office of Federal Procurement Policy (OFPP).

#### 519.202 Specific policies.

#### 519.202-2 Locating small business sources.

(a) Confer with your SBTA when you need help to identify additional small business sources to solicit for a requirement. The SBTA will coordinate with the Small Business Administration (SBA) Procurement Center Representative (PCR).

(b) At a minimum, the SBTA should query SBA’s PRO-Net database (http://www.sba.gov), the Department of Commerce Profiles database, Solicitation Mailing List files, and vendor capability statements on hand to identify sources.

(c) If the SBTA is unable to identify small, HUBZone small, small disadvantaged, or women-owned small business sources for an acquisition, the SBTA must consult with the enterprise development staff.

#### 519.202-4 Solicitation.

To encourage small business participation in an acquisition, particularly if subcontracting or teaming arrangements are feasible, you may issue a copy of the solicitation mailing list (if one is developed for the acquisition) concurrently with the solicitation.

### Subpart 519.3—Determination of Status as a Small Business, HUBZone Small Business, or Small Disadvantaged Business Concern

#### 519.302 Protesting a small business representation.

If SBA determines that an offeror is not a small business concern and there is evidence that the offeror knowingly misrepresented itself as a small business concern, refer the matter as follows:

(a) Contracting activities in Central Office must refer the matter to the Inspector General (J).

(b) Regional contracting activities must refer the matter to the Regional Inspector General.

#### 519.305 Protesting a representation of disadvantaged business status.

If SBA determines that a small business concern is not disadvantaged and there is evidence that the offeror knowingly misrepresented it’s disadvantaged status, refer the matter as follows:

(a) Contracting activities in Central Office must refer the matter to the Inspector General (J).

(b) Regional contracting activities must refer the matter to the Regional Inspector General.

#### 519.306 Protesting a firm’s status as a HUBZone small business concern.

If SBA determines that an offeror is not a HUBZone small business concern and there is evidence that the offeror knowingly misrepresented itself as such, refer the matter as follows:

(a) Contracting activities in Central Office must refer the matter to the Inspector General (J).

(b) Regional contracting activities must refer the matter to the Regional Inspector General.

### Subpart 519.4—Cooperation With the Small Business Administration

The Associate Administrator for Enterprise Development is the focal point for interfacing with SBA. Refer issues relating to small business programs through the designated SBTA.

### Subpart 519.5—Set-asides for Small Business

#### 519.502 Setting aside acquisitions.

#### 519.502-1 Requirements for setting aside acquisitions.

(a) A contracting activity that is meeting goals under the Small Business Competitiveness Demonstration Program must contract for construction, architectural and engineering, or trash/garbage collection services estimated to exceed $25,000 using unrestricted procedures (See FAR 19.10 and 519.10.). If this circumstance applies, do not use the procedures in 519.502-70. You may make awards under the 8(a) program.

(b) Once a contracting activity acquires a product or service successfully on the basis of a set-aside, the activity must acquire all future requirements for that product or service using set-aside procedures. If you determine that you no longer can reasonably expect to receive offers from at least two responsible small business concerns and make awards at fair market prices, use the procedures in FAR 19.506 to withdraw a repetitive set-aside.

#### 519.502-70 Review of non-set-aside determinations.

##### Acquisition expected to exceed $100,000.

(a) GSA Form 2689, Procurement Not Set Aside. If you decide that an acquisition expected to exceed $100,000 cannot be set aside for small business, record your decision on GSA Form 2689. Submit the form to the SBTA for review.

(b) Reviews and timeframes.

If… | Then…
--- | ---
(1) The acquisition meets any one of the following conditions: (i) It will be a multiple award schedule contract. (ii) The estimated value does not exceed $500 million, including options. (iii) The contract will cover only one region or designated locations in one region (at any dollar value). | The SBTA provides a copy of the GSA Form 2689 to the SBA representative for review. The SBTA and the SBA representative must complete their review within 5 workdays after the SBTA receives the Form, or request an extension from you.
(2) The acquisition, excluding multiple award schedule contracts, meets either one of the following conditions: (i) The estimated value exceeds $500 million (including options) and contract performance will occur in two or more regions. (ii) Based on political sensitivity or importance to GSA, the Associate Administrator for Enterprise Development designates the acquisition for review. | The SBTA provides a copy of the GSA Form 2689 to the AAOED for review and comment on the decision. After the AAOED review, the SBTA submits the GSA Form 2689 to the SBA representative for review. The AAOED and SBTA each have 5 workdays to review the decision. All reviews and comments must be completed within 10 workdays after the SBTA receives the Form, or the SBTA must request a time extension from you.

(c) Disagreements. If a reviewing official disagrees with your decision not to set-aside an acquisition, the SBTA must provide you the rationale for the disagreement or provide you with additional small business sources that are interested in and capable of fulfilling the requirement. Review and consider any information provided by the SBTA before making a decision.

(d) Resolving disagreements. The Contracting Director resolves disagreements between you and the SBTA. To resolve disagreements with the SBA representative, see FAR 19.505.

#### 519.503 Setting aside a class of acquisitions.

(a) Definition. A class set-aside is an item (or service), a group of related items under a Federal Supply Class (FSC), or a whole FSC set aside for exclusive small business participation on more than a one-time basis. If the item or group of items constitute only a small portion of an FSC, this definition still applies.

(b) Determinations. If you have procurement responsibility for the class of items or services involved, prepare the determination required by FAR 19.503(b). The determination can apply to either a total or partial set-aside.

#### 519.506 Withdrawing or modifying set-asides.

If you and the SBTA disagree over the withdrawal or modification of a set-aside, the SBTA must notify the AAOED at the same time the matter is referred to the SBA PCR.

#### 519.508 Solicitation provisions and contract clauses. Insert 552.219-70, Allocation of Orders—Partially Set-Aside Items, in solicitations and requirements type supply contracts that are partially set aside for small business.

### Subpart 519.6—Certificates of Competency and Determinations of Responsibility

#### 519.602 Procedures.

#### 519.602-3 Resolving differences between the agency and the Small Business Administration.

(a) Within 5 business days after requesting the SBA Area Office to refer an intention to issue a Certificate of Competency to SBA Headquarters for review, forward the information in paragraphs (a)(1) and (a)(2) of this subsection to the AAOED. This period may be extended by mutual agreement.

(1) Copies of all correspondence between GSA and SBA concerning the case. Include the initial referral notice of nonresponsibility.

(2) Copies of all technical documents sent to SBA (for example, the solicitation, preaward surveys, or any abstract of offers). Include any new information and justify your decision to continue the appeal.

(b) After considering all the facts and conferring with the applicable contracting activity, the AAOED will decide whether or not to file a formal appeal. Before deciding not to appeal, the AAOED must notify the concerned activity. The AAOED also must notify you of the decision regarding the appeal.

(c) For decisions on cases over $25,000,000, the AAOED will confer with the contracting activity before responding to SBA regarding either of the options in FAR 19.602-3(b)(1)(i) and (ii).

### Subpart 519.7—The Small Business Subcontracting Program

#### 519.700-70 Additional responsibilities.

In addition to FAR 19.705 responsibilities, your preaward responsibilities include:

(a) Develop target goals for sealed bid solicitations when practicable.

(b) Following FAR 15.306, conduct discussions with individual offerors, as appropriate, concerning the subcontracting plans submitted for a negotiated solicitation.

(c) Notify the AAOED after receipt of offers if you determine that an apparent successful offeror’s proposal has no subcontracting opportunities.

(1) Coordinate the notice through your Small Business Technical Advisor. In a regional contracting activity, also coordinate the notice through the regional enterprise development staff.

(2) Obtain the AAOED’s concurrence on the determination prior to contract award.

#### 519.702 Statutory Requirements.

In addition to the exemptions in FAR 19.702(b), other exemptions to the requirement for subcontracting plans include contracts with:

(a) Federal Prison Industries.

(b) Nonprofit agencies of the National Industries for the Blind (NIB) and NISH awarded under the provisions of the Javits-Wagner-O’Day Act.

#### 519.705 Responsibilities of the contracting officer under the subcontracting assistance program.

#### 519.705-2 Determining the need for a subcontracting plan.

(a) When you calculate the applicable threshold, consider the actual or estimated value of the contract for the entire term of the contract, including any option period(s). This also applies to schedule contracts and other indefinite delivery type contracts. Consider the estimated value of all orders expected to be placed during the term plus all options.

(b) FAR 19.705-2(d) permits you to require submission of subcontracting plans with initial offers under a negotiated acquisition. You must require all offerors (other than small business concerns) to submit subcontracting plans with their initial offers when a negotiated acquisition meets all four conditions listed below:

(1) You anticipate receiving individual subcontracting plans (not commercial plans).

(2) You will award on the basis of trade-offs among cost or price and technical and/or management factors under FAR 15.101-1.

(3) The acquisition is not a commercial item acquisition.

(4) The acquisition offers more than minimal subcontracting opportunities.

(c) Nothing in paragraph (a) above limits your ability to request subcontracting plans with initial offers under other negotiated acquisitions when you decide such action is appropriate under FAR 19.705-2(d). For example, such action may be appropriate for multiple award schedules where GSA may have responsibility for negotiating commercial plans.

#### 519.705-3 Preparing the solicitation.

(a) If an acquisition, excluding any multiple award schedule contract, will cover two or more Regions and is estimated to exceed $500 million (including options):

(1) In addition to the SBA PCR, provide the SBTA and Office of Enterprise Development (E) a reasonable period of time to review any solicitation requiring submission of a subcontracting plan and to submit advisory findings before issuing the solicitation. Ensure that evaluation criteria contained in the solicitation do not unnecessarily limit subcontracting opportunities for small, HUBZone small, small disadvantaged, and women-owned small business concerns.

(2) For a negotiated acquisition, if you believe that the acquisition provides substantial subcontracting opportunities, consider including the offeror’s subcontracting plan as an evaluation factor for award. This may be most appropriate in acquisitions when you expect individual plans or master plans. You may wish to consult with your SBTA, the enterprise development staff, or the Office of Enterprise Development for assistance in developing subcontracting plan evaluation criteria before incorporating the plan into the solicitation as an evaluation factor.

##### Target goals in sealed bidding

(b) Unrealistic target goals tend to inhibit competition or increase acquisition costs if goals are too high. Target goals that offer no challenge to potential contractors reflect poorly on GSA’s commitment to ensure maximum practicable use of small, HUBZone small, small disadvantaged, and women-owned small business concerns as subcontractors.

(c) In establishing target goals for sealed bid solicitations, avoid using mechanical formulas or similar approaches that may be considered arbitrary. Reviewing historical performance by contractors performing similar work is valid, but you should consider each solicitation independently in terms of the potential for subcontracting. Use as many information sources as practical, including your own knowledge of the supplies or services. Factors to consider in setting targets include:

(1) Manufacturing processes involved.

(2) Availability and location of potential subcontractors.

(3) The basis for establishing subcontracting relationships.

(4) The diversity in prevailing economic conditions in the place of contract performance.

(d) If you cannot establish realistic target goals, do not state specific targets in the solicitation.

(1) Establishing realistic target goals is likely to be a problem in contracting for supplies because the place of contract performance may not be known prior to contract award.

(2) Even if you can predict the area of contract performance because a particular industry is concentrated there, the diversity of manufacturing processes may affect the amount of subcontracting and how subcontracting relationships are established. For example, some manufacturers may use formal teaming arrangements or long term relationships versus nonrepetitive purchase orders.

#### 519.705-4 Reviewing the subcontracting plan.

(a) You may provide offerors a model subcontracting plan when you determine it appropriate, e.g., when it may facilitate evaluation or negotiation. Use the model plan developed by the Office of Enterprise Development (E) in Appendix 519A. Include the following notice on the transmittal, if you provide the model in response to a single request, or in the solicitation, if you include it as an attachment:

Notice to Offerors: “GSA provides this model plan as a tool. You must adapt this model plan to fit your subcontracting situation. The plan is not a fill-in-the-blank form and you must remove instructional language. This model does not establish minimum requirements for an acceptable plan. The model reflects objectives GSA encourages contractors to adopt.”

(b) Performance under other contracts is an indicator of an offeror’s understanding of the reasons for the law and benefits of the program.

(1) If an offeror prepared a subcontracting plan for another contract, contact the contracting officer responsible for administering the earlier plan to determine if the offeror met the plan’s objectives and submitted required reports in a timely manner.

(2) Consider overall compliance in your evaluation, not just whether or not the offeror met the goals established in the plan.

(3) Submission of timely reports is an indication the offeror takes its responsibilities seriously.

(c) Be flexible and guard against using arbitrary criteria when reviewing a subcontracting plan. If an offeror has not submitted a previously-approved commercial or master subcontracting plan, such detailed review may not be necessary. You may use the Subcontracting Plan Evaluation Checklist at Appendix 519B to identify potential weaknesses that should be called to the offeror’s attention.

(1) Remember that a positive goal is required to establish a gauge for measuring results and to provide an incentive for continuing efforts to increase the dollar value of subcontracts placed with small, HUBZone small, small disadvantaged, and women-owned small business concerns. Carefully scrutinize any subcontracting category (e.g., small business, HUBZone small business, etc.) where the offeror does not specify a goal and accept it only after assuring that no subcontracting opportunities exist. If you accept any category with no goal:

(i) You must document the file explaining why you accepted it.

(ii) The subcontracting plan must include an assurance that the contractor will make every effort to continue seeking subcontracting opportunities in the category that lacks a goal.

(2) One measure of the adequacy of a subcontracting plan is that it provides a challenge to the offeror and then builds upon previous achievements in subsequent contracts.

(3) Include in the contract file your basis for determining the subcontracting plan’s acceptability.

(d) You can not tell the offeror what its goals must be. You may tell the offeror what GSA’s national goals are. Ensure that an offeror’s subcontracting plan reflects realistic goals and provide the maximum opportunity practicable to small, HUBZone small, small disadvantaged, and women-owned small business concerns to participate as subcontractors. If necessary, obtain information from the offeror to substantiate the offeror’s proposed goals, past performance with respect to subcontracting, and the proposed good faith effort. This information may include the names of proposed subcontractors and other such data.

(e) When you receive subcontracting plans with initial offers, provide an opportunity to the SBTA to review the subcontracting plans of those offers in the competitive range. Allow the SBTA 5 workdays for review. Consider the SBTA’s comments in developing your negotiation strategy.

##### Negotiating Goals and Other Aspects of Plans

(f) For complex or large dollar value procurements, when an offeror proposes miniscule or minimally acceptable goals for small, HUBZone small, small disadvantaged, and women-owned small business concerns, ensure that the offeror has included all subcontracts that contribute to contract performance (see FAR 52.219-9(d)(1)).

(g) Develop a strategy for negotiating the subcontracting plan and goals just as you would for negotiating a contract. Be forceful in negotiating the subcontracting plan and, whenever possible, offer recommendations for subcontracting potential with small, HUBZone small, small disadvantaged, and women-owned small business concerns. Suggest organizations the offeror may contact to identify potential sources. For example, offerors may contact any of the following:

(1) Local SBA offices. An offeror can ask for assistance in accessing the SBA’s Procurement Marketing and Access Network (PRO-Net).

(2) Department of Commerce, Minority Business Development Agencies (MBDA’s). An offeror can ask for access to the MBDA’s Profile System. Refer offerors to Internet address http://www.mbda.gov for more information.

(3) GSA Regional enterprise development staffs and SBTAs, as well as Office of Enterprise Development.

(4) State, county, and city government minority business offices.

(5) Small, minority, and women-owned business associations by accessing Internet address http://www.gsa.gov/oed. Click on Publications, then Available Resources to obtain “Suggested Resources for Identifying Small, Minority, and Women-Owned Businesses”.

(6) Local chambers of commerce.

(7) Trade associations, professional organizations, and Procurement Technical Assistance Centers.

(h) In developing a negotiation strategy, consider whether the offeror’s plan is realistic and does more than merely restate the elements required by FAR clause 52.219-9. Question aspects of the plan that do not appear to be realistic or do not demonstrate a serious attempt to address requirements.

##### Commercial plans

(i) Obtain from the contractor copies of any commercial plan for the company’s fiscal year and approval document from another GSA contracting activity or another Federal agency. Incorporate these documents in the contract.

(j) If GSA is the first agency to enter into a contract with a company during the company’s fiscal year, you must approve the commercial plan, ensure receipt of the SF 295, and evaluate compliance with the plan. If contract administration is delegated, the Administrative Contracting Officer (ACO) generally is assigned responsibility for receiving the SF 295 and evaluating compliance. Subsequent GSA contracts awarded during the company’s same fiscal year and incorporating the previously approved plan will not require submission of subcontracting reports.

(k) If the commercial plan was approved by another agency, the first GSA contracting officer entering into a contract with the company during the company’s same fiscal year in which the plan was approved requires the contractor to submit the SF 295 report and monitors receipt of the report. GSA requires no other monitoring or evaluation of this plan.

#### 519.705-5 Awards involving subcontracting plans.

(a) For each contract that requires a subcontracting plan, both the SBTA and SBA PCR review the apparent successful offeror’s subcontracting plan. When you make multiple awards under a solicitation, submit the subcontracting plans of all apparent successful offerors.

(1) Except as noted in (b) below, provide the SBTA a copy of the plan at least 5 workdays before the anticipated award date.

(2) Consider any recommendations the SBTA or SBA PCR provides about whether to accept or reject a subcontracting plan. In the case of an unresolved disagreement, notify the AAOED and consider any subsequent advice the AAOED provides.

(b) For contracts that meet either of the conditions listed below, the AAOED will review the SBTA’s and SBA PCR’s recommendations. Provide the SBTA a copy of the plan at least 10 days before the anticipated award date. The SBTA and SBA PCR have 5 workdays to review and comment on the plan and the AAOED has 5 workdays to review their recommendations. All reviews must be completed in 10 workdays unless you grant an extension.

(1) Contract performance will occur in two or more Regions and the estimated value of the acquisition exceeds $500 million (including options), excluding multiple award schedule contracts.

(2) Based on political sensitivity or importance to GSA, the AAOED designates the procurement for review.

(c) Notification letter for individual contract plans. After approval of an individual contract plan, using the format below, send a letter to the contractor transmitting copies of the SF 294 and SF 295. Send the letter with the award package or as soon as practicable after award.

Name
Address
City, State, Zip Code
Re: Subcontracting Plan Reports Contract No.
Dear :
Your individual contract plan submitted for the subject contract has been approved. You must submit subcontracting reports on Standard Form (SF) 294, Subcontracting Report for Individual Contracts, and Standard Form (SF) 295, Summary Subcontract Report.
Use the SF 294 to report subcontracting activity under this contract. Submit the report semiannually by April 30 for the reporting period October 1–March 31 and by October 30 for the reporting period April 1–September 30. A separate report is required at contract completion. If requested by the Contracting Officer, you must furnish the name and size status of your subcontractor(s), and the dollar amount of the subcontract(s).
Use the SF 295 to report total subcontracting activity under all of your GSA contracts. Submit the report annually for the period October 1–September 30 (the Government fiscal year). The report is due on or before October 30th of each year. A new reporting cycle begins October 1st of each year.
Send the SF 294 report to: [insert address of contracting office administering the contract], with a copy to: [insert address of SBTA in Region or Central Office service where contract was awarded].
In addition to the Commercial Market Representative (CMR), forward the SF 295 to [insert the address of the contracting officer administering the contract] and to: GSA Office of Enterprise Development (E), 1800 F Street, NW, Washington, DC 20405.
The SF 294 and SF 295 report forms are enclosed.
Sincerely,
Contracting Officer
Enclosures (SF 294 and SF 295)

(d) Notification letter for commercial plans. After approval of a commercial plan, send a letter to the contractor transmitting copies of the SF 295 using the format below. Send the letter with the award package or as soon as practicable after award.

Name
Address
City, State, Zip Code
Re: Subcontracting Plan Reports Contract No.
Dear :
Your commercial plan, submitted in connection with the subject contract has been approved by [insert name, address, and telephone number of approving official]. You must submit subcontracting reports on Standard Form (SF) 295, Summary Subcontract Report.
The SF 295 is an annual report due on or before October 30th of each year. The reporting period is October 1–September 30, i.e., the Government fiscal year. The report should summarize subcontracting activity under all contracts awarded during the current fiscal year that are covered by this commercial plan.
If at any time during contract performance you are unable to identify capable small, HUBZone small, small disadvantaged, or women-owned small business concerns, please contact the Office of Enterprise Development by telephone at (202) 501–1021 or by facsimile at (202) 208–5938.
In addition to the Commercial Market Representative (CMR), forward the SF 295 to both: [insert address of contracting office administering the contract]; and send a copy to: GSA Office of Enterprise Development (E), 1800 F Street, NW, Washington, DC 20405.
The SF 295 report forms are enclosed.
Sincerely,
Contracting Officer
Enclosure (SF 295)

#### 519.705-6 Postaward responsibilities of the contracting officer.

In addition to responsibilities described in FAR 19.705-6, you must give the SBTA and the Office of Enterprise Development (E) a copy of the notice of award and the successful offeror’s subcontracting plan within five days of contract award or contract modification when applicable. The notice of award must contain all the following:

(a) Contractor’s name, address, and phone number.

(b) Subcontracting plan administrator’s name, address, and phone number.

(c) Contract number.

(d) Place of performance.

(e) Dollar amount of contract award.

(f) Period of contract performance.

(g) Description of items/services (including FPDS Product/Service Code).

(h) Contracting Officer’s name, address, and phone number.

(i) Administrative contracting office address and phone number.

(j) Type of plan.

(k) Approved goals stated both as percentages of total subcontracting planned and in dollars.

(l) A notation, “Awarded under the Energy Policy Act of 1992”, if the contract will be used to measure GSA achievements under Section 3021 of the Energy Policy Act of 1992.

#### 519.705-7 Liquidated damages.

(a) Initial assessment. Provide your SBTA an information copy of your initial assessment that the contractor did not make a good faith effort to comply with the plan.

(b) Final decision. Before making a final decision, consider all pertinent available information including the contractor’s response, if any, to your notification letter required by FAR 19.705-7 that the contractor did not comply with the plan. Document your decision in a “final decision”, which is appealable by the contractor under the “Disputes” clause of the contract. Provide your SBTA a copy of your final decision assessing liquidated damages. In addition to the FAR provisions, include in the final decision letter:

(1) A description of the contractor’s failure.

(2) Reference to the appropriate contract terms.

(3) A statement of the factual areas of agreement and disagreement.

(4) A statement of your decision with supporting rationale.

(5) A demand for liquidated damages.

(6) An explanation of the contractor’s appeal rights.

(c) Funds withheld from payments. If funds to collect liquidated damages are withheld from payments due, the funds may be returned to the applicable GSA account along with other funds that were obligated but not expended. If a commercial plan is involved, or if all payments have been made under a contract with an individual contract plan, instruct the contractor to submit a check to GSA. The GSA Office of Finance will transfer the funds to the Treasury Department for deposit in the general receipts account.

(d) Copy to the SBTA your final decision assessing liquidated damages.

#### 519.706 Responsibilities of the cognizant administrative contracting officer.

(a) If you administer a contract with an individual contract plan, you must also monitor receipt of SF 294 reports.

(b) On all contracts with a subcontracting plan (individual or commercial), you must monitor receipt of the SF 295 reports.

(c) Review reports for progress in meeting subcontracting goals by comparing the applicable report with the plan. If percentage goals are not met, require the contractor to explain the shortfall in the “Remarks” block of the subcontracting report. You may also require the contractor to submit evidence of its outreach efforts to locate and provide subcontracting opportunities to small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns.

(d) If an SF 294 or SF 295 is not received within 10 days of the due date, contact the contractor and request that the report be submitted immediately. For contracts with individual contract plans, pay particular attention to the final SF 294 required at contract completion. Issue to contractors who do not respond to the first notice a second notice by certified mail indicating:

(1) The named report has not been received.

(2) The contractor’s failure to submit the report is a material breach of its contract (see FAR 52.219-9, Small Business Subcontracting Plan).

(3) If the report is not received within 10 days from the date of the notice, you will consider withholding payments until the report is received or terminating the contract for default. To ensure that the facts support a termination for default, the notice should provide the contractor with the opportunity to show cause why the contract should not be terminated for default. [Note: These statements do not apply to leases of real property unless the terms of the lease expressly provide for withholding of payment or termination under this circumstance.]

(4) Failure to submit the report may affect the contractor’s ability to receive future awards from GSA (see FAR 9.104-3(c)) and willful failure to perform or a history of failure to perform may result in debarment from future contracting with the Government for a period of time (see FAR 9.406-2(b)).

(5) That the report should be submitted to you and a copy of the report must be sent to the Office of Enterprise Development (E), if it is an SF 295 report, or to the appropriate SBTA, if it is an SF 294 report.

#### 519.708 Contract clauses. #### 519.708-70 Solicitation provisions. Insert the following provisions as directed: (a) 552.219-71, Notice to Offerors of Subcontracting Plan Requirements, on the cover page of solicitations containing the clause at FAR 52.219-9, Small Business Subcontracting Plan. (b) 552.219-72, Preparation, Submission, and Negotiation of Subcontracting Plans, in solicitations requiring submission of the subcontracting plan with initial offers.
(c) 552.219-73, Goals for Subcontracting Plan as follows: (1) Use the basic provision in sealed bid solicitations containing FAR 52.219-9 if you are able to establish realistic target goals. (2) Use Alternate I in: (i) Sealed bid solicitations if you cannot establish target goals. (ii) Negotiated solicitations that include FAR 52.219-9, but do not include 552.219-72.

### Subpart 519.8—Contracting With the Small Business Administration (The 8(a) Program)

#### 519.803 Selecting acquisitions for the 8(a) program.

#### 519.803-70 Contracting officer evaluation of recommendations for 8(a) set-aside(s).

(a) If you disagree with a recommendation by the Associate Administrator for Enterprise Development or the SBTA to set aside a procurement for award under the 8(a) program, discuss the matter with the official who made the recommendation. If you decide not to award the contract under the 8(a) program, forward a copy of the documentation required by FAR 19.202-1(e)(4) to the Office of Enterprise Development (E) within 10 working days.

(b) Once a contracting activity acquires a product or service successfully on the basis of an 8(a) set-aside, the activity must acquire all future requirements for that product or service using 8(a) set-aside procedures. If you determine that acquiring the product or service as an 8(a) set-aside is no longer in the Government’s best interest, use the procedures in FAR 19.506 to withdraw a repetitive set-aside.

#### 519.803-71 Withdrawing or modifying 8(a) set-asides.

If you and the SBTA disagree over the withdrawal or modification of a set-aside, the SBTA must notify the Associate Administrator for Enterprise Development at the same time the matter is referred to the SBA PCR.

#### 519.870 Direct 8(a) contracting.

#### 519.870-1 Authority and applicability.

(a) Under a May 6, 1998, Memorandum of Understanding (MOU) between GSA and SBA, SBA delegated to GSA its authority under Section 8(a)(1)(a) of the Small Business Act to enter into prime contracts and Section 8(a)(1)(B) to subcontract the performance of the contracts to eligible 8(a) participants. To implement the MOU, GSA obtained a class deviation to the Federal Acquisition Regulation (FAR) permitting direct 8(a) contracting.

(b) The delegation streamlines the acquisition process for requirements not exceeding the simplified acquisition threshold (SAT) by eliminating offering letters and acceptance letters. For acquisitions over the SAT, this delegation expedites the contracting process by shortening the period of SBA’s acceptance of the requirement for the 8(a) program from 15 working days to 5 working days, and eliminating the requirement for multiple copies of the award document, SBA’s signature, and the tripartite agreement.

(c) This authority applies to all 8(a) acquisitions conducted by FSS, FTS, and PBS. It does not apply to FSS’s multiple award schedule program.

#### 519.870-2 Acquisitions at or under the SAT.

(a) For acquisitions over the micropurchase threshold but not over the SAT, use the simplified acquisition procedures of FAR Part 13 to issue purchase orders or contracts to 8(a) participants.

(b) You are not required to send offering letters to, nor obtain acceptance letters from, SBA.

(c) Use PRO-Net to establish that the selected 8(a) firm is a current program participant.

(d) Establish the price with the selected 8(a) firm and prepare and issue a purchase order or contract in accordance with FAR Part 13.

(e) Forward to the SBA District Office serving the 8(a) firm a copy of the purchase order or contract within 5 days after the order is issued.

#### 519.870-3 Acquisitions exceeding the SAT.

(a) In addition to the requirements of FAR 19.804-2, the offering letter must:

(1) State that the requirement is being offered under the GSA/SBA Memorandum of Understanding.

(2) Ask SBA to fax or e-mail its acceptance letter to you.

(b) SBA will determine the eligibility of the firm(s) and advise you within 5 working days of the receipt of the request. If SBA determines the firm is ineligible, then submit information on the next low offeror or next apparent successful offeror (as applicable) to the cognizant SBA district office.

(c) SBA must transmit its decision whether to accept the requirement to you in writing within 5 working days of receipt of the offering letter.

(d) If you do not receive an acceptance or rejection of the offering from SBA within 5 days of SBA’s receipt of the offering letter, you may assume that SBA has accepted the requirement and proceed with the acquisition.

(e) The acceptance letter includes all elements of eligibility (e.g., determination of adverse impact, Standard Industrial Classification code appropriateness, and program eligibility) of the recommended 8(a) contractor. SBA will make a final determination of size eligibility for the procurement as of the date of the 8(a) concern’s initial offer which includes price.

(f) When required by FAR 15.4, obtain cost or pricing data directly from the 8(a) contractor.

#### 519.870-4 Sole source requirements.

(a) For a sole source 8(a) requirement over the simplified acquisition threshold, the selected contractor is responsible for negotiating with you within the time you establish. If the 8(a) contractor does not negotiate within the established time and you cannot allow additional time, notify SBA. When you receive SBA’s approval, proceed with the acquisition from other sources.

(b) You have authority to negotiate directly with the 8(a) participant. However, if requested by the 8(a) participant, the SBA may participate in negotiations.

(c) Prepare the contract award or order to the 8(a) firm using your contracting activity’s normal, non-8(a) procedures for similar acquisitions (e.g., contract type and dollar amount), except for the following:

(1) The award form must cite 41 U.S.C. 253(c)(5) and 15 U.S.C. 637(a) as the authority for use of other than full and open competition.

(2) Include SBA’s requirement number on the contract for acquisitions exceeding the SAT.

(3) Use a single award document between GSA and the 8(a) contractor. As such, a single signature by the Contracting Officer who is identified as having concurrent authority under the MOU to enter into 8(a) contracts will suffice (i.e., an SBA signature is not required). The “Issued by” block must identify the awarding GSA office. Your title must include SBA and the appropriate GSA business line, as illustrated below:

Contracting Officer for SBA and GSA/(Name of Business Line)

(4) For a contract, have the 8(a) contractor sign the award document as the prime contractor. Place the 8(a) contractor’s name and address in the “awarded to” or “contractor name” block on the appropriate forms. At your discretion, you may also have the contractor sign a purchase order (See FAR 13.302-3).

#### 519.870-5 Competitive requirements.

(a) Advertise competitive 8(a) acquisitions in the Commerce Business Daily through the Electronic Posting System (EPS) in accordance with FAR 5.101(a)(1) and GSAR 505.101. Provide a copy of the announcement to the SBA’s coordinating office.

(b) Prepare the contract or order, and signatures, using the procedures in 519.870-4(c).

#### 519.870-6 Contract administration.

(a) Awards under the MOU are subject to 15 U.S.C. 637(a)(21). These contracts and orders contain the clause at 552.219-74, Section 8(a) Direct Award, that requires the 8(a) contractor to notify the SBA and the Contracting Officer when ownership of the firm is being transferred.

(b) For any contract or purchase order awarded pursuant to this MOU, you must coordinate contract termination and novation proceedings with SBA prior to initiating action.

#### 519.870-7 Reporting.

(a) Under the MOU, GSA must report quarterly to SBA on direct (8) actions. GSA will make these reports to SBA through the Office of Enterprise Development (E).

(b) Each business line (FSS, FTS, PBS)) will be responsible for electronically reporting to E within 10 days at the close of each fiscal year quarter the following information for each direct 8(a) contract, order, and modification:

(1) Contractor’s name.

(2) Contract number.

(3) SBA requirement number (for new contract awards only).

(4) Dollar amount obligated.

(5) Contract type.

(6) Contract period.

(7) If applicable, the modification number, modification award date, modification dollar amount.

(c) To facilitate reporting and avoid duplication of effort, GSA has developed a pre-programmed retrieval from the GSA Procurement Data System (GPDS). Each business line must designate a point of contact to access the system and retrieve the report. The report will have all of the required data fields except the “requirement number” which is provided by SBA to the contracting officer for new contract awards (not modifications or orders) over the SAT. The designated point of contact will need to obtain the “requirement number” for new actions that appear on the report and add the “requirement number” in the blank field provided for any new contracts over the SAT.

#### 519.870-8 Contract clauses. (a) Insert the following clauses in solicitations, contracts, and orders issued under the MOU: (1) Insert the clause at 552.219-74, Section 8(a) Direct Award. (2) Insert the clause at FAR 52.219-14, Limitation on Subcontracting. (3) Insert the clause at FAR 52.219-18, Notification of Competition Limited to Eligible 8(a) Concerns. Substitute the paragraph below for paragraph (c) of the clause. Add the word “Deviation” at the end of the clause title. “(c) Any award resulting from this solicitation will be made directly by the Contracting Officer to the successful 8(a) offeror selected through the evaluation criteria set forth in this solicitation.”
(b) Do not use the clauses at FAR 52.219-11, Special 8(a) Contract Conditions, FAR 52.219-12, Special 8(a) Subcontract Conditions, or FAR 52.219-17, Section 8(a) Award.

### Subpart 519.10—Small Business Competitiveness Demonstration Program

#### 519.1006 Procedures.

#### 519.1006-70 Designated industry goals.

(a) GSA goals. GSA goals for designated industry groups are as follows:

Designated Industry | Small Business Goal | Emerging Small Business Goal
--- | --- | ---
Construction under standard industrial classification (SIC) codes that comprise major groups 15, 16, and 17 (excluding dredging) | 40% | 15%
Architect-Engineer (A-E) services (including surveying and mapping) under SIC codes 7389, 8711, 8712, or 8713 (limited to FPDS service codes C111 through C216, C219, T002, T004, T008, T009, T014, and R404) awarded under the Brooks A-E Act selection procedures | 40% | 15%
Refuse systems and related services, including portable sanitation services, under SIC codes 4212 or 4953, limited to FPDS service code S205 | 40% | 15%

(b) Calculating goal achievement. All prime contract awards to small business or emerging small business, including awards under the 8(a) program, sole source and the HUBZone Act of 1997, count toward goal attainment. Contract awards made to fulfill the 15 percent goal for emerging small business also count toward attainment of the 40 percent goals for small business.

(c) Good faith effort for emerging small business awards. GSA must make a good faith effort to award not less than 15 percent of the value of awards in the designated industry groups to emerging small business.

(d) Monitoring goal achievement. The Senior Procurement Executive will monitor goal achievement on an annual basis through the GSA Procurement Data System (GPDS). The Senior Procurement Executive will provide reports to the Office of Enterprise Development (E) for forwarding to the Small Business Administration (SBA). These annual reviews and reports are due to SBA no later than January 31 of each year. GSA will measure goal achievement for the preceding 12 month period.

(e) Notification of changes to procedures. The Senior Procurement Executive will provide notice of changes to agency solicitation procedures based on goal attainment through changes to the GSAM. The Senior Procurement Executive will also publish public notice of changes to solicitation procedures in the Commerce Business Daily and the Federal Register under procedures established by OFPP.

(f) Failure to attain goals. If goal attainment for any designated industry group falls below 40 percent, GSA shall reinstate set-asides for that designated industry group at organizational unit(s) within the agency that failed to achieve the 40 percent goal.

#### 519.1006-71 Procedures for designated industry groups.

(a) Emerging small business procurements.

(1) Reserve the following for emerging small businesses:

(i) Procurements of construction or trash/garbage collections with an estimated value of $25,000 or less if you have a reasonable expectation of obtaining offers from two or more sources that will be competitive in terms of market price, quality, and delivery.

(ii) Procurements of A-E services with an estimated value of $50,000 or less if you have a reasonable expectation of obtaining offers from three or more sources that will be competitive in terms of market price, quality, and delivery.

(2) You may use any procurement method under the reserve program, not just simplified acquisition procedures.

(3) The reserve program applies only to new awards. Modifications within the scope of work of contracts having an initial award value in excess of the $25,000 for construction and trash/garbage collection service or $50,000 for A-E service are not subject to the reserve program.

(4) If you cannot reserve a procurement for emerging small businesses, process it as a small business set aside under FAR 13.105 or in accordance with FAR 19.5 or 19.8.

(5) If you determine that a procurement cannot be set aside for small business under FAR 19.5 or 19.8, you may make the procurement using unrestricted procedures.

(b) Unrestricted procurements. You may make procurements of construction or trash/garbage collection services with an estimated value in excess of $25,000 and procurements of A-E services with an estimated value in excess of $50,000 on an unrestricted basis as long as quarterly reviews show that GSA, as an agency, has attained the 40 percent goals.

(1) The 40 percent goal applies to each of the 3 major groups in construction (group 15, 16, and 17), to trash/garbage collection, and to A-E services.

(2) If goal attainment, for GSA as an agency, in any individual SIC code or FPDS service code drops below 40 percent, the Senior Procurement Executive will reinstate small business set-asides even if the major group met the 40 percent goal. Competition will be restricted to small business, in accordance with FAR 19.5, on future procurements by the GSA contracting activities (e.g., Regions) that failed to attain the goal. Other GSA contracting activities that meet the goals will continue to use unrestricted procedures.

(3) You may continue to use unrestricted procedures if GSA fails to meet the 15 percent goal for emerging small businesses.

(4) You may set aside procurements in the designated industry groups, under the HUBZone Empowerment Contracting Program, that exceed the emerging small business reserve amount even though GSA is attaining its 40 percent small business goal. This is consistent with the Small Business Regulations implementing the HUBZone Act.

(5) Notwithstanding the Small Business Competitiveness Demonstration Program, you may award contracts under the 8(a) program at any time.

(c) Contract award documents. For each procurement awarded under the program, include the following statement on the award document:

“This procurement is being made under the Small Business Competitiveness Demonstration Program.”

(d) Reporting. Report contract awards under the program that exceed $500 on Standard Form 279 using standard GPDS reporting procedures (See 504.602-70).

#### 519.1006-72 Goal attainment for period: Fiscal Year 1999.

(a) Report. Appendix 519C provides the Report on Small Business Participation Under the Small Business Competitiveness Demonstration Program for Designated Industry Groups for all of PBS and a separate report for each PBS region. These reports reflect performance during the period from October 1, 1998 through September 30, 1999.

(b) Performance toward small business goals. Review of cumulative award data from the GSA Procurement Data System for the period beginning October 1, 1998 through September 30, 1999, indicates that:

(1) GSA met the 40 percent goal for construction industry groups 16 and 17. However, not all organizational units met the 35 percent goal in all individual SIC codes.

(2) GSA did not meet the 40 percent overall goal in construction industry group 15 or in A-E services.

(3) GSA did meet the 40 percent overall goal in refuse systems and related services (trash/garbage collection services). The 35 percent rule does not apply to refuse systems and related services (trash/garbage collection services).

(c) Performance toward emerging small business goals. Review of cumulative award data from the GSA Procurement Data System for the period beginning October 1, 1998 through September 30, 1999, indicates that:

(1) GSA exceeded the 15 percent goal for emerging small business concerns in construction industry groups 16 and 17 and in refuse systems and related services.

(2) GSA did not meet the 15 percent goals in construction industry group 15 (General Building Contractors) and A-E services.

#### 519.1006-73 Procurement procedures for solicitations issued on or after February 1, 2000.

(a) Construction or trash/garbage collection services with an estimated value of $25,000 or less and procurement of A-E services with an estimated value of $50,000 or less. Follow the procedures in 519.1006-71 for these procurements.

(b) Procurements above the reserve levels in 519.1006-71(a). Use the following procedures for construction or trash/garbage collection services estimated to exceed $25,000 and A-E services estimated to exceed $50,000.

(1) Construction services in SIC Groups 15, 16, and 17. Conduct procurements in these SIC Groups on an unrestricted basis except as follows. For the regions and SIC Groups listed below, you must set aside the procurements for small business when you have a reasonable expectation of obtaining competition from two or more small businesses. If no such expectation exists, you may conduct the procurement on an unrestricted basis.

Region | SIC
--- | ---
Region 1 | 1711, 1794, and 1796
Region 3 | 1799
Region 4 | 1541, 1542, 1711
Region 5 | 1542
Region 7 | 1541, 1611
National Capital Region | 1542, 1711

(2) Trash/garbage collection services in PSC S205. Conduct any procurement for refuse services in PSC S205 on an unrestricted basis.

(3) Architect-Engineer services (all PSC codes under the Program). Conduct procurements for A-E services under the Program on an unrestricted basis except as follows. For the regions and PSC codes listed below, you must set aside the procurements for small business when you have a reasonable expectation of obtaining competition from two or more small businesses. If no such expectation exists, you may conduct the procurement on an unrestricted basis.

Region | PSC
--- | ---
Region 2 | C111
Region 3 | C111
Region 4 | C119, C211, and C219
Region 5 | C111 and C211
Region 6 | C111
Region 8 | C111
Region 10 | C111
National Capital Region | C211

### Subpart 519.11—Price Evaluation Adjustment for Small Disadvantaged Business Concerns

#### 519.1102 Applicability.

In addition to the exceptions listed in FAR 19.1102(b), the price evaluation adjustment (PEA) does not apply to:

(a) Acquisitions of leasehold interests in real property.

(b) Orders placed under a Federal Supply Schedule.

#### 519.1103 Procedures.

(a) Decision chart. Appendix 519D provides a decision chart to help you determine whether a PEA applies and how to apply it to a specific acquisition. Appendix 519E provides examples of how to apply both the PEA and the HUBZone price evaluation preference.

(b) Total contract amount. The PEA applies across the total contract amount, not just that portion proposed to be performed by the small business concern. For example, if the small business concern proposes to perform 80% of the work and subcontract 20% to large business concern, then the 10% adjustment applies to 100%.

(c) Single and multiple awards. Apply the PEA to each group of items on which you will make award. That is, if you will make one award, the PEA applies to 100% of the items. If you will make more than one award, the PEA applies to each group where the predominant SIC code and region, if applicable, is listed. Add other evaluation factors (e.g., transportation costs or rent-free use of Government facilities) to the offers before applying the PEA.

(d) Industries eligible by region. In a SIC major group authorized by region, the offeror’s address governs whether the PEA applies (i.e., not the place of performance or contract office location).

(e) Example. The following provides an example of how to apply the PEA. Assume you have an acquisition affected by the PEA and the PEA is 10%. You receive two offers; one from an SDB, and one from a non-SDB (e.g., a small or other than small business concern). The SDB’s price for the acquisition is $105,000, while the non-SDB’s price is $100,000. You apply the PEA of 10% to the non-SDB’s price, making the evaluated price $110,000. The SDB wins the award because its price of $105,000 is less than the non-SDB’s evaluated price of $110,000. Note that you must still determine that the price ($105,000) proposed for award is considered fair and reasonable under the guidelines in FAR 15.404-1(b). Also note that the PEA does not necessarily apply to all other offerors (see FAR 19.1103(a)).

(f) Equal low offers or tie bids. Follow the procedures in FAR 14.408-6 to resolve equal low offers or tie bid situations. If you have an offer from a HUBZone small business, see 519.13 and the examples in Appendix 519E.

If, after applying the PEA, you have a tie between… | Then…
--- | ---
(1) Two SDBs. (2) An SDB and an other small business concern. | FAR 14.408-6(a)(1) requires award to the firm that is also a labor surplus area concern. If both or neither are a labor surplus area concern, then use FAR 14.408-6(b) to determine which offeror to select.
(3) An SDB and a large business concern. | FAR 14.408-6(a)(2) requires award to the SDB, not because it is an SDB, but because it is a small business concern.

### Subpart 519.12—Small Disadvantaged Business Participation Program

#### 519.1201 General.

A solicitation may separately contain source selection evaluation factors or subfactors for small and women-owned small business concerns. However, any factor or subfactor for SDB concerns must comply with FAR 19.12 and this subpart.

#### 519.1202 Evaluation factor or subfactor. #### 519.1202-2 Applicability In addition to the exceptions in FAR 19.1202-2, do not evaluate the extent of participation of SDB concerns in performance of multiple award schedule contracts when all fair and reasonable offers from responsible sources are accepted.

#### 519.1202-4 Procedures.

An offeror may receive credit under the evaluation factor only for proposed SDB participation by a prime contractor, joint venture partner, teaming arrangement member, or subcontractor in the authorized Standard Industrial Classification (SIC) Major Groups. At this time these are the same SIC Major Groups authorized for the PEA (see FAR 19.201(b)).

#### 519.1203 Incentive subcontracting with small disadvantaged business concerns.

(a) To include monetary incentives in a contract under FAR 19.1203, you must have funds available for the incentives and obligate these at the time of contract award.

(b) Do not provide for monetary incentives under FAR 19.1203 in a contract that includes an award fee.

### Subpart 519.13—Historically Underutilized Business Zone (HUBZone) Program

#### 519.1305 HUBZone set-aside procedures.

(a) Reviews and timeframes. For an acquisition that exceeds the simplified acquisition threshold, if you decide not to set the acquisition aside for HUBZone Small Businesses, submit your written decision to the SBTA for review. The following reviews and timeframes apply:

If… | Then…
--- | ---
(1) The acquisition meets any one of the following conditions: (i) It will be a multiple award schedule contract. (ii) The estimated value does not exceed $500 million, including options. (iii) The contract will cover only one region or designated locations in one region (at any dollar value). | The SBTA provides a copy of the decision not to set aside for HUBZone small business concerns to the SBA representative for review. The SBTA and the SBA representative must complete their review within 5 workdays after the SBTA receives the decision, or request an extension from you.
(2) The acquisition, excluding multiple award schedule contracts, meets either one of the following conditions: (i) The estimated value exceeds $500 million (including options) and contract performance will occur in two or more regions. (ii) Based on political sensitivity or importance to GSA, the Associate Administrator for Enterprise Development designates the acquisition for review. | The SBTA provides a copy of the decision to the AAOED for review and comment. After the AAOED review, the SBTA submits the decision to the SBA representative for review. The AAOED and SBTA each have 5 workdays to review the decision. All reviews and comments must be completed within 10 workdays after the SBTA receives the decision, or the SBTA must request a time extension from you.

(b) Disagreements. If a reviewing official disagrees with your decision not to set-aside an acquisition, the SBTA must provide you the rationale for the disagreement or provide you with additional HUBZone small business sources that are interested in and capable of fulfilling the requirement. Review and consider any information provided by the SBTA before making a decision.

(c) Resolving disagreements. The Contracting Director resolves disagreements between you and the SBTA. To resolve disagreements with the SBA representative, see FAR 19.1305(e).

(d) Setting aside a class of acquisitions.

(1) Definition. A HUBZone small business class set-aside means an item, a group of related items under a Federal Supply Class (FSC), or a whole FSC set aside for exclusive HUBZone small business participation on more than a one-time basis. If the item or group of items constitute only a small portion of an FSC, this definition still applies.

(2) Determination. If you have procurement responsibility for the class of items involved, prepare the determination required by FAR 19.503(b).

(3) Withdrawing or modifying HUBZone small business concern set-asides: If you and the SBTA disagree over the withdrawal or modification of a HUBZone small business set-aside, the SBTA must notify the AAOED at the same time the matter is referred to the SBA PCR.

#### 519.1307 Price evaluation preference for HUBZone small business concerns.

Appendix 519E provides examples of how to apply both the PEA and the HUBZone price evaluation preference (PEP).