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Federal Acquisition Regulation 52.219–14: Limitations on Subcontracting

Summary

Federal Acquisition Regulation 52.219–14, Limitations on Subcontracting (OCT 2022), in 48 CFR Ch. 1 (10–1–25 Edition), on a page that also carries 52.219–12 Special 8(a) Subcontract Conditions and 52.219–13 Notice of Set-Aside of Orders (MAR 2020). Under paragraph (e) of the clause the contractor agrees that for services (except construction) it will not pay more than 50 percent of the amount paid by the Government to subcontractors that are not similarly situated entities, and not more than 50 percent for supplies, excluding the cost of materials. For construction by special trade contractors it will not pay more than 75 percent. Paragraph (g) says a small business protégé in an approved joint venture shall perform at least 40 percent of the work performed by the joint venture.

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“Federal Acquisition Regulation 52.219–14: Limitations on Subcontracting.” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/cfr-2025-title48-vol2-sec52-219-14-2026-09-19-1b981cd263/, SHA-256 82247307c29fa85a81b9ce355d32de4fa4d2bfe421966b91f56f245cc7322d5b.

Full text

                                                                    Federal Acquisition Regulation                                                                   52.219–14

                                                                                      (End of clause)                          NOTICE OF SET-ASIDE OF ORDERS (MAR 2020)
                                                                                                                                 (a) The Contracting Officer may set aside
                                                                    [48 FR 42478, Sept. 19, 1983, as amended at 54             orders for the small business concerns identi-
                                                                    FR 46009, Oct. 31, 1989; 55 FR 3888, Feb. 5, 1990;         fied in 19.000(a)(3).
                                                                    61 FR 67422, Dec. 20, 1996; 82 FR 4731, Jan. 13,             (b) The Contracting Officer will give notice
                                                                    2017]                                                      of the order or orders, if any, to be set aside
                                                                                                                               for small business concerns identified in
                                                                    52.219–12 Special            8(a)     Subcontract          19.000(a)(3) and the applicable small business
                                                                        Conditions.                                            program. This notice, and its restrictions,
                                                                                                                               will apply only to the specific orders that
                                                                      As prescribed in 19.811–3(b), insert the                 have been set aside for any of the small busi-
                                                                    following clause:                                          ness concerns identified in 19.000(a)(3).

                                                                     SPECIAL 8(a) SUBCONTRACT CONDITIONS (OCT                                  (End of clause)
                                                                                        2019)
                                                                      (a) The Small Business Administration                      Alternate I (MAR 2020). As prescribed
                                                                    (SBA) has entered into Contract No. ____                   in 19.507(f)(2), substitute the following
                                                                    [insert number of contract] with the ____ [insert          paragraph (a) for paragraph (a) of the
                                                                    name of contracting agency] to furnish the                 basic clause:
                                                                    supplies or services as described therein. A                 (a) The Contracting Officer will set aside
                                                                    copy of the contract is attached hereto and                orders for the small business concerns identi-
                                                                    made a part hereof.                                        fied in 19.000(a)(3) when the conditions of
                                                                      (b) The ____ [insert name of subcontractor],             FAR 19.502–2 and the specific program eligi-
                                                                    hereafter referred to as the subcontractor,                bility requirements are met, as applicable.
                                                                    agrees and acknowledges as follows:
                                                                                                                               [76 FR 68036, Nov. 2, 2011, as amended at 85
                                                                      (1) That it will, for and on behalf of the               FR 11770, Feb. 27, 2020]
                                                                    SBA, fulfill and perform all of the require-
                                                                    ments of Contract No. ___ [insert number of                52.219–14 Limitations            on       Subcon-
                                                                    contract] for the consideration stated therein                 tracting.
                                                                    and that it has read and is familiar with
                                                                    each and every part of the contract.                         As prescribed in 19.507(e), insert the
                                                                      (2) That the SBA has delegated responsi-                 following clause:
                                                                    bility, except for novation agreements, for
                                                                                                                                LIMITATIONS ON SUBCONTRACTING (OCT 2022)
                                                                    the administration of this subcontract to the
                                                                    ___ [insert name of contracting agency] with                 (a) This clause does not apply to the unre-
                                                                    complete authority to take any action on be-               stricted portion of a partial set-aside.
                                                                    half of the Government und_d conditions of                   (b) Definition. Similarly situated entity, as
                                                                    this subcontract.                                          used in this clause, means a first-tier sub-
                                                                      (3) That it will notify the [insert name of              contractor, including an independent con-
                                                                    contracting agency] Contracting Officer in                 tractor, that—
                                                                    writing immediately upon entering an agree-                  (1) Has the same small business program
                                                                    ment (either oral or written) to transfer all              status as that which qualified the prime con-
                                                                                                                               tractor for the award (e.g., for a small busi-
                                                                    or part of its stock or other ownership inter-
                                                                                                                               ness set-aside contract, any small business
                                                                    est to any other party.
                                                                                                                               concern, without regard to its socioeconomic
                                                                      (c) Payments, including any progress pay-                status); and
                                                                    ments under this subcontract, will be made                   (2) Is considered small for the size standard
                                                                    directly to the subcontractor by the ____                  under the North American Industry Classi-
                                                                    [insert name of contracting agency].                       fication System (NAICS) code the prime con-
                                                                                                                               tractor assigned to the subcontract.
                                                                                      (End of clause)                            (c) Applicability. This clause applies only
                                                                                                                               to—
                                                                    [48 FR 42478, Sept. 19, 1983, as amended at 54               (1) Contracts that have been set aside for
                                                                    FR 34757, Aug. 21, 1989; 54 FR 46009, Oct. 31,             any of the small business concerns identified
                                                                    1989; 55 FR 3889, Feb. 5, 1990; 55 FR 38518,               in 19.000(a)(3);
                                                                    Sept. 18, 1990; 61 FR 67422, Dec. 20, 1996; 82 FR            (2) Part or parts of a multiple-award con-
                                                                    4731, Jan. 13, 2017; 84 FR 47864, Sept. 10, 2019]          tract that have been set aside for any of the
                                                                                                                               small business concerns identified in
                                                                    52.219–13       Notice of Set-Aside of Or-                 19.000(a)(3);
                                                                        ders.                                                    (3) Contracts that have been awarded on a
                                                                                                                               sole-source basis in accordance with subparts




skersey on DSK4WB1RN3PROD with CFR
                                                                      As prescribed in 19.507(f)(1), insert the                19.8, 19.13, 19.14, and 19.15;
                                                                    following clause:                                            (4) Orders expected to exceed the simplified
                                                                                                                               acquisition threshold and that are—

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                                                                    52.219–15                                                              48 CFR Ch. 1 (10–1–25 Edition)
                                                                      (i) Set aside for small business concerns                tract performance, excluding the cost of ma-
                                                                    under multiple-award contracts, as described               terials, to subcontractors that are not simi-
                                                                    in 8.405–5 and 16.505(b)(2)(i)(F); or                      larly situated entities. Any work that a
                                                                      (ii) Issued directly to small business con-              similarly situated entity further sub-
                                                                    cerns under multiple-award contracts as de-                contracts will count towards the prime con-
                                                                    scribed in 19.504(c)(1)(ii);                               tractor’s 75 percent subcontract amount that
                                                                      (5) Orders, regardless of dollar value, that             cannot be exceeded.
                                                                    are—                                                         (f) The Contractor shall comply with the
                                                                      (i) Set aside in accordance with subparts                limitations on subcontracting as follows:
                                                                    19.8, 19.13, 19.14, or 19.15 under multiple-
                                                                                                                                 (1) For contracts, in accordance with para-
                                                                    award contracts, as described in 8.405–5 and
                                                                    16.505(b)(2)(i)(F); or                                     graphs (c)(1), (2), (3) and (6) of this clause—
                                                                      (ii) Issued directly to concerns that qualify              [Contracting Officer check as appropriate.]
                                                                    for the programs described in subparts 19.8,                 ____By the end of the base term of the con-
                                                                    19.13, 19.14, or 19.15 under multiple-award                tract and then by the end of each subsequent
                                                                    contracts, as described in 19.504(c)(1)(ii); and           option period; or
                                                                      (6) Contracts using the HUBZone price                      ____By the end of the performance period
                                                                    evaluation preference to award to a                        for each order issued under the contract.
                                                                    HUBZone small business concern unless the                    (2) For orders, in accordance with para-
                                                                    concern waived the evaluation preference.                  graphs (c)(4) and (5) of this clause, by the end
                                                                      (d) Independent contractors. An independent              of the performance period for the order.
                                                                    contractor shall be considered a subcon-                     (g) A joint venture agrees that, in the per-
                                                                    tractor.                                                   formance of the contract, the applicable per-
                                                                      (e) Limitations on subcontracting. By sub-               centage specified in paragraph (e) of this
                                                                    mission of an offer and execution of a con-                clause will be performed by the aggregate of
                                                                    tract, the Contractor agrees that in perform-
                                                                                                                               the joint venture participants.
                                                                    ance of a contract assigned a North Amer-
                                                                    ican Industry Classification System (NAICS)                  (1) In a joint venture comprised of a small
                                                                    code for—                                                  business protégé and its mentor approved by
                                                                      (1) Services (except construction), it will              the Small Business Administration, the
                                                                    not pay more than 50 percent of the amount                 small business protégé shall perform at least
                                                                    paid by the Government for contract per-                   40 percent of the work performed by the joint
                                                                    formance to subcontractors that are not                    venture. Work performed by the small busi-
                                                                    similarly situated entities. Any work that a               ness protégé in the joint venture must be
                                                                    similarly situated entity further sub-                     more than administrative functions.
                                                                    contracts will count towards the prime con-                  (2) In an 8(a) joint venture, the 8(a) partici-
                                                                    tractor’s 50 percent subcontract amount that               pant(s) shall perform at least 40 percent of
                                                                    cannot be exceeded. When a contract in-                    the work performed by the joint venture.
                                                                    cludes both services and supplies, the 50 per-             Work performed by the 8(a) participants in
                                                                    cent limitation shall apply only to the serv-              the joint venture must be more than admin-
                                                                    ice portion of the contract;                               istrative functions.
                                                                      (2) Supplies (other than procurement from
                                                                    a nonmanufacturer of such supplies), it will                               (End of clause)
                                                                    not pay more than 50 percent of the amount
                                                                    paid by the Government for contract per-                   [86 FR 44245, Aug. 11, 2021, as amended at 87
                                                                    formance, excluding the cost of materials, to              FR 58226, Sept. 23, 2022]
                                                                    subcontractors that are not similarly situ-
                                                                    ated entities. Any work that a similarly sit-
                                                                    uated entity further subcontracts will count
                                                                                                                               52.219–15     [Reserved]
                                                                    towards the prime contractor’s 50 percent
                                                                    subcontract amount that cannot be exceed-                  52.219–16 Liquidated             Damages—Sub-
                                                                    ed. When a contract includes both supplies                     contracting Plan.
                                                                    and services, the 50 percent limitation shall                As prescribed in 19.708(b)(2), insert
                                                                    apply only to the supply portion of the con-               the following clause:
                                                                    tract;
                                                                      (3) General construction, it will not pay                   LIQUIDATED DAMAGES—SUBCONTRACTING
                                                                    more than 85 percent of the amount paid by                               PLAN (SEP 2021)
                                                                    the Government for contract performance,
                                                                    excluding the cost of materials, to sub-                     (a) Failure to make a good faith effort to com-
                                                                    contractors that are not similarly situated                ply with the subcontracting plan, as used in
                                                                    entities. Any work that a similarly situated               this clause, means a willful or intentional
                                                                    entity further subcontracts will count to-                 failure to perform in accordance with the re-
                                                                    wards the prime contractor’s 85 percent sub-               quirements of the subcontracting plan ap-
                                                                    contract amount that cannot be exceeded; or                proved under the clause in this contract en-




skersey on DSK4WB1RN3PROD with CFR
                                                                      (4) Construction by special trade contrac-               titled ‘‘Small Business Subcontracting
                                                                    tors, it will not pay more than 75 percent of              Plan,’’ or willful or intentional action to
                                                                    the amount paid by the Government for con-                 frustrate the plan.

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