“Good Faith Effort” in Small Business Subcontracting Plans
Any large business receiving a GSA contract, where they expect GSA sales to exceed $650,000, must agree that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance. Recently GSA has required Small Business Subcontracting plans from all large businesses, regardless of anticipated GSA sales and many contractors struggle to understand this policy and fulfill the requirements. Make no mistake, small business subcontracting is considered a "deliverable" under the contract and should be taken seriously.
When you create your Small Business Subcontracting Plan for your GSA Schedule in accordance with FAR 52-219-9, it is important that you establish what your Good Faith Efforts will look like. In determining whether you have made a "good faith effort" to secure subcontracting opportunities with the small business community your contracting officer will look at your subcontracting plan and in accordance with FAR 19.705-7(d) will make that determination. This section states the following:
In determining whether a contractor failed to make a good faith effort to comply with its subcontracting plan, a contracting officer must look to the totality of the contractor's actions, consistent with the information and assurances provided in its plan. The fact that the contractor failed to meet its subcontracting goals does not, in and of itself, constitute a failure to make a good faith effort.
FAR 19.701 defines "Failure to make a good faith effort to comply with the subcontracting plan" as:
...willful or intentional failure to perform in accordance with the requirements of the subcontracting plan, or willful or intentional action to frustrate the plan.
Contractors who fail to achieve their goals and do not provide a good faith effort to secure subcontracting opportunities in the performance of their awarded schedule activities can be subject to liquidated damages as described in FAR 19.705-7. Specifically section 19.705-7 (b) states:
(b) The amount of damages attributable to the contractor's failure to comply shall be an amount equal to the actual dollar amount by which the contractor failed to achieve each subcontracting goal.
It is required to have a section entitled "Good Faith Effort" in your subcontracting plan which describes in as much detail as is necessary, a list of the various activities that your company will undertake to insure to the government that you indeed are putting your best foot forward in this effort. Once your good faith effort activities are accepted by the contracting officer, document internally your activities and keep this information together. If you are questioned about your efforts you can easily reference the actions agreed upon in your plan and thus not be found to be negligent of your pursuit for small business opportunities - therefore free from any liquidated damages. With more and more government focus on transparency and contractor accountability, understanding the "letter of the law" is the first step to ensuring your compliance and subcontracting success.
About Steve Young
Steve serves as the Director of the Technology Resale division. Steve manages all aspects of Winvale’s GSA Schedule contracts. Steve also leads the company in RFP/RFQ responses where Winvale is the Prime Contractor. Responsible for over 60 manufacturers on Winvale’s GSA Schedule contracts, Steve insures that each manufacturer’s products or services are compliant and within scope of each GSA contract.