C.F.R. » Title 48 » CHAPTER 1—FEDERAL ACQUISITION REGULATION › SUBCHAPTER H—CLAUSES AND FORMS › PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES › Subpart 52.2—Text of Provisions and Clauses

48 C.F.R. § 52.219-14

52.219-14 Limitations on Subcontracting.

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As prescribed in 19.507(e), insert the following clause:

Limitations on Subcontracting (OCT 2022)

(a) This clause does not apply to the unrestricted portion of a partial set-aside.

(b) Definition. Similarly situated entity, as used in this clause, means a first-tier subcontractor, including an independent contractor, that—

(1) Has the same small business program status as that which qualified the prime contractor for the award (e.g., for a small business set-aside contract, any small business concern, without regard to its socioeconomic status); and

(2) Is considered small for the size standard under the North American Industry Classification System (NAICS) code the prime contractor assigned to the subcontract.

(c) Applicability. This clause applies only to—

(1) Contracts that have been set aside for any of the small business concerns identified in 19.000(a)(3);

(2) Part or parts of a multiple-award contract that have been set aside for any of the small business concerns identified in 19.000(a)(3);

(3) Contracts that have been awarded on a sole-source basis in accordance with subparts 19.8, 19.13, 19.14, and 19.15;

(4) Orders expected to exceed the simplified acquisition threshold and that are—

(i) Set aside for small business concerns under multiple-award contracts, as described in 8.405-5 and 16.505(b)(2)(i)(F); or

(ii) Issued directly to small business concerns under multiple-award contracts as described in 19.504(c)(1)(ii);

(5) Orders, regardless of dollar value, that are—

(i) Set aside in accordance with subparts 19.8, 19.13, 19.14, or 19.15 under multiple-award contracts, as described in 8.405-5 and 16.505(b)(2)(i)(F); or

(ii) Issued directly to concerns that qualify for the programs described in subparts 19.8, 19.13, 19.14, or 19.15 under multiple-award contracts, as described in 19.504(c)(1)(ii); and

(6) Contracts using the HUBZone price evaluation preference to award to a HUBZone small business concern unless the concern waived the evaluation preference.

(d) Independent contractors. An independent contractor shall be considered a subcontractor.

(e) Limitations on subcontracting. By submission of an offer and execution of a contract, the Contractor agrees that in performance of a contract assigned a North American Industry Classification System (NAICS) code for—

(1) Services (except construction), it will not pay more than 50 percent of the amount paid by the Government for contract performance to subcontractors that are not similarly situated entities. Any work that a similarly situated entity further subcontracts will count towards the prime contractor's 50 percent subcontract amount that cannot be exceeded. When a contract includes both services and supplies, the 50 percent limitation shall apply only to the service portion of the contract;

(2) Supplies (other than procurement from a nonmanufacturer of such supplies), it will not pay more than 50 percent of the amount paid by the Government for contract performance, excluding the cost of materials, to subcontractors that are not similarly situated entities. Any work that a similarly situated entity further subcontracts will count towards the prime contractor's 50 percent subcontract amount that cannot be exceeded. When a contract includes both supplies and services, the 50 percent limitation shall apply only to the supply portion of the contract;

(3) General construction, it will not pay more than 85 percent of the amount paid by the Government for contract performance, excluding the cost of materials, to subcontractors that are not similarly situated entities. Any work that a similarly situated entity further subcontracts will count towards the prime contractor's 85 percent subcontract amount that cannot be exceeded; or

(4) Construction by special trade contractors, it will not pay more than 75 percent of the amount paid by the Government for contract performance, excluding the cost of materials, to subcontractors that are not similarly situated entities. Any work that a similarly situated entity further subcontracts will count towards the prime contractor's 75 percent subcontract amount that cannot be exceeded.

(f) The Contractor shall comply with the limitations on subcontracting as follows:

(1) For contracts, in accordance with paragraphs (c)(1), (2), (3) and (6) of this clause—

[Contracting Officer check as appropriate.]

____By the end of the base term of the contract and then by the end of each subsequent option period; or

____By the end of the performance period for each order issued under the contract.

(2) For orders, in accordance with paragraphs (c)(4) and (5) of this clause, by the end of the performance period for the order.

(g) A joint venture agrees that, in the performance of the contract, the applicable percentage specified in paragraph (e) of this clause will be performed by the aggregate of the joint venture participants.

(1) In a joint venture comprised of a small business protégé and its mentor approved by the Small Business Administration, the small business protégé shall perform at least 40 percent of the work performed by the joint venture. Work performed by the small business protégé in the joint venture must be more than administrative functions.

(2) In an 8(a) joint venture, the 8(a) participant(s) shall perform at least 40 percent of the work performed by the joint venture. Work performed by the 8(a) participants in the joint venture must be more than administrative functions.

(End of clause) [86 FR 44245, Aug. 11, 2021, as amended at 87 FR 58226, Sept. 23, 2022]
Notes of Decisions
Cited in 14 cases, 1993–2019 · leading case: Centech Grp., Inc. v. United States, 554 F.3d 1029 (Fed. Cir. 2009).
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Centech Grp., Inc. v. United States, 554 F.3d 1029 (Fed. Cir. 2009). · cites it 2× “The Limitation on Subcontracting (“LOS”) clause, set forth at 48 C.F.R. § 52.219-14 (2008), implements the mandate of the Act.”
Excel Mfg., Ltd. v. United States, 111 Fed. Cl. 800 (Fed. Cl. 2013). · cites it 5× “Post-Award Bid Protest; Standing; Limitations on Subcontracting Clause, 48 C.F.R. § 52.219-14 (2012). OPINION AND ORDER Bush, Judge.”
Stamford Wrecking Co. v. United Stone Am., Inc., 912 A.2d 1044 (Conn. App. Ct. 2007). · cites it 4× “Specifically, the defendants allege that the agreement’s failure to assign United Stone more than 15 percent of the work on the project would have violated 48 C.F.R. § 52.219-14 (2005) and 13 C.F.R.”
DCMS-ISA, Inc. v. United States, 84 Fed. Cl. 501 (Fed. Cl. 2008). “219-14[, 48 C.F.R. § 52.219-14 (2006) ], 26 the offer- or itself will be required to expend at least 50 percent of the labor costs under the contract for its own employees.”
Sealift, Inc. v. United States, 82 Fed. Cl. 527 (Fed. Cl. 2008). “” 48 C.F.R. § 52.219-14 (b)(l). In addition, a contractor awarded a small business set-aside contract for services must show that at least 50 percent of the labor costs incurred will be performed by the company’s own employees.”
Wallace Asset Mgmt., LLC v. United States, 126 Fed. Cl. 741 (Fed. Cl. 2016). · cites it 6× “Id at 373, 419-20; see also 48 C.F.R. § 52.219-14 . *745 The RFP provided that the government would conduct the solicitation using a Performance Price Trade-Off (“PPT”) methodology.”
Premier Gaming Trailers, LLC v. Luna Diversified Enters., Inc., 304 F. Supp. 3d 1270 (M.D. Fla. 2018). · cites it 2× “§ 657s(a)(2) ; see also 48 C.F.R. § 52.219-14 (c)(2) ("By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for .”
Strategic Analysis, Inc. v. United States Dep't of the Navy, 939 F. Supp. 18 (D.D.C. 1996). “Defendant argues that because plaintiff did not raise Mr. Siewert's employment status in its initial protest on September 27, 1995, plaintiff has failed to exhaust its administrative remedies and is untimely with respect to this issue.”
Modern Elec., Inc. v. Ideal Elec. Sec. Co., 145 F.3d 395 (D.C. Cir. 1998). · cites it 2× “Ill Ideal finally claims that the district court erred in denying it a twenty-percent offset for “labor credits,” arguing such offset was required by a Federal Acquisition Regulation, 48 C.F.R. § 52.219-14 (b)(4) (1997). Because this argument presents a question of law, our…”
Sigmatech, Inc. v. United States (Fed. Cl. 2018). · cites it 3× “5/18/17 Gov’t Reply at 9 (quoting 48 C.F.R. § 52.219-14 (c)(1)); see also AR 873.”
Pride Int'l, LLC v. United States, 64 Fed. Cl. 754 (Fed. Cl. 2005). “See 48 C.F.R. § 52.219-14 (b)(1). II. Procedural Background Plaintiff alleges that: 1.”
Alutiiq Mfg. Contractors, LLC v. United States (Fed. Cl. 2019). · cites it 2× “PX 35 at 1; PX 43 at 1–2; see 48 C.F.R. § 52.219-14 . AMC sought a subcontractor to design and produce asphalt.”
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