Clauses · FAR · Small business, labor and socioeconomic
FAR 52.219-16 Liquidated Damages-Subcontracting Plan
Does the regulation require it to flow down?
No
No regulatory mandate exists. FAR 19.708(b)(2) is an instruction to the CONTRACTING OFFICER about solicitations and contracts, not to a contractor about subcontracts; 52.219-16 itself contains no insertion paragraph; and 52.219-9 — read in full including Alternates I-IV — nowhere requires the prime to put 52.219-16 into a subcontract. What FAR 19.704(a)(9) actually requires is that a large subcontractor over $900,000 with further subcontracting possibilities 'adopt a subcontracting plan that complies with the requirements of this clause' — the plan, not the damages clause. Primes flow 52.219-16 down anyway because the damages the Government can assess against THEM are driven by goals that their large subs are supposed to help meet; copying the clause down is their way of creating a matching contractual hook. Read the mechanics before accepting it: the damages in 52.219-16(b) are payable 'to the Government,' after a Contracting Officer's written notice and final decision under (c), appealable under the Disputes clause per (e) — none of which a prime can perform. A prime that flows this clause down verbatim has flowed down a remedy it has no standing to invoke.
A clause can reach your subcontract without a mandate. Once it is in your document, it is a contract term all the same. The missing mandate is a fact about the regulation. It is not a ruling on your order.
Checked against acquisition.gov on 2026-08-05 · edition Sep 2021 · base v0.9.3 Read the text ↗
What it makes you produce
One item for your checklist.
Nothing to send now
It does not hold the order. It decides what money moves later — what you can claim, what can be claimed from you, and what can be held back — and none of that changes after signature.
- FAR 52.219-16(c)
The demonstration of good faith effort — your solicitations to small firms, the source lists and outreach you ran, and the reasons a small source was not used — which is what the damages are measured against
Owed when you receive written notice of a proposed finding that a good faith effort was not made, before the final decision
When it is used
FAR 19.708(b)(2): 'Insert the clause at 52.219-16, Liquidated Damages-Subcontracting Plan, in all solicitations and contracts containing the clause at 52.219-9, Small Business Subcontracting Plan, or the clause with its Alternate I, II, III, or IV.' It has no threshold, no exception and no commercial carve-out of its own — it is a pure rider on 52.219-9. 52.219-9 in turn is prescribed for solicitations and contracts that offer subcontracting possibilities, are expected to exceed $900,000 ($2 million for construction of public facilities), and are required to include 52.219-8; it is not used when the acquisition is set aside or accomplished under the 8(a) program, and its own paragraph (a) says 'This clause does not apply to small business concerns.' The route to a subcontractor is indirect: FAR 19.704(a)(9) makes the prime's plan promise that all subcontractors other than small business concerns receiving subcontracts over that threshold with further subcontracting possibilities will adopt a complying plan.
Read closely
Damages equal the dollar shortfall against your own percentage goals, not a fixed penalty, and the trigger is a finding of willful or intentional failure to perform in accordance with the plan or willful action to frustrate it (paragraph (a)). Paragraph (e) gives a right of appeal under the Disputes clause and paragraph (f) leaves the Government's other remedies intact. The clause is a rider on FAR 52.219-9: standing alone in a list, with no 52.219-9 anywhere in the document, it has no goals to measure.
The 4 templates that name it, with the line
Source: acquisition.gov, FAR 52.219-16, FAR 19.708(b), FAR 19.704(a), FAR 52.219-9 (Jan 2025) and FAR 52.212-5 (verified 2026-08-05)
This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.