Requires small business contractors to perform percentage of work themselves (not fully subcontract).
Applicability: Required for small business set-asides and contracts under specific NAICS.
Key Requirements
Small business must perform at least 50% of contract cost (or higher percentage per agency)
Track subcontractor spend against limitation percentage
Document in-house performance and subcontracting plan
Notify government if you plan to exceed subcontracting limit
Common Issues & Pitfalls
Subcontracting >50% and losing contract/debarment
Mischaracterizing subcontractor labor as your own staff
Failing to track percentages accurately (creates audit findings)
Changing subcontracting percentage after award without approval
Contractor Guidance for Your Bid
This is the #1 reason small business contracts fail. If the limit is 50%, you must do 50% yourself. Not your affiliate, not a vendor you control—YOU. Keep subcontractor invoices separate. If you are unsure on percent, ask the contracting officer in writing before you subcontract.
Related FAR Clauses
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