Good Faith Efforts – Is it enforced or is it a Convenient Excuse?

All Prime/Large (other-than-small) contractors are responsible for submitting sub-contracting plan for all Prime or Sub-contract over $500,000 (over $1,000,000 for construction of a public facility) contracts. Any “other-than-small” business that receives a Federal contract or subcontract must adopt a subcontracting plan with separate and distinct goals for each category of small business.  The proposed subcontracting plan must be accepted and approved by the contracting officer before the contract can be awarded.  Once approved, the subcontracting plan is incorporated into the contract.  This is significant because an “other-than-small” contractor that fails to make a Good Faith Effort (GFE) to achieve the goals established in the subcontracting plan may be assessed liquidated damages or found in material breach of contract and terminated for default.  

Over the years, there have been complaints from small businesses whether or not the GFE was actually conducted by Prime/Large businesses. What determines whether a Prime/Large company actually conducted a GFE, how is it measured and who within the government determines if the Prime/Large companies effectively exercise a GFE to award small businesses sub-contracts? Many complaints generally decry the use of GFE and consider the GFE requirements more form than substance, a convenient, it is sometime determined an excuse for non-compliance. Although there may be some merits to many complaints, the effectiveness of the GFE standard hinges upon the manner in which recipient applies the standard to a bidder’s efforts to meet the goal.

The GFE requirements on a federal assisted contract that contain contract goals is governed by 49 CFR Part §26.53. Section 26.53 provides that when a small business goal is established, the recipient can award the contract only to a bidder or offeror that has made a GFE to achieve the contract goal. 

The GFE guidance articulates a clear standard that requires that the bidder’s efforts to meet the goal must be reasonable and necessary steps to meet the goal. The scope, intensity and appropriateness of the bidder’s efforts should be evaluated in order to determine if the efforts would reasonably lead the bidder to obtaining sufficient small business participation. Mere, pro forma efforts are not GFE to meet the goal. The guidance also cautions the recipients not to reject bona fide GFE by a bidder or offeror to meet the goal. In short, the determination of a bidder or offeror’s GFE is a judgment call and the recipient must make a reasoned and balanced decision in making the GFE determination.

The question remains Good Faith Efforts - Is it Enforced or is it a Convenient Excuse?

Leave a Comment