FAR 52.219-14 — Limitations on Subcontracting
What It Is
FAR 52.219-14 is the contract clause that implements the statutory limitations on subcontracting for small-business set-asides, including SDVOSB set-asides. It is written as a percentage cap on what the prime may pay to subcontractors that are not similarly situated entities: for services, no more than 50% of the amount paid by the government may go to such firms; for supplies/products (other than from a nonmanufacturer), no more than 50% excluding the cost of materials; for general construction, no more than 85%; and for specialty trade construction, no more than 75%. Work performed by similarly situated entities (subcontractors that themselves hold the same set-aside status) does not count against the cap, which is what makes compliant teaming possible.
When It Applies
- Every small-business set-aside above the simplified acquisition threshold, including SDVOSB, WOSB, HUBZone, and 8(a) set-asides and sole-source awards.
- Measured over the base term and each option period separately, and (for set-aside orders) generally at the order level on indefinite-delivery vehicles.
- By work category — the applicable percentage depends on whether the contract is principally for services, supplies, general construction, or specialty trade construction.
Key Provisions
| Provision | What It Means |
|---|---|
| Services: 50% self-performance | On a services contract, the prime plus similarly situated subs must perform at least 50% of the work — no more than 50% of the amount paid by the government may go to firms that are not similarly situated. |
| Supplies: 50% excluding materials | On a supply contract, the same 50% cap applies but the cost of materials is excluded from the calculation. |
| Construction: 85% / 75% | General construction caps payments to non-similarly-situated firms at 85% (prime performs ≥15%); specialty trade construction caps at 75% (prime performs ≥25%), excluding materials. |
| Similarly situated entities don't count against the cap | Work subcontracted to a similarly situated entity (a small business with the same socioeconomic status) is treated as if the prime performed it — the basis for compliant teaming. |
What It Means for an SDVOSB
This is the compliance clause that most often trips SDVOSBs after award. The percentage is measured against the amount paid by the government to the prime, so a teaming plan that looks fine on paper can breach it once subcontract dollars are tallied — especially on services and on time-and-materials work, where the test is applied to labor. Run your specific contract through the limitations-on-subcontracting calculator, route as much subcontracted work as possible to similarly situated SDVOSBs (which does not count against the cap), and keep records that prove compliance over the base term and each option.
Common Pitfalls
- Counting work sent to similarly situated entities against your cap — it doesn't count, and missing that can make a compliant plan look non-compliant (or push you to over-self-perform).
- Measuring compliance only at the total-contract level when it is tested over the base term and each option period (and per order on set-aside IDIQ orders).
- On time-and-materials services, applying the 50% test to total invoiced dollars (including pass-through materials) instead of to the labor, where SBA measures it.
Run the Numbers
Frequently Asked
How much of an SDVOSB set-aside must the prime self-perform?
It depends on the work. On a services contract the prime, together with any similarly situated subcontractors, must perform at least 50% of the work (no more than 50% of the amount paid by the government may go to firms that are not similarly situated). On supplies the same 50% applies but excludes materials. General construction requires at least 15% self-performance and specialty trade construction at least 25%, both excluding materials.
What is a 'similarly situated entity' and why does it matter for FAR 52.219-14?
A similarly situated entity is a subcontractor that has the same small-business socioeconomic status as the prime for the set-aside — for an SDVOSB set-aside, another SDVOSB. Work the prime subcontracts to a similarly situated entity is treated as if the prime performed it, so it does not count against the limitations-on-subcontracting cap. That carve-out is what lets SDVOSBs team with one another and still satisfy the self-performance requirement.
Primary Sources
Plain-English reference, not legal advice. Which clauses apply, and in which version, is set by the specific solicitation, and the FAR is periodically amended — always read the actual clause text in your solicitation and confirm its application with your contracting officer before relying on this.
Change log (1)
- LaunchedPublished the federal contract clauses reference covering the standard FAR Part 52 clauses an SDVOSB encounters in a set-aside contract — the SDVOSB set-aside clause (52.219-27), limitations on subcontracting (52.219-14), utilization of small business concerns (52.219-8), the reps-and-certs provisions (52.204-8 / 52.212-3), the commercial terms clauses (52.212-4 / 52.212-5), Changes (52.243-1), Termination for Convenience and Default (52.249-2 / 52.249-8), Prompt Payment and EFT payment (52.232-25 / 52.232-33), Service Contract Labor Standards (52.222-41), and basic cybersecurity safeguarding (52.204-21) — each with a key-provisions table, common pitfalls, an SDVOSB-specific angle, FAQPage, Legislation, Dataset, and BreadcrumbList structured data, primary-source FAR citations, and cross-links into the glossary, forms reference, contract types, regulation explainers, how-to guides, FAQ, and the limitations-on-subcontracting and price-to-win calculators.