When does FAR 52.219-14 apply?

Is the contract a small-business set-aside (or SDVOSB / 8(a) / HUBZone / WOSB set-aside)? If yes, FAR 52.219-14 (or its sister clauses for specific socioeconomic programs) flows. Full-and-open and unrestricted competitions do not carry this clause. Are subcontractors paid more than the threshold percentage of the contract value? Calculate using the "amount paid by the government" denominator and the "amount paid to non-similarly-situated firms" numerator. The math is contract-by-contract, not portfolio-level. Are some subcontractors "similarly situated" small businesses? If yes, dollars to those subs count toward self-performance. Verify status at the time of subcontract award and document it. Status changes during performance do not retroactively affect the calculation.

What are the most common contractor pitfalls under FAR 52.219-14?

Computing on cost rather than amount paid: The 2020 SBA rule changed the denominator. Computing 50% on internal cost rather than amount paid to non-similarly-situated firms is a common mistake that produces a non-compliant subcontracting pattern that looks compliant on paper. Relying on a similarly-situated sub that loses status mid-contract: If a similarly-situated sub graduates from 8(a) or exceeds the size standard during performance, the dollars paid to that sub still count as similarly-situated for the original calculation. But for new task orders or modifications, the status determination is at the time of the new action. Pass-through arrangements with non-similarly-situated firms: Routing work through a small-business front to a large-business performer is a 13 CFR 121.103 ostensible-subcontractor rule trigger and a False Claims Act exposure. SBA size protests target this pattern.

What audit-flag patterns are associated with FAR 52.219-14?

Auditors and contracting officers commonly flag: Subcontracting plan showing >50% to non-similarly-situated firms on a services set-aside; Internal labor on contract less than 30% of direct labor base when self-performance was certified; Similarly-situated documentation missing or based on prime's self-attestation rather than sub's certification; Pattern of subcontract awards exceeding 70% to a single non-similarly-situated firm.

FAR

FAR 52.219-14 — Limitations on Subcontracting

On small-business set-aside awards, requires the prime to self-perform a minimum percentage of the contract: at least 50% of personnel cost on services, 50% of cost less material on supplies, 15% of cost on general construction, and 25% on specialty trade construction.

Citation: 48 C.F.R. § 52.219-14 · Live text on acquisition.gov · eCFR

What this clause does

FAR 52.219-14 enforces the small-business set-aside policy by preventing primes from acting as pass-throughs to large-business subcontractors. The 2020 SBA rule change moved the calculation from "cost of personnel" to "amount paid to the contractor" minus the amount paid to similarly situated subcontractors, which substantially changed the math for many primes.

The four percentage rules apply by contract type. Services: the prime cannot pay more than 50% of the amount paid by the government to firms that are not similarly situated. Supplies (other than from a regular dealer): same 50% rule, computed on cost less material. General construction: 85% to non-similarly-situated subs is the cap (i.e., 15% self-performance). Specialty trade construction: 75% cap (25% self-performance).

"Similarly situated" is the key phrase. A small-business subcontractor that qualifies under the same set-aside is similarly situated and the dollars flowing to it count toward the prime's self-performance. This makes mentor-protégé and small-business teaming viable; it does not let a small prime hide a large-business sub.

Does this clause apply to my contract?

Three tests resolve applicability. Read each in order; the first "no" usually means the clause does not flow.

1.Is the contract a small-business set-aside (or SDVOSB / 8(a) / HUBZone / WOSB set-aside)?
If yes, FAR 52.219-14 (or its sister clauses for specific socioeconomic programs) flows. Full-and-open and unrestricted competitions do not carry this clause.
2.Are subcontractors paid more than the threshold percentage of the contract value?
Calculate using the "amount paid by the government" denominator and the "amount paid to non-similarly-situated firms" numerator. The math is contract-by-contract, not portfolio-level.
3.Are some subcontractors "similarly situated" small businesses?
If yes, dollars to those subs count toward self-performance. Verify status at the time of subcontract award and document it. Status changes during performance do not retroactively affect the calculation.

Common contractor pitfalls

Patterns that produce questioned costs, back-wage liability, or False Claims Act exposure under this clause.

Computing on cost rather than amount paid
The 2020 SBA rule changed the denominator. Computing 50% on internal cost rather than amount paid to non-similarly-situated firms is a common mistake that produces a non-compliant subcontracting pattern that looks compliant on paper.
Relying on a similarly-situated sub that loses status mid-contract
If a similarly-situated sub graduates from 8(a) or exceeds the size standard during performance, the dollars paid to that sub still count as similarly-situated for the original calculation. But for new task orders or modifications, the status determination is at the time of the new action.
Pass-through arrangements with non-similarly-situated firms
Routing work through a small-business front to a large-business performer is a 13 CFR 121.103 ostensible-subcontractor rule trigger and a False Claims Act exposure. SBA size protests target this pattern.

Audit-flag patterns

Specific signals that contracting officers, DCAA, and agency IGs use to surface noncompliance.

Subcontracting plan showing >50% to non-similarly-situated firms on a services set-aside
Internal labor on contract less than 30% of direct labor base when self-performance was certified
Similarly-situated documentation missing or based on prime's self-attestation rather than sub's certification
Pattern of subcontract awards exceeding 70% to a single non-similarly-situated firm

How FieldLedger helps

Project P&L tracks direct labor, subcontract dollars, and material costs at the contract line level. The compliance reports surface subcontracting percentage trending against the FAR 52.219-14 thresholds in near real time, before the contracting officer asks.

DCAA compliance →Indirect Rate Engine →DCAA readiness check →

Related clauses

Clauses that flow alongside or interact with FAR 52.219-14.

Frequently asked

What does FAR 52.219-14 require?: On small-business set-aside awards, requires the prime to self-perform a minimum percentage of the contract: at least 50% of personnel cost on services, 50% of cost less material on supplies, 15% of cost on general construction, and 25% on specialty trade construction.
When does FAR 52.219-14 apply?: Is the contract a small-business set-aside (or SDVOSB / 8(a) / HUBZone / WOSB set-aside)? If yes, FAR 52.219-14 (or its sister clauses for specific socioeconomic programs) flows. Full-and-open and unrestricted competitions do not carry this clause. Are subcontractors paid more than the threshold percentage of the contract value? Calculate using the "amount paid by the government" denominator and the "amount paid to non-similarly-situated firms" numerator. The math is contract-by-contract, not portfolio-level. Are some subcontractors "similarly situated" small businesses? If yes, dollars to those subs count toward self-performance. Verify status at the time of subcontract award and document it. Status changes during performance do not retroactively affect the calculation.
What are the most common contractor pitfalls under FAR 52.219-14?: Computing on cost rather than amount paid: The 2020 SBA rule changed the denominator. Computing 50% on internal cost rather than amount paid to non-similarly-situated firms is a common mistake that produces a non-compliant subcontracting pattern that looks compliant on paper. Relying on a similarly-situated sub that loses status mid-contract: If a similarly-situated sub graduates from 8(a) or exceeds the size standard during performance, the dollars paid to that sub still count as similarly-situated for the original calculation. But for new task orders or modifications, the status determination is at the time of the new action. Pass-through arrangements with non-similarly-situated firms: Routing work through a small-business front to a large-business performer is a 13 CFR 121.103 ostensible-subcontractor rule trigger and a False Claims Act exposure. SBA size protests target this pattern.
What audit-flag patterns are associated with FAR 52.219-14?: Auditors and contracting officers commonly flag: Subcontracting plan showing >50% to non-similarly-situated firms on a services set-aside; Internal labor on contract less than 30% of direct labor base when self-performance was certified; Similarly-situated documentation missing or based on prime's self-attestation rather than sub's certification; Pattern of subcontract awards exceeding 70% to a single non-similarly-situated firm.
How does FieldLedger help with FAR 52.219-14?: Project P&L tracks direct labor, subcontract dollars, and material costs at the contract line level. The compliance reports surface subcontracting percentage trending against the FAR 52.219-14 thresholds in near real time, before the contracting officer asks.

Sources

FAR clause text — acquisition.gov/far/52.219-14
Live regulatory text — eCFR (Title 48)
DCAA Contract Audit Manual — dcaa.mil/Guidance/CAM
Plain-English methodology — FieldLedger methodology

Snapshot date: 2026-05-08. Clause text is binding only as of the version incorporated into your specific contract — check acquisition.gov for the live regulatory text.