Overview
FAR Part 26 implements several diverse socioeconomic programs and federal policies that do not fall under the traditional small business categories. It covers incentives for using Indian-owned subcontractors, preferences for local firms during disaster relief, support for Historically Black Colleges and Universities (HBCUs), food donation initiatives, drug-free workplace requirements, and safety policies regarding texting while driving.
Key Rules
- Indian Incentive Program: Provides prime contractors with an incentive payment equal to 5% of the amount paid to a subcontractor that is an Indian organization or Indian-owned economic enterprise.
- Disaster Preference: Under the Stafford Act, agencies must give preference to local firms in a declared disaster area through local area set-asides or evaluation preferences.
- Disaster Work Transition: Agencies must transition existing work to local firms after a disaster declaration unless the agency head determines it is not feasible or practicable.
- Food Donation: While the government encourages the donation of "apparently wholesome food" to nonprofits, it will not reimburse contractors for the costs of logistics or transportation associated with these donations.
- Drug-Free Workplace: Contractors (other than individuals) are prohibited from receiving contracts exceeding the simplified acquisition threshold unless they establish a formal drug-free awareness program and notify employees of prohibited workplace conduct.
- Texting While Driving: Agencies are mandated to include a clause in all contracts encouraging contractors to adopt and enforce policies banning text messaging while driving for official government business.
Responsibilities
- Contracting Officers (COs):
- Insert relevant clauses based on contract type and threshold.
- Consult the Disaster Response Registry via SAM.gov before awarding disaster relief contracts.
- Approve written justifications for spending federal funds on non-local firms in disaster areas.
- Refer challenges regarding Indian-owned status to the Bureau of Indian Affairs (BIA).
- Prime Contractors:
- Establish drug-free workplace programs and notify COs within 10 days of receiving notice of an employee's workplace drug conviction.
- Identify and utilize Indian-owned subcontractors to qualify for the 5% incentive.
- Transition emergency response work to local firms when directed by the agency.
- Bureau of Indian Affairs (BIA): Responsible for determining the eligibility of subcontractors when their status as an Indian-owned enterprise is challenged.
Practical Implications
For contractors, FAR Part 26 offers a unique "profit-boosting" opportunity through the Indian Incentive Program, where a prime can essentially earn a 5% bonus on subcontracted work. In the realm of disaster recovery, the regulations create a "local-first" barrier for outside firms, requiring them to justify why a local firm cannot perform the work. Furthermore, the Drug-Free Workplace and Texting While Driving subparts impose non-negotiable compliance standards; failure to maintain a drug-free workplace can lead to a suspension of payments or contract termination for default. Finally, while food donation is encouraged, contractors should be aware that these acts of charity are entirely self-funded and categorized as unallowable public relations costs for reimbursement purposes.