Certification in Supplier Diversity Practice Exam

According to Section 19.704 - 10 of the FAR, what must a subcontract plan assure?

1. All subcontractors must be small businesses

2. Periodic reports for compliance monitoring

3. No changes to the subcontractor's terms

4. Standardized pricing across all contracts

The correct answer is: Periodic reports for compliance monitoring

The requirement for a subcontract plan to assure periodic reports for compliance monitoring is vital in maintaining oversight and accountability in government contracting. Such reports help ensure that subcontractors are meeting the terms of the contract and adhering to the necessary regulations. This practice is essential for monitoring various aspects such as performance, compliance with small business utilization goals, and overall contract adherence. Periodic reporting allows primary contractors and contracting officers to verify that subcontractor relationships are functioning as intended and that the objectives of the subcontracting plan are being met. This transparency is crucial for ensuring that government contracts support the growth and development of small businesses and other diverse suppliers, which is a primary goal of supplier diversity initiatives. The other choices do not align with the specific requirements outlined in the FAR regarding subcontract plans. For instance, while promoting small businesses is beneficial, it is not mandatory that all subcontractors must be small businesses according to this section. Additionally, while maintaining consistent terms is important, the FAR does not explicitly state that no changes to the subcontractor's terms must be assured. Lastly, standardized pricing across contracts does not pertain to the essence of a subcontract plan, as pricing structures can vary based on specific contract requirements and market conditions.