Subcontracting Plan – A Guide for Prime Contractors

Government agencies are required to award a certain percentage of their contracting funds to small businesses. Each year, these requirements receive more examination and reinforcement from the SBA, elected officials, and the public at large. In the current economic climate, with job creation a high priority, small business set-asides are under more scrutiny than ever.

Larger businesses can still compete for and win government contracts – in fact, in many cases they are better equipped to do so. However, utilizing small business subcontractors for government contracts is no longer a strategy that prime contractors can afford to ignore.

Many government RFPs now specifically require a subcontracting plan to be submitted as part of the proposal. The subcontracting plan is therefore just like any other part of an RFP – not only a requirement to be fulfilled to the letter, but an opportunity to point out your company’s unique value proposition. In a previous post about subcontracting plans, I discussed the mandatory elements of a subcontracting plan. Let’s go through those again now with an eye on proving value.

Subcontracting Plan Walk-Through

• Goals for the percentage of total subcontracting dollars that will go to each small business category (small, women-owned, veteran-owned, etc.).

• Total dollar amount of the contract that will be subcontracted out, both overall and by small business category.

• Description of the supplies/services to be subcontracted, both total and by small business category.

These first three steps are cut-and-dried: all that’s required is a simple list of the percentages, dollar amounts, and supplies/services that will be contracted out. You should already know which companies you plan to use as subcontractors – work with them to arrive at the estimated dollar amounts their unique services will require. The more informed you are about the services that will be subcontracted out, and their costs, the better you’ll be able to adhere to your goals – this will help you set realistic goals, and delivering on them once you win the contract will establish a great track record for future contract wins.

• Description of the method used by the prime contractor to arrive at the subcontracting plan and goals above.

Don’t approach your subcontracting plan as using subcontractors to fill gaps in your services – think of subcontractors as adding value. There are many instances when a smaller company can deliver cheaper or better services than a large one, either through low overheads or special expertise. This is also your first opportunity to discuss the stellar credentials your subcontractors bring to the table.

Note: Make sure your small/disadvantaged business subcontractors are certified as such by the SBA before you begin drafting your subcontracting plan.

• Description of the method to be used to identify potential small business subcontractors.

Again, remember that the purpose of the subcontracting plan is to prove value. If you’re using subcontractors with whom you’ve worked well in the past, that’s a strong indicator of quality products/services, but government purchasers are also interested in getting the best deal possible while still contracting to small/disadvantaged businesses. Make sure you’ve shopped around using sources like the SBA’s PRO-Net, and that you’ve solicited or plan to solicit bids from multiple potential subcontractors. Be prepared to explain your reasons if you don’t go with the lowest bidder.

• Whether or not indirect costs have been included in the goals outlined in the subcontracting plan, to what extent and the method used to determine what share of the indirect costs will be incurred with small business concerns.

This is another area of the subcontracting plan where a cut-and-dried description of the methodology your company has used to determine what, if any, indirect costs will be included in the plan.

• Contact information for the person who is administrating the subcontracting program, and a description of their duties within the overall organization.

Subcontracting is often a bit of a blind spot for government agencies, since they don’t directly manage the relationship. It’s important to demonstrate that the person administrating the program is responsible and experienced, and that he or she will ensure that small business concerns are adequately considered and included in the overall contract.

• Description of efforts being made to ensure that small businesses have an equitable opportunity to compete for the subcontracts in question.

These efforts may include frequently-updated source lists of small businesses and purchase of necessary supplies from small and small disadvantaged business. Show your company’s commitment to small and disadvantaged business by describing your internal efforts, such as workshops and training programs, to increase awareness of small and disadvantaged business concerns. A well-drafted compliance plan can also help prove your company’s seriousness in its commitment.

• Assurances that the prime contractor will:
  • Cooperate in any studies and surveys
  • Submit periodic compliance reports
  • Submit the proper forms, as required

This part of the plan is legal boilerplate. Enlist the help of a lawyer to make sure your assurances are legal and in the correct format.

• Description of what records will be kept to document compliance with the subcontracting plan’s requirements and goals, as well as record-keeping procedures and processes, and documentation of the prime’s efforts to locate small business concerns and award subcontracts to them.

• Any flow-down clauses and reporting requirements, including the Utilization of Small Business Concerns clause and the Subcontracting Plan clause from part 52 of the FAR.

For more on these topics, read Federal Compliance Programs – Laws and Regulations and Subcontract Flow-Down Clauses.

WILLIAM HAGGAR said,

August 11, 2009 @ 10:23 am

LOOKING TO FOR WORK IS THERE ANY LEADS THAT YOU COULD SEND ME IN THE BUILDING AND REMODELING

editor said,

August 24, 2009 @ 8:52 am

William – An Onvia Contracting Expert will contact you to set up a sample of 5 free leads that are relevant to your business.

Ann McCleary-Heron said,

August 31, 2009 @ 9:00 am

What are the pros and cons in having a Master Plan? Are the goals specific to each contract or are they at a top level governing all contracts, and are these goals updated annualy even though the plan is approved for three years?

Thanks,

editor said,

September 10, 2009 @ 8:30 am

Having a Master Plan may save you valuable time in the proposal writing process, and is a good indicator to government agencies that your company sees subcontracting as an integral part of its overall business. However, it’s important to tailor your plan to each specific contract. The goals should be specific to that contract, and should last the lifetime of the contract, although this may vary - check the language in the RFP to see how the agency would like your subcontracting goals to be presented.

RODLEY ODEUS said,

October 5, 2009 @ 12:23 pm

PAINT, CARPET, DRYWALL, FRAMING , LANDSVAPING ,CARBENET PH 407- 914- 0578

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