Subcontracting Plans and Small Business Subcontracting

Posted by Administrator on December 7th, 2007

Part 19 of the FAR is devoted to regulations for the Small Business Subcontracting Program and subcontracting plans. Basically, it says that for any contract over the simplified acquisition threshold, the contractor receiving the award must agree to make provisions for subcontracting by small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone Small Business, small disadvantaged business, and women-owned small business concerns. The prime contractor proves willingness to comply with the Small Business Subcontracting Program by submitting a subcontracting plan. For contracts over $550,000 ($1 million for construction), the prime contractor selected for the award must provide an acceptable subcontracting plan or be considered ineligible for the contract.

While subcontractors are not responsible for drafting or enacting subcontracting plans, it’s still important to be familiar with the rules governing them. Small businesses such as those listed above should note the many ways that subcontracting plan regulations attempt to level the playing field.

Types of Subcontracting Plan

Most subcontracting plans fall into one of four categories:

Individual: Makes provisions for the life of one specific contract, and includes goals for the prime’s planned subcontracting effort.
Master: A boilerplate contract containing necessary clauses. A master subcontracting plan doesn’t include goals, and is effective for 3 years after approval. The master plan may be incorporated into more specific individual plans.
Commercial: An annual plan applying to all government contracts in the contractor’s fiscal year. Preferred for commercial items.
Comprehensive: Specific to the DoD Test Program for Negotiation of Comprehensive SB Subcontracting Plans.

Mandatory Elements of a Subcontracting Plan

Regardless of the type of subcontracting plan being used, all subcontracting plans must contain these basic elements:

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.
Description of the method used by the prime contractor to arrive at the subcontracting plan and goals above.
Description of the method to be used to identify potential small business subcontractors.
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.
Contact information for the person who is administrating the subcontracting program, and a description of their duties within the overall organization.
Description of efforts being made to ensure that small businesses have an equitable opportunity to compete for the subcontracts in question.
Assurances that the prime contractor will:
- Cooperate in any studies and surveys
- Submit periodic compliance reports
- Submit the proper forms, as required
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.