Small Business Subcontracting Plans
The Small Business Subcontracting Program is based on Public Law 95-507, which was passed in 1978 to ensure that prime contractors further the goals of increasing participation of small businesses in federal procurement. Per Federal Acquisition Regulation (FAR) Subpart 19.7, any contractor receiving a contract for more than the simplified acquisition threshold must agree in the contract that small business, veteran-owned small business (VOSB), service-disabled veteran-owned small business (SVOSB), Historically Utilized Business (HUBZone) small business, small disadvantaged business (SDB) and women-owned small business (WOSB) concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance.
The federal government equires that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with these same small business components. It requires the adoption of FAR Clause 52.219-8, "Utilization of Small, Small Disadvantaged and Women-Owned Small Business Concerns," in all purchases/contracts over simplified acquisition threshold that offer subcontracting opportunities. The legislation requires certain prime contractors and subcontractors to prepare formal subcontracting plans.
As prescribed in FAR 19.708(b), the contracting officer shall, when contracting by negotiation, insert FAR Clause 52.219-9, "Small, Small Disadvantaged and Women-Owned Small Business Subcontracting Plan," in solicitations and contracts that offer subcontracting possibilities and are expected to exceed $750,000, including options, or $1.5 million for construction. This clause does not apply to small business concerns.
Offerors submitting a proposal in response to the government´s solicitation must submit a small business subcontracting plan that complies with the requirements of FAR Clause 52.219-9. Subcontracting plans are not required:
- From small business concerns
- For personal services contracts
- For contracts or contract modifications that will be performed entirely outside of the United States and its outlying areas
- For modifications to contracts within the general scope of the contract that do not contain the clause at 52.219-8, "Utilization of Small Business Concerns" (or equivalent prior clauses, e.g., contracts awarded before the enactment of Public Law 95-507).
Subcontracting Plan Types
There are four types subcontracting plans:
Individual Plan: This subcontracting plan covers the entire contract period (including option periods), applies to a specific contract, and has goals that are based on the offeror's planned subcontracting in support of the specific contract.
If the offeror is submitting an individual plan, the plan must separately address subcontracting with small business, VOSB, SDVOSB, HUBZones, SDB and WOSB concerns with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract.
Master Plan: A master plan contains all the elements required by the clause at 52.219-9, "Small Business Subcontracting Plan," except goals and may be incorporated into individual contracts, provided the master plan has been approved. Contractors may establish a master plan, on a plant or division-wide basis.
Master plans shall be effective for a three-year period after approval by the administrative contracting officer; however, it is incumbent upon contractors to maintain and update master plans. Changes required to update master plans are not effective until approved by the administrative contracting officer. A master plan shall apply to that contract throughout the life of the contract.
Commercial Plan: This subcontracting plan, including goals, covers the offeror’s fiscal year and applies to the entire production of commercial items sold by either the entire company or a portion thereof (e.g., division, plant or product line).
Comprehensive Subcontracting Plan: This subcontracting plan has been approved under the Department of Defense (DoD) Comprehensive Subcontracting Plan Test Program which authorizes the negotiation, administration and reporting of subcontracting plans on a plant, division or company-wide basis as appropriate. The purpose of the test is to determine whether comprehensive subcontracting plans will result in increased subcontracting opportunities for small business while reducing the administrative burdens on contractors.
Subcontracting Plan Templates
The following templates may be used in the submission of an individual or master subcontracting plan and are provided as downloadable files below:
Requirements for Establishing a Subcontracting Plan
Offerors submitting a proposal in response to the government’s solicitation shall submit a subcontracting plan that complies with the requirements of FAR clause 52.219-9. The following outline for a subcontracting plan satisfies the requirements implemented by public law and supplemented by the FAR.
As prescribed within the Federal Acquisition Regulation (FAR) Subpart 19.7: Prime contractors other than small business shall submit a subcontracting plan that separately addresses subcontracting with small business, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns.
Multi-year contracts or contracts with options: For multi-year contracts or contracts containing options, the cumulative value of the basic contract and all options is considered in determining whether a subcontracting plan is necessary. If a plan is necessary and the offeror is submitting an individual contract plan, the plan shall contain all the required elements and shall contain separate statements and goals for the basic contract and for each option.
Subcontracting plans shall include the following elements:
- Goals: Separate percentage goals for using small business (including ANCs and Indian tribes), VOSB, SDVOSB, HUBZone, SDB and WOSB concerns as subcontractors
- Total Dollars: A statement of the total dollars planned to be subcontracted and a statement of the total dollars planned to be subcontracted to Small Business, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns
- Principal Supplies, Services and/or Outcomes: A description of the principal types of supplies and services to be subcontracted and an identification of types planned for subcontracting to Small Business, VOSB, SDVOSB, HUBZone, SDB, and WOSB concerns
- Methodology to Develop Subcontracting Goals: A description of the method used to develop the subcontracting goals
- Methodology Used to Identify Potential Sources: A description of the method used to identify potential sources for solicitation purposes
- Indirect Costs: A statement as to whether or not the offeror included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with Small Business, VOSB, SDVOSB, HUBZones, SDB, and WOSB concerns
- Subcontract Plan Administrator: The name of an individual employed by the offeror who will administer the offeror’s subcontracting program, and a description of the duties of the individual
- Equitable Opportunity: A description of the efforts the offeror will make to ensure that Small Business, VOSB, SDVOSB, HUBZones, SDB, and WOSB concerns have an equitable opportunity to compete for subcontracts
- Flow-Down Clauses: Assurances that the offeror will include the clause at FAR 52.219-8, ‘Utilization of Small Business Concerns’, in all subcontracts that offer further subcontracting opportunities, and that the offeror will require all subcontractors (except small business concerns) that receive subcontracts in excess of $750,000 ($1.5 million for construction) to adopt a plan that complies with the requirements of the clause at 52.219-9, ‘Small Business Subcontracting Plan’
- Reports and Surveys: Assurances that the offeror will—
- Cooperate in any studies or surveys as may be required;
- Submit periodic reports so that the Government can determine the extent of compliance by the offeror with the subcontracting plan;
- Submit the Individual Subcontract Report (ISR), and the Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS) (http://www.esrs.gov), following the instructions in the eSRS;
- Ensure that its subcontractors with subcontracting plans agree to submit the ISR and/or the SSR using the eSRS;
- Provide its prime contract number, its DUNS number, and the e-mail address of the offeror’s official responsible for acknowledging receipt of or rejecting the ISRs to all first-tier subcontractors with subcontracting plans so they can enter this information into the eSRS when submitting their ISRs; and
- Require that each subcontractor with a subcontracting plan provide the prime contract number, its own DUNS number, and the e-mail address of the subcontractor’s official responsible for acknowledging receipt of or rejecting the ISRs, to its subcontractors with subcontracting plans.
- Maintenance of Records: A description of the types of records that will be maintained concerning procedures adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of the offeror’s efforts to locate small business, VOSB, SDVOSB, HUBZones, SDB, and WOSB concerns and to award subcontracts to them.
- Assurance of Good Faith Effort: Assurance that the contractor will make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns that the offeror used in preparing the bid or proposal, in the same or greater scope, amount and quality used in preparing and submitting the bid or proposal.
- Assurance of Explanation of Failure to Acquire: Assurance that the contractor will provide the contracting officer with a written explanation if the contractor fails to acquire articles, equipment, supplies, services or materials or obtain the performance of construction work as described in section.
- Assurance to Not Prohibit Subcontractor Payment or Utilization Discussions: Assurance that the contractor will not prohibit a subcontractor from discussing with the contracting officer any material matter pertaining to payment to or utilization of a subcontractor.
- Assurance of Payment to Small Business Subcontractors: Assurance that the contractor will pay its small business subcontractors on time and in accordance with the terms and conditions of the subcontract and notify the contracting officer if the offeror pays a reduced or an untimely payment to a small business subcontractor.