Subcontracting Plans Required for Contracts Performed: A Guide for Federal Contractors
As a federal contractor, it is important to have a clear understanding of the subcontracting plans required for contracts performed. The government has set requirements for federal contractors to proactively engage and promote opportunities for small businesses, women-owned, and other disadvantaged businesses to participate in federal contracting. Subcontracting plans are an essential tool for achieving this objective.
Subcontracting plans are contracts between the prime contractor and a subcontractor, where the prime contractor agrees to utilize the services of the subcontractor in the performance of a federal contract. Subcontracting plans are required for contracts that exceed the simplified acquisition threshold (currently set at $250,000). The prime contractor is required to submit a subcontracting plan to the contracting officer before the contract award. The subcontracting plan must identify the percentage of the total contract price that will be subcontracted to small businesses, women-owned businesses, HUBZone businesses, and service-disabled veteran-owned small businesses.
The Federal Acquisition Regulation (FAR) requires that the prime contractor establish a subcontracting goal. The goal is a percentage of the total contract price that the prime contractor plans to subcontract to small businesses. The subcontracting goals are established by the Small Business Administration (SBA). The prime contractor must report the actual subcontracting dollars awarded during the performance of the contract to the government. The government then compares the actual subcontracting dollars to the goals established by the SBA.
The subcontracting plan requires the prime contractor to make a good faith effort to identify and utilize small businesses, women-owned businesses, HUBZone businesses, and service-disabled veteran-owned small businesses as subcontractors. The prime contractor must provide a list of potential subcontractors to the contracting officer. The contracting officer reviews the list and determines if it is adequate. The prime contractor must then negotiate the subcontracting agreement with the selected subcontractors.
The government requires that the prime contractor report the subcontracting achievements during the performance of the contract. The prime contractor must complete the Individual Subcontract Report (ISR) and the Summary Subcontract Report (SSR) in the Electronic Subcontracting Reporting System (eSRS). The ISR is used to report the subcontract awards made to small businesses and other groups, and the SSR is used to report the subcontract awards made to large businesses.
In conclusion, subcontracting plans are an essential tool for promoting opportunities for small businesses, women-owned, and other disadvantaged businesses to participate in federal contracting. Federal contractors must comply with the requirements established by the SBA and the FAR by establishing subcontracting goals, making a good faith effort to identify and utilize small businesses, and reporting the subcontracting achievements to the government. By doing so, federal contractors can help promote diversity and inclusion in federal contracting while also fulfilling the requirements of their contracts.