Small Business Subcontracting Information

The Small Business Subcontracting Program is based on Public Law 95-507 that was passed in 1978 to ensure that prime contractors further the goals of increasing participation of small businesses in federal procurement. Originally focused on only small and small disadvantaged businesses, the subcontracting program now includes women-owned small businesses. The government requires the adoption of Federal Acquisition Regulation (FAR) 52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned Small Business Concerns, in all purchases/contracts over $25,000 that offer subcontracting opportunities. The legislation requires certain prime contractors and subcontractors to prepare formal subcontracting plans. The law specifically requires submission and implementation of a subcontracting plan for contracts exceeding $650,000, including options, $1.5 million for construction, as well as reporting and record keeping for contractors with 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 $650,000, 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 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. The checklist for evaluation of subcontracting plans includes the elements that are to be included in subcontracting plans.

Requirements for Establishing a Small Business Subcontracting Plan

As prescribed within FAR 19.7:

Prime contractors other than small business shall submit a subcontracting plan that separately addresses subcontracting with small business concerns, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business concerns, small disadvantaged business and with women-owned small business concerns. If the offeror is submitting an individual contract plan, the plan must separately address subcontracting with small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business 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.

Subcontracting plans shall include the following:

Goals, expressed in terms of percentages of total planned subcontracting dollars, for the use of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business concerns as subcontractors. The offeror shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs.

A statement of:

  • Total dollars planned to be subcontracted for an individual contract plan; or the offeror’s total projected sales, expressed in dollars, and the total value of projected subcontracts to support the sales for a commercial plan
  • Total dollars planned to be subcontracted to small business concerns (including ANC and Indian tribes)
  • Total dollars planned to be subcontracted to veteran-owned small business concerns
  • Total dollars planned to be subcontracted to service-disabled veteran-owned small business
  • Total dollars planned to be subcontracted to HUBZone small business concerns
  • Total dollars planned to be subcontracted to small disadvantaged business concerns (including ANCs and Indian tribes)
  • Total dollars planned to be subcontracted to women-owned small business concerns.

A description of the principal types of supplies and services to be subcontracted, and an identification of the types planned for subcontracting to:

  • Small business concerns
  • Veteran-owned small business concerns
  • Service-disabled veteran-owned small business concerns 
  • HUBZone small business concerns
  • Small disadvantaged business concerns
  • Women-owned small business concerns.

A description of the method used to develop the subcontracting goals:

A description of the method used to identify potential sources for solicitation purposes (e.g., existing company source lists, the Central Contractor Registration (CCR) database, veterans service organizations, the National Minority Purchasing Council Vendor Information Service, the Research and Information Division of the Minority Business Development Agency in the Department of Commerce, or small, HUBZone, small disadvantaged, and women-owned small business trade associations). A firm may rely on the information contained in CCR as an accurate representation of a concern’s size and ownership characteristics for the purposes of maintaining a small, veteran-owned small, service-disabled veteran-owned small, HUBZone small, small disadvantaged and women-owned small business source list. Use of CCR as its source list does not relieve a firm of its responsibilities (e.g., outreach, assistance, counseling or publicizing subcontracting opportunities) in this clause.

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 concerns (including ANC and Indian tribes)
  • Veteran-owned small business concerns
  • Service-disabled veteran-owned small business concerns
  • HUBZone small business concerns
  • Small disadvantaged business concerns (including ANC and Indian tribes)
  • Women-owned small business concerns.

The name of the individual employed by the offeror who will administer the offeror’s subcontracting program, and a description of the duties of the individual. A description of the efforts the offeror will make to assure that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business concerns have an equitable opportunity to compete for subcontracts.

Assurances that the offeror will include the clause of this contract titled “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 $550,000 ($1,000,000 for construction of any public facility with further subcontracting possibilities) to adopt a plan similar to the offeror’s plan.

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 Standard Form (SF) 294 Subcontracting Report for Individual Contract in accordance with the paragraph (l) of this clause.
  • Submit the Summary Subcontract Report (SSR) in accordance with the paragraph (l) of this clause using the Electronic Subcontracting Reporting System (eSRS) at http://esrs.gov. The reports shall provide information on subcontract awards to small business concerns, veteran-owned small business concerns, service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, women-owned small business concerns, and historically black colleges and universities and minority institutions. Reporting shall be in accordance with this clause, or as provided in agency regulations
  • Ensure that its subcontractors with subcontracting plans agree to submit the ISR reports via eSRS and ensure that subcontractors with subcontracting plans agree to submit the SSR using eSRS.

A description of the types of records that will be maintained concerning procedures that have been 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, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns and award subcontracts to them. The records shall include at least the following (on a plant-wide or company-wide basis, unless otherwise indicated):

  • Source lists (e.g., CCR), guides, and other data that identify small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business concerns.
  • Organizations contacted in an attempt to locate sources that are small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business or women-owned small business concerns.
  • Records on each subcontract solicitation resulting in an award of more than $100,000, indicating (a) Whether small business concerns were solicited and if not, why not; (b) Whether veteran-owned small business concerns were solicited and, if not, why not; (c) Whether service-disabled veteran-owned small business concerns were solicited and, if not, why not; (d) Whether HUBZone small business concerns were solicited and, if not, why not; (e) Whether small disadvantaged business concerns were solicited and if not, why not; (f) Whether women-owned small business concerns were solicited and if not, why not; and (g) If applicable, the reason award was not made to a small business concern.
  • Records of any outreach efforts to contact (a) trade associations; (b) business development organizations; (c) conferences and trade fairs to locate small, HUBZone small, small disadvantaged, and women-owned small business sources; and (d) veterans service organizations.
  • Records of internal guidance and encouragement provided to buyers through: (a) workshops, seminars, training, etc., and (b) monitoring performance to evaluate compliance with the program’s requirements.
  • On a contract-by-contract basis, records to support award data submitted by the offeror to the government, including the name, address and business size of each subcontractor. Contractors having commercial plans need not comply with this requirement.

In order to effectively implement this plan to the extent consistent with efficient contract performance, the contractor shall perform the following functions:

  • Assist small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business concerns by arranging solicitations, time for the preparation of bids, quantities, specifications and delivery schedules so as to facilitate the participation by such concerns. Where the contractor’s lists of potential small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time.
  • Provide adequate and timely consideration of the potentialities of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business concerns in all “make-or-buy” decisions.
  • Counsel and discuss subcontracting opportunities with representatives of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business and women-owned small business firms.
  • Confirm that a subcontractor representing itself as a HUBZone small business concern is identified as a certified HUBZone small business concern by accessing the CCR database or by contacting SBA.
  • Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small, veteran-owned small business, HUBZone small, small disadvantaged or women-owned small business for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the contractor’s subcontracting plan.

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