Skip to main content

Subcontracting for Prime Contractors

Section
Managing My GSA Contract
Topic
Contract Management

The federal government prioritizes small business participation in our buying programs. Some government contracts require “other than small businesses” to maximize subcontracting with small businesses. This creates more opportunities for small businesses to get involved in federal contracting.

Eligibility

Federal contracts awarded to other than small businesses (OTSBs) over a certain dollar threshold [$900k ($2M construction)] must contain a small business subcontracting plan. In this plan, which follows the requirements of FAR 52.219-9, the prime contractor sets goals for what it plans to subcontract to small businesses, small disadvantaged businesses, women-owned small businesses, HUBZone small businesses, veteran-owned small businesses, and service-disabled veteran-owned small businesses. Small businesses are not required to have a small business subcontracting plan.

What is "Other Than Small Business?"

"Other Than Small Business" (OTSB) includes all businesses that are not small businesses. This includes large businesses, state and local governments, non-profit organizations, public utilities, educational institutions, and foreign-owned firms that receive federal contracts if any portion of the contract is to be performed in the United States. 

How is the threshold determined?

At the time your contract is awarded, your GSA Contracting Officer will estimate the value of the contract. This contract value is to include any possible option periods. Unless an exception applies, contractors with contracts valued at or above $900k ($2M construction) are required to submit and comply with a small business subcontracting plan.

Requirements

The program requires OTSBs to ensure that small businesses receive the maximum practicable opportunity to participate in contract performance. The small business subcontracting plan and associated reports documenting subcontracting achievements help contractors and COs ensure compliance.

Small business subcontracting plan:

GSA contractors are offered the choice of an Individual Subcontracting Plan or a Commercial Subcontracting Plan:

  • Individual Plan:
    • Appropriate for contracts that offer both non-commercial and commercial products and services
    • Must be negotiated for each contract awarded; if multiple contracts awarded, a separate plan must be negotiated for each
    • Based on subcontracting activity for that specific contract only
    • Negotiated at the time of award for the entire contract period of performance (may or may not include option periods)
    • Goals are amended when options are exercised to reflect subcontracting opportunities not envisioned previously.
    • Based on the supplies/services provided, may limit the amount of progress shown toward subcontracting goal requirements
  • Commercial Plan:
    • The preferred type of plan for contractors selling commercial items
    • Based on company-wide subcontracting activity (both commercial and government-related)
    • NOT appropriate for contracts that include non-commercial products and services
    • The contracting officer with the latest completion date is who reviews and approves the plan
    • Negotiated annually based upon the company’s fiscal year
    • Satisfies plan requirements for all government contracts—only one plan is required regardless of the number of contracts held
    • In general, permits greater progress toward meeting subcontracting goal requirements

Progress Reports:

All Subcontracting Plan Reports (SPR) reports must be submitted via the electronic subcontracting reporting system at SAM.gov. See details of progress report plans below:

  • Summary Subcontracting Report (SSR):
    • Submitted annually following the end of the government fiscal year by November 14th
    • Shows subcontracting awards (subcontracting costs incurred by the contractor) during the fiscal year involved
    • Required for both Individual and Commercial plan holders
    • For Commercial plan holders, encompasses all subcontract awards under the commercial plan in effect during the Government’s fiscal year
    • For Individual plan holders, encompasses all subcontracting under prime contracts and subcontracts with an executive agency during the Government’s fiscal year 
  • Individual Subcontracting Report (ISR):
    • Required of Individual plan holders only
    • Submitted semi-annually by May 15thth and November 14th
    • Shows subcontracting achievements under the specific contract on a a cumulative basis since inception of the contract

SBA Certifications

In order to be eligible as a subcontractor under a subcontracting plan, a concern is required to represent itself as a small business or small disadvantaged business or be certified by SBA as a veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, or woman-owned small business. To represent itself as a small business or small disadvantaged business, a concern must meet the appropriate definition in FAR 2.101.

There is no formal process for becoming certified as a small business. The Small Business Administration (SBA) is the authority on business sizes, classifications, and size standards. A company is responsible for self-certifying as a small business. This is typically accomplished by registering in the System for Award Management (SAM) – and indicating the proper business size and category.

Certification Resources

Locating Subcontractors

Below are several resources for OTSBs looking to partner with small businesses: 

Other Resources

  • SBA Commercial Marketing Representatives (CMR) can assist you with questions about the Subcontracting Program, as well as help you locate sources. 
  • APEX Accelerators are staffed by individuals who are knowledgeable of procurement issues and can help you locate local sources. They also run local events involving small businesses.