CHAPTER 13 SMALL BUSINESS SUBCONTRACTING PLANS

FAR Subpart 19.7 requires that offerors competing for unrestricted negotiated procurements—those not set aside for small business—in excess of $650,000 ($1.5 million for construction contracts) commit to an acceptable small business subcontracting plan in order to receive a contract award. This requirement applies whenever there are “subcontracting opportunities.” If the solicitation is set aside for competition only among small businesses, then this subcontracting plan is not required. In unrestricted solicitations, in which both large and small businesses can participate, only large businesses must submit this subcontracting plan.

When a subcontracting plan is to be submitted by competing contractors, acquisition planners must address exactly how this is to be accomplished. The law requires only that the contractor and the contracting officer agree to a satisfactory plan before a contract is awarded. The standard FAR provision at FAR 52.219-9, Small Business Subcontracting Plan (2010), allows the contracting officer to choose between two different subparagraphs when placing the provision in a solicitation. One of the subparagraphs requires a competing contractor to submit a plan “upon the request of the contracting officer.” The other requires that all competing large businesses submit such a plan as a part of their proposal. In the first instance, the contracting officer could elect to ask for a plan only from the apparent successful offeror. If a satisfactory plan is not negotiated, then the contractor would not be eligible for award.

The two solicitation provision subparagraphs appear in Exhibit 13-1. While it is presumably the contracting officer’s decision which is to be used, agency-published guidance or practice may favor a particular approach.

If the competing contractors are to be required to submit subcontracting plans as a part of their proposals, then acquisition planners, together with the contracting officer and agency small business advisors, must decide whether:

• The plans will be deemed “acceptable”/“not acceptable.” This choice is available for both LPTA and tradeoff source selections.

• The plans will be scored or rated, which is done only for tradeoff source selections. The U.S. Army, for example, has a numerical scoring scheme for subcontracting plans with an acceptability goal of 70 percent (Appendix DD to the Army FAR Supplement).

Additionally, source selection officials can either:

• Put target goals in the solicitation that competing contractors must meet.

• Allow competing contractors to propose their own goals.

If a competing contractor already has an approved subcontracting plan that covers its government business (company or division plans called either master plans or commercial plans), it can submit or reference the plan as part of its proposal.

Each agency also has internal guidance on small business subcontracting issues that is either mandatory or advisory. Accordingly, government personnel must review agency guidance before deciding among the choices available. Also, many agencies have prescribed forms or formats that competing contractors must use when submitting a small business subcontracting plan. When appropriate, this information must be included in the proposal submission instructions given to offerors in the solicitation.

SMALL DISADVANTAGED BUSINESS PARTICIPATION PROGRAM

FAR Subpart 19.12 also requires that a Small Disadvantaged Business (SDB) Participation Program provision be placed in solicitations for specific areas of industry that are identified annually by the Department of Commerce. The FAR directs:

The solicitation shall describe the SDB participation evaluation factor or subfactor. The solicitation shall require offerors to provide, with their offers, targets, expressed as dollars and percentages of total contract value, in each of the applicable, authorized NAICS Industry Subsector[s], and a total target for SDB participation by the contractor, including joint venture partners, and team members, and a total target for SDB participation by subcontractors.

OTHER SOCIOECONOMIC EVALUATION FACTORS

Some agencies, such as some DoD components, may also include in solicitations a Small Business Participation Program requirement. All categories of businesses are asked to identify their subcontracting plans for various categories of small businesses and, where appropriate, historically black colleges and minority institutions. Again, agency instructions should be consulted.

How and when these evaluation factors are used can vary widely among agencies. It is important that the agency small business advisor be a part of the planning team to help navigate through and effectively comply with FAR- and agency-mandated requirements.

EXHIBIT 13-1 FAR Language for the Small Business Subcontracting Provision