Subcontracting Plan

Full Definition

A subcontracting plan is a document required by FAR 19.702 from other-than-small business prime contractors on any contract or modification expected to exceed $750,000 ($1.5 million for construction). The plan must establish specific percentage goals for subcontracting to small businesses across all socioeconomic categories: small business overall, small disadvantaged business, 8(a), HUBZone, SDVOSB, WOSB, and veteran-owned small business. Plans can be individual (contract-specific) or commercial (company-wide, approved by the SBA). The government monitors compliance through the Electronic Subcontracting Reporting System (eSRS) where large primes submit Individual Subcontracting Reports (ISRs) and Summary Subcontracting Reports (SSRs). Failure to make good-faith efforts to meet subcontracting goals can result in liquidated damages equal to the shortfall amount.

Why It Matters

Subcontracting plans are a major source of opportunities for small businesses because large prime contractors actively seek qualified small business subcontractors to meet their plan goals and avoid liquidated damages. If you are a small business, proactively market yourself to large primes working in your technology area by attending industry matchmaking events, registering in prime contractor supplier portals, and responding to teaming requests on SubNet and agency small business office websites. Building a track record as a reliable subcontractor develops past performance, builds customer relationships, and generates revenue that positions you for future prime contract pursuits. Many primes prefer to develop long-term subcontractor relationships rather than finding new partners for every contract.

Example

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