Companies with federal contracts above the Simplified Acquisition Threshold (SAT) of $750,000 and categorized as “other than small” businesses, must have a subcontracting plan in place. Any business that’s in the process of acquiring a GSA Schedule contract knows that gathering all the documentation and forming the offer together requires time and patience. While you are going to focus on prioritizing time and energy on major bulks/sections of your proposal, it’s easy to put the subcontracting plan task on the back burner.
We strongly recommend against pushing this deliverable aside because there’s much more to do than just “filling in blanks” with data. Forming a realistic plan requires thorough research. Let's go through the ins and outs of developing your GSA small business subcontracting plan.
Understanding Subcontracting and Conducting the Necessary Research
One of the primary reasons for implementing subcontracting plans is to encourage the participation of small businesses in federal contracting opportunities. Small businesses are crucial to the economy, and the government aims to provide them with fair opportunities to compete for and win federal contracts.
By mandating large businesses to include subcontracting plans, it promotes diversity, innovation, and competition in the marketplace. When you begin to structure your plan, it's important to conduct thorough research on GSA requirements, regulations, and best practices related to subcontracting plans. This will help you get familiar with the specific goals and objectives as outlined in the Multiple Award Schedule (MAS) solicitation for subcontracting participation.
Drafting Your Commercial/Individual Plan
Create your subcontracting plan using the necessary templates which can be downloaded from GSA’s official website. There are two types of plans, commercial and individual. Whichever plan you’re drafting, you’ll be including detailed descriptions of subcontracting goals and strategies for achieving them.
For the commercial plan, you’ll need to mark down the principal types of supplies and/or services that your company anticipates being outsourced and identify the type of supply/service you’re offering to each business concern. It’s your responsibility to ensure that you’re keeping track of all records of all subcontracting activities to maintain transparency with your contracting specialist. Commercial plans cover all the federal contracts for the year and are based on actual spend. You will not need to create a separate plan for each contract.
For individual plans, your goals are based on what you expect to subcontract for the period of the entire contract, instead of your past performance from the previous fiscal year. You must create one for each contract, meaning you are only creating an individual plan for your GSA Schedule in your offer and not other contracts. In general, you only submit this plan once since it covers the entire period of performance and is broken down by option periods.
Subcontracting Plan Review and Approval Process
Once you’ve drafted your commercial or individual plan for the first time, you submit it with your GSA Schedule offer. Some commercial plans are submitted to another agency first for approval and then you submit to GSA. You will need to resubmit your commercial plan to eMod annually (even if GSA isn’t the primary approval agency), and individual plans will generally only need to be submitted with your offer unless major changes are made.
Ensure that your plan meets all regulatory requirements and addresses, any specific expectations outlined in your contract. Be prepared to engage in constructive dialogue and feedback with your contracting specialist to address any concerns or clarifications regarding your plan. Once you get the approval from your contracting specialist, implement your subcontracting plan in accordance with the goals that you’ve set.
Subcontracting Reporting
In terms of subcontracting reporting, whether you’re filling out a commercial plan or an individual plan, you need to familiarize yourself with the Summary Subcontract Report (SSR) in the Electronic Subcontracting Reporting System (eSRS) tool. In the SSR, you should report your subcontracting figures by business type, including small business categories, and compare them to the targets specified in your plan.
If you are unable to meet your goals, you will need to demonstrate to the federal government that you have made a genuine effort. You can make notes in the remarks section of the report to show the extent of your efforts. The SSR report is due once a year, by October 30th, which applies to commercial plans. If you’re not hitting your goals, you’ll need to show the federal government you are making a “good faith effort.” You can make notes in the remarks section of the report to demonstrate your effort.
If you have an individual plan, you must submit a report titled the Individual Subcontracting Report (ISR). These are due on April 30th and October 30th. These are similar to the SSR because you’ll need to report how much money went toward subcontracting and compare it to the goals you set in your plan.
Who Gets the Money in Subcontracting?
It is important to understand how payments are distributed and how responsibilities are allocated in subcontracting partnerships to ensure contract compliance. Once the government pays the prime contractor, the prime becomes responsible for disbursing payments to subcontractors according to the terms and conditions of the agreements.
This process usually involves reviewing subcontractor invoices, verifying the work performed, and issuing payments accordingly. Furthermore, as the prime contractor you are responsible for ensuring that subcontractors follow the terms and conditions of the prime contract, which includes the requirements related to performance, quality, reporting, and compliance. If GSA identifies any reporting discrepancies, they will notify you, and you will need to make corrections on the eSRS. Failing to respond and make these corrections can result in penalties or termination of the subcontract.
Tips for Successful Implementation of Your Subcontracting Plan
Once you have secured an opportunity and started a project, it becomes your responsibility as the prime contractor to ensure that ongoing projects are delivered promptly and performed flawlessly. After all, it is you who will be taking credit for the successful outcome of the project. Let’s go over some successful tips when implementing your plan.
- Be sure you’re openly communicating and actively collaborating with subcontractors throughout the project lifecycle.
- Monitor subcontracting activities regularly and address any issues or abnormalities from the plan promptly.
- Sync with your subcontractors and provide enhanced training and support to boost their capacity and work performance.
- Track project timelines and progress the effectiveness of your subcontracting plan periodically and make adjustments as needed to ensure that all objectives are being met accordingly.
Identifying Potential Subcontractors
Once you are comfortable with the information that’s required in subcontracting, it's time to start looking for teaming partners and researching your competitors. It's essential to maintain good relationships with your competitors as they can transform into your teaming partners in the future.
You can also find potential partners by attending industry events and professional meetings or by searching for opportunities on the Federal Procurement Data System (FPDS), which is a useful tool for all contractors looking to find small businesses that win government contracts.
Other helpful resources include:
- Dynamic Small Business Search
- National Women’s Business Council
- Veteran Owned Business Directory
- Minority Business Development Agency
Need Help with Your Subcontracting Plan?
Formulating a GSA small business subcontracting plan may seem overwhelming at first. Especially if you are a new or prospective contractor and are trying to balance the plan with all the other requirements you have to fulfill. Our consultants can help you with your complete GSA Schedule offer including your subcontracting plan, so you’re setting yourself up for long term success. If you already have a Schedule, we can assist with subcontracting reporting and other maintenance support.
