Phone: (202) 296-5505 Email:

New Call-to-action

 Back to all posts

Understanding GSA Schedule Subcontracting Rules Blog Feature
Morgan Taylor

By: Morgan Taylor on May 20th, 2020

Print/Save as PDF

Understanding GSA Schedule Subcontracting Rules

GSA Schedule | 5 Min Read

As a GSA contractor, or just a government contractor in general, odds are that you have come across subcontracting requirements and processes. GSA’s requirements are set forth in order to help government agencies meet their small business spending budgets each fiscal year, whether directly or indirectly. Within the scope of subcontracting, there are many intricacies, but Winvale is here to provide you a streamlined guide to the basics of GSA subcontracting.

Small Business Administration (SBA) Size Standards

The SBA establishes the government’s definition of business size using OMB-approved industry NAICS codes and their associated size standards. These size standards are based on a company’s 12-month average number of employees or average annual receipts over the past five years, which should be updated in annually. Companies should also ensure that all small business socio-economic categories are accurately represented in, including the following: Small Disadvantaged (SDB), Women-Owned (WOSB), Economically Disadvantaged Women-Owned (EDWOSB), Veteran-Owned (VOSB), Service-Disabled Veteran-Owned (SDVOSB), HUBZone or Minority-Owned. Many companies have multiple NAICS Codes listed in their SAM account. You may have noticed that the same company can be considered an “other than small” business under one NAICS Code, but a small business under another – GSA Schedule contractors must choose a preponderance of work, or primary NAICS Code, when obtaining a GSA Schedule contract. This NAICS Code should represent the NAICS which comprises the majority of the firm’s business under the GSA Schedule.

Small Business Subcontracting Plans

Per FAR 19.702, generally any contractor receiving a contract with a value greater than the simplified acquisition threshold must accept in the contract that SB (including ANCs and Indian tribes), VOSB, SDVOSB, HUBZone, SDB (including ANCs and Indian tribes), and WOSB concerns will have maximum practicable opportunity to participate in contract performance  consistent with its efficient performance. Specifically for GSA contractors, if your business is considered an other than small business under the primary NAICS Code as defined by GSA, and if your estimated GSA contract value exceeds $700,000 ($1.5 million for construction), then you are required to submit a subcontracting plan for the contract if the Contracting Officer determines that subcontracting opportunities exist.

Developing a Small Business Subcontracting Plan

When developing a Small Business Subcontracting Plan specific to your GSA Schedule contract, there are three types of plans to choose from: commercial, individual, or master. GSA has published a subcontracting plan template for offerors, which can be found on GSA’s Available Offerings and Requirements website page.

The commercial subcontracting plan includes planned subcontracting for both commercial and government business, not just a single agency like GSA. The commercial plan only covers the company’s fiscal year and must be revised and approved each year. The revised plan is due 30 working days before the plan’s expiration date. This type of plan is often utilized by contractors who are including more than one company within the corporation under the coverage of the plan.

The individual subcontracting plan applies specifically to the single GSA contract and covers the entire contract period, including all options whether exercised or not. This type of plan includes goals that are based on the contractor’s planned subcontracting (and purchasing) in support of the GSA contract itself.

The master subcontracting plan may be established on a plant or division-wide basis when all elements of the plan are standard to the company, with the exception of the goals. This plan contains all the required elements of an individual subcontracting plan, except the goals portion, and must include the list of supplies/services the company typically subcontracts, which will cover any specific project or acquisition that comes up. This plan type is effective for a 3-year period after approval of a government Contracting Officer.

Subcontracting Goals

Individual and commercial small business subcontracting plans should include goals for dollars spent with small business, VOSB, SDVOSB, HUBZone, SDB (including ANCs and Indians Tribes) and WOSB. Your goals should be realistic but also reflect best faith efforts to exceed the minimum. The goals should include an estimate of total dollars to be spent on outsourcing, purchases, or spend over the period covered by the type of plan selected (individual or commercial). When determining your goals, the SBA often prefers that your goals are at least loosely in line with the latest FY Goaling Guidelines. These goals are set by Congress and require the Federal government attempt to allocate a percentage of spend to small business concerns.

Subcontracting Tracking

All GSA contractors with an active small business subcontracting plan are required to comply with tracking and reporting requirements. Throughout the year, contractors should be accurately tracking the business size status of all applicable subcontracting expenses. It is a good idea to implement internal company processes to determine the business size of each potential subcontractor/ vendor at the onset of the relationship. Often, companies will use the small business representations made in to determine socio-economic business size status, which is totally acceptable. However, if the vendor does not have a SAM record, there are multiple other ways to determine size status, such as 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. Companies will also often use some version of a vendor self-certification form to determine the business size status of their vendors.

Indirect vs Direct Subcontracting Costs

Another important part of subcontracting tracking is whether indirect costs are included in the approved subcontracting plan. Indirect costs are costs not directly associated with a specific GSA Schedule but are inclusive of company-wide spending (G&A) expenses. Please note, this does exclude specific items mentioned in CFR 125.3. Commercial plans should always include indirect costs because this type of plan is meant to capture all company-wide expenses. Companies proposing an individual plan have the choice to include or exclude indirect costs, which are prorated to performance on the individual contract. There are pros and cons to including indirect costs in your individual plan. Firms that do not include indirect costs on the individual plan will only track subcontracting dollars specific to work associated with the GSA contract. For some firms, this is an easier method of tracking, especially for some larger companies with high-valued contracts. For others, often smaller businesses, not including indirect costs can make it more challenging to meet the established subcontracting goals. Ultimately, including indirect costs on the individual plan won’t help contractors with little to no GSA sales meet subcontracting goals, but could be helpful for companies who do have GSA sales, but struggle to outsource costs directly related to the GSA Schedule contract.   

Subcontracting Reporting

Regardless of the plan you choose, you are required to comply with subcontracting reporting requirements. Contractors with a commercial subcontracting plan are only required to report one Summary Subcontract Report per year for the period of October 1 through September 30, which is due to eSRS by October 30 of each year. Contractors with an individual subcontracting plan are required to file two cumulative Individual Subcontracting Reports and one Summary Subcontracting Report each year. The first ISR is for the period of October 1 – March 31 and is due by April 30. The second ISR is for the period of April 1 – September 30 and is due on October 30. The Summary Subcontracting Report is for the period of October 1 through September 30 and is also due on October 30.

Subcontracting requirements are meant to offer small businesses access to greater opportunities in the federal marketplace. Small businesses have access to small business set-asides and assistance programs that mid to large businesses do not. Are you a small business looking for advice on taking advantage of small business set-aside goals or subcontracting opportunities? Are you a mid-sized to large business looking for assistance developing or managing your small business subcontracting plan? Either way, Winvale can help! Contact your Winvale Consultant today for further support!

Understanding the basics of GSA small business subcontracting


About Morgan Taylor

Morgan Taylor is a Lead Consultant for Winvale’s Professional Services Department. Her career at Winvale began in 2017 as a Business Development and Consulting Intern. Since 2018, Morgan has served as a full time Consultant with Winvale where she provides GSA Schedule acquisition and maintenance support to her clients. Morgan is a graduate of James Madison University with a Bachelor of Arts Degree in International Affairs and Spanish Language and minors in Political Science and Latin American & Caribbean Studies. Morgan is currently a member of the National Contract Management Association (NCMA).