small business subcontracting

Minimize the Chance of Noncompliance and Contract Termination

FAR 52.219-9 small business subcontracting plan requirements are frequently seen in solicitations from the federal government. The underlying reason is to advance opportunities for small businesses in larger contracts. Contractors sometimes get into trouble because they fail to show good faith when trying to comply with the subcontracting requirements under the FAR, notify in the government including failure to find new subcontractors or business locally that can perform the work.

This is an example of Congress’s efforts to provide more contracting vehicles to smaller companies.

FAR Subcontracting Plan requirements usually seek to provide additional opportunities to Small Disadvantaged Business veteran (SDB), Woman-Owned Small Businesses (WOSB), VOSB, SDVOSB and each HUBZone small business concern.

FAR 52.219-9 Small Business Subcontracting Plan Requirements

When you submit a subcontractor plan, it must include the following:

Separate goals, expressed in terms of total dollars subcontracted, and as a percentage of total planned subcontracting dollars, for the use of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns as subcontractors.

For individual plans, and if required by the Contracting Officer, goals shall also be expressed in terms of percentage of total contract dollars, in addition to the goals expressed as a percentage of total subcontract dollars.

The small business subcontracting plan shall also include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs.

  • A description of the method used to develop the subcontracting goals
  • A description of the method used to identify potential sources for solicitation purposes
  • A statement as to whether or not the Offeror included indirect costs in establishing goals and a description of the method used to determine the proportionate share of indirect costs to be incurred by your subcontractors

 A common hurdle for bidders when developing FAR 52.219-9 small business subcontracting organization requirements s whether there are actual contractors that are available to do the work. Others fear that when they submit the requirement in their bid, whether the Agency could terminate them for failure to meet the requirements.

These are valid concerns. However, Small Business Subcontracting Plans should be viewed as goals. Large businesses can run into problems when they do not in good faith try to meet those goals. Be aware that the SBA has issued new rules about FAR 52.219-9 subcontracting plan requirements.

Do You have to Use Small-Business Subcontractors During Performance?

The new SBA rules now require you as a prime contractor under FAR clause 52.219-9 to make good-faith efforts to utilize their proposed small-business subcontractors during performance to the same degree that such small businesses were relied on when the prime prepared the response to the government’s bid. If the prime contractor is unable to make this effort, it must explain in writing to the contracting officer. There also is something to be said for the requirements of similarly situated small business rules when trying to meet this requirement.

Be Aware of Other Provisions Besides FAR 52.219-9

When challenging FAR 52.219 9 small business subcontracting plan requirements in a bid protest, be mindful that some agencies may also have their own local rules in addition to the FAR 52.219-9.  When responding to a solicitation, contractors should also look for additional information the agency requests that are over and beyond the basic government regulations.

  • When filing a bid protest, making the argument that the goals are unrealistic will not get a favorable result. 
  • Agencies have the discretion to decide what is best when choosing their procurement strategies.  

If there are no viable sources to meet the subcontracting plan requirements, then bidders should provide evidence to that effect in their proposals. If the source selection penalizes you, then you may have a viable challenge in a bid protest if the agency cannot provide conflicting facts.  See also Small Business Set Aside Bid Protests.

Under the new rules, the agency contracting officer can require a subcontracting plan during contract performance in two situations:

  1. Demand that you provide a subcontracting plan when your small business size changes from small to large as a result of a size re certification on a federal contract that contains FAR clause 52.219-9.
  2. When there is a contract modification of any value causes a contract’s value without a subcontracting plan to exceed the subcontracting plan threshold and other subcontracting opportunities exist.

Government’s Obligation: FAR 19.705-2, titled “Determining the need for a subcontracting plan,” requires a contracting officer to ascertain, for each offeror, whether subcontracting possibilities exist before directing the offeror to submit a small business subcontracting plan. See also limitations on subcontracting.

Challenging the CO’s decision to include small business subcontracting plan requirements in the RFP almost never wins in a protest. Instead, you may want to look for vague terms, our show that there are no viable sources. Providing a copy of a SAM report with your proposal could help companies choosing to file a protest. See information about government contract bundling.

Government Contract Tips When Challenging FAR 52.219-9 Small Business Subcontracting Plan Requirements: Disputes arise when the government contract agencies may not tell you that your subcontracting plan did not meet the agency’s expectation. First, bidders may want to see whether or not subcontracting plans were supposed to be evaluated. In negotiated procurements, the solicitation will provide guidance as to what weight, if any, is given to FAR 52.219-9 Subcontracting Plans.

  • Your goal when submitting a government proposal is to always see whether you can exceed the agency’s expectation as to the percentage for each subcategory.

Next, businesses who submit proposals for federal government contracts must understand that agencies are not required to discuss the contents of your Small Business Subcontracting Plan simply because it received a lower score than your competition.  More specifically, this issue comes up in meaningful discussions.  If your Subcontracting Plan was the tiebreaker between your company and the awardee, then maybe there could be an argument when filing a bid protest.

Speak to an Attorney & Get a Free Initial Consultation

If you are challenging FAR 52.219-9 small business subcontracting plan requirements in a bid protest to GAO or U.S. Court of Federal Claims, call our government contracts and bid protest lawyers at 1-866-601-5518. FREE INITIAL CONSULTATION.

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