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Subcontracting

USAID publishes both intended procurements and awards of procurements on the FedBizOpps website. Publishing this information is required by the FAR, and it allows U.S. small businesses to identify business opportunities and potential joint venture and subcontracting partners.

Subcontracting or teaming with a prime contractor can be a profitable experience as well as a growth opportunity for your business. If, after assessing the capabilities and capacity of your business, you conclude that you are not ready to bid competitively for prime contracts, consider the opportunities available through subcontracting. The experience gained from performing as a subcontractor can assist you in responding to solicitations as a prime contractor.

Subcontracting, however, should not be viewed only as an opportunity for less-experienced business, but also as a vehicle to enhance your qualifications to become more competitive to perform as a prime contractor.

Over the years, several laws have been passed regarding subcontracting to small business, including Section 8(d) of the Small Business Act, Public Law 95-507, Public Law 103-355, and FAR 19.702. These laws require prime contractors having contracts that exceed the simplified acquisition threshold to provide maximum practicable subcontracting opportunities to small businesses, HUBZone small businesses, small disadvantaged businesses, and women-owned small businesses. The clause "Utilization of Small Business Concerns," must be included in all federal contracts exceeding this threshold.

The FAR requires:

• contracts more than $550,000 (or $1,000,000 for construction of a public facility) large prime contractors and other-than-small subcontractors submit subcontracting plans containing specific percentage goals for small, small disadvantaged, women-owned, HUBZone small, veteran-owned and service-disabled veteran-owned small businesses.
• subcontracting plans contain a description of the methods and efforts used to assure that small business enterprises have an equitable opportunity to compete for subcontracts.
• subcontracting plans must be submitted by contractors for review prior to the award of any contract; failure to comply in good faith with its approved plan may subject the contractor to liquidated damages or termination for default.

Subcontracting plans are not required for:

• small businesses,
• contracts under the prescribed dollar amounts,
• prime contracts not offering subcontracting possibilities, or
• contracts to be performed entirely outside the United States.

The subcontracting reports are used by both the contracting agency and the Federal Procurement Data Center to measure the contractor's achievement of the subcontracting goals expressed in the Small Business Subcontracting Plan.

A prime contractor's performance in implementing a Small Business Subcontracting Plan and in achieving goals expressed in the Plan are part of "past performance" evaluations that are considered for future awards.

Before you agree to serve as a subcontractor to a prime contractor, be sure that you understand your contract. You should know:

• how and when you will receive payment from the prime contractor.
• when and how much you can rely on the prime contractor for resources and information.
• what type of control and what procedures will be applied to your subcontract.

To help Federal prime contractors meet their subcontracting requirements, the Small Business Administration has a website where prime contractors can post those subcontracting opportunities for products/services at: http://web.sba.gov/subnet/search/index.cfm.

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