Small Business Subcontracting Plans FAQs

Why do I need to create a small business subcontracting plan?

The Small Business Subcontracting Program was designed to ensure that prime contractors further the goals of increasing participation of small businesses in federal procurement. Per Federal Acquisition Regulation (FAR) Subpart 19.7, any contractor receiving a contract over $750,000  ($1.5 million for construction) must agree in the contract that 1) small business, 2) veteran-owned small business (VOSB), 3) service-disabled veteran-owned small business (SVOSB), 4) Historically Underutilized Business (HUBZone) small business, 5) small disadvantaged business (SDB) and 6) women-owned small business (WOSB) concerns will have the maximum practicable opportunity to participate in contract performance.

When do I submit a small business subcontracting plan?

A small business subcontracting plan is generally required to be submitted with the proposal, and is subject to scrutiny during the negotiation phase of an award. Each Federal agency has established subcontracting goals and generally include them with the specific RFP; the goals are also often set out in the sample form for a subcontracting plan. At the time of the proposal, it is usually sufficient to prepare the subcontracting plan for the total cost of a multi-year proposal.

Are subrecipients subject to the small business subcontracting plan compliance?

Yes. A small business subcontracting plan is also required of any subrecipient whose total dollar subcontract amount is expected to exceed total costs of $750,000 for the entire period of performance.

Are there different types of small business subcontracting plans applicable to the University?

The most common small business subcontracting plan used by the University to date is:

Individual Plan:  This subcontracting plan covers the entire contract period (including option periods), applies to a specific contract, and has goals that are based on the offeror’s planned subcontracting in support of the specific contract. If the offeror is submitting an individual plan, the plan must separately address subcontracting with small business, VOSB, SDVOSB, HUBZones, SDB and WOSB concerns with a separate part for the basic contract and separate parts for each option (if any). The plan shall be included in and made a part of the resultant contract.

Master Plan: A master plan contains all the elements required by the clause at 52.219-9, “Small Business Subcontracting Plan,” except goals and may be incorporated into individual contracts, provided the master plan has been approved. Contractors may establish a master plan, on a plant or division-wide basis. Master plans shall be effective for a three-year period after approval by the administrative contracting officer; however, it is incumbent upon contractors to maintain and update master plans.

This is something that the University is looking into for future use.

How do I look up a business classification or identify a small business supplier?

 A business may self-certify as a small business on the System of Awards (SAM) database. https://www.sam.gov/SAM/

  • Check the Small Business Administration (SBA) – Dynamic Small Business Search (DSBS) to search for companies/vendors/suppliers with various small business designations
  • Check the Vendor Information Pages (VIP) for Veteran companies – https://www.va.gov/osdbu/
  • Check the Women’s Business Enterprise National Council (WBENC) – https://www.wbenc.org/
  • Check the National Minority Business Council (NMBC) – http://www.nmbc.org/
  • Check the Procurement Services Vendor/Supplier Search (requires single sign on) to search University of Maine System Marketplace for companies/vendors/suppliers that have small business designations
  • Run a query (UMS_VENDORS_MM_CLASS) (single sign on required) to view a listing of University diversity designated vendors to satisfy the small business subcontracting plan requirements.

How do I justify the goals proposed to the Sponsor?

Your goals development should take into account:

  • Historical data, previous spend history.
  • Projected forecast based upon current year’s data.
  • Projected goals based on experience, business forecasts, & commitment to improvement, etc.

You will need to liaise with procurement or discuss previous specific purchases with your financial administrator to get an idea of what is realistic. Be prepared to justify in detail the goals proposed at the award/negotiation stage with the sponsor. For example, for certain specific pieces of equipment that are only made by large companies, a sole source justification is done per Procurement process guidance. It would be therefore, difficult to justify even 1% target under this budget category for a small disadvantaged business when you know that this is required.

What if the small business supplier is too expensive?

Products and services from small business suppliers may be priced higher than what might be obtained through a large-business or university strategic contract. This, however, is not an acceptable explanation for not purchasing through a small business enterprise unless the cost difference is significant. Remember that when the PI commits to the spending goals and supplier sources identified in the small business plan, the spend should be placed with those suppliers, or suppliers within the same small business category or categories, regardless of possible savings elsewhere.

What if a conflict of interest exists with a small business supplier?

Any potential or actual conflict of interest (COI) with suppliers must be identified, and the University’s COI policy and procedures must be followed.

What are the recordkeeping requirements of a small business subcontracting plan?

52.219-9(d)(11) describes “the types of records that will be maintained concerning procedures that have been adopted to comply with the requirements and goals in the plan”, including;

  • Source lists that identify small business types
  • Organizations contacted in an attempt to locate sources
  • Records with FAR-specified information on each subcontract solicitation resulting in an award of more than $150,000
  • Records of any outreach efforts
  • Records of internal guidance and encouragement provided to buyers

What are the reporting requirements for a small business subcontracting plan?

The requirement is to prepare and submit annual reports through the Electronic Subcontracting Reporting System: eSRS. This Internet-based tool streamlines the process of reporting on subcontracting plans and provides Federal agencies with access to analytical data on subcontracting performance and accomplishments.

Reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or since the previous report.

  • Submit all individual subcontracting reports (ISR) to ORA 10 days in advance of the submission deadline for review and approval.
  • Submit all Individual Subcontracting Reports (ISR) within 30 days of the close of each reporting period.
  • Check specific reporting periods with the Federal Agency – (generally semi annual/annual)
  • Save a copy of the final submitted report on file and send a copy to ORA.

Who do I contact if I am not able to spend with a small business included in my goals?

After the small business subcontracting plan is accepted by the sponsor, the expectation is that the goals will be met. Therefore, it will be necessary to explain in writing the reason spending could not occur during a federal reporting period and describe what efforts will be made to purchase from that business in the future. The PI must notify the sponsor of these circumstances.

If spend will not occur at all with the business, explain the reason why in writing and document the name of an alternate small business to provide the goods or services.  If another small business cannot be used, document why, and the name of the large business from which the goods or services will be purchased. The PI must then contact the Sponsor to explain the situation.

What if there is a change to the Prime contract with the sponsor?
Whenever a request to alter the contract is to be submitted, you should contact ORA to determine if a modified Small Business Subcontracting Plan is required. This could include adding an additional phase, extending the date, or increasing the contract dollar amount

 What happens when a project does not meet its goals?

University of Maine could be held liable for fines.

Per FAR 19.702, legislation enacted in 1989 outlines financial penalties, referred to as “liquidated damages” for the prime contractor in the amount of the actual cash value for any shortfall not realized per Small Business Administration small/disadvantaged business subcontracting plan goals.

It is important to formulate a realistic small business subcontracting plan and execute its budgeting details.  As indicated above, there are potential monetary penalties for not meeting goals.  Moreover, non-compliance issues, such as not meeting goals set in the Small Business Subcontracting Plan, are documented by federal agencies and could affect all future funding applicants at the University.

The PI and department are responsible for managing and tracking spending on your small business subcontracting plan. Failure to meet the subcontracting goals may also negatively affect future funding prospects for other University of Maine applicants.

Who do I contact for more information and assistance?

Depending on what stage of the process you are in, please contact the following for assistance:

  • Office of Research Administration
    • Plan review and submission – Proposal administrator
    • Justification and Negotiation – Award Reviewer
    • General inquiries: umgrants@maine.edu and reference the PARS number
  • Procurement
    • Notify Procurement when sourcing vendors that you have a small business subcontracting plan. RFP v RFB (we cannot necessarily go with the lowest value bid).
    • General inquiries – sourcing@maine.edu