When Subcontracting Plans Are Required

Standard contracts: $750,000 or more requires a subcontracting plan if awarded to other-than-small business. This includes supply, service, and A&E contracts.
Construction contracts: $1.5 million or more requires a subcontracting plan if awarded to other-than-small business. Higher threshold reflects construction industry characteristics.
First-tier subcontracts: Large business subcontractors receiving subcontracts at or above thresholds must also submit subcontracting plans to the prime contractor.
Contract modifications: Modifications that cause previously exempt contracts to exceed thresholds may trigger subcontracting plan requirements.
Indefinite delivery contracts: IDIQ contracts may require plans at the contract level, order level, or both depending on structure and anticipated values.

Elements of a Subcontracting Plan

Subcontracting goals: Separate percentage and dollar goals for each small business category (SB, SDB, WOSB, HUBZone, VOSB, SDVOSB)
Total subcontract value: Estimated total value of all planned subcontracts against which percentages are calculated
Principal products and services: Description of what the contractor intends to subcontract
Method for developing goals: Explanation of how goals were determined, including market research conducted
Method for identifying potential sources: How small business sources were identified and will be solicited
Indirect costs: Confirmation that indirect costs are included in subcontract calculations
Program administrator: Name of individual responsible for plan administration and compliance
Compliance procedures: Description of efforts to ensure subcontractor compliance with flow-down requirements
Good faith effort documentation: Commitment to maintain records demonstrating good faith efforts to achieve goals

Individual subcontracting plan: Contract-specific plan developed for a single acquisition. Most common type, required when other plan types don't apply.
Commercial subcontracting plan: Company-wide plan for contractors whose sales are predominantly commercial. Covers all government prime contracts and subcontracts. Must be approved by a designated agency and renewed annually.
Master subcontracting plan: Contains elements common across multiple contracts but requires individual goals negotiated for each contract. Reduces repetitive planning while maintaining contract-specific commitments.
Comprehensive subcontracting plan: Used primarily with test program authority. Establishes company-wide goals tested against aggregate performance rather than individual contracts.

1
Analyze contract scope
Identify all elements of work that could potentially be subcontracted. Consider supplies, services, construction, and any other contract requirements.
2
Research small business capabilities
Search SAM.gov, DSBS, and other sources to identify small businesses capable of performing identified subcontract requirements.
3
Evaluate past performance
Review your historical subcontracting achievement on similar contracts. This provides baseline for setting achievable goals.
4
Consider make-or-buy decisions
Determine which work you'll perform in-house versus subcontract. Subcontracting decisions directly affect achievable small business percentages.
5
Develop category-specific goals
Set goals for each small business category based on availability and capability research. Not all categories will have equal opportunity.
6
Document methodology
Record your research and rationale for goal levels. This documentation supports plan approval and demonstrates good faith.

Individual Subcontract Report (ISR): Contract-specific report showing subcontracting achievement against plan goals. Due semi-annually at minimum.
Summary Subcontract Report (SSR): Aggregate report covering all contracts with the reporting agency. Due annually for contractors with commercial plans.
Submission deadlines: Standard deadlines are April 30 and October 30 for semi-annual reports. Check contract terms for any different requirements.
Review and acceptance: Contracting officers review submitted reports. Unacceptable reports require revision and resubmission.
Retention requirements: Maintain supporting documentation for report data. Records may be subject to audit or verification.

Early engagement: Begin identifying small business sources during proposal development, not after award
Mentor-protégé participation: Developing mentor-protégé relationships creates reliable small business partners
Supplier diversity programs: Formal programs promoting diverse supplier participation support subcontracting compliance
Regular monitoring: Track progress monthly or quarterly, not just at reporting deadlines
Documentation: Maintain records of good faith efforts including outreach, solicitations, and award decisions
Leadership support: Visible commitment from leadership drives organizational behavior toward compliance