Small business subcontracting plans necessarily mean a large business enterprise sub letting or taking help from small businesses. In large business outfits, the amount of office supplies is great hence a small business firm is contacted and a contract is signed with them to provide office materials regularly.
o A subcontract is broadly defined as an understanding agreed upon by a prime contract and subcontractor to provide goods or services needed for complementing the performance of the prime contract.
o The service a small business provides, however, is not necessarily under the prime contract; it should satisfy the prime contractor’s ordinary overhead requirements attributable to the prime contract.
This entire process of contracting out a part of the project to a small business firm is known as small business subcontracting. The contract is made formal only if the costs involved in providing materials exceed $500.000 for the entire period of performance.
o a small business subcontracting plan must state an expected amount of business that the prime contractor expects to award to small business contractors
However, it is untrue that all business concerns need subcontracted businesses to reach the stage of completion.
o In order to ensure completion, each subcontracting plan must name a manager or contract person, called a plan administrator, in charge of promoting compliance under the plan.
Only when the magnitude of the business project demands calculated subcontracts sub recipients are brought into discussions.
The subcontractor’s SBSP mentions the materials to be purchased, the total amount of money that will be spent on each small business outfit and the percentage of money that has been stipulated for supplies and/or services that these purchases represent.
Small business concerns usually used as sub recipients of such huge business projects are:
o Small Disadvantaged Business concern
o Minority Institutes
o Veteran Owned Small Business concern
o Women Owned Small Business concern
o Historically Black Colleges and Universities
Rather than waiting for communication, a small business can contact prime contractors directly to inform them of its small business.
A small business can approach agencies themselves to show inclination of its availability for subcontracting.
A SBSP is prepared by the principal investigator of the project. The principal investigator takes up the responsibility of meeting the goals set in the plan. If the SBSP fails for any reason, the contractor may be made responsible for the damage and the business concern handling the project may be denied new contracts.
Once the SBSP is prepared, it is presented as a part of the business proposal. It is open to negotiation.
o In soliciting subcontracts, prime contractors often seek several small business sources to insure they are obtaining a fair price
o If a small business is dissatisfied with the treatment it receives from the prime contractor, it cannot protest to the agency or General Accounting Office.
The principal investigator informs the Procurement Resource Services (PRS) administrator of the need of subcontractors. The PRS then aids investigators in identifying suppliers as per the requirement of the project.
o Prime contractors are increasingly aware of the need to subcontract with small businesses for delegating work.
o Certain small business contracts stress the possibility of dollar penalties on those failing to meet their subcontracting plans.
Typical samples small business subcontracting plans require the following information:
o Identification Data – name of the company, address, date of preparation of SBSP, Solicitation Number and Item or Service required
o Type of Plan – individual, master or commercial
o Goals – estimated dollar value of all planned subcontracting, estimated dollar value and percentage of total planned subcontracting to large business concerns, estimated dollar value and percentage of total planned subcontracting to small business concerns etc
o Details of Program Administrator
o Equitable Opportunity
o Reporting and Co-operation time line
o Record Keeping
o Timely payments to Subcontractors
o Description of Good Faith Report