Your Ultimate Guide to Small Business Subcontracting Plans
It’s a known fact that the federal government prefers small businesses when it comes to establishing contracts.
For instance, in 2019, the federal government granted $132 billion to small businesses. Similarly, it awarded over $90 billion in subcontracts to small businesses.
But wait… what does the government hope to achieve by doing this?
During our childhood, our parents often used to teach us that sharing is caring.
The concept, although way more complex than sharing your favorite toys with your friends, is still relevant.
And the federal government is a big fan of this idea. They require and encourage Other Than Small Businesses (OTSB) to create opportunities for small businesses, so that they can participate in federal procurement.
An effective way to accomplish this is through small business contracting.
What Is Small Business Subcontracting Plan?
To understand what a small business subcontracting plan is, you have to understand the background.
The objective of a small business subcontracting plan is for contractors to outsource a part of their federal contracting dollars to small businesses.
But these businesses don’t directly work with the government. Instead, they work with the contractors, who may ask small businesses to submit a plan. This plan is called a small business subcontracting plan.
A small business subcontracting plan helps determine and achieve your subcontracting goals. It highlights the estimated dollar amount that you’ll need to put aside for a small business.
Types Of Small Business Contracting Plans
These plans can be divided into two categories:
A commercial plan covers all federal contracts for a particular year. This means you won’t need to make separate plans if you’ve got more than a few contracts. It’s based on the amount that you spent on subcontracting the last year.
Apart from paying for the specific expenses outlined in your contract, a commercial plan covers most of your corporate expenses. You can negotiate the terms of the plan every year on 30th October, when it’s renewed.
If you work in a product manufacturing industry, a commercial plan would be best suited for your needs. As we’ve already mentioned before, this plan includes all your corporate expenses. So, you won’t have to worry about paying an extra amount.
As evident from the name itself, in an individual plan, you’ll need to make a separate plan for each contract in a specific year. And it’s based on what you expect from the subcontracting plan, not your previous year’s performance.
How To Report Your Subcontracting Plan?
Once you’ve decided whether you want a commercial or individual plan, you’ll need to report it to the government. You’ll be required to fill out a Summary Subcontract Report (SSR) in the Electronic Subcontracting Reporting System (eSRS).
What’s A Small Business According to The Government?
Small Business Administration (SBA) has proposed a list of qualifications. You must meet all of them if you want the government to consider you a small business. You should:
- Have a physical location in the US.
- Run your business operations primarily in the US.
- Be a for-profit organization.
Additionally, if you run a small business and belong to one of the following subcategories, you can earn federal government dollars:
- Small Disadvantaged Business
- Women-Owned Small Business (WOSB)
- Veteran-Owned Small Business (VOSB)
- Service-Disabled Veteran-Owned Small Business (SDVOSB)
What’s The Eligibility Criteria to Be Considered for A Subcontracting Plan?
To be considered eligible for a subcontracting plan, you need to fulfill two conditions:
- You’re not a small business
- You have a federal contract over the Simplified Acquisition Threshold (SAT) of $150,000.
Talk To an Expert
Understanding small business subcontracting plans can be tricky. There are a lot of factors involved. And if you overlook even the smallest of the detail, it can produce unfavorable results.
At SBLO2GO, we recognize that, which is why we’ll help you navigate this challenging landscape with ease and comfortability. All you need to do is connect with us, and we’ll handle the rest.