A Subcontracting Plan is a formal document required from large businesses awarded certain federal contracts, outlining how they will provide subcontracting opportunities to small businesses throughout the life of the contract. The plan is a mandatory compliance requirement under federal acquisition regulations for contracts that exceed specific dollar thresholds, and it plays a vital role in ensuring inclusive participation in federal procurement.
By requiring Subcontracting Plans, the government seeks to promote economic opportunity for small, disadvantaged, and socio-economically classified businesses, while holding large prime contractors accountable for contributing to national small business utilization goals.
Purpose of the Subcontracting Plan
The federal government has a long-standing policy of fostering the growth of small businesses, recognizing their role in job creation, innovation, and regional development. To help achieve this, Subcontracting Plans are used to:
- Promote small business participation in federal contracts awarded to large businesses
- Track and report subcontracting performance, including percentage goals by category
- Ensure accountability through reporting and oversight mechanisms
- Support SBA and agency-specific small business objectives
The plan essentially serves as a roadmap and commitment from a large prime contractor to include small businesses in the execution of the contract.
When a Subcontracting Plan Is Required
A Subcontracting Plan is required when:
- A large business (not classified as a small business under the applicable NAICS code) is awarded a federal contract or subcontract that is expected to exceed:
- $750,000 for most contracts
- $1.5 million for construction contracts
- The contract contains subcontracting possibilities (i.e., the prime will not perform all work in-house)
This requirement applies to both GSA MAS contracts and non-GSA contracts, unless the contract is entirely for commercial off-the-shelf (COTS) items with no further manufacturing or services involved.
Types of Subcontracting Plans
There are several types of Subcontracting Plans, each applicable to different contracting scenarios:
1. Individual Subcontracting Plan
- Applies to a specific contract
- Includes goals and commitments for that contract alone
- Most common for task orders or stand-alone contract awards
2. Master Subcontracting Plan
- A general framework that covers multiple contracts with similar subcontracting approaches
- Must still be tailored through Individual Plans per contract
3. Commercial Subcontracting Plan
- Used when a contractor sells commercial products or services
- Applies to entire commercial operations, not just a specific contract
- Accepted only for prime contracts for commercial items
4. Comprehensive Subcontracting Plan (CSP)
- Applies only to participants in the DoD’s CSP Test Program
- Covers multiple contracts across agencies
For most GSA MAS contractors, the Individual or Commercial Subcontracting Plan is most relevant.
What’s Included in a Subcontracting Plan
An effective Subcontracting Plan must be comprehensive and include the following required elements (as outlined in FAR 52.219-9):
- Total dollar value of all planned subcontracts
- Separate goals, expressed in both dollars and percentages, for:
- Small Businesses (SB)
- Small Disadvantaged Businesses (SDB)
- Women-Owned Small Businesses (WOSB)
- HUBZone Small Businesses
- Service-Disabled Veteran-Owned Small Businesses (SDVOSB)
- Description of efforts to ensure equitable opportunity
- Identification of the Subcontracting Plan Administrator
- Procedures for flowing down clauses to subcontractors
- Methods of reporting and recordkeeping
- Procedures for compliance and monitoring
The plan must also describe how the contractor will make good faith efforts to meet the stated goals and how performance will be measured.
How Subcontracting Plans Are Reviewed and Approved
Subcontracting Plans are reviewed by the contracting agency’s Contracting Officer (CO), often in consultation with a Small Business Specialist or the Office of Small and Disadvantaged Business Utilization (OSDBU).
Approval is based on:
- Realism of goals based on the scope of the contract
- Clarity of methods for outreach and engagement
- Consistency with prior performance, if applicable
- Compliance with FAR 19 and agency-specific requirements
Once approved, the plan becomes a contractual obligation and is legally enforceable.
Subcontracting Plan Compliance and Reporting
Prime contractors are required to report their subcontracting achievements via the Electronic Subcontracting Reporting System (eSRS). The main reports include:
- Individual Subcontracting Report (ISR) – Filed semi-annually and at contract completion
- Summary Subcontracting Report (SSR) – Filed annually to summarize all subcontracting activity across all contracts
Contractors must track and report:
- Dollars subcontracted to each small business category
- Narrative justifications for missed goals
- Actions taken to increase subcontracting opportunities
Failure to comply can lead to:
- Negative past performance ratings
- Termination for default
- Liquidated damages, per FAR 52.219-16
- Suspension or debarment, in severe cases
Subcontracting Plans and GSA MAS Contracts
Large businesses awarded GSA MAS contracts are subject to the Subcontracting Plan requirement if they offer services or custom products and meet the dollar thresholds. GSA provides resources, including:
- Templates and instructions via the Vendor Support Center (VSC)
- Access to SBA Dynamic Small Business Search (DSBS) for market research
- Guidance on submitting ISR/SSR reports through eSRS
Subcontracting Plans are submitted during the MAS offer process and must be updated with each option period or when the scope changes significantly.
Best Practices for Prime Contractors
To ensure success in meeting Subcontracting Plan goals, prime contractors should:
- Develop a comprehensive outreach strategy for finding qualified small businesses
- Maintain a living directory of vetted small business partners
- Use forecasting and early planning to identify subcontracting opportunities
- Build strong relationships with OSDBUs and PTACs (now part of APEX Accelerators)
- Document all outreach and negotiation efforts, even when no subcontract is awarded
Being proactive and transparent not only supports compliance but also improves competitiveness and long-term federal market positioning.
Conclusion
The Subcontracting Plan is more than a paperwork requirement — it is a strategic and regulatory tool that ensures large businesses contribute to the federal government’s small business inclusion goals. By creating clear goals, tracking progress, and engaging the small business community meaningfully, contractors fulfill both a legal obligation and a broader mission of economic equity and supply chain diversity.
In the context of GSA MAS and broader federal procurement, a well-executed Subcontracting Plan helps large businesses succeed by demonstrating commitment, compliance, and cooperation — all values that matter deeply in today’s acquisition environment.
