Government agencies are required to award a certain percentage of their contracting dollars to small businesses. In the current economic climate in which job creation is such a high priority, small business set-asides are under more scrutiny than ever.
Many government RFPs now specifically require a subcontracting plan to be submitted as part of the proposal. The plan is therefore just like any other part of an RFP — not only a requirement to be fulfilled to the letter, but an opportunity for a business to point out its unique value proposition. In another article on subcontracting plans, we discussed the mandatory elements of a subcontracting plan. Let's go through those again now with an eye on proving value.
Subcontracting Plan Walk-Through
- Goals for the percentage of total subcontracting dollars that will go to each small business category (small, women-owned, veteran-owned, etc.).
- Total dollar amount of the contract that will be subcontracted out, both overall and by small-business category.
- Description of the supplies/services to be subcontracted, both total and by small-business category.
- Description of the method used by the prime contractor to arrive at the subcontracting plan and goals above.
Don't approach your subcontracting plan as a way to fill gaps in your services — instead, think of subcontractors as adding value. In many instances a smaller company can deliver cheaper or better services than a large one, either due to low overheads or special expertise. This is also your first opportunity to discuss the stellar credentials your subcontractors bring to the table. Note: Make sure your small/disadvantaged business enterprise subcontractors are certified as such by the SBA before you begin drafting your subcontracting plan.
- Description of the method to be used to identify potential small-business subcontractors.
Again, the purpose of the subcontracting plan is to prove value. If you're using subcontractors with whom you've worked well in the past, that's a strong indicator of quality products/services. But government purchasers are also interested in getting the best deal possible while still contracting to small/disadvantaged businesses. Make sure you've shopped around by using sources like the SBA's PRO-Net, and that you've solicited or plan to solicit bids from multiple potential subcontractors. Be prepared to explain your reasons if you don't go with the lowest bidder.
- Whether and to what extent indirect costs have been included in the goals outlined in the subcontracting plan, and the method used to determine what share of the indirect costs will be incurred with small businesses.
This is another area of the subcontracting plan in which to include a cut-and-dried description of the methodology your company has used to determine what, if any, indirect costs will be included.
- Contact information for the person who is administrating the subcontracting program, and a description of that person's duties within the organization.
Subcontracting is often a bit of a blind spot for agencies, because they don't directly manage the relationship. It's important to demonstrate that the person administrating the program is responsible and experienced, and that he or she will ensure that small businesses are adequately considered and included in the overall contract.
- Description of efforts being made to ensure that small businesses have an equitable opportunity to compete for the subcontracts in question.
These may include frequently updated source lists of small businesses and purchase of necessary supplies from small and disadvantaged businesses. Show your company's commitment to small and disadvantaged businesses by describing your internal efforts, such as workshops and training programs, to increase awareness of small and disadvantaged business concerns. A well-drafted compliance plan can also help prove your company's seriousness in its commitment.
- Assurances that the prime contractor will do the following:
- Cooperate in any studies and surveys
- Submit periodic compliance reports
- Submit the proper forms, as required
This part of the plan is legal boilerplate. Enlist the help of a lawyer to confirm that your assurances are legally sound and in the correct format.
- Description of what records will be kept to document compliance with the subcontracting plan's requirements and goals, as well as record-keeping procedures and documentation of the prime's efforts to locate small businesses for subcontracting.
- Any flow-down clauses and reporting requirements, including the Utilization of Small Business Concerns clause and the Subcontracting Plan clause from part 52 of the FAR.
