A Small Business Subcontracting Plan is required of any other-than-small prime contractor on a federal contract expected to exceed seven hundred fifty thousand dollars ($1.5M for construction), under FAR Subpart 19.7. The plan establishes percentage and dollar goals for subcontracting to small businesses overall and to each socioeconomic category — Small Disadvantaged Business, Women-Owned Small Business, HUBZone, Service-Disabled Veteran-Owned Small Business — based on the planned procurement structure of the prime contract. The plan must be approved by the contracting officer before award and is incorporated into the contract by reference, making the goals contractually binding.
Required plan contents include named subcontracting goals, a description of how the prime will identify small business sources, good-faith efforts to use small businesses, the small business liaison officer, methods for ensuring participation in prime planning, and procedures for reviewing subcontract opportunities. Performance is reported through the Individual Subcontract Report (SF-294) and the Summary Subcontract Report (SF-295) annually via the Electronic Subcontracting Reporting System. Failure to make a good-faith effort can result in past-performance downgrades, withholdings, or termination.
For small contractors, the prime's subcontracting plan is a teaming opportunity surface. Primes pursuing large contracts need credible small business subcontractor pipelines to populate their plans — particularly in socioeconomic categories where the prime lacks direct relationships. Approaching primes with relevant past performance before the prime's proposal is due is the standard inroad. Once incorporated, the small business should expect actual workflow under the contract, not just plan-population.