19.705-2 Determining the need for a subcontracting plan
Source: FAR 19.705-2 on acquisition.gov
Contracting officers must thoroughly assess and document the need for a subcontracting plan, ensuring compliance with thresholds and maximizing small business participation opportunities.
Overview
FAR 19.705-2 outlines the process contracting officers must follow to determine whether a subcontracting plan is required for a proposed contract or contract modification. The regulation requires officers to assess if the contract value exceeds the threshold specified in FAR 19.702(a) and to evaluate whether subcontracting opportunities exist based on industry practices, prequalification requirements, and the feasibility of subcontracting portions of the work. If no subcontracting possibilities are found, a detailed, higher-level-approved rationale must be documented. The section also addresses the timing for requiring subcontracting plans in solicitations, the prohibition on multiple plans per contract (with exceptions for IDIQ orders), and the need to update goals when modifications or options introduce new subcontracting opportunities. When a plan is added due to a modification or size re-representation, reporting requirements begin from the date of incorporation.
Key Rules
- Threshold Determination
- Contracting officers must determine if the contract or modification exceeds the subcontracting plan threshold in FAR 19.702(a).
- Assessment of Subcontracting Possibilities
- Officers must consider industry practices, prequalification requirements, and feasibility of subcontracting work.
- Documentation of No Subcontracting Possibilities
- If no opportunities exist, a detailed rationale must be approved above the contracting officer and filed.
- Solicitation Requirements
- Officers may require plans with initial offers or later, considering competition integrity and small business opportunities.
- Single Plan Rule and Goal Amendments
- Only one plan per contract, but separate goals for IDIQ orders are allowed; goals must be updated for new opportunities.
- Reporting for Added Plans
- When a plan is added, reporting starts from the incorporation date and must be cumulative.
Responsibilities
- Contracting Officers: Assess thresholds, evaluate subcontracting possibilities, document decisions, determine timing for plan submission, ensure only one plan per contract, and update/amend goals as needed.
- Contractors: Comply with plan requirements, update goals when modifications occur, and report achievements as required.
- Agencies: Approve no-subcontracting determinations at a higher level and maintain contract file documentation.
Practical Implications
- Ensures small business subcontracting opportunities are considered for eligible contracts.
- Requires careful documentation and justification when subcontracting is deemed not feasible.
- Impacts solicitation and contract administration processes, especially for modifications and IDIQ contracts.
- Common pitfalls include failing to document rationale for no plan, missing updates after modifications, or improper timing of plan submission.
The contracting officer shall take the following actions to determine whether a proposed contractual action requires a subcontracting plan:
(a)
(1) Determine whether the proposed total contract dollars will exceed the subcontracting plan threshold in 19.702(a).
(2) Determine whether a proposed modification will cause the total contract dollars to exceed the subcontracting plan threshold (see 19.702(a)).
(b) Determine whether subcontracting possibilities exist by considering relevant factors such as-
(1) Whether firms engaged in the business of furnishing the types of items to be acquired customarily contract for performance of part of the work or maintain sufficient in-house capability to perform the work; and
(2) Whether there are likely to be product prequalification requirements.
(3) Whether the firm can acquire any portion of the work with minimal or no disruption to performance (with consideration given to the time remaining until contract completion), and at fair market value, when a determination is made in accordance with paragraph (a)(2).
(c) If it is determined that there are no subcontracting possibilities, the determination shall include a detailed rationale, be approved at a level above the contracting officer, and placed in the contract file.
(d) In solicitations for negotiated acquisitions, the contracting officer may require the submission of subcontracting plans with initial offers, or at any other time prior to award. In determining when subcontracting plans should be required, as well as when and with whom plans should be negotiated, the contracting officer must consider the integrity of the competitive process, the goal of affording maximum practicable opportunity for small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns to participate, and the burden placed on offerors.
(e) A contract may not have more than one subcontracting plan. However, a contracting officer may establish separate subcontracting goals for each order under an indefinite-delivery, indefinite-quantity contract (19.705-1(b)(2)). When a contract modification exceeds the subcontracting plan threshold (see 19.702(a)) or an option is exercised, the goals of an existing subcontracting plan shall be amended to reflect any new subcontracting opportunities not envisioned at the time of contract award. These goal changes do not apply retroactively.
(f) If a subcontracting plan has been added to the contract due to a modification (see 19.702(a)(1)(iii)) or a size re-representation (see 19.301-2(e)), the subcontracting goals apply from the date of incorporation of the subcontracting plan into the contract and the contractor's achievements must be reported on the ISR (or the SF-294, if applicable) on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.