The federal government helps small businesses get an opportunity to subcontract on federal prime contracts.

Overview 

  • Prime contracting
  • Subcontracting with small businesses
  • Awards with subcontracting plans
  • Compliance reviews
  • Subcontractor compliance
  • Subcontract reporting
  • Subcontracting rules and regulations
  • Training and education

Prime contracting

Prime contractors work directly with the government. They manage any subcontractors, and are responsible for ensuring that the work is completed as defined in the contract.

To become a prime contractor, you must first register your business with the System for Award Management (SAM). You can search for federal contracting opportunities through FedBizOpps, and GSA Schedules. You can post your subcontracting opportunities to the Subcontracting Network database.

You can find historical award information with the Federal Procurement Database Systems – Next Generation.

Subcontracting with small businesses

Unlike prime contractors, subcontractors do not work directly with the government, but instead work for other contractors.

Some government contracts require large companies to subcontract with a small business. This creates more opportunities for small businesses to get involved in federal contracting.

Subcontracting opportunities are posted in the following directories:

  • Subcontracting Network database
  • General Services Administration’s Subcontracting Directory for Small Businesses
  • Department of Defense Subcontracting Opportunity Directory
  • SBA’s Directory of Federal Government Prime Contractors with a Subcontracting Plan

Awards with subcontracting plans

Some federal contracts require a subcontracting plan to outsource work to a small business subcontractor. Contracting officers can include specific subcontracting goals for the prime contractor to try to meet.

In its proposal to a large business, a small businesses must self-certify as small for the NAICS code on the solicitation. If a small business fails to do this, a subcontract will not count toward small business subcontracting goals.

Any large business can publish outreach events, notices of sources sought, and solicitations for subcontracting work to the subcontracting database, in an effort to locate small business subcontractors.

You can also use the Dynamic Small Business Search to find small businesses. Contact a Procurement Technical Assistance Center for more help finding small businesses to subcontract.

For additional guidance about complying with prime contractor requirements, contact Subcontracting Program Assistance (SPA).

Limitations on subcontracting

Under certain kinds of set-aside contracts, small business prime contractors are required to perform minimum levels of work.

Subcontracting limitations are part of the governing rules and responsibilities that all contractors should be familiar with.

The limitations on subcontracting are fully defined in 13 CFR 125.6.

Compliance reviews

Any prime contractor with a subcontracting plan can be selected for a subcontracting compliance review. The review confirms the prime is following relevant regulations, processes, procedures, and the subcontracting plan.

If you’re selected for review, a CMR or an official from the awarding agency will contact your government point of contact. The review will rate the prime contractor’s level of conformity and identify any deficiencies that need to be addressed.

If the review identifies any deficiencies, the prime contractor must submit a corrective action plan to their CMR. The CMR will follow up with the contractor several months later to see if the corrective action plan was followed. The entire compliance review will be documented in the contract file.

Failing to address any deficiencies could result in negative past performance ratings, which can affect your future ability to receive federal contracts. It could also cause you to be assessed liquidated damages according to FAR 52.211-11 and FAR 52.211-12.

Subcontractor compliance

Large business contractors must ensure lower-tier subcontractors adhere to the requirements of subcontracting-related contract clauses. This includes monitoring and enforcing compliance with flow-down clauses, subcontracting plans, subcontract reporting, and subcontracting goals.

Prime contractors may be required to “flow down” some clauses of their contract to subcontractors. When that’s the case, obtain an acceptable flow-down subcontracting plan from your commercial market representative.

Subcontract reporting

To track compliance with subcontracting requirements, large businesses are required to submit regular subcontract reports using the Electronic Subcontract Reporting System (eSRS). You’ll need to submit reports even if you don’t have any active subcontracts for the reporting period.

Subcontracting rules and regulations

The rules and regulations that govern the subcontracting program are fully defined in the Code of Federal Regulations, the Federal Acquisition Regulations, and supplements that are individually published by federal agencies.

Here are some of the most-used subcontracting program regulations:

  • 13 CFR 121.404: When is the size status of a business concern determined?
  • 13 CFR 121.410: What are the size standards for SBA’s Section 8(d) Subcontracting Program?
  • 13 CFR 121.411: What are the size procedures for SBA’s Section 8(d) Subcontracting Program?
  • 13 CFR 125.3: What types of subcontracting assistance are available to small businesses?
  • FAR 19.7: The Small Business Subcontracting Program
  • FAR 52.212-5: Contract Terms and Conditions Required to Implement Statutes or Executive Orders — Commercial Items
  • FAR 52.219-8: Utilization of Small Business Concerns
  • FAR 52.219-9: Small Business Subcontracting Plan
  • FAR 52.244-6: Subcontracts for Commercial Items

Training and education

The SBA provides free training to both prime contractors and subcontractors. The courses are held online, and you don’t need to register ahead of time.