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# Prime and subcontracting

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## Content

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## 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 SAM and GSA Schedules.

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

## Subcontracting

Unlike prime contractors, subcontractors do not work directly with the government, but instead work for other contractors. This allows contractors that are not prepared to work directly with a federal agency to still participate in Federal procurements.

Some government contracts require “other than small” businesses, including large businesses, to subcontract with a small business. This creates more opportunities for small businesses to get involved in federal contracting.

## Awards with small business subcontracting plans

Federal contracts awarded to “other than small” businesses over a certain dollar threshold must contain a small business subcontracting plan. In this plan, which follows the requirements of FAR 52.219-9, the prime contractor sets goals for what it plans to subcontract to small businesses, small disadvantaged businesses, women-owned small businesses, HUBZone small businesses, veteran-owned small businesses, and service-disabled veteran-owned small businesses. A listing of contractors with subcontracting plans can be found at SBA’s Directory of Federal Government Prime Contractors with a Subcontracting Plan.

Some federal agencies maintain subcontracting websites that include directories of large prime contractors so that small businesses know what contractors may have subcontracting opportunities:
                  - General Services Administration’s Subcontracting Directory for Small Businesses
                  - DOT Subcontracting Directory | US Department of Transportation
                  - Subcontracting and Other Partnerships | GSA

In an effort to locate small business subcontractors, any large business can post a notice of a subcontracting opportunity, including the solicitation, to SBA’s subcontracting database, SUBNet. Prime contractors wanting to publish opportunities in SUBNet must sign in through SBA Connect. Small businesses can search and view these posted subcontracting opportunities at SUBNet. (Small businesses do not need to register at SBA Connect to view SUBNet postings.)

Prime contractors also use the Dynamic Small Business Search to find small businesses. Ensure that your profile in DSBS is complete including socioeconomic representations and certifications, a capabilities narrative, keywords, NAICS codes, and performance history.

Contact an APEX Accelerator (formerly known as a Procurement Technical Assistance Center) for more help finding small businesses subcontracting opportunities.

### 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 Commercial Market Representative (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.

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 for liquidated damages according to FAR 52.219-16.

## 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.

The reporting periods and due dates are as follows:

**Reports due for an individual subcontracting plan**

**Reports due for a commercial subcontracting plan**

 

## 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

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.

Check SBA’s upcoming events to find training on subcontracting topics.

### Need help?

A Procurement Center Representative (PCR) can assist with the pre-award aspects of small business subcontracting plans.

A Commercial Market Representative can provide assistance with subcontracting plan compliance after contract award.

General subcontracting questions can be sent to Subcontracting@sba.gov.

The Office of Policy, Planning & Liaison can help you with questions about subcontracting rules and regulations.

If you have questions about the Electronic Subcontracting Reporting System (eSRS), visit the Federal Service Desk or call 866-606-8220 (within the United States) or 334-206-7828 (outside the United States).