Small Business Subcontracting Plans For Small And Small Disadvantaged Businesses

last updated 09/25/07

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Background

The Federal Acquisition Regulation (FAR 52.219-9) requires a Small Business Subcontracting Plan (SBSP) for each contract with an awarded value of $500,000 for the entire period of performance. An SBSP is also expected of any subrecipient whose total subcontract amount is expected to exceed $500,000 for the entire period of performance. Under these plans, prime contractors and subcontractors, such as Northwestern, must agree to purchase a percentage of the supplies and services required for the performance of a contract from small business concerns. Some federal agencies set specific percentage goals and others rely on the contractor to make a good faith effort.

The prime or subcontractor's SBSP specifies which items will be purchased from small business concerns, the total dollars to be spent with each small business concern, and the percentage of dollars budgeted for supplies and services that these purchases represent. Small business concerns include: Small Disadvantaged Business (SDB) Concerns, Women-Owned Small Business (WOSB) Concerns, Historically Black Colleges and Universities (HBCU) and Minority Institutions (MI), HUBZone Small Business (HUBZone SB) Concerns, Veteran-Owned Small Business Concerns (VOSB), and Service-Disabled Veteran-Owned Small Business Concerns (SDVOSB).

The SBSP is developed jointly by the principal investigator, the unit (department, center, or institute) business administrator, and Purchasing Resource Service's Procurement Administrator. Once the award has been made, the SBSP becomes part of the contract and the principal investigator is expected to meet the goals set in the plan. Failure to produce a good faith effort can result in the contractor being assessed damages and the entire University being adversely affected in its ability to obtain new contracts.

Northwestern University has a large number of federal contracts that require SBSPs. This document is intended to provide guidance on the preparation, execution and monitoring, and reporting requirements of SBSPs, including a description of the responsibilities of the various parties.

Procedures

A. Preparing an SBSP

An SBSP is generally required as part of the Business Proposal and is subject to negotiation during the negotiation phase of the project. A sample SBSP is usually incorporated as an attachment to an RFP and agency goals are often set out in the sample form. When specific goals are not stated, Northwestern is expected to make a good faith effort to identify small business concerns and determine target percentages.

The principal investigator for the contract or the department business administrator starts the process by notifying John Marshall, Procurement Administrator in Purchasing Resource Services (PRS), of the need for an SBSP. PRS makes every effort to assist investigators in the identification of diverse suppliers for inclusion under the plan. Because these plans are highly customized to the individual project, at least five days advance notice to PRS is required. The principal investigator, working together with the unit business administrator, provides the Procurement Administrator with the non-personnel portion of the project budget, a list of known suppliers for the project, and suggestions for the use of small business concerns. The Procurement Administrator then takes this information and, using University-approved vendors who satisfy SBSP requirements, attempts to suggest small business vendors as alternate sources that principal investigators can buy from in order to meet the recommended goals of the RFP or to establish a good faith effort.

Once subcontracting opportunities have been identified and dollar and percentage goals calculated, the Procurement Administrator enters the necessary information on an SBSP form (refer to Template section, below). The subcontracting plan form used by PRS is modeled after the NIH form and is widely accepted by federal contracting agencies. PRS signs the SBSP and returns it to the principal investigator who includes it within the Business Proposal. The plan is subject to negotiation during the negotiation phase of a proposal and during this time, the agency may request a revised plan.

B. Executing and Monitoring Performance Against an SBSP

C. Reporting Performance Against an SBSP

As a federal contractor, the University is required to submit periodic reports to the federal government on its accomplishments in subcontracting and purchasing with small businesses. The submission of a semi-annual report, the SF-294, is a contract requirement and is due for periods ending March 31 and September 30 for each contract with an SBSP (refer to Template section, below).

The Procurement Administrator in PRS completes the SF-294s. ASRSP sends the monthly account budget statements to the Procurement Administrator (John Marshall), who then identifies the use of all small businesses and completes the SF-294 form for the semi-annual period and for the cumulative period. Upon completion, the Procurement Administrator signs the SF-294 form and forwards it to both ASRSP and the principal investigator. The principal investigator and his/her business administrator is asked to review the completed form within 5 business days and alert the Procurement Administrator and ASRSP of any issues. In order to meet reporting deadlines, ASRSP will submit the SF-294 to the agency's Contracting Officer after 5 business days, unless otherwise instructed by the principal investigator. ASRSP sends a copy of the final SF-294, as submitted to the agency, to PI and the unit business administrator and retains a copy in the project file.

If the use of small business accomplishments falls below that which would be expected using a straight-line projection of goals through the period of contract performance, an explanation must be provided in the remarks section (box 17) of the form. It is the responsibility of the principal investigator and his/her staff to provide this explanation to the Procurement Administrator for inclusion on the form.

In addition to the semi-annual SF-294 submission form, an annual report, the SF-295, may be required by the terms of the individual contract or by request of the Contracting Officer. The SF-295 summarizes all of the subcontracting plans by unit of the University for the 12 months ending September 30. The SF-295 form is completed by the Procurement Administrator and forwarded to ASRSP for submission to the agency's Contracting Officer.

Templates

Small Business Subcontracting Plan:
http://www.knownet.hhs.gov/smallbus/sb-subplan-hhs.pdf
SF-294 Form:
http://contacts.gsa.gov/webforms.nsf/0/2D5E310C4C549B2E85256A72004B1364/$file/sf294.pdf

Roles and Responsibilities

Questions regarding these procedures should be directed to:
Mike Daniels, Director of ASRSP (1-3385, m-daniels2@northwestern.edu)
Devi Patel, Procurement Administrator, Purchasing Resource Services (1-8122, d-patel3@northwestern.edu)

Summary of Key Roles and Responsibilities for Small Business Subcontracting Plans (SBSPs)

P = primary responsibility
S = support responsibility