If your company is not a small business and you win a large federal contract, you will likely have to submit a small business subcontracting plan. The plan sets out how much of the work you will subcontract to small businesses, and to which types, and how you’ll track and report it.
Weak plans cost primes evaluation points, and missed goals can hurt future awards. Here’s how the requirement works.
When is a subcontracting plan required?
Under FAR Subpart 19.7, other-than-small businesses generally must submit a subcontracting plan when a contract, or a modification, is expected to exceed $900,000, or $2 million for construction, and has subcontracting possibilities. These thresholds took effect on October 1, 2025, when the FAR Council raised them for inflation from $750,000 and $1.5 million.
Small businesses are exempt, as are contracts performed entirely outside the United States. Always check the solicitation, because the contracting officer decides whether a plan is required.
What goes into a subcontracting plan
- Goals, in dollars and as a percentage of total planned subcontracting, for small businesses, small disadvantaged businesses, women-owned small businesses, HUBZone small businesses, veteran-owned small businesses and service-disabled veteran-owned small businesses.
- A description of the work you plan to subcontract, and to which types of firms.
- How you set the goals, including the sources you used to identify capable small businesses.
- A named administrator responsible for running the program.
- Your outreach efforts to give small businesses a fair chance to compete.
- Flow-down commitments for large subcontractors that must have their own plans.
- Records and reporting, including reports in the government’s Electronic Subcontracting Reporting System (eSRS).
Individual, master and commercial plans
An individual plan covers one contract. A master plan sets out a company’s general approach and is used as the base for individual plans. A commercial plan covers a company’s whole fiscal year when it sells commercial products or services. The right choice depends on how much federal work you do and what you sell.
How primes meet their goals
- Identify small businesses early. Search SAM.gov, the SBA Dynamic Small Business Search and SubNet by NAICS code months before the proposal is due.
- Break out work small firms can perform, such as research, professional services, supply, logistics and specialty trades.
- Vet partners’ registrations and certifications so their participation counts.
- Document every outreach effort. If you fall short of a goal, your records are your good faith evidence.
- Report on time in eSRS and keep subcontracting records current throughout performance.
California state contracts work differently
California doesn’t use federal subcontracting plans, but state contracts carry a 25% Small Business and a 3% DVBE participation goal. Many solicitations require DVBE participation, or documented good faith efforts, as a condition of a responsive bid. For more detail, see our guides to DVBE certification and bidding on public works projects.
Frequently asked questions
What is the subcontracting plan threshold in 2026?
For contracts with other-than-small businesses, a subcontracting plan is generally required when the contract is expected to exceed $900,000, or $2 million for construction. These thresholds took effect on October 1, 2025.
Do small businesses need a subcontracting plan?
No. Small business prime contractors are exempt from the federal subcontracting plan requirement.
What happens if a prime contractor misses its subcontracting goals?
The contracting officer reviews whether the prime made a good faith effort. A failure to make a good faith effort can lead to liquidated damages and hurt past performance ratings on future awards.
Where are subcontracting plans reported?
Primes report progress in the Electronic Subcontracting Reporting System (eSRS) through Individual Subcontract Reports and Summary Subcontract Reports.
Work with GERC
We help prime contractors build subcontracting plans, identify and vet certified small business subcontractors, and document outreach and good faith efforts. GERC is a woman-owned firm in San Bernardino, registered in SAM.gov under CAGE code 11SD2 and certified by the State of California as a Small Business (Micro) and a Small Business for Public Works (SB-PW). Book a consultation or see our capability statement.