Lower-Tier Small Business Subcontracting Plan and Reporting Requirements
- Flow-Down Threshold
- Federal Acquisition Regulation
- Plan Review and Approval
- Plan Types
- Subcontracting Possibilities Determination
- Report Types
Federal government subcontracts valued at over $650,000 that are awarded to large subcontractors ("subcontractors") contain specific clauses included in RTI's federally funded prime contracts, which also apply to the subcontracts. These contractual terms are referred to as flow-down clauses. Small businesses are exempt from this flow-down requirement. The term subcontract refers to a contract or contractual action entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind.
Federal Acquisition Regulation (FAR) Flow-Down of the FAR 52.219-9(d)(9) Small Business Subcontracting Plan
Subcontractors – including large businesses, nonprofit (including colleges and universities) and foreign organizations – are required to develop and submit to RTI a lower-tier small business subcontracting plan ("Plan") that:
- Includes an explanation of the methods used to increase the use of small business
- Provides realistic small business subcontracting goals
- Describes the subcontractor's good-faith efforts in providing maximum opportunities for small businesses
- Meets minimum requirements outlined in FAR 52.219-9.
A large subcontractors' good-faith efforts may include proactive participation at an RTI and/or a federal agency's small business outreach event. If the subcontractor does not have a standard plan, they are encouraged to ask for assistance from RTI's Small Business Office.*
RTI's Small Business Office reviews and approves all proposed plans, which can then be submitted to RTI's representatives working with subcontractors in the pre-award/proposal phase. If a proposed subcontract effort does not appear to have direct project subcontracting opportunities, a plan is still required. RTI will review a proposed plan that has small business subcontracting goals that include a proportional share of a subcontractor's indirect costs. Indirect costs can be included in the goal development and reporting methodology, as long as the subcontractor provides an acceptable explanation of how the small- and large-business indirect costs are applied to the plan and to the subsequent reports.
If the subcontractor is a prospective RTI subcontractor planning to provide services or non-commercial items valued above the $650,000 threshold, then the type of plan must be an "individual contract plan," which means a subcontracting plan that covers the entire contract period (including option periods) and has goals that are based on its subcontracting activities. If the prospective RTI supplier is selling a commercial item valued above the $650,000 threshold, then the plan type must be a "commercial plan."
According to FAR 19.705-2(c), the determination that there are no subcontracting possibilities under the prime contract can only be made at one level above the government contracting officer. The flow-down rule allows this determination to be done on lower-level subcontracting plans, as well. RTI can request for the contracting officer to agree in writing that there are no subcontracting possibilities at an RTI subcontractor's level. Likewise, RTI can sign off on the determination that there are no subcontracting possibilities at a second-tier subcontractor's level. (Note: the term subcontract means a contract or contractual action entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime or subcontract. Travel, supplies, shipping, consultants, services materials, equipment, and other vendor-related costs are all considered subcontracting possibilities.)
Subcontractors must meet biannual reporting deadlines in April and October of each year. The individual subcontracting report ("ISR") must be submitted for all subcontracts containing an individual subcontracting plan. It must include the negotiated subcontracting goals that are a part of that plan, and report all subcontracting activity since the start of the subcontract (the ISR replaced standard form (SF) 294). Subcontractors also must submit a summary subcontract report ("SSR") in October of each year. ISRs and SSRs are required as long as a subcontract is open or active. After the subcontract close-out process is complete, the subcontractor must then submit a final ISR.
To submit the ISR and the SSR, subcontractors must register in the electronic subcontracting reporting system (eSRS) and add the contract to the contract worklist in order to fulfill their reporting obligations. The prime contract number (without dashes) is required to complete this step. Hard or soft copy reports submitted to RTI representatives are NOT considered official reports. The prime contractor (or the higher-tier subcontractor) will review each ISR and determine if a report should be accepted or rejected. If further assistance is needed, please contact RTI's Small Business Office.*
Subcontractors preparing to file the ISR for the first time should have the following required information:
- Prime contract number (to be provided to you by RTI's subcontracts and/or small business specialist)*
- RTI's DUNS number: 004868105
- RTI's subcontract number (to be provided to you by RTI's subcontracts representative)*
- RTI's point of contact email (eSRS's ISR email target): firstname.lastname@example.org
- Subcontractor's DUNS number (DUNS number for RTI's subcontractor)
- The subcontracting plan approved by RTI with the subcontracting goals dollars and percentages established in such plan, and the actual subcontracting dollars for the reporting period.
When preparing to file a subsequent ISR for the same subcontracting plan, the subcontractor only needs the prime contract number and the actual subcontracting dollars for the reporting period.
If an RTI subcontractor establishes lower-tier plans with their subcontractors, ISRs for such plans must also be submitted through eSRS. The following information is needed for proper lower-tier ISR submission:
- Prime contract number (to be provided to you by RTI or by the first-tier subcontractor)*
- First-tier subcontractor's DUNS number (to be provided to you by RTI's subcontractor)
- First-tier subcontractor's subcontract number (issued to you by RTI's subcontractor to the lower-tier subcontractor)
- First-tier subcontractor's point of contact email (eSRS's ISR email target): (provided to you by the first-tier subcontractor)
- Second-tier subcontractor's DUNS number (DUNS number for subcontractor to RTI's subcontractor)
- The subcontracting plan approved by the first-tier subcontractor with the subcontracting goals for dollars and percentages established in such plan, and the actual subcontracting dollars for the reporting period
Note: The lower-tier subcontracting plan requirements and subsequent reports flow-down to tiers below second-tier as applicable.
The SSR collects all prime and subcontractor award data related to any and all funded contracts in all federal agencies. All lower-tier subcontractors (first-,second-, and third-tier, etc.) must submit the SSR in October to the agency that originally awarded the contract. All prime and subcontractors with Department of Defense (DoD) and the National Aeronautics and Space Administration contracts must submit SSR reports in both April and October. Reports are required by the due date, regardless of whether there has been any subcontracting activity for the reporting period. Contact RTI's Small Business Office* for further assistance and review the eSRS guide.
Subcontractors preparing to file an SSR should have the following required information:
- Subcontractor's DUNS number (DUNS number for RTI's subcontractor)
- Subcontractor's product and service code (PSC) (defines services provided to higher-tier client)
- Subcontractor's North American Industry Classification System (NAICS) (defines services provided to higher-tier client)
- RTI's point of contact email (eSRS's email target): email@example.com
- Subcontracting activity summary for the previous reporting period
ISRs are reviewed electronically by RTI's Small Business Office. Please do not send ISRs to RTI's Subcontracts Office or any other representatives. If you need help completing an ISR, visit the eSRS website at www.esrs.gov and read the "Most Frequently Asked Questions" and view sample reports. If additional information is required, contact SupplierDiversity@rti.org for assistance.