Thursday, October 29, 2015

Reminder to File Subcontract Reports

Contractors receiving a contract for more than the simplified acquisition threshold (currently $150 thousand) agree to utilize small businesses, small disadvantaged businesses, women-owned small businesses, historically underutilized business zone small businesses, veteran-owned small businesses, and serviced-disabled veteran-owned small business concerns participate in the performance of the contract to the extent practicable. Contractors receiving a contract or a modification to a contract expected to exceed $700 thousand must submit a subcontracting plan that provides maximum practicable opportunities for those types of businesses (see FAR 19.702).

In conjunction with these subcontracting plans for contracts greater than $700, contractors are required to submit semi-annual reports of the small business subcontracting progress to the Government. These semi-annual reports must be entered into the Individual Subcontract Report (ISR) module in the Electronic Subcontracting Reporting System (eSRS). The ISR is the electronic equivalent of the Standard Form 294, Subcontracting Report for Individual Contracts. The SF 294 is still used for certain contracts (e.g. classified contracts) but the electronic version is generally required.

These reports compare actual dollars awarded to the various classifications of small businesses with the contractor's goals for awards to those categories. Where do the goals come from? Usually the contractors goals conform to the Federal Government's goals. If they do not, contractors will probably be receiving a call from their contracting officers asking why not. Refer to the SBA website for the current goal percentages.

The cost to comply with the subcontract reporting requirements is not insignificant. The Government estimates that contractors will expend 40 hours per year to comply. This, in our opinion, is significantly understated however some larger contractors have implemented systems to facilitate the collection and reporting process.

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