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Edited: 8/14/2018 10:43 AM
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THAO LY
Commercial [Subcontracting] Plan

​FAR 19.705-2, Determining the Need for a Subcontracting Plan, states:

The contracting officer shall take the following actions to determine whether a proposed contractual action requires a subcontracting plan:

(a)

    (1) Determine whether the proposed total contract-dollars will exceed the subcontracting plan threshold in 19.702(a).

    (2) Determine whether a proposed modification will cause the total contract dollars to exceed the subcontracting plan threshold (see 19.702(a)).

(b) Determine whether subcontracting possibilities exist by considering relevant factors such as --

    (1) Whether firms engaged in the business of furnishing the types of items to be acquired customarily contract for performance of part of the work or maintain sufficient in-house capability to perform the work; and

    (2) Whether there are likely to be product prequalification requirements.

    (3) Whether the firm can acquire any portion of the work with minimal or no disruption to performance (with consideration given to the time remaining until contract completion), and at fair market value, when a determination is made in accordance with paragraph (a)(2).

(c) If it is determined that there are no subcontracting possibilities, the determination shall include a detailed rationale, be approved at a level above the contracting officer, and placed in the contract file.

My question relates to the determination that subcontracting possibilities exist when it comes to commercial purchases under FAR 12. For instance, many COTS vendors do not produce everything in-house. It has its own vendors (aka subcontractors) that provide materials or produce components that go into the end product it sells. The government contract does not create NEW opportunities for subcontracting since the vendor already has its set list of providers which it uses for its commercial products.

Is FAR 19.705-2 only addressing the subcontracting opportunities created by the government contract or subcontracting opportunities overall (aka the vendor has no subcontractors while producting its commercial item)?

My interpretation, based on the relevant factors provided in section (b), leads me to believe that even if the government requirement does not create NEW subcontracting opportunities, the fact that the vendor has a list of provides (aka vendors or subcontractors) argues in favor of there being subcontracting opportunities; therefore, a subcontracting plan is required if other criteria are met. I also believe this because of the fact that the government wants companies that get federal dollars to actively think about how the company can help grow small businesses.

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  • THAO LY
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THAO LY

​FAR 19.705-2, Determining the Need for a Subcontracting Plan, states:

The contracting officer shall take the following actions to determine whether a proposed contractual action requires a subcontracting plan:

(a)

    (1) Determine whether the proposed total contract-dollars will exceed the subcontracting plan threshold in 19.702(a).

    (2) Determine whether a proposed modification will cause the total contract dollars to exceed the subcontracting plan threshold (see 19.702(a)).

(b) Determine whether subcontracting possibilities exist by considering relevant factors such as --

    (1) Whether firms engaged in the business of furnishing the types of items to be acquired customarily contract for performance of part of the work or maintain sufficient in-house capability to perform the work; and

    (2) Whether there are likely to be product prequalification requirements.

    (3) Whether the firm can acquire any portion of the work with minimal or no disruption to performance (with consideration given to the time remaining until contract completion), and at fair market value, when a determination is made in accordance with paragraph (a)(2).

(c) If it is determined that there are no subcontracting possibilities, the determination shall include a detailed rationale, be approved at a level above the contracting officer, and placed in the contract file.

My question relates to the determination that subcontracting possibilities exist when it comes to commercial purchases under FAR 12. For instance, many COTS vendors do not produce everything in-house. It has its own vendors (aka subcontractors) that provide materials or produce components that go into the end product it sells. The government contract does not create NEW opportunities for subcontracting since the vendor already has its set list of providers which it uses for its commercial products.

Is FAR 19.705-2 only addressing the subcontracting opportunities created by the government contract or subcontracting opportunities overall (aka the vendor has no subcontractors while producting its commercial item)?

My interpretation, based on the relevant factors provided in section (b), leads me to believe that even if the government requirement does not create NEW subcontracting opportunities, the fact that the vendor has a list of provides (aka vendors or subcontractors) argues in favor of there being subcontracting opportunities; therefore, a subcontracting plan is required if other criteria are met. I also believe this because of the fact that the government wants companies that get federal dollars to actively think about how the company can help grow small businesses.

28/14/2018 10:42 AM8/14/2018 10:43 AMNoAsk the Community
31.1255081018519
5/14/2018 5:09 PM
Posted: 8/22/2018 12:58 PM
Picture Placeholder: KEVIN LINDEN
KEVIN LINDEN

FAR 19.705-2 addresses subcontracting opportunities that the contracing officer determines exist.  If the contracting officer determines that no subcontracting opportunities exist, then a subcontracting plan won't be required.  The contracting officer must (FAR 19.705-2(d)) consider the integrityof the competitive process, the goal of affording maximum practicable opportunity for small business and the other socio-economic small business categories, as well as the burden placed on offerers.  

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  • KEVIN LINDEN
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KEVIN LINDEN

FAR 19.705-2 addresses subcontracting opportunities that the contracing officer determines exist.  If the contracting officer determines that no subcontracting opportunities exist, then a subcontracting plan won't be required.  The contracting officer must (FAR 19.705-2(d)) consider the integrityof the competitive process, the goal of affording maximum practicable opportunity for small business and the other socio-economic small business categories, as well as the burden placed on offerers.  

THAO LY7008/22/2018 12:58 PM8/22/2018 12:58 PM
6/8/2017 8:36 AM
Posted: 8/22/2018 3:15 PM
Picture: DONALD MANSFIELD
DONALD MANSFIELD

Good question. I couldn't find an official interpretation, so I can only provide my own. I think you need to consider the preamble to both paragraphs (a) and (b), which is ​"The contracting officer shall take the following actions to determine whether a proposed contractual action requires a subcontracting plan:..." [Bold added for emphasis]. In this context, I think (b) is referring to subcontracting opportunities for the proposed contractual action. Another thing to consider is FAR 19.702(a)(1) and (2), which require subcontracting plans for contracts that have subcontracting possibilities. Lastly, when reporting actual subcontracting under an individual subcontracting plan, the reporting period begins when the contract is awarded. For a COTS item, the purchase of the components/materials is typically done prior to having a contract. Dell doesn't wait until they get a contract from the Govt. to start making their computers.

Having said that, I think the CO could require the submission of a commercial plan (see FAR 19.704(d).

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  • DONALD MANSFIELD
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DONALD MANSFIELD

Good question. I couldn't find an official interpretation, so I can only provide my own. I think you need to consider the preamble to both paragraphs (a) and (b), which is ​"The contracting officer shall take the following actions to determine whether a proposed contractual action requires a subcontracting plan:..." [Bold added for emphasis]. In this context, I think (b) is referring to subcontracting opportunities for the proposed contractual action. Another thing to consider is FAR 19.702(a)(1) and (2), which require subcontracting plans for contracts that have subcontracting possibilities. Lastly, when reporting actual subcontracting under an individual subcontracting plan, the reporting period begins when the contract is awarded. For a COTS item, the purchase of the components/materials is typically done prior to having a contract. Dell doesn't wait until they get a contract from the Govt. to start making their computers.

Having said that, I think the CO could require the submission of a commercial plan (see FAR 19.704(d).

THAO LY7008/22/2018 3:15 PM8/22/2018 3:15 PM
7/27/2017 2:46 PM