GAO: Subcontracting Plan Requirement Applies Broadly

When a Contracting Officer determines that subcontracting possibilities will exist under a qualifying unrestricted contract, subcontracting plans are required from all offerors other than small businesses–including entities that do not intend to issue any subcontracts.

In a recent bid protest decision, the GAO rejected a protester’s argument that the subcontracting plan requirement is to be determined on an “offeror by offeror” basis, and held that the requirement to provide a subcontracting plan is broadly applied.

The GAO’s decision in The University of Montana, B-410432 (Dec. 22, 2014) involved a GSA solicitation for the acquisition of commercial language services.  The solicitation was issued as an unrestricted procurement under GSA Schedule 738 II, and contemplated the award of an unlimited number of IDIQ contracts.

The solicitation included FAR 52.219-9, Alternate II (Small Business Subcontracting Plan), which required all offerors, other than small businesses, to submit a subcontracting plan with their initial offer.  The solicitation also included a GSA Acquisition Regulation clause which imposed a similar subcontracting plan requirement.

The University of Montana filed a GAO protest challenging the terms of the solicitation.  The University stated that it intended to submit a proposal under the solicitation, but had not done so because, as a university, it does not subcontract for the performance of the language services that it would be proposing to perform.  The University argued, in part, that the FAR contemplates an “offeror by offeror determination regarding  the need for a small business subcontracting plan.”  The University suggested that, based on this “offeror by offeror” analysis, the GSA should accept a proposal from the University, even if the proposal omitted a subcontracting plan.

The GAO noted that the FAR provides, with exceptions not relevant to this protest, that “if a solicitation is expected to result in a contract valued in excess of $650,000, with subcontracting possibilities, the solicitation shall require the apparently successful offeror to submit a small business subcontracting plan prior to award.”  Additionally, FAR 52.219-9 “requires an apparently successfully offeror to submit an acceptable small business subcontracting plan in order to receive a contract award, and provides further guidance on the type of information that should be included in the plan.”

The GAO concluded “[t]hus, notwithstanding the protester’s assertions to the contrary, [the FAR] does not contemplate a contracting officer making a determination of the need for a subcontracting plan on an offeror-by-offeror basis after proposals have been submitted; rather, the subcontracting plan determination is made prior to the issuance of the solicitation.”  The GAO denied the University’s protest.

The GAO’s decision in The University of Montana is good news for small business subcontractors.  If the GAO had reached the opposite conclusion, it could have opened the door for prime contractors to wiggle out of their small business subcontracting obligations.  Instead, the GAO held that the small business subcontracting plan requirement applies broadly, even when the prospective prime contractor is a university.

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