Subcontracting Plan Threshold
$750,000
Also known as: Small business subcontracting plan threshold
At a Glance
- Current amount
- $750,000 (standard); $1.5 million for construction of a public facility
- Where it is set
- FAR 19.702, implemented by the clause at FAR 52.219-9
- What it requires
- An acceptable small-business subcontracting plan with goals for SDVOSB and other small-business categories
- Who it applies to
- Other-than-small (large) primes; small-business primes are exempt
- Applies when
- The contract exceeds the threshold and offers subcontracting possibilities
What It Is
The subcontracting plan threshold is the dollar line above which a large-business prime contractor must negotiate and follow a small-business subcontracting plan. Under FAR 19.702 and the clause at FAR 52.219-9, when a contract awarded to an other-than-small business exceeds $750,000 — or $1.5 million for the construction of a public facility — and has subcontracting possibilities, the prime must submit an acceptable subcontracting plan that sets percentage goals for awarding subcontracts to small business concerns, including service-disabled veteran-owned small businesses, HUBZone small businesses, small disadvantaged businesses, and women-owned small businesses. The plan becomes a material part of the contract: the prime reports actual subcontracting achievement (through the electronic Subcontracting Reporting System, eSRS), and failure to make a good-faith effort to meet the goals can carry consequences including liquidated damages. Small-business primes are exempt from the requirement, because the policy behind it is to push subcontracting dollars from large primes down to small firms.
What Changes at This Dollar Level
- A large-business prime on a contract over $750,000 ($1.5 million for public-facility construction) with subcontracting possibilities must submit a small-business subcontracting plan.
- The plan must set separate goals for SDVOSB, HUBZone, small disadvantaged, and women-owned small business subcontracting.
- The prime reports actual achievement against the goals in eSRS, and a lack of good-faith effort can trigger liquidated damages.
- Small-business primes are exempt — the requirement targets large primes.
Key Features
| Feature | What It Means |
|---|---|
| Only large primes | The plan requirement falls on other-than-small primes; a small-business prime — including an SDVOSB — is exempt from having its own subcontracting plan. |
| Two dollar lines | The threshold is $750,000 for most contracts and $1.5 million for the construction of a public facility. |
| Named goals for SDVOSBs | The plan must include a specific goal for subcontracting to service-disabled veteran-owned small businesses, alongside goals for other socioeconomic categories. |
| Enforced through reporting | Achievement is reported in eSRS, and failure to make a good-faith effort to meet the goals can result in liquidated damages. |
What It Means for an SDVOSB
This threshold is where a service-disabled veteran-owned small business finds subcontracting work rather than prime awards: every large-business prime on a contract over $750,000 must carry a subcontracting plan with a specific SDVOSB goal, which creates standing demand for veteran-owned subcontractors on big contracts you could never win as a prime. The practical play is to get in front of large primes as they compete for those contracts, because a prime that can name a committed, capable SDVOSB subcontractor strengthens both its subcontracting plan and its own evaluation. And there is a defensive angle: if you team as a similarly situated SDVOSB subcontractor on a set-aside, the work you perform can count toward the prime's limitations-on-subcontracting compliance — a different rule from the subcontracting plan, but one that also rewards SDVOSB-to-SDVOSB teaming.
Watch Out For
- Assuming an SDVOSB prime needs a subcontracting plan — small-business primes are exempt; the requirement is on large primes.
- Confusing the subcontracting PLAN threshold (a large-prime obligation) with the limitations-on-subcontracting rule (a self-performance limit that applies to set-aside primes of any size).
- Missing the higher $1.5 million line for public-facility construction.
- Treating the plan goals as optional — a prime's failure to make a good-faith effort to meet them can carry liquidated damages.
Run the Numbers
Frequently Asked
When is a small-business subcontracting plan required?
Under FAR 19.702 and the clause at FAR 52.219-9, a subcontracting plan is required when a contract is awarded to an other-than-small (large) business, exceeds $750,000 — or $1.5 million for the construction of a public facility — and offers subcontracting possibilities. The plan must set percentage goals for subcontracting to small business concerns, including service-disabled veteran-owned small businesses. Small-business primes are exempt from the requirement.
Does an SDVOSB prime need a subcontracting plan?
No. Small-business primes, including SDVOSBs, are exempt from the FAR 52.219-9 subcontracting-plan requirement. The policy behind the plan is to push subcontracting dollars from large primes down to small firms, so it applies only to other-than-small primes. Note that this is different from the limitations-on-subcontracting rule (FAR 52.219-14), which does apply to SDVOSB primes on a set-aside and limits how much of the work they may subcontract out.
How does the subcontracting plan help SDVOSBs?
Because every large prime on a contract over the threshold must set and report a specific SDVOSB subcontracting goal, the rule creates ongoing demand for veteran-owned subcontractors on large contracts. An SDVOSB that positions itself with large primes as they compete can win subcontract work on requirements far bigger than it could pursue as a prime, and the prime benefits from being able to name a committed, capable SDVOSB in its plan.
Primary Sources
- FAR 19.702 — Statutory requirements (subcontracting plans)
- FAR 52.219-9 — Small Business Subcontracting Plan
- FAR 19.704 — Subcontracting plan requirements
Plain-English reference, not legal advice. Acquisition-related dollar thresholds are periodically re-indexed for inflation and the underlying FAR sections and statutes are amended from time to time — always confirm the current figure and its exceptions against the FAR and the actual solicitation before relying on it, and consult qualified counsel for your specific situation.
Change log (1)
- LaunchedPublished the federal procurement dollar thresholds reference covering the dollar lines that shape an SDVOSB set-aside — the micro-purchase threshold (FAR 2.101), the simplified acquisition threshold and the automatic small-business reserve (FAR 2.101 / 19.203), the commercial simplified-procedures ceiling (FAR 13.500), the SDVOSB sole-source ceiling (FAR 19.1406), the subcontracting-plan threshold (FAR 52.219-9), the certified cost or pricing data / TINA threshold (FAR 15.403-4), the Cost Accounting Standards threshold (48 CFR 9903.201-1), the Service Contract Labor Standards (41 U.S.C. § 6702) and Davis-Bacon (40 U.S.C. § 3142) labor thresholds, and the FFATA subaward reporting threshold (FAR 52.204-10) — each with an at-a-glance quick-facts card showing the current dollar amount, a what-changes-at-the-line list, a key-features table, an SDVOSB-specific angle, watch-outs, FAQPage, Article, Dataset, and BreadcrumbList structured data, primary-source citations, and cross-links into the glossary, regulation explainers, clauses, how-to guides, FAQ, and the size-standard, set-aside eligibility, subcontracting, and price-to-win calculators.