FAR 19.705-2—Determining the need for a subcontracting plan.
Plain-English Summary
FAR 19.705-2 tells the contracting officer how to decide whether a proposed contract action must include a subcontracting plan and how that plan should be handled if required. It covers the threshold test under FAR 19.702(a), the analysis of whether subcontracting opportunities actually exist, the documentation and approval required when the answer is no, and the timing rules for requiring plans in negotiated acquisitions. It also addresses how many subcontracting plans a contract may have, when goals must be revised because of a modification or option exercise, and how those revised goals apply going forward rather than retroactively. Finally, it explains how to treat a plan added later because of a modification or size rerepresentation, including when goals start and how performance is reported on the ISR or SF-294. In practice, this section is the contracting officer’s roadmap for deciding whether subcontracting planning is required, ensuring the decision is supportable, and making sure small business participation goals are set and tracked correctly over the life of the contract.
Key Rules
Check the subcontracting threshold
The contracting officer must first determine whether the total contract value, or a modification that increases the total value, exceeds the subcontracting plan threshold in FAR 19.702(a). If the threshold is not exceeded, a subcontracting plan is not required under this section.
Assess real subcontracting opportunities
Even when the threshold is exceeded, the contracting officer must determine whether subcontracting possibilities exist by looking at the nature of the work, whether firms in the industry normally subcontract part of the effort or have enough in-house capability, and whether product prequalification requirements are likely to limit subcontracting.
Consider performance and value on mods
For a modification that triggers the threshold, the contracting officer must also consider whether any portion of the work can be subcontracted with minimal or no disruption to performance and at fair market value, taking into account the time remaining on the contract.
No subcontracting possibilities requires strong support
If the contracting officer concludes that there are no subcontracting possibilities, the determination must include a detailed rationale, be approved above the contracting officer level, and be placed in the contract file. This creates a higher standard of review for a no-plan decision.
Plan timing in negotiated acquisitions
In negotiated procurements, the contracting officer may require subcontracting plans with initial offers or at any point before award. The timing decision must balance competition integrity, maximum practicable small business opportunity, and the burden on offerors.
Only one plan per contract
A contract may not contain more than one subcontracting plan. For IDIQ contracts, however, the contracting officer may establish separate subcontracting goals for each order under FAR 19.705-1(b)(2).
Update goals when scope changes
If a modification exceeds the threshold or an option is exercised, the existing subcontracting plan’s goals must be amended to reflect new subcontracting opportunities that were not anticipated at award. These changes apply prospectively only and do not rewrite past performance.
Late-added plans start from incorporation date
If a subcontracting plan is added later because of a modification or size rerepresentation, the goals apply starting on the date the plan is incorporated into the contract. Contractor performance is reported cumulatively from that date on the ISR, or SF-294 if applicable.
Responsibilities
Contracting Officer
Determine whether the contract action or modification exceeds the subcontracting plan threshold; evaluate whether subcontracting opportunities exist; decide when to require a plan in negotiated acquisitions; ensure only one plan is on the contract; amend goals when required; and document and route any no-subcontracting determination for higher-level approval.
Contracting Officer Above the CO
Review and approve determinations that there are no subcontracting possibilities, providing an additional level of oversight before the decision is placed in the contract file.
Offerors/Prospective Contractors
Submit subcontracting plans when required by the solicitation or before award; negotiate plan terms and goals as directed; and, once a plan is incorporated, track and report subcontracting performance from the applicable start date.
Contractor
Implement the subcontracting plan, adjust performance and reporting when goals are amended due to a modification or option exercise, and report achievements on the ISR or SF-294 on a cumulative basis from the date the plan becomes effective.
Agency/Acquisition Team
Support the contracting officer’s analysis of subcontracting potential, competition impacts, and small business participation objectives, and maintain the contract file documentation supporting the decision.
Practical Implications
The threshold test is only the first step; even if the dollar value is high enough, the contracting officer still has to analyze whether subcontracting is actually feasible for the work.
A no-subcontracting decision is not casual or conclusory — it needs a detailed written rationale and higher-level approval, so weak documentation is a common protest or audit risk.
In negotiated acquisitions, asking for plans too early or too late can affect competition and burden offerors, so timing should be deliberate and tied to the acquisition strategy.
When a modification or option adds new work, the subcontracting plan may need updated goals, but those changes do not retroactively change prior performance expectations or reporting.
If a plan is added after award, contractors must start measuring performance from the incorporation date, which is a frequent source of reporting mistakes if teams assume the plan applies back to contract start.
Official Regulatory Text
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. (d) In solicitations for negotiated acquisitions, the contracting officer may require the submission of subcontracting plans with initial offers, or at any other time prior to award. In determining when subcontracting plans should be required, as well as when and with whom plans should be negotiated, the contracting officer must consider the integrity of the competitive process, the goal of affording maximum practicable opportunity for small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns to participate, and the burden placed on offerors. (e) A contract may not have more than one subcontracting plan. However, a contracting officer may establish separate subcontracting goals for each order under an indefinite-delivery, indefinite-quantity contract ( 19.705-1 (b)(2)). When a contract modification exceeds the subcontracting plan threshold (see 19.702 (a)) or an option is exercised, the goals of an existing subcontracting plan shall be amended to reflect any new subcontracting opportunities not envisioned at the time of contract award. These goal changes do not apply retroactively. (f) If a subcontracting plan has been added to the contract due to a modification (see 19.702 (a)(1)(iii)) or a size re-representation (see 19.301-2 (e)), the subcontracting goals apply from the date of incorporation of the subcontracting plan into the contract and the contractor's achievements must be reported on the ISR (or the SF-294, if applicable) on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.