Understanding the difference between a Small Business Participation Plan and a Small Business Subcontracting Plan is important to ensure that small businesses get a competitive opportunity when bidding on government contracts.

During a Small Business Lunch and Learn presentation Jan. 10, Jennifer Letson, the Subcontracting Program Manager for the Aviation and Missile Command's Office of Small Business, reviewed the differences between the two plans with Army Contracting Command-Redstone employees.

"There is a lot of confusion about these plans," Letson said. "But, small businesses can benefit from contracts requiring a Small Business Participation Plan because it allows them to include their self-performance. It especially benefits them when they are competing for a contract as a prime contractor."

As government contracting officials work through the acquisition process on a new contract, they should keep in mind the importance of providing bidding opportunities to small businesses, she said.

"Small businesses should not be an afterthought. They should be part of the process from the very beginning," Letson said. "Requests for Proposals should be structured to allow small businesses to submit their own participation plans. The RFP shouldn't ask small businesses to subcontract since small businesses are not required to submit small business subcontracting plans."

When a Request for Proposal asks small and large businesses to submit subcontracting goals, the request requires small businesses to serve as a subcontractor on the contract. But, small businesses can achieve goals through their own participation as a prime contractor, Letson said.

A Subcontracting Plan requires information from the large business on how the small business will serve as a subcontractor and is based on total planned subcontracting dollars. A Participation Plan requires information from either the large or small business on how the small business will participate and is based on total contract value.

"Assessment of a Subcontracting Plan and evaluation of a Participation Plan are two separate, yet related areas. They are treated differently in the solicitation, during source selection and in award," Letson said. "The Subcontracting Plan is not submitted for the purpose of complying with a source selection evaluation criterion, but as a matter to be eligible to receive a contract award. Subcontracting Plans are not evaluated as part of the source selection, but reviewed for acceptability."

On the other hand, Participation Plans are part of the source selection evaluation, and are focused on determining the extent of which small businesses are specifically identified in proposals, extent of commitment to the small businesses, the extent of participation of small businesses in terms of total value, and the complexity and variety of work being performed.

The most significant measurement of the differences between the two plans are in the determination of the contract dollar value reserved for small businesses, Letson said.

With a Small Business Subcontracting Goal, a small business gets 20 percent of the dollars available for subcontracting. If a large business decides to subcontract $100,000 on a $1 million contract, then the small business will get 20 percent of the $100,000 in the contract available for subcontracting, or $20,000.

With a Small Business Participation Goal, small businesses get 20 percent of the total value of the entire contract. If a large business proposes 20 percent small business participation on a $1 million contract, then small businesses receive 20 percent of $1 million, or $200,000 in subcontract work.

"Large businesses and small businesses will utilize small businesses in the performance of government contracts," Letson said. "Small businesses are the backbone of our country and how we operate.

"We have Small Business Participation Plans to ensure contractors receiving a government award, whether large businesses or small businesses, will utilize small businesses in the performance of the contract; to encourage prime contractors to include small businesses in proposal development; and to ensure those small businesses are actually awarded subcontracts. We need to hold prime contractors accountable to what they say they are going to do in including small businesses on a contract."

For that reason, contracting officers should require the submission of a Small Business Participation Plan separate from a Subcontracting Plan in the proposal process, Letson said. The Participation Plan must clearly state the percentage goals for small business participation, and the breakdown of those goals for various small business socio-economic concerns, such as veteran owned and woman owned small businesses.

In the evaluation of a Participation Plan, the complexity of the work set aside for small businesses is closely scrutinized.

"Small businesses are very capable of performing complex work," Letson said. "We want to ensure small businesses are given meaningful work. They are trying to build up their past performance so they can grow into a prime contractor. It's important for the contractor to show the complexity and variety of work the small business is performing."

Other factors considered are whether small businesses are specifically identified in the proposal, the realism of the proposal and the past performance of complying with subcontracting requirements.

If the prime contractor is a small business, they can include their own participation along with the participation of small business subcontractors in their proposal, Letson said.

When the prime contractor is a large business, they must submit both a Small Business Participation Plan and Subcontracting Plan, and the two plans should be consistent.

"Subcontracting plans should contain realistic, challenging and attainable goals for subcontracting with small businesses and small business socioeconomic categories," Letson said. "Large businesses are not eligible for an award if they fail to submit an acceptable subcontracting plan."

There are more than 500 small businesses that are qualified to do business with AMCOM on aviation, missile and Garrison contracts, she said.

For more information on Small Business Participation Plans and Subcontracting Plans, contact Letson in the AMCOM Office of Small Business Programs, 876-2230, jennifer.l.letson.civ@mail.mil .