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Public Law 95-507 requires contractors (other than small business concerns) receiving a Federal contract exceeding $700,000 ($1,500,000 for construction), which offers subcontracting possibilities, to establish subcontracting plans and goals that provide maximum contracting opportunities for Small Businesses, Small Disadvantaged Businesses, Women-Owned Small Businesses, HUBZone Small Businesses, Veteran-Owned Small Businesses and Service-Disabled Veteran-Owned Small Businesses, Government-wide goals have been established as five percent for small disadvantaged businesses, five percent for women-owned small businesses, three percent for HUBZone certified small businesses, three percent for veteran-owned small businesses and three percent for service-disabled veteran-owned small businesses; these goals pertain to the agency’s total value of all prime contract and subcontract awards for each fiscal year.

A subcontracting plan is required of large business prime contractors with contracts meeting the thresholds, provides for the establishment of goals.  Subcontracting plans also contain other provisions to ensure that the potential capabilities of a small business, small disadvantaged business, women-owned small business, HUBZone small business, veteran-owned and small business and service-disabled veteran-owned small business concerns are fully considered for use.  The plan may apply to a specific contract requirement or the entire production of a commercial product.  In establishing subcontracting goals, the contractor may include all purchases that contribute to the performance of the contract, including a proportionate share of the product or service costs which are normally allocated as indirect costs.  A company official is appointed to administer the plan.