Importance of Small Business Subcontracting Plans

Small businesses work with subcontractors and contractors to ensure projects are completed on time and through various tasks delegated as needed based on the size and scope of the duties. Some small businesses are able to maintain subcontracting plans and work with other companies with programs and projects that exceed $700,000 in total.

There are many different regulations and stipulations necessary to retain subcontracting companies and individuals for a project. A small business may need to subcontract to a minority company or agency to satisfy certain laws or ordinances of local areas. Some plans require discrimination removed from these situations which may prompt a hire of small women-owned businesses, veteran-owned small business and small disadvantaged companies through these projects. The specific dollar amount, time and resources should be filled out in forms. Any additional information should be requested or researched to ensure the small business is following the appropriate laws and statutes.

When a company has a plan for a project, it is important to ensure that subcontracting plans are drafted out as well to provide for the side and smaller work to be completed with the rest of the job. The base contract is usually handled by a company working with or for the small business, and then they may subcontract out to another for bits of their part of the main project. Sometimes, the primary entity may have an already established relationship with a subcontracting agency and may direct the contractor to this company for partial work. Effecting a plan and implementing it so that all work is completed on time is essential to the overall mission.

The Need for Subcontractors

When a company has obtained a contract bid and successfully acquired the job, there are many aspects of the work that must be completed by a firm that has the tools, equipment and manpower. The small business may use an agency that supplies these persons. Then, when there are other jobs or duties that are better suited to specialists or a group more training in certain equipment, a subcontractor becomes part of the project. These workers then will usually work for the contracting firm first and then supply information or details to the small business attached if the subcontractor is even aware of the other entity.

A subcontracting plan for work to projects that may not usually exceed $1 million usually must contain a plan with specifics of how certain details are handled. This may include payment to the subcontractor, duties that are provided to the worker and the length of time allotted for the job. These details must generally be in place before the contract is awarded to the small business, and the entity is required to update this plan each year. Small businesses may not need to plan, but it is beneficial to everyone involved so that disaster may be avoided.

Benefits over Requirements

Many corporations must submit a business plan of action for subcontracting and what is permitted based on how much the project will provide, how much is allocated to the agency and similar considerations. However, small businesses are not required to follow these same plans. It is beneficial to have a plan in place that shows how much time is allotted for subcontract work, what tasks may be appointed and how much funding is supplied to these workers. These general guidelines are helpful overall for the small business so that there is more time to iron out details and progress through the job.

Different plans are needed based on what type of work is performed. When the subcontractor is to perform tasks for commercial real estate, individual property or residential locations, the tasks and duties are often different in scope and size. Some plans put in place are necessary to cover for purchases of products, services and information. Others are necessary so that other small businesses are able to benefit from these same processes. Veteran-owned small businesses and women-owned companies are able to work in conjunction with the standard small business to achieve the same goals.

The Lawyer for Small Businesses

Legal representatives may expound on the benefits of having a plan for subcontract work and agencies when a project is too much for the primary company or a contracting entity. Legal services retained may also work to ensure the rights of the company are protected against possible violations or allegations of criminal activity. A lawyer may prevent possible disaster with a subcontractor in the legally binding agreements as well.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.
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