SDVOSB Subcontracting Goals: How Primes Plan Veteran Participation

SDVOSB subcontracting goals are one of the reasons federal prime contractors look for veteran-owned trade partners. SDVOSB stands for Service-Disabled Veteran-Owned Small Business. The federal government sets a goal for how much of its contracting dollars reach these businesses, and that goal reaches subcontractors through the plans large primes submit. For a prime, the question is how to meet the goal with real work done well. For a subcontractor, the question is how to be easy to find and easy to verify.

Where the goals come from

Federal law sets government-wide small business goals, including one for service-disabled veteran-owned small businesses, and each agency negotiates its own goals with the Small Business Administration. Agencies meet those goals two ways: by awarding prime contracts to small businesses and by counting what their large primes subcontract to them. That second route is why the goals show up in private subcontracting decisions on federal work.

The small business subcontracting plan

On federal contracts above set thresholds, a prime that is not a small business generally has to submit a subcontracting plan. The plan sets goals for each small business category, including SDVOSB, describes how the prime will find and use those businesses, and names who at the company is responsible. After award, the prime reports what it actually paid to each category. Contracting officers review the plan before award and review performance against it afterward.

• Goals by category, stated in the plan the agency approves.
• A description of the outreach the prime will do.
• Records of the subcontractors solicited and selected.
• Reports of actual subcontract payments after award.

How certification is verified now

The SBA now certifies veteran-owned and service-disabled veteran-owned small businesses through its Veteran Small Business Certification program, called VetCert. A prime planning to count a subcontractor toward an SDVOSB goal should confirm the certification in the SBA's records rather than accept a company's own description. The certification has an issue date and an expiration date, and a prime should check it is active for the period the work will be performed.

Wattsmith Electric holds SBA VetCert certification as both a Service-Disabled Veteran-Owned Small Business and a Veteran-Owned Small Business. The certification details are published on our insurance and licensing page for any prime to check.

Why electrical work is a practical fit

A subcontracting goal is easiest to meet with a scope that is well defined, separately priced and performed by a licensed trade. Electrical work fits that description on almost every building project: it has its own drawings, its own permit and inspections, and a clear line where it meets the other trades. A prime can assign the whole electrical scope or a defined part of it, such as lighting retrofits, service upgrades or maintenance, and measure the result in the payments it reports.

Our commercial electrical services page lists the work we take on, and our page on government and military buildings covers facility work on public sites.

What a prime should ask an SDVOSB subcontractor

Certification makes a subcontractor eligible to count toward a goal. It does not make the company qualified for the work. A prime should ask the same questions of an SDVOSB electrical contractor as of any other: the Texas electrical contractor license, insurance at the contract's levels, experience with the type of building, how the company handles outages in occupied facilities, and how change orders are priced. A goal met with a subcontractor that cannot perform does not help the prime or the agency.

Federally funded work and wage rules

Construction funded by federal money often carries Davis-Bacon prevailing wage requirements and weekly certified payroll. Those rules apply to the subcontractor as well as the prime, so the electrical subcontract should name them and the subcontractor should be ready to report. Our guide to prevailing wage and Davis-Bacon explains the basics.

Read next: prevailing wage and Davis-Bacon, the Texas HUB program for state contracts, and our government page.

Set-asides versus subcontracting goals

SDVOSB status matters in two different ways on federal work. A contracting officer can set aside a prime contract for service-disabled veteran-owned small businesses, so that only those firms can compete for it. Separately, large primes on unrestricted contracts set subcontracting goals that include SDVOSB participation. The first decides who can bid for the prime contract. The second decides how a large prime spreads its subcontracts. A small electrical contractor may meet both: competing for set-aside work directly and subcontracting to large primes on bigger projects.

Limits on subcontracting

When a small business wins a set-aside prime contract, federal rules limit how much of the contract it may pass on to firms that are not similarly situated. The rules differ by type of contract, and they exist so that the business that won the set-aside actually performs a meaningful share of the work. A prime that wins a set-aside and plans to subcontract should read those limits in the solicitation before it builds its team.

Making participation real

Goals are met with work, not with names on a plan. The primes that meet SDVOSB goals well tend to bring their subcontractors in early, give them complete scopes and drawings, and pay on the terms in the subcontract. Subcontractors that do well on federal work tend to be easy to verify, responsive on paperwork such as certified payroll and insurance certificates, and clear about what they can and cannot take on. Both sides benefit from a scope sized to what the subcontractor can actually perform.

Getting found by primes

Large primes search the SBA's certification records, the federal contract opportunities site and their own vendor lists when they build a subcontracting plan. A subcontractor helps itself by keeping its federal registration active, its certification current, its codes accurate and a short capability statement ready to send. Primes also look for firms that respond quickly to a request for a quote with a clear, complete price.

Electrical scopes that divide well

When a prime wants more than one small business to take part, the electrical scope can often be divided along natural lines without creating gaps. Site lighting, interior power and lighting, lighting controls, and scheduled maintenance after turnover are each priceable on their own. Each part needs its own clear limits, so that every subcontractor knows where its work stops and the next one's begins, and the prime should coordinate the shared items, such as panels that serve more than one scope, in writing.

Primes that do this well tend to keep notes on each subcontractor's capacity and past performance, so the next plan starts from experience rather than a search. Subcontractors, for their part, help by saying plainly how much work they can take at once and by asking questions early when a scope is unclear, rather than pricing around the gaps.

Keeping the plan honest

Subcontracting plans are reviewed, and so are the reports that follow them. Count only certified businesses toward each category, count only the work they actually perform, and keep the records that show it. A subcontractor that passes most of its work to another company may not count the way the prime expects. Clear scopes and clear records keep the plan and the payments in line.

Related services: generator installation for standby power, and electrical repair for building service calls.