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Small Business Primes with Subcontracts

Small Business Primes with Subcontracts

If the federal government awards your company with a prime contract information about your five most highly compensated employees typically becomes public. Many small businesses award direct (Cost of Goods and Services Sold) subcontracts under prime contracts. Information about the five most highly compensated employees of each such subcontractor also becomes public. Small businesses are not exempt.

In a push toward spending transparency, the federal government reports prime contracts under the Federal Funding Accountability and Transparency Act (FAR 4.14) and requires that prime contractors report most subcontracts under those prime contracts. Data is recorded in the Federal Procurement Data System (FPDS) with access to the public. For each subcontract with reported data, subcontractor-employee compensation is also required.

What does the Government mean by “compensation”? Salary might be the largest, but not the only, component. For the purposes of this reporting, include salary, bonuses, and fringe benefits that result in additional benefits to the employee. Compare total compensation amounts among employees. Report the five most highly compensated for each applicable subcontract.

Emerging and small businesses new to the GovCon market often suppose they need not report this information about their subcontractors. FAR and the related Public Laws have no exclusions for newness or size of companies. Consider giving potential subcontractors forewarning, if the requirements of clause 52.204-10 will publicize their compensation information. Please download the FPDS “Decision Tree” to learn whether your company is required to report your subcontracts in FPDS.

Download the FPDS “Decision Tree” Here