Department of State Subcontracting Workshop U S Small

Department of State Subcontracting Workshop U. S. Small Business Administration October 2, 2003

Subcontracting Program What’s New? F CCR and PRO-Net Interface F MOU between SBA and DCMA F Web-based SF-294 and SF-295 (coming soon!) F New Proposed Rules – FAR Revisions from OFPP Policy Letter 99 -X – Good-Faith Effort – GWAC Subcontracting Credit F Interim Policy on SDB Recertification

Mandatory Subcontracting Goals (as clarified by Federal Register Notice published on January 14, 2002) F Small Business (SB) F Small Disadvantaged Business (SDB) F Women-Owned Small Business (WOSB) F HUBZone Small Business (HUBZone SB) F Veteran-Owned Small Business (VOSB) F Service-disabled VOSB

Determining the Need for a Plan FAR 19. 705 -2 F Dollar Threshold: – contract or contract mod is expected to exceed $500, 000 ($1, 000 for construction) F Subcontracting possibilities: – contract appears to offer subcontracting possibilities

Determining the Need for a Plan (continued) F Subcontracting plans are not required: – From small business concerns – For personal services contracts – For contracts or mods that will be performed entirely outside of the U. S. – For contracts that do not contain 52. 219 -8 (e. g. , contracts awarded prior to PL 95 -507)

Multi-year Contracts or Contracts Containing Options F Include the value of options in determining whether the dollar threshold for a subcontracting plan is met. F Require separate goals for the basic contract and for each option.

Types of Plans F Individual Plan - FAR 19. 704(a) – requires a separate plan for each contract F Master Plan - FAR 19. 704(b) – contains no goals F Commercial Plan - FAR 19. 704(d) – usually company-wide and based on offeror’s fiscal year (not the Government’s fiscal year)

Elements of a Subcontracting Plan FA subcontracting plan must contain goals expressed in both dollars and percentages. F Other required elements are set forth in the FAR at subpart 19. 704 and in the clause at 52. 219 -9. F SBA provides a Fact Sheet on Subcontracting that explains goals, flow-down, and reporting requirements.

Subcontracting Flow-Down FA subcontracting plan must include a statement that the prime contractor will require all subcontractors (except small businesses) that receive subcontracts in excess of $500, 000 ($1 million in construction) to adopt a subcontracting plan that complies with the requirements of FAR clause 52. 219 -9.

Subcontracting Flow-Down (con’t) F The FAR also requires prime contractors to flow down the “Best Effort” clause (FAR 52. 219 -8) for subcontracts over the Simplified Acquisition Threshold (currently $100, 000). F This particular requirement applies to small businesses as well as to large businesses.

Subcontracting Flow-Down (con’t) F The FAR Council is currently addressing an apparent contradiction in the clauses at 52. 212 -5(e) and 52. 244 -6(c) that appears to exempt subcontracts for commercial items from one, or both, of these flow-down requirements.

SBA’s Role in Subcontracting Types of Reviews: F Pre-Award Subcontracting Plan Reviews – SBA’s PCRs review subcontracting plans prior to contract award (advisory) F Post-Award Compliance Reviews – SBA’s CMRs monitor goal achievement after contract award

What SBA Can and Cannot Do FSBA Can: – Conduct needs assessments and compliance reviews FSBA Cannot: – Prescribe the amount of subcontracting – Require the prime contractor to use a particular small business

Elements of a Compliance Review F Validation of the SF-294 & SF-295 F Five-Year Trend Analysis F Overall Evaluation of SB Program F Sampling of Contracts Containing Plans F Sampling of PO’s to Large Business F Follow-up on Prior SBA Recommendations F Follow-up on SBA Referrals

SBA’s Ratings FA - Outstanding ( formerly “Excellent”) FB - Highly Successful ( formerly “Good”) FC - Acceptable FD - Marginal FF - Unacceptable

Liquidated Damages F When a contractor fails to make a goodfaith effort to comply with a subcontracting plan, Federal law mandates that liquidated damages be paid to the Government. F The amount of damages shall be equal to the actual dollar amount by which the contractor failed to achieve each goal.

MOU between SBA and Do. D F In May 2003, the SBA and the Defense Contract Management Agency (DCMA) signed a Memorandum of Understanding (MOU). F The agreement outlines the procedures for joint compliance reviews of contractors that have contracts with both DOD and civilian agencies. F An attachment to the MOU provides the criteria for rating the contractors.

SBA Awards F For Small Businesses – Prime Contractor-of-the-Year – Subcontractor-of-the-Year F For Large Businesses – Award of Distinction – Dwight D. Eisenhower Award – Frances Perkins Vanguard Award

SBA Awards for Large Businesses F Award of Distinction – Company receives an “Outstanding” on a compliance review; their CMR may then nominate them for this award. F Dwight D. Eisenhower Award – Company demonstrates overall excellence; they may now nominate themselves (changed to self-nomination in 1999). F Frances Perkins Vanguard Award – Company excels in utilization of women-owned small business; self-nomination.

Reporting Requirements F SF-294 - Subcontracting Report for Individual Contracts – semi-annual and upon contract completion – cumulative from inception of the contract – not required for Commercial Products Plans F SF-295 - Summary Subcontract Report – annual for civilian agencies; semi-annual for DOD – dollars are reported for only the current year

Reporting Requirements F SF-294 and SF-295 are always due 30 days after the reporting period F Submit originals to the procuring agency(ies) in accordance with their instructions F Submit copies of SF-295 to SBA CMR F Submit copies of SF-294 to SBA CMR upon request

Reporting Requirements F SF-295 “Summary Subcontract Report” submitted at the end of each year must include a breakout of subcontract awards to SDBs by 3 -digit NAICS code. F Contractors with Commercial Products Plans may accomplish this by obtaining a predominant NAICS code from each of their subcontractors. 22

New Regulations on Subcontracting 1. SBA Proposal to FAR Council F Improvements to FAR 19. 7, the clauses at 52. 219 -8 and 52. 219 -9, and the instructions on the back of the SF-294 and SF-295. F Many of the changes come from OFPP Policy Letter 99 -X, which was published as a Proposed Rule in April 1999. F Will strengthen the flow-down provision and clarify many ambiguous requirements.

New Regulations on Subcontracting 2. Proposal to Define Good-Faith Effort F Represents a substantial rewrite of SBA’s subcontracting regulation (13 CFR 125. 3). F Updates and clarifies the role of the CMR. F Introduces the concept of SOAR reviews. F Provides specific examples of good-faith efforts by large & small prime contractors. F Affords a 60 -day public comment period.

New Regulations on Subcontracting 3. Proposal for Subcontracting Credit Ensures that the agency that spends the money gets the credit (not necessarily GSA). F Applies to Government-wide Acquisition Contracts, Multiple-Award Schedules, and similar contract vehicles. F Proposes a solution with two variations, one for commercial plans and one for everything else. F Affords a 60 -day public comment period. F

Web-Based SF-294 and SF-295 F An interagency committee is now meeting monthly and working out the details for a Internet-based reporting system. F The result of this effort will be a Governmentwide reporting system that will effectively replace the SF-294 and SF-295 paper reports used today.

Web-Based SF-294 and SF-295 F The system will calculate percentages automatically and will provide an audit trail showing who entered data or revised it. F Enhancements under consideration include capturing lower-tier dollars and calculating the percentages two ways, by total contract value and total subcontracting.

Lower-Tier Reporting F SBA has requested that the web-based reporting system (e. SRS) be designed to capture dollars at lower tiers. F For prime contractors to receive credit towards their subcontracting goals, this will also require a change to the Federal Acquisition Regulation (FAR).

Certification Regulations 13 CFR 121. 410 and 121. 411 F If the subcontract is $10, 000 or less, the size standard is 500 employees F If the subcontract is over $10, 000, the size standard is determined by the NAICS code of the product or service being provided on the subcontract. F Proposed Rule will eliminate this $10, 000 distinction; the NAICS code of the subcontract will determine the size standard regardless of the dollar amount.

SDB Recertification F SDB certification normally expires after 3 years (8(a) firms have longer) F If an SDB applies for recertification before its certification expires, SBA will allow you to continue to count the firm as an SDB until its application for recertification has been processed. F This is an interim policy pending publication of a formal regulation.

SBA’s Resources to Help Small Businesses Obtain Subcontracts Commercial Market Representatives (CMRs). F Subcontracting Opportunities Directory F SUB-Net -- Electronic Bulletin Board for Subcontracting Opportunities F

Resources to Help Large Businesses Identify Small Businesses F SBA’s CMRs F PRO-Net F SUB-Net: A web site for prime contractors to post subcontracting opportunities

Interface Between PRO-Net and CCR F Effective December 17, 2002, firms register only once, using the CCR; F Firms now in PRO-Net that wish to update their profiles will do so in the CCR; F Users searching for small businesses will continue to use PRO-Net; and F PRO-Net will continue to be the official web site for verifying the certification of 8(a) firms, SDBs, and HUBZone firms.

Enhancements to SUB-Net under Development F Prime contractors will be able to list multiple NAICS codes in one solicitation (i. e. , numerous types of subcontracts). F Small businesses will be able to search for solicitations geographically (by state). F Prime contractors will be able to specify what type of small business they are seeking (SDB, WOSB, HUBZone, etc. ).

SBA’s Key Internet Addresses SBA’s Home Page: www. sba. gov (includes links to PRO-Net and SUB-Net) F Government Contracting: www. sba. gov/GC F SDB: www. sba. gov/sdb F HUBZone: www. sba. gov/hubzone F Women: www. womenbiz. gov F

Subcontracting Workshop F Thank you for participating in the subcontracting workshop today. F Please feel free to contact me if I can help you in any way.