Lesson 3 PreSolicitation Developing a Subcontracting Strategy 3

Lesson 3: Pre-Solicitation: Developing a Subcontracting Strategy 3 -1

Terminal Learning Objective During the Pre-Solicitation phase of an acquisition, advise the acquisition team in pursuing a subcontracting strategy that maximizes small business participation. Subcontracting 3 -2

Contracting Process for Acquisitions Pre-Solicitation Initial Planning/Form the Team Market Research Solicitation-Award Solicitation (RFQ, IFB, RFP) Post-Award Monitor Performance Evaluation Deliverables Define Requirements (PWS, SOW, SOO) Negotiation Acquisition Business Strategy Award Subcontracting Payments Closeouts 3 -3

Contracting Process for Acquisitions Process Flow General Rule: The diagram on the preceding slide is generalized for teaching purposes in the small business courses and is not specific to governing policies and regulatory requirements for any specific type of acquisition (Do. DI 5000. 2 [ACATs]; Do. DI 5000. 74 [Services]; and others). SBPs must understand the type of acquisition applicable to any new or recurring requirements and follow those governing policies and regulations accordingly. Pre-Solicitation • Phase begins with the valid acquisition need driving initial planning and team formation. • Phase ends with acquisition strategy that is documented in an acquisition plan. Subcontracting Solicitation-Award • Phase begins with a clearly defined acquisition strategy and acquisition plan. These may or may not be approved, but they guide the development of solicitations and source selection plans. Department of Defense (Do. D) peer reviews occur prior to obtaining approval to issue a solicitation. • Decision Point: Approval To Issue Solicitation Policy requires prior written approvals of the acquisition strategy, acquisition plan, and Do. D peer reviews, if any. Exchanges with Industry: Tightly controlled upon issuance of solicitation through award of contract(s). • Phase ends when the source selection decision is acted upon via award of a contract(s) Post-Award • Phase begins after the contract(s) is awarded. • Phase ends when all contract performance is complete and contract(s) closeout actions are completed. 3 -4

Enabling Learning Objectives • Identify effective market research techniques to gather information to support a proactive subcontracting strategy. • Recommend incentive subcontracting when appropriate. • Ensure that the acquisition strategy includes an appropriate subcontracting strategy that maximizes small business utilization. • Review the subcontracting strategy as documented on DD Form 2579. Subcontracting 3 -5

Market Research 1. What types of data collected during market research can be used to support the use of subcontracting as part of the acquisition strategy? 2. Where would you get that information? 3. How does market research to develop a proactive subcontracting strategy differ from market research to support a setaside? 4. Let’s explore this in detail. Subcontracting 3 -6

Elements That Affect Subcontracting Availability of Capability and Capacity Small Businesses of Small Businesses Type of Work Complexity Degree of Subcontracting 3 -7

3. 1: Determining a Subcontracting Quantitative Objective(s Based on Market Research Results Set-Aside Partial Set-Aside Full and Open Subcontracting Quantitative Objective 3 -8

Subcontracting Quantitative Objective Example Col #1: Percent of tasking categories from Independent Gov’t Cost Estimate Subcontracting Col #2: IT requirements/ tasking categories Col #4: Col #3: Number and size of Level of firms analyzed for participation/Quantitative Objective Market Research 10% Help Desk 15 Small Business (SB) ? 50% Programming 20 Other Than SB (OTSB) ? 30% Analyst 5 SB ? 10% Cyber Security 2 OTSB ? 3 -9

Subcontracting Quantitative Objective(s) Formulated IGCE + MRA = QO Subkting P G QO 3= MQR SB Par Subcontracting 3 -10

Activity 3. 1: Determine a Subcontracting Quantitative Objective Based on Market Research Results Using the market research data provided, determine an appropriate subcontracting quantitative objective for only small businesses and provide supporting rationale. (Graded Individual Assignment – 10 points) Subcontracting 3 -11

Activity 3. 1 Key Points • • • Quantitative objectives ≠ Do. D subcontracting goals. The degree of subcontracting is based on a variety of things. Establishing subcontracting quantitative objectives helps the Government: – Determine whether small business subcontracting plan goals are acceptable • Decide whether or not goals should be negotiated. – Decide whether requiring a minimum level of quantitative participation is appropriate – Determine reasonableness of proposed SB participation in SBPCDs • In actual acquisitions, SBPs would also assist in the development of quantitative objectives for the socioeconomic categories Subcontracting 3 -12

Incentive Subcontracting • Provides the Government with the opportunity to encourage subcontracting to small businesses by providing a monetary incentive • Must be commensurate with the efficient and economical performance of the contract [FAR 19. 708(c)(1)] Subcontracting 3 -13

Incentive Subcontracting (cont’d. ) • Why would the Government use incentive subcontracting? • When would it be prudent to use incentive subcontracting? • When would incentive subcontracting not be used? Subcontracting 3 -14

Common Types of Incentive Subcontracting Cost-Plus-Award-Fee Contract Incentive Subcontracting Program (FAR 52. 219 -10) • Small business subcontracting can • Awarded based on an assigned be one of the factors to consider percentage of the dollars in excess when determining the award fee. of each goal in the subcontracting • A percentage of the award fee pool plan, unless the Contracting Officer is awarded based on the adjectival determines that the excess was not rating earned. due to the contractor’s efforts. Note: FAR 52. 219 -10 gives Contracting Officers the flexibility to be innovative in creating other incentives, so long as they are within the regulatory parameters. Subcontracting 3 -15

Non-Monetary Alternatives to Incentive Subcontracting Evaluate small business participation as an evaluation factor/substantial subfactor in source selection. Subcontracting Establish MQRs in the solicitation. 3 -16

3. 2: Review an Award Fee Plan Award fees are one way to implement incentive subcontracting. Subcontracting Award Fee Plan 3 -17

Activity 3. 2: Review an Award Fee Plan 1. Working in pairs, review the Award Fee Plan. 2. Answer the questions that are in the activity instructions. Subcontracting 3 -18

Activity 3. 2 Key Points • Incentive subcontracting is a viable tool for increasing small business utilization in contracts. • The award fee can be an effective method of incentive subcontracting. • Using the flexibility of FAR clause 52. 219 -10 should be considered when appropriate. Subcontracting 3 -19

3. 3: Developing a Small Business Subcontracting Incentive FAR 19. 708(c) states that subcontracting incentives can take many forms. What can you come up with? Subcontracting 3 -20

3. 3: Subcontracting Incentive Considerations • Potential impact to the successful contractor’s cost, schedule, and performance • Whether the Government would mitigate any negative impact to the contractor • Data rights implications • Cost to the Government • Benefits to the Government Subcontracting S N TIO A R E C ID S ON 3 -21

Activity 3. 3: Develop a Small Business Subcontracting Incentive 1. Working in teams, develop a small business subcontracting incentive in response to a scenario. 2. Draft solicitation language for your incentive. Subcontracting 3 -22

Activity 3. 3 Rubric You will use the activity rubric, which identifies desired behaviors, to rate your performance. Desired Behaviors • Carefully analyze the scenario. • Address the given considerations. • Use the maximum flexibility afforded in FAR 19. 708 (c). • Develop an effective and fiscally sound incentive. • Develop an incentive that is palatable to industry. Subcontracting 3 -23

Activity 3. 3 Key Points • FAR 19. 708(c) allows Contracting Officers to be innovative in developing incentives to address acquisition small business subcontracting challenges. • Use of incentives is one way we can promote utilization of small businesses. Subcontracting 3 -24

Acquisition Plans • Address all the technical, business, management, and other significant considerations that will govern the acquisition (FAR 7. 105). • Discuss the small business strategy, including set-asides, bundling and consolidation, and subcontracting. Subcontracting 3 -25

Acquisition Plan Requirements • FAR 7. 105 – Contents of Written Acquisition Plans • DFARS 207. 105 DFARS Subcontracting 3 -26

Acquisition Plan Review When market research does not support a set-aside, SBPs need to ensure that the acquisition plan reflects a proactive subcontracting strategy that maximizes opportunities for small businesses. Subcontracting 3 -27

Acquisition Plan Review Considerations • • • Subcontracting Column 1 – Drawn from FAR 7. 105 Column 2 – Small Business Strategy Considerations Column 3 – Findings and Other Notes 3 -28

3. 4: The Small Business Subcontracting Sections of an Acquisition Plan To ensure that the acquisition plan contains a robust and tailored small business strategy within the acquisition strategy, SBPs should be proactive and draft the sections of the plan related to small business subcontracting. Subcontracting 3 -29

Activity 3. 4: Draft the Small Business Subcontracting Sections of an Acquisition Plan Based on the market research results you analyzed earlier, work in your teams to draft the small business subcontracting sections of the acquisition plan: FAR 7. 105 • 1. Sources • 2. Competition • 4. Source Selection • 12. Make or Buy Use the Acquisition Plan Review Considerations document as a reference Subcontracting 3 -30

Activity 3. 4 Rubric You will use the activity rubric, which identifies desired behaviors, to rate your performance. • • Desired Behaviors Collaborate to develop a team strategy for approaching the activity. Carefully analyze the market research results. Develop language that is tailored to the acquisition. Develop robust language that encourages small business subcontracting. Subcontracting 3 -31

Activity 3. 4 Key Points • • It is important to consider small business as early as possible in the contracting process. The acquisition plan must include a thorough discussion of small business considerations, including small business subcontracting. SBPs are the experts on small business matters on the acquisition team, so they need to be prepared to draft sections of the acquisition plan related to small business subcontracting. There is not a single correct way to draft the acquisition plan. Subcontracting 3 -32

Purpose of DD Form 2579 IAW DFARS 219. 201 (c)(10) The SBP (and the SBA Procurement Center Representatives, as required) is required to review and make recommendations for acquisitions before issuing the solicitation or certain contract modifications by documenting the review on DD Form 2579, Small Business Coordination Record. Subcontracting 3 -33

Subcontracting on DD Form 2579 Block 13: • Indicate whether a small business subcontracting plan is required. • Specify actions that will be taken to maximize small business participation (if the acquisition is not a set-aside or is consolidated or bundled). Subcontracting 3 -34

3. 5: Review DD Form 2579 Coordinating on DD Form 2579 is one of the SBP’s most important responsibilities. Subcontracting 3 -35

Activity 3. 5: Review DD Form 2579 Instructions • Using the provided DD Form 2579 and instructions, review the small business subcontracting rationale and documentation. • Answer the questions. Subcontracting 3 -36

Activity 3. 5 Key Points • • It is important to thoroughly review the subcontracting strategy in DD Form 2579. The more detailed information on the subcontracting strategy in the revised DD Form 2579 emphasizes the importance Do. D is placing on maximizing opportunities for small businesses as subcontractors. The requirement to review and make recommendations on acquisitions—and to document the review using DD Form 2579—is one of the SBP’s most important responsibilities. The DD Form 2579 itself is not as important as the documents provided to support it. Subcontracting 3 -37

Lesson Summary Determining quantitative objectives Contribute to an Acquisition Plan Subcontracting Incentive Subcontracting Requirements Review 2579 Subcontracting Strategy 3 -38

Action Planning • Identify one key insight from this lesson. • Identify one thing you will do differently on the job. • Discuss with your accountability partner. Subcontracting 3 -39