Small Business Subcontracting Plan Overview Presented by Micole

Small Business Subcontracting Plan Overview Presented by Micole Stephens Procurement Resource Specialist Federal Supply Schedule Service November 16, 2020 For Official Use Only 1

Purpose The purpose of this training is to provide you with information that will help you prepare a compliant Small Business Subcontracting Plan. For Official Use Only 2

Objective Provide key information that will create a better understanding of each required element of the small business subcontracting plan which will aid in providing an acceptable and compliant plan. For Official Use Only 3

Agenda • Plan Requirement • Commercial and Individual Plan Differences • Components of a Small Business Subcontracting Plan • Contacts • Resources 4

Requirement for a Subcontracting Plan FAR 19. 702 states the requirement for a Small Business Subcontracting Plan. When the following is present, a plan is required: 1) Contract value is estimated at over $750, 000, this includes the base contract and all options 2) The Contractor must have further subcontracting opportunities, and 3) Contractor is classified as an “other than small business” For Official Use Only 5

Requirements and Template Usage Required Elements FAR clause 52. 219 -9(d) contains the elements required of an acceptable plan. Our template mirrors the verbiage in the FAR. FSS Template vs. Other formats that present how you will comply with FAR clause 52. 219 -9 are acceptable. However, we will verify that the contents of the format used includes all required information and does not remove or paraphrase any of the required FAR verbiage, which could deem the plan unacceptable. For Official Use Only 6

Plan Period - Commercial • Per FAR 52. 219 -9(b), the plan period for commercial plans must coincide with the company’s fiscal year. • Initial plans should reflect your company’s entire fiscal year while the plan is negotiated. Prior to the approval of an initial plan, the plan dollars will be prorated to shorter or longer than a 12 -month period. We will always coordinate the dates with you. The start date is adjusted so that the initial plan starts with the contract award date and ends with the company’s fiscal year-end (e. g. 10/1/20 – 12/31/21, a 15 -month plan or 6/1/20– 12/31/20, a 7 -month plan). For Official Use Only 7

Plan Types Small Business Subcontracting Plan Types: Commercial Plan is a subcontracting plan that: • covers the contractor’s fiscal year and is negotiated annually • based off a company’s division or company • applies to the company or divisions entire production of commercial items sold • Indirect costs are included at 100% Individual Plan is a subcontracting plan that: • covers the entire contract period/period of performance • applies to a specific contract, and • has goals that are based on the offeror's planned subcontracting in support of the specific contract, • except that indirect costs incurred for common or joint purposes can only be allocated on a prorated basis to the contract For Official Use Only 8

Comm/Indiv Comparisons Commercial Plans Submitted annually. Goals can be adjusted annually based upon company’s current climate. Plans (goals) Individual Plans Submitted for the entire performance period. Separate goals are set for the base and each option period in a single, approved plan. If goals were overestimated initially, they are carried for the life of the contract without the chance for revision. Includes all company spend Includes only dollars spent in support of the one, VA FSS contract. Documentation must be maintained of how each pool of spend is allocated to supporting the specific contract. One signed plan can be used for all gov’t contracts Must have a separate individual plan for each government contract. Having more than one gov’t contract could mean managing multiple plans simultaneously. Submit annual SSR (due by October 30 th) e. SRS Reports (actual results) Submit annual SSR (due by October 30 th) Submit biannual ISR (due by March 30 th and October 30 th) Two extra contract level spend reports per year. Break down subcontracting data for each order when reporting subcontracting achievements for IDIQ contracts used by multiple agencies. Spend also reported for each order. For Official Use Only 9

Plan Period - Individual • Individual plans cover the entire performance period of the specific contract, including potential option years (i. e. 10 -years for most FSS schedules). • Initial plans (prior to contract award) should leave the effective dates blank as that will be determined just prior to contract award. For Official Use Only 10

Date Submitted Plans for Current Contractors The date submitted should be when the plan was actually submitted to FSS (either directly to PMRS, as requested, or indirectly through the CS). New Plans for Offers The date submitted should not be prior to when the offer was received by FSS. Plans Revisions Update the date revised with each submission. Place the date revised in the space asking for date submitted. For Official Use Only 11

Name of Planholder • The planholder may not necessarily be the name of the contract holder. • If the planholder is different from the contract holder, make sure to list the contract holder as a subsidiary. For Official Use Only 12

Subsidiaries Included • If subsidiaries are included, then each one must be clearly identified here or a referenced attachment. • If there are no subsidiaries included, then this section should indicate “none” or “N/A”. This section of the plan can’t be blank. For Official Use Only 13

Address The address must be that of the planholder, not a listed subsidiary and not necessarily the contractor or Plan Administrator (unless they are one and the same). For Official Use Only 14

Item/Service Type • This should be a listing of the type(s) of items/services covered by the plan. • It should include generic descriptions of item/service types, such as “pharmaceuticals”. • Do not state brand names, contract number, schedule or SIN. For Official Use Only 15

Plan Type Preferred Plan Type 52. 219 -9(g): “A commercial plan is the preferred type of subcontracting plan for contractors furnishing commercial items. The commercial plan shall relate to the offeror’s planned subcontracting generally, for both commercial and Government business, rather than solely to the Government contract. ” For Official Use Only 16

#1 - Type of Plan • Select either an individual plan or a commercial plan. • The instructions highlight some areas of excluded spend which should not be included in the base (i. e. total value of projected subcontracts) upon which percentage goals are calculated for the various business types in #2. For Official Use Only 17

Excluded Spend - Categories Per 13 CFR 125. 3(a)(1)(iii), the following categories should not be included in the total subcontracting spend base in #1, the proposed goals in #2, nor in the categories of spend listed in #3: Internally generated costs such as salaries and wages; employee insurance; other employee benefits; payments for petty cash; depreciation; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, and dues; Original Equipment Manufacturer relationships during warranty periods (negotiated up front with product); utilities such as electricity, water, sewer, and other services purchased from a municipality or solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. Utility companies may be eligible for additional exclusions unique to their industry, which may be approved by the contracting officer on a case-by-case basis. For Official Use Only 18

Excluded Spend – Lower Tier The SBA’s regulations at 13 CFR 125. 3(a)(1)(i)(C), as revised to be effective 1/23/2017, permit individual subcontracting planholders to receive credit for lower-tier SB subcontracting awards. This change has still not been incorporated into the FAR. Therefore, our contractors are still unable to get credit for lower tier spend as our contractors are bound by the FAR clauses contained within their FSS contracts. For Official Use Only 19

Spend vs. Sales Total value of projected subcontracts. Total value of what is planned to be subcontracted from both small and large business or "spend” during the plan year. Total Sales. Is the total value of goods and services sold. As required by FAR 52. 219 -9(d)(2)(i), for commercial plans, list the total value of projected subcontracts and total projected sales and accompanying percentage comparison of sales vs. spend. For Official Use Only 20

#1 a – Individual Plan Individual plans may only include spend that supports the specific VA FSS contract. Any spend which cannot be tied to supporting the VA FSS contract would not be permitted. Indirect/G&A/overhead type spend that supports the VA FSS contract can be “allocated” to the individual plan. See more information on indirect spend in #6. The “Total Contract Value” field should be left blank when initially submitted as this amount will be filled in just prior to contract award. For Official Use Only 21

#1 b – Commercial Plan Type Commercial plans permit the choice of a Company-wide Plan or a Division-wide Plan. Company-wide Plan-Applies to the entire production of commercial items sold by the entire company and could include subsidiaries. Division-wide Plan -Includes a single division. Planholders cannot choose multiple divisions or companies to include in a division-wide plan. For Official Use Only 22

#2 - Goals • Contractors must propose goals for each category. • 0% goals are not acceptable. All goals must round to at least one decimal place (e. g. 0. 1%). • If the goal doesn’t round up to a minimum of 0. 1 % (i. e. 0. 0499%), then the goal is not acceptable. For Official Use Only 23

#2 – Goals Commercial #2 a – Commercial Plans: This section is to be completed by commercial plan holders only with one year goals broken down by total dollars and percentage of the base (total projected subcontracting dollars listed in #1) for each category (a-f). For Official Use Only 24

#2 – Goals Individual #2 b – Individual Plans: This section is to be completed by Individual plan holders only with two, separate five-year goals broken down by total dollars and percentage of the base (total projected subcontracting dollars listed in #1). For Official Use Only 25

#2 – Goal Calculations The calculated percentage for each category is based upon the total value of projected subcontracting dollars (total “base” spend) listed in #1. Example: HUBZone dollars of $400, 000 ÷ Total Subcontracting dollars of $2, 500, 000 = 16%. Please note that the calculations used the total “base” spend, not total SB spend. All percentage goals must be properly rounded to the nearest 10 th of a percent (e. g. 6. 5234% = 6. 5% or 1. 054% = 1. 1%) to mirror online reporting of goals at e. SRS. gov. For Official Use Only 26

#2 – Multiple Counting Multiple Category Counting: All small business dollars count once in the Small Business category and can count multiple times in the subcategories. For example, a $500, 000 subcontract with a small, veteran, woman-owned business would count in all three categories. The subcategories will not add up to total SB spend due to multiple counting. SB spend should always be higher than any of the individual subcategories as they are subsets of SB spend. VO spend should be higher than SDVO spend as it is a subset of VO. For Official Use Only 27

#2 – Goals for VO/SDVO • Please be aware that the SDVO category is a subset of the VO category. • Therefore, all businesses that qualify as an SDVO also fall under the VO category. • VO goals must therefore be higher than SDVO goals because having the same VO and SDVO goals essentially mean that you would not have a VO goal, only an SDVO goal. For Official Use Only 28

VA Goals – FY 2020 Below are the VA’s recommended subcontracting goals for each category. These are updated each fiscal year. To date, the 2021 VA recommended goals were not provided. We will continue using the 2020 goals. These are suggested goals, not mandatory goals. If you are unable to propose the VA goals recommended for any category, then you must provide justification for us to accept lower goal(s). See slide #4 – Goal Development and the slide for “Justification for Low Goals” for more information. • • • Small Businesses: 16. 6% Veteran-Owned Small Businesses: 7. 0% Service-Disabled Veteran-Owned Small Businesses: 5. 0% Disadvantaged Small Businesses: 5. 0% Women-Owned Small Businesses: 5. 0% • HUBZone Small Businesses: 3. 0% For Official Use Only 29

VO/SDVO Verification If the FSS planholder’s subcontracting plan covers any VA contract containing the clause 852. 219 -9 VA Small Business Subcontracting Plan Minimum Requirements, then VOSBs and SDVOSBs must be verified as eligible on Vet. Biz. gov in the Vendor Information Pages database in order for their dollars to count towards plan goals. Additionally, the planholder/contractor is required to submit to OSDBU an annual list of any VO or SDVO businesses counted in their achievements. This requirement would never apply to a planholder who only had a VA FSS contract, as our solicitations do not contain this clause. It would only apply to FSS planholders whose plan also applies to other VA contracts which do include this clause. For Official Use Only 30

#3 - Products/Services You must propose a product/service to be purchased in every category. Don’t list the same items for each category. Examine each category independently. Refer to the list of excludable items listed in Section 1 of the plan. If you are including indirect costs in #6, then you must list indirect costs here as well. For Official Use Only 31

#4 - Goal Development This question asks for the method or how you arrived at the proposed goal. Examples could include: • Historical data, previous spend history • Projected forecast based upon current year’s data • Projected goals based on experience, business forecasts, & commitment to improvement, etc. Additionally this section is used to provide justification for proposing goals that are less than the VA’s suggested goals (or in a separate justification letter). For Official Use Only 32

Justification is required for two reasons (either in #4 or a separate letter): 1) Whenever you propose any percentage goal that is less than your actual percentage achievement during the prior plan period for any category. 2) When you propose a percentage goal that is lower than the VA suggested goal in any category. For FY 2020, goals are as follows: • • • Small Businesses: 16. 6% Veteran-Owned Small Businesses: 7. 0% Service-Disabled Veteran-Owned Small Businesses: 5. 0% Disadvantaged Small Businesses: 5. 0% Women-Owned Small Businesses: 5. 0% HUBZone Small Businesses: 3. 0% For Official Use Only 33

Justification – cont’d Be specific in explaining the challenges faced in meeting the VA’s suggested goals and address specific subcategories when applicable (i. e. don’t “broad stroke” justification). Examples for proposing lower than the VA suggested goals include: • • FDA registration/approval Strict and/or unusual quality control/technical requirements Buyer specifications Proximity/Logistics – rural companies with few local SBs to meet needs Examples for proposing % goals lower than prior year achieved % include: • Prior SBs are now LBs; must search for new SBs • Moved to new location and lost local SBs For Official Use Only 34

#5 – Identifying Potential Sources As identified in FAR 52. 219 -9(d)(5), this question is asking about specific resources planned to be used to find small businesses, such as • • SBA Dynamic Small Business Search (DSBS, http: //dsbs. sba. gov) Vet. Biz. gov Women’s Business Enterprise National Council (www. wbenc. org) National Minority Business Council (www. nmbc. org) *Generic responses, such as “internet sources” or “small business groups” is not sufficient and does not show a good faith effort or a concrete way forward. For Official Use Only 35

#6 – Indirect Costs – Comm. Plans For commercial plan types (not individual), if you choose “have been”, Please leave this section blank. Commercial plans that choose to include indirect costs apply them at 100%. DO NOT determine a proportionate share. Reminder: All plan types may choose “have” or “have not been” included. Even commercial plans are given a choice per the word “may” at FAR 52. 219 -9(d)(1). If “have been” is checked, be sure to verify that specific categories of indirect costs are listed in #3 Products and/or Services. For Official Use Only 36

#6 – Indirect Costs – Indiv. Plans For individual plans (not commercial), indirect/G&A/overhead spend that supports the VA FSS contract can be included and “allocated” on a percentage basis, unless the supporting spend can be specifically identified by dollars. You must examine each pool of spend (e. g. accounting, landscaping, marketing, etc. ) since the portion of support to the specific VA FSS contract could vary greatly from one pool of spend to the next. For overarching spend categories (e. g. janitorial services), a good way to apply a percentage for individual plan holders is to compare the sales dollars generated by the specific contract vs. all other company sales. For example, if the gov’t contract (for the individual plan) will produce $200 K in annual sales and all other company sales total $800 K, then the contract sales percentage would be 20% of total sales. So, 20% of janitorial spend would be applied to the individual subcontracting plan. For Official Use Only 37

Indirect Costs – Impact on e. SRS Summary Subcontract Report (SSR): Planholders (both commercial and individual) that do not include indirect costs in their plans are required to report indirect costs in their SSR. (52. 219 -9(l)(2), effective 11/1/2016). Individual Subcontract Report (ISR): Individual plan holders are only required to report indirect costs in the ISR when indirect costs were included in their plan goals per 52. 219 -9(l)(1)(ii)(B). Be aware that choosing not to include indirect spend in a subcontracting plan will create difficulties for planholders when tracking spend and filing their SSR, and it will create difficulties for us when we compare actual achievements in the SSR with their established plan goals. Therefore, we highly encourage you to include indirect costs in your goals. For Official Use Only 38

#7 – Program Administrator List the person that is responsible for all subcontracting plan and e. SRS issues, including instructions, reminders, delinquency notices, etc. This is the person we will contact. For Official Use Only 39

#7 – Program Admin Duties Be specific and comprehensive when listing duties. Your listing should always include involvement with/oversight of plan preparation and filing e. SRS reports. Duties listed here must be duties that will actually be performed. Be prepared to provide proof the duties are/were carried out. For Official Use Only 40

#8 – Equitable Opportunity An adequate response for this section of the plan must include a list of the internal and external proactive efforts that will be made during the plan period, do not list efforts that you made in the past. This demonstrates “good faith effort” toward goal achievement. For Official Use Only 41

#8 – Equitable Opp. – Specifics Examples of areas of external effort include: 1) Contacts w/ SB, minority, WO, etc. trade associations & business development organizations and 2) Attendance at/sponsorship of SB conferences, trade shows, seminars, training programs, etc. Examples of areas of internal effort include: 1) Internal training for purchasing staff to ensure consideration of SBs for all procurements and 2) Instituting self-certification protocol with accounting department (properly classifying spend for audit purposes). You must identify specific examples. The examples above are only provided to demonstrate general areas of efforts for consideration. For Official Use Only 42

#9 – Flow-Down Clause 9. FLOW-DOWN CLAUSE The offeror agrees that the FAR clause of this contract entitled “Utilization of Small Business Concerns” (52. 219 -8) will be included in all subcontracts that offer further subcontracting opportunities, and that the Offeror will require all subcontractors (except small business concerns) that receive subcontracts in excess of $750, 000 ($1. 5 million for construction of any public facility) with further subcontracting possibilities to adopt a subcontracting plan that complies with the requirements of FAR clause 52. 219 -9. NOTE: See exceptions listed in FAR 52. 219 -9(j). The flow-down language above lists two requirements: 1) The flow-down of 52. 219 -8, and 2) The requirement (when listed criteria are met) for subs to have their own plans. The exception listed in 52. 219 -9(j) states that plans aren’t required from subcontractors when the prime contract contains 52. 212 -5, which is included in all FSS contracts. This means that the FSS planholder would only have to flow-down 52. 219 -8 unless your plan covers another gov’t contract which does not have clause 52. 212 -5. For Official Use Only 43

Sections #9 - #15 are the assurances/agreement sections where, by signing the plan, you agree to abide by the verbiage contained within these sections. The text of these sections is from FAR 52. 219 -9(d). While you may add to this language, you cannot paraphrase or deviate from it such that it changes the intent of the FAR, as these sections are FAR required components of an acceptable plan. For Official Use Only 44

Signature You must provide a signed copy of the plan for our review. A scanned copy sent via e-mail is sufficient. Unsigned plans will be returned without review. We now accept digital/electronic signatures. We do not accept images of a signature. For Official Use Only 45

Summary of Goals – Comm. Plans Commercial Plan holders (except for initial plans) should complete this table. This is designed to be a comprehensive snapshot of where you proposed that your company would be, where it landed, and where it is going with respect to subcontracting dollars and percentages. For Official Use Only 46

Summary of Goals – Cont’d Column 1 – Prior Year Goals Prior year goals must match the previously approved, signed plan. Column 2 – Prior Year Achievements Prior year $ achievements listed (if they had a prior plan) may be based on the most recent SSR in e. SRS or be based on your actual plan period. Column 3 – Current Goals Your current, proposed goals should match those listed in #1 and #2. For Official Use Only 47

NAC & PTAC Contacts Subcontracting Plan Reviewers VA Federal Supply Schedule (FSS) Micole Stephens, Subcontracting. VAFSS@va. gov, 708 -786 -5156 National Contract Service (NCS) Contracts Brendalee Clarke, Brendalee. Clarke@va. gov, 708 -786 -4385 Other Plan Assistance Procurement Technical Assistance Centers (PTAC) http: //www. aptac-us. org For Official Use Only 48

SBA Area Offices AREA I: Janette Fasano, jannette. fasano@sba. gov, (617) 565 -5622 - Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island Vermont and the Commonwealth of Puerto Rico & Virgin Islands AREA II: Amy Kim, amy. kim@sba. gov, (202) 205 -7311 - Delaware, Maryland, Pennsylvania, Virginia and West Virginia, and the Washington, DC Metropolitan Area III: Carol Thompson, carol. thompson@sba. gov, (404) 331 -7587 - Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee AREA IV: Pamela Beavers, pamela. beavers@sba. gov, (312)353 -7381 - Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, & Wisconsin AREA V: Tanika L. Pierce, tanika. pierce@sba. gov, (817)684 -5302 - Arkansas, Colorado, Louisiana, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming AREA VI: Nicholas Manalisay, nicholas. manalisay@sba. gov, (415) 744 -8429 - Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Washington, and Guam For Official Use Only 49

Legal Resources • Public Law 95 -507 The Small Business Act • FAR 19. 7 The Small Business Subcontracting Program • FAR 52. 219 -8 Utilization of Small Business Concerns • FAR 52. 219 -9 Small Business Subcontracting Plan • FAR 52. 219 -16 Liquidated Damages – Subcontracting Plans 50

Resources (cont’d) • GSAR 552. 219 -71 Notice to Offerors of Subcontracting Plan Requirements • GSAR 552. 219 -72 Preparation, Submission, and Negotiation of Subcontracting Plans • 13 USC 121 Small Business Size Regulations • 13 USC 125 Government Contracting Programs 51

This Concludes Our Training 52