Department of State Subcontracting Workshop

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Department of State

Subcontracting Workshop


U.S. Small Business Administration

October 2, 2003

Subcontracting Program

What’s New?


CCR and PRO
-
Net Interface


MOU between SBA and DCMA


Web
-
based SF
-
294 and SF
-
295 (coming soon!)


New Proposed Rules


FAR Revisions from OFPP Policy Letter 99
-
X


Good
-
Faith Effort


GWAC Subcontracting Credit


Interim Policy on SDB Recertification



Mandatory Subcontracting Goals


(as clarified by
Federal Register

Notice

published on January 14, 2002)




Small Business (SB)


Small Disadvantaged Business (SDB)


Women
-
Owned Small Business (WOSB)


HUBZone Small Business (HUBZone SB)


Veteran
-
Owned Small Business (VOSB)


Service
-
disabled

VOSB

Determining the Need for a Plan
FAR 19.705
-
2


Dollar Threshold
:


contract or contract mod is expected to exceed
$500,000 ($1,000,000 for construction)


Subcontracting possibilities
:


contract appears to offer subcontracting
possibilities


Determining the Need for a Plan
(continued)


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


Include the value of options in determining
whether the dollar threshold for a
subcontracting plan is met.


Require separate goals for the basic contract
and for each option.

Types of Plans


Individual Plan
-

FAR 19.704(a)


requires a separate plan for each contract


Master Plan
-

FAR 19.704(b)


contains no goals


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


A subcontracting plan must contain goals
expressed in both
dollars

and
percentages
.


Other required elements are set forth in the
FAR at subpart 19.704 and in the clause at
52.219
-
9.


SBA provides a Fact Sheet on Subcontracting
that explains goals, flow
-
down, and reporting
requirements.

Subcontracting Flow
-
Down


A 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)


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).


This particular requirement applies to
small
businesses

as well as to large businesses.

Subcontracting Flow
-
Down (con’t)


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
:


Pre
-
Award Subcontracting Plan Reviews


SBA’s PCRs review subcontracting plans
prior to contract award (
advisory
)


Post
-
Award Compliance Reviews


SBA’s CMRs monitor goal achievement
after contract award

What SBA Can and Cannot Do


SBA
Can
:


Conduct needs assessments and
compliance reviews


SBA
Cannot
:


Prescribe the amount of subcontracting


Require the prime contractor to use a
particular small business

Elements of a Compliance Review


Validation of the SF
-
294 & SF
-
295


Five
-
Year Trend Analysis


Overall Evaluation of SB Program


Sampling of Contracts Containing Plans


Sampling of PO’s to Large Business


Follow
-
up on Prior SBA Recommendations


Follow
-
up on SBA Referrals

SBA’s Ratings


A

-

Outstanding ( formerly “Excellent”)


B

-

Highly Successful ( formerly “Good”)


C

-

Acceptable


D

-

Marginal


F

-

Unacceptable


Liquidated Damages


When a contractor fails to make a good
-
faith effort to comply with a subcontracting
plan, Federal law mandates that liquidated
damages be paid to the Government.


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 DoD


In May 2003, the SBA and the Defense Contract
Management Agency (DCMA) signed a
Memorandum of Understanding (MOU).


The agreement outlines the procedures for joint
compliance reviews of contractors that have
contracts with both DOD and civilian agencies.


An attachment to the MOU provides the criteria
for rating the contractors.

SBA Awards


For Small Businesses


Prime Contractor
-
of
-
the
-
Year


Subcontractor
-
of
-
the
-
Year


For Large Businesses



Award of Distinction


Dwight D. Eisenhower Award


Frances Perkins Vanguard Award

SBA Awards for Large Businesses


Award of Distinction


Company receives an “Outstanding” on a compliance review;
their CMR may then nominate them for this award.


Dwight D. Eisenhower Award


Company demonstrates overall excellence; they may now
nominate themselves (changed to self
-
nomination in 1999).


Frances Perkins Vanguard Award


Company excels in utilization of women
-
owned small
business; self
-
nomination.

Reporting Requirements


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


SF
-
295
-

Summary Subcontract Report


annual for civilian agencies; semi
-
annual for DOD


dollars are reported for only the
current year

Reporting Requirements


SF
-
294 and SF
-
295 are always due 30 days
after the reporting period


Submit originals to the procuring agency(ies)
in accordance with their instructions


Submit copies of SF
-
295 to SBA CMR


Submit copies of SF
-
294 to SBA CMR upon
request

22



Reporting Requirements


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
.


Contractors with Commercial Products
Plans may accomplish this by obtaining a
predominant NAICS code from each of
their subcontractors.

New Regulations on Subcontracting

1. SBA Proposal to FAR Council


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.


Many of the changes come from OFPP
Policy Letter 99
-
X, which was published as
a Proposed Rule in April 1999.


Will strengthen the flow
-
down provision
and clarify many ambiguous requirements.

New Regulations on Subcontracting

2. Proposal to Define Good
-
Faith Effort


Represents a substantial rewrite of SBA’s
subcontracting regulation (13 CFR 125.3).


Updates and clarifies the role of the CMR.


Introduces the concept of SOAR reviews.


Provides specific examples of good
-
faith
efforts by large & small prime contractors.


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).


Applies to Government
-
wide Acquisition Contracts,
Multiple
-
Award Schedules, and similar contract
vehicles.


Proposes a solution with two variations, one for
commercial plans and one for everything else.



Affords a 60
-
day public comment period.


Web
-
Based SF
-
294 and SF
-
295


An interagency committee is now meeting
monthly and working out the details for a
Internet
-
based reporting system.


The result of this effort will be a Government
-
wide reporting system that will effectively
replace the SF
-
294 and SF
-
295 paper reports
used today.


Web
-
Based SF
-
294 and SF
-
295


The system will calculate percentages
automatically and will provide an audit trail
showing who entered data or revised it.


Enhancements under consideration include
capturing lower
-
tier dollars and calculating the
percentages two ways, by total contract value
and total subcontracting.


Lower
-
Tier Reporting



SBA has requested that the web
-
based
reporting system (eSRS) be designed to
capture dollars at lower tiers.


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


If the subcontract is $10,000 or less, the size
standard is 500 employees


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.


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


SDB certification normally expires after
3 years (8(a) firms have longer)


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.


This is an interim policy pending
publication of a formal regulation.

SBA’s Resources to Help Small
Businesses Obtain Subcontracts


Commercial Market
Representatives (CMRs).


Subcontracting Opportunities
Directory


SUB
-
Net

--

Electronic
Bulletin Board for
Subcontracting Opportunities


Resources to Help Large Businesses
Identify Small Businesses


SBA’s CMRs


PRO
-
Net


SUB
-
Net: A web site for
prime contractors to post
subcontracting opportunities

Interface Between PRO
-
Net

and CCR


Effective December 17, 2002, firms register
only once, using the CCR;


Firms now in PRO
-
Net

that wish to update
their profiles will do so in the CCR;


Users searching for small businesses will
continue to use PRO
-
Net
; and


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


Prime contractors will be able to list multiple
NAICS codes in one solicitation (i.e., numerous
types of subcontracts).


Small businesses will be able to search for
solicitations geographically (by state).


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
)


Government Contracting:
www.sba.gov/GC


SDB: www.sba.gov/sdb


HUBZone: www.sba.gov/hubzone


Women: www.womenbiz.gov

Subcontracting Workshop


Thank you for
participating in the
subcontracting
workshop today.


Please feel free to
contact me if I can
help you in any way.