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Health and Human Services Agency Training
Small Business Program
July 20, 2015
Barbara Weaver, PCR, SBA-OGC, Area II
Our Mission is to maintain and strengthen the economy by
enabling the establishment and viability of small businesses.
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SBA Area II Office of Government Contracting
. .
PCR – Procurement Center Rep Reviews procurement
actions over $150,000 Helps make decisions
about small business set-asides [SDB, 8(a) WOSB, HZSB, SDVets]
Reviews SB Subcontracting Plans
CMR – Commercial Market Rep Monitors small business
programs of large federal prime contractors
Size Specialist Handles Size Protests
COC Specialist Conducts responsibility
reviews for SB
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Socio-Economic Programs Market ResearchSubcontracting Requirements Limitations on SubcontractingCertificates of CompetencyThis ‘n’ that . . .
Outline of Today’s Training
Small Business Policies
It is the policy of the Government to provide maximum practicable opportunities in its acquisitions to small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business.
Such concerns must also have the maximum practicable opportunity to participate as subcontractors.
FAR 19.201
Small BusinessSet-Asides – FAR 19.5
Set-Aside – the reserving of an acquisition exclusively for small business concerns Determined by using NAICS Codes and
size standards May be total or partial and/or unilateral
or joint Are justified when there is an
expectation that two or more small businesses are qualified
Set-Aside RequirementsFAR 19.502-1
(a) The contracting officer shall set aside an acquisition when—
(1) It is determined to be in the interest of maintaining or mobilizing the Nation’s full productive capacity, war or national defense programs; or
(2) To assure that a fair proportion of Government contracts in each industry category is placed with small business concerns
Relationship among small business programs (parity) for procurements valued over $150,000 based upon market research:
The Contracting Officer has the latitude to select set-aside type, before considering a small business set aside. These decisions are determined by market research.
Parity Among Programs
FAR 19.203
HZSB 8(A) SB ED/WOSBSDVOSB
Market ResearchFAR Part 7, Acquisition Planning: “Agencies shall…conduct market research for all acquisitions…”
FAR Part 10, Market Research: “Agencies shall…conduct market research appropriate to the circumstances,…and use market research to…”
FAR Part 11, Describing Needs: “Agencies shall specify needs using market research…”
Continuous process of collecting and analyzing data on products, services, business practices and vendor capabilities
Critical tool in helping contracting officers to find qualified small business vendors
Also important in determining availability of commercial items
Helps in justifying the need for bundling and consolidation
Market Research
Market research is critical to elevating small business participation.
Must be conducted: before developing new contract requirement documents before soliciting offers for acquisitions above $150k before soliciting offers for requirements below $150k
when sufficient information about small firms is not available
before soliciting offers that could lead to contract bundling
Market Research
Should provide solid information on: Existing products Capable small business sources Competitive market forces Commercial practices Product performance and quality Successful acquisition practices
Market Research
Performed to support the development of effective and written acquisition planning
One comprehensive document that provides: Explanation of the acquisition background and purpose Description of the agency needs, in terms of function and
performance Desired schedule of delivery List of potential small business and other sources Evaluation of the capabilities of potential sources Discussion of customary commercial practices Historical records – recent research, former bidder lists, etc. Information from industry conferences, publications,
meetings and databases
Market Research Report
FPDS-NG for Market Research
Federal Procurement Data System (FPDS) website at: https://www.fpds.gov/fpdsng_cms/index.php/en/
• FPDS data is a tactical & strategic market research tool for Government and Industry.
• Procurement data details who, what, where, when, and how the Gov’t spends the taxpayers money.
FPDS-NG for Market Research
FPDS data provides contract history:
Through search of the whole database for contract awards for the same or similar requirement.
Provides small business representation data -- who, what, and how many small businesses are doing business with the Federal Government.
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Defined by SBA asthe process of putting in place a “Subcontract” for supplies and other performance under a Federal prime contract.
Includes services and/or supplies that the prime contractor either can’t or doesn’t want to supply
May include, but is not limited to – Purchase orders Changes and modifications to purchase orders
The Prime is always responsible for its subs and the C.O. is responsible for monitoring the prime.
Subcontracting
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Small Business Jobs Act of 2010
Became law Sept 27, 2010 Requires higher accountability in Small Business
Subcontracting performed by large prime contractors.
Thresholds for submission of a Small Business Subcontracting Plan: $700,000* or $1.5M for construction
* New Threshold effective 10-1-2015
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Other Jobs Act Changes (Section 1321)
Subcontracting Misrepresentations: Required the government to establish policy on
small business subcontracting compliance Established assignment of compliance
responsibilities between the contracting/program offices and SBA
Established periodic oversight and review activities.
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Other Jobs Act Changes (Section 1321) Compliance:
Large prime contractors are accountable for written goals in subcontracting plans.
Primes must explain in writing if they are unable to make a good faith effort to meet small business subcontracting goals.
Failure to make a good faith effort can result in assessment of Liquidated Damages up to the amount specified in the subcontracting plan.
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Other Jobs Act Changes (Section 1321)
Payment to Subcontractors: Prime must notify the contracting officer in
writing when subcontractor payments are less than the agreed price and/or payment is not made within 90 days.
Non- or late-payment is a factor in rating performance along with subcontracting plan compliance.
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Small Business Subcontracting Plan
Formal plan negotiated by the C.O. with a successful LARGE prime offeror prior to award. Plan becomes part of the contract. (FAR Part 19.7)
Usually negotiated after evaluation and just prior to award.
Based on total dollars available for subcontracting.
Presents distinct goals for all small business categories (SB, SDB, WOSB, HUBZone, VOSB, and SDVOSB).
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Compliance Reviews
Government: Reviews quarterly and annual subcontracting
reports submitted through the eSRS system. Approves acceptability of efforts; formulates
corrective action plan to comply with subcontracting plan
Prime Contractor: Reviews lower-tier individual subcontracting
reports with large subs and enforces flow down clauses.
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Final Performance Evaluation
Government:
At the end of the contract, final evaluation of achievement against contract goals is performed.
Liquidated Damages are assessed if Contractor failed to meet goals as a result of lack of good faith effort made.
Performance is documented in Past Performance Information Retrieval System (PPIRS) for all Federal agencies to view.
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A Small Business Participation Plan is an evaluation provision in an unrestricted NEGOTIATED solicitation for Best Value (Trade offs) requiring ALL offerors to address how they will get work into the hands of small business.
FAR 15.304
Small Business Participation Plans
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Small Business Participation Plan
Applies to both small and large business offerors.
Submitted with offer.
Does not apply to Invitations for Bid or negotiated procurements evaluated on a Lowest Price Technically Acceptable (LPTA) basis.
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Small Business Participation Plans
A submittal attachment to an Offer which outlines how much work will go to small business.
Based on total amount of offer – NOT the total expected to be subcontracted.
Is evaluated and scored based on the criteria for the solicitation; i.e. highest $ amount gets rated highest.
Offers showing written commitments to specific small businesses get higher scores.
Small business offerors get “credit” for self-performance in the percentage of participation.
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After Evaluation…
If the successful Offeror is a LARGE business. . .
Must have submitted an acceptable Subcontracting Plan prior to award,
Which MIRRORS the percentages, dollars, and commitments to small businesses in its Small Business Participation Plan.
Subcontracting Plan becomes a material part of the awarded contract.
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After Evaluation… If the successful Offeror is a SMALL
business . . .
the Small Business Participation Plan becomes part of the offer and is filed in the contract file.
No subcontracting plan is required for small business.
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REMEMBER –
If the solicitation was set aside for small business at any tier, inclusion of a Small Business Participation Plan and evaluation factor is NOT required. These Plans are only required on unrestricted full and open solicitations.
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Limitations on Subcontracting
Contract Clause (FAR 52.219-14) restricts subcontracting “excessive” portions of the work. Helps to ensure that pass-through contracts aren’t
issued. Helps to ensure that work stays in the hands of
small business. Does NOT apply to large businesses – they have
a subcontracting plan they must follow.
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Limitation on Subcontracting Clause is required . . .
On Contracts/Solicitations over $150K
In all contracts and solicitations for supplies, services and construction, if any portion is set aside for small business
On multiple award contracts (MATOCs) when terms require that work orders under certain $$ amounts be set aside for SB
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Limitation on Subcontracting Clause becomes binding . . .
With submission of an offer or bid and the execution of the contract
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The contractor agrees under:
SERVICE CONTRACTS: To perform at least 50% of the cost of labor with their own employees; i.e. directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply.
MANUFACTURING CONTRACTS: To perform at least 50% of the cost of manufacturing SUPPLIES excluding cost of materials
But see the Non-Manufacturer Rule for exception…
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The contractor agrees under:
CONSTRUCTION CONTRACTS: To perform at least 15% of the cost of the contract for a GENERAL Construction Contractor excluding cost of materials/equipment. NAICS 236 & 237
General contractor has no specific specialty, but has experience in a myriad of construction areas.
Can include management, oversight, quality control activities, safety and other “non-trade”- type work
Doesn’t necessarily have to perform specific on-site actual construction trades.
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The contractor agrees under:
SPECIALTY CONSTRUCTION CONTRACTS: To Perform at least 25% of the cost of the contract for a SPECIAL TRADES construction contractor, excluding cost of materials. NAICS 238
Is higher because it’s assumed there’s at least one trade the contractor can do, like electrical or plumbing
Can include management, oversight, quality control activities, safety and other “non-trade”- type work
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Limitations on Subcontracting Does Not Apply to Unrestricted
Procurement
OR to a small business that is the successful offeror or bidder on an unrestricted procurement
OR to a large business – they can subcontract with no limitations, BUT they must have a small business subcontracting plan.
Certificate of Competency
This process allows a small business to demonstrate responsibility with the objective of helping them win federal contracts.
Authorities:◦ Section 8(b)(7) of SBA Act ◦ 13 CFR 125.5◦ FAR 19.6
COC Overview COC process requires SBA to review a non-
responsibility determination and issue a Certificate of Competency [COC]
The issuance of a COC can only be initiated by a C.O.’s referral.
A COC review provides a small firm with an avenue of appeal to a C.O.‘s negative responsibility determination.
The COC process culminates in a written certification that the small business has the capability to perform on a specific government contract.
C.O. Referral to SBA
C.O. must determine lack of responsibility in one or more of the following areas: Capability Competency Capacity Credit Integrity Perseverance Tenacity Limitation on Subcontracting
Referral Includes . . . The solicitation A copy of the offer submitted by the small business;
abstract of bids (if applicable) Pre-award survey (if applicable) The CO’s written determination of non-responsibility Technical data package Any other justification or determination used to arrive
at the non-responsibility determination. Clear statement that the offeror has been found to be
responsive regarding some elements of the solicitation The reasons for the determination of non-
responsibility.
Burden of Proof
The burden of proof is on the small business.
Once a C.O.’s COC referral is received by the SBA, SBA will inform the small business of the C.O.’s determination and offer the opportunity to apply for a COC by a specific date.
The offeror must demonstrate to the SBA that it is eligible
for COC consideration. That is, the burden of proof is on the business to show that it meets specific COC eligibility criteria regarding small business size standards, type of business, performance requirements and end products being delivered.
Release of COC
SBA notifies C.O. of decision. C.O. may
◦Accept the decision and proceed with award
◦Request suspension to allow time for additional review
◦Appeal SBA’s decision
Effect of a COC A certificate of competency is conclusive relative
to responsibility. That is, if SBA issues a COC on behalf of a small business with respect to a particular contract, the contracting officer is required to award the contract without requiring the firm to meet any other requirement with respect to responsibility.
Further, if the SBA issues a COC with respect to a referral, the contracting officer may not be required to issue an award to that offeror if the contracting officer denies the contract for reasons unrelated to responsibility.
Effect of a Denial
Denial of a COC by SBA does not preclude a C.O. from awarding a contract to the referred firm, nor does it prevent the concern from making an offer on any other procurement.
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FAR Case 2014-022, Inflation Adjustment of Acquisition-Related Thresholds, as required every five years. Micro-Purchase increased from $3,000 to $3,500 SB Subcontracting Plan threshold increased from
$650,000 to $700,000 Commercial Items SAT increased from $6.5 M to
$7 M; FAR 13.500 to $13M Cost or pricing data requirements increased from
$700,00 to $750,000 Numerous other threshold changes in several
areas of the FAR
Final Rules . . . Effective 10-1-15
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FAR Case 2014-003. Published in Federal Register 6-10-15, under the Jobs Act relative to Subcontracting Plans. Comments due by 8-10-15.◦ SB Sub Plan is required when size of prime changes.◦ Plan is required when a mod increases contract value over
plan threshold.◦ Primes are required to use NAICS in lower tier
subcontracting.◦ Subcontractors may address payment and utilization issues
directly with the C.O.◦ Subcontract reports must be corrected within 30 days.◦ Failure to comply in good faith is now a material breach of
contract.◦ Credit for awards under the Economy Act will vest in funding
– not awarding - agency.
Changes Coming Up . . .
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FAR Case 2014-015, Consolidation and Bundling of Contract Requirements, published June 3, 2015. This rule proposes to amend the FAR to implement sections of the Small Business Jobs Act of 2010 and regulatory changes made by the Small Business Administration, which provide for a Government-wide policy on the consolidation and bundling of contract requirements. The public comment period closes August 3, 2015
Changes Coming Up . . .
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Small Business Training Market Research – missing, no process or
procedures, no “comprehensive document” Authority and placement of Small Business Staff Use of Social Media to advertise SB opportunities Subcontracting Plans - low and unsupported
goals, missing SBA review, plans not provided to SBA, no process to review reports
Generally lacking quality control and checks and balances – so forms, determinations, reviews and steps are missing and/or ignored.
Notes from 2015 Surveillance Reviews
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Barbara M. Weaver, PCRSBA-OGC-Area II320 West Pike St., Suite 330Clarksburg, WV [email protected]