## NAS15-10000

## Boeing's Small Business and Small Disadvantaged 

## Business Subcontracting Plan Revision #15

#### *Dated* *October 24, 2002*

Prepared By:

Kevin Howard

Supplier Diversity Manager

NASA Systems

281-226-4381

Review:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Theodore Welch

Procurement Operations & Systems Integrity Manager

NASA Systems

281-226-4441

> NAS15-10000
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> Modification 1165

## 

## NAS15-10000

## Boeing's Small Business and Small Disadvantaged 

## Business Subcontracting Plan Revision #12-R1

## NASA RFP BG\--01-130, Dated 5/15/01

## Integration and Operation Proposal 

#### *Dated* *August* *30,2001*

#### D684-11272-01

## 

**Kevin Howard** **\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**
**Russell** **Carroll\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Supplier Diversity Administrator** **Director Supplier Management &
Procurement**

NAS15-10000

## Boeing's Small Business and Small Disadvantaged 

## Business Subcontracting Plan Revision #15

#### *Dated* *August 30, 200October 24, 20021*

*Boeing is committed to a meaningful* *Supplier Diversity program in
which identification,development, and maximum utilization of*
*SB/SDB/WO/HBCU/MI's/HUBZone/Vet's/Service Disabled Vet' is central to
Boeing's success*

**SECTION 1.0 INTRODUCTION**

The Boeing Company, prime contractor for the International Space
Station, and its team members are committed to supporting NASA's Small
Business (SB) and Small Disadvantaged Business (SDB) program, Woman
Owned Business (W/O), Historically Black Colleges and Minority
Institutions (HBCU/MI), Historically Underutilized Business Zone
(HUBZone), Veteran Owned Business (Vet) and Service Disabled Vet's.
These categories will be referred to in this document as Supplier
Diversity goals. Boeing understands the Supplier Diversity goals levied
on NASA Headquarters and further understands that it will need the NASA
procuring agency as well as all Prime Contractors and Subcontractors to
support NASA in order to accomplish the congressionalNASA goals. The
Boeing Company is committed to expend its best efforts to the fullest
extent consistent with efficient contract performance on this contract
to achieve the various goals of Supplier Diversity participation for the
total contract effort. Under this plan, two distinct sections are
represented to satisfy both Federal Acquisition Regulations (FAR) and
NASA requirements.

1.  The FAR section describes Supplier Diversity Goals, which are
    measured against the estimated subcontracting scope.

2.  The NASA section describes Supplier Diversity Goals measured against
    the total estimated contract cost with inputs from lower tier
    suppliers.

Boeing has pursued an aggressive, proactive and innovative Supplier
Diversity subcontracting strategy to achieve these goals. As the Prime
Contractor, we are performing the following:

1.  Require our Large Business subcontractors to submit their
    Subcontracting plans on all purchase contracts, which exceed \$500K
    (\$1,000,000 for construction) in subcontracting opportunities. We
    will manage these plans and monitor their progress to assure
    subcontractors meet their planned commitments. Equally important, we
    will direct our subcontractors to require this same approach with
    their suppliers that exceed the \$500K value and have subcontract
    opportunities.

2.  Require first tier subcontractors to consolidate lower tier Supplier
    Diversity activity and report the results back to Boeing. We will
    measure their progress, anticipate or identify and avert any
    potential problems, and develop any necessary corrective actions to
    enhance Supplier Diversity participation at all subcontracting
    levels.

3.  We share NASA's special emphasis on utilizing high technology
    businesses to the greatest extent possible. Our principal
    subcontractors will pursue this same objective.

4.  When there are a sufficient number of capable Diverse Suppliers to
    compete for a particular requirement within the International Space
    Station Program, Boeing and its subcontractors will award
    subcontracts to Diverse Suppliers based on a qualified "Diverse
    Supplier only" competition, providing their prices are found to be
    fair and reasonable.

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    Modification 1165

5.  Boeing, as well as its subcontractors will initiate imaginative,
    creative and innovative approaches to improve Diverse Supplier
    bidding opportunities and the number of Diverse Supplier
    subcontracts placed. These imaginative actions range from an
    evaluation of planned large business procurement packages to a total
    reassessment of our make/buy planning strategies and decisions.

**SECTION 2.0 BACKGROUND**

The Boeing Fiscal Year 2001 Puget Sound Non-DOD Master Small Business
and Small Disadvantaged Business (SB/SDB) Subcontracting Plan Document
D658-10340-1 is incorporated herein by reference. The Federal
Government\'s responsible Contract Administration Office Principal
Administrative Contracting Officer has approved the
master-subcontracting plan, for the period October 1, 2000 through
September 30, 2003. The master plan contains all the elements required
in a SB/SDB Subcontracting Plan except SB/SDB percentage goals, planned
procurement dollars, the identification of primary products, services
and high technology requirements, and goal and solicitation
methodologies which are included in the summary of Boeing's SB/SDB
Subcontracting Strategy.

In August 1997, The Boeing Company purchased the McDonnell Douglas
Corporation, which is now a wholly owned subsidiary of The Boeing
Company. In concert with Boeing's purchase of Rockwell International's
Space and Defense Groups, the Boeing Company acquired total program
ownership of the International Space Station Program and is promoting a
"One Company" image. The merger brought to an end the Product Group
association of three distinct companies, and restructured the ISS
program into inter-component relationships. The following Boeing ISS
Subcontracting Plan and subsequent modification(s) to the Subcontracting
Plan will be addressed within the context of a single Boeing Company
with four major locations and numerous lower tier subcontractors
supporting the program.

This update #15 dated October 21, 2002 to the ISS Subcontracting Plan
(NAS15-10000). FAR Clause 52.219-8, "Utilization of Small Business
Concerns", will be inserted in all subcontracts that offer further
subcontracting opportunities, and that Boeing will require all
subcontractors (except small business concerns) that receive
subcontracts in excess of \$500,000 (\$1,000,000 for construction) to
adopt a plan that complies with the requirements of the clause at
52.219-9, Small Business Subcontracting Plan.

In addition, NASA FAR Supplement 1852.219-76 requires Contractor's best
efforts to the fullest extent consistent with efficient contract
performance to assist NASA in achieving the to various goals of Supplier
Diversity goals. The Boeing Company and its International Space Station
(ISS) team members submit this proposed Revision #15 Supplier Diversity
Subcontracting Plan, which reflects a best-effort plan, to the fullest
extent consistent with efficient contract performance, with specific
subcontracting goals.

We still firmly believe in identifying, developing, employing and
rewarding Diverse Suppliers who can make significant contributions to
new technology, product/service quality and Customer satisfaction. We
consider a strong Supplier Diversity base to be absolutely essential to
a healthy, growing national economy. These Diverse Suppliers are the
businesses that consistently demonstrate:

-   Ability - to provide requisite skills, knowledge, resources and
    experience

-   Integrity - to supply high quality products/services at fair prices

-   Performance - to manufacture and deliver superior quality products
    or perform a noteworthy service on schedule and within budget

-   Customer Satisfaction - to constantly look for opportunities to
    outperform minimum contractual requirements, including better or
    more efficient ways to do things, for the prime contractor and the
    ultimate customer.

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    Modification 1165

    In return, Boeing offers these Diverse Suppliers:

-   Mentoring - training, guidance and continuous feedback necessary to
    help Supplier Diversity businesses become, and remain, important
    contributors.

-   Participation - opportunity to be part of the team, not just a
    directed subcontractor, and grow in both degree of involvement and
    business success.

-   Motivation - recognition for a job well done and appropriate correct
    action or incentives to continuously improve quality.

-   Ethical Treatment - fair business dealings and equal opportunity to
    compete for work they are qualified to perform

    **SECTION 3.0 Goal Development**

    **(3.1) Principal Types of Products and Services to be
    Subcontracted.**

    Boeing has identified potential bidding opportunities for Diverse
    Suppliers. They include Engineering, Professional, and Technical
    services, along with original

    equipment manufactures (OEM). Bid opportunities continue to expand
    and Boeing is committed to expend its best efforts regarding maximum
    opportunities.

    We have matched up qualified / potentially qualifiable SB/SDB
    bidders with these requirements and continue to expand the list of
    "Qualified and/or High Potential" SB/SDB list. To refine our
    supplier team, including large businesses, we continue to:

-   Screen existing and prospective candidates through a
    pre-qualification process.

-   Issuing Requests for Proposals/Quotations/Request or Information
    (RFP/RFQ/RFI) to qualified subcontracts and exceptional supplier
    prospects

-   Provide detailed explanations and positive suggestions to bidders
    not selected

-   Ensure that each team member perform and contribute toward
    accomplishing our Supplier Diversity goals

    **(3.2) Approach Used to Develop Supplier Diversity Goals.**

    The planning process for setting Supplier Diversity Goals focuses
    attention on the front end of the business, when critical decisions
    are made regarding acquisition strategy, design and development. To
    effectively meet or surpass the Supplier Diversity Goals established
    under the International Space Station Program, the Boeing Program
    Management team, supported by the Supplier Diversity Administrators,
    will reassess project requirements and identify procurement
    opportunities. Program Management is responsible in defining all
    significant subcontracting opportunities during the program cycle.
    This will ensure that the goals are realistic in terms of
    requirements and are clearly understood by various levels of
    management and the people responsible for the acquisition decision
    "own" the Supplier Diversity utilization process.

    **(3.3) Method Used to Identify Prospective Sources**

    Based on the subcontracting requirements, we are continuing to
    assemble a list of known and potential Diverse Suppliers capable of
    performing International Space Station work. This list is developed
    from using internal and external sources.

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    Modification 1165

    **Internal sources include:**

-   NASA Supplier Diversity Document (Active NASA Prime Contractors and
    Subcontractors)

-   NASA List of Diverse Suppliers

-   SBA\'s ProNet

-   Aerospace Industries Association (AIA) SDB Database System

-   NASA Minority Business Resource Advisory Committee (MBRAC)

-   National Directory of Woman-Owned Manufacturing Firms

-   Inventory of Historically Black Colleges & Universities and Minority
    Institutions

-   Federal and State Suppliers Guide

-   NASA's University Program Management Information System HBCU/MI
    Listing

-   Minority owned High-Tech Businesses, Business Research Services,
    Inc.

-   Try Us (annual) SDB Directory

-   Boeing\'s internal databases and network of Supplier Diversity
    Administrators

    **External Sources include:**

-   NASA regional SDB conferences (JPL, New England, Goddard, etc.)

-   High Tech SBIR (Small Business Innovation & Research) conferences
    sponsored by NASA, DOD and other Federal Agencies

-   National Minority Material Council Vendor Information Service

-   National / regional Minority Supplier Development Councils (NMSDC)

-   Procurement Technical Assistance Centers (PTAC) nation-wide

-   Local, regional and national community Supplier Diversity
    opportunity procurement events

-   Congressional procurement opportunity conferences

-   Small Business Administration Regional/District offices

    **(3.4) Efforts to Ensure Equitable Opportunity**

    As an adjunct to federal and state laws, Boeing corporate policy
    defines rigid standards of ethical conduct/treatment for its
    employees, Suppliers, and customers. In addition, Boeing has
    implemented an initiative to review the Supplier Diversity Program
    to ensure that the appropriate resources and authority are retained
    therein to effectively achieve corporate and program Supplier
    Diversity Goals. Within these guidelines, Boeing has implemented
    aggressive action with innovative initiatives to improve its
    Supplier Diversity participation, especially in High Technology
    areas. Examples of our current and planned initiatives include:

-   Creating a High Technology Advocate within the technical
    organization to focus on the generation of requirements for Diverse
    Supplier participation

-   Evaluating, considering and identifying Supplier Diversity bidding
    possibilities as part of the overall process during the transition
    process, product development and make/buy planning.

-   Requiring all Boeing Space & Communications procurement and program
    organizations associated with the acquisition process to identify
    outsourcing procurement packages SDB for "restricted competition"
    evaluations. This technique involves reviewing all planned large
    business procurement requirements and identifying key subsystems,
    subassemblies or components that could be provided by a Diverse
    Supplier.

-   Working to identify any presently projected "make" items for off
    load to Diverse Suppliers.

-   Create Diverse Supplier-only competitions in those commodity groups
    in which there are a sufficient number of qualified Diverse
    Suppliers to make a reasonable competition.

-   Continuing to develop our list of HBCU/MIs proficient in the
    different high technology fields to perform high tech research,
    studies, design, development, analysis, and testing.

-   Accepting the responsibility to expend the resources and time to aid
    in the development and expansion of a high tech Diverse Supplier
    base.

-   Work to ensure Diverse Supplier participation as the program
    transitions from hardware to Technical Services.

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**(3.5) Requirements Flow Down**

Supplier Diversity subcontracting requirements are imposed on each of
our subcontractors through the provisions of the purchase contract. This
includes FAR 52.219-8, Utilization of Small, Business Concerns, and FAR
52.219-9, Small Business Subcontracting Plan, for subcontracts over
\$500K, (except small business concerns or \$1,000,000 for construction)
"NASA" FAR supplement 18-52.219-75, "Small Business Subcontracting
Reporting"; and 18-52.219-76, "NASA 8% Goal."

In addition, the subcontractors will be requested to submit periodic
reports reflecting their committed lower tier subcontracted dollars to
more accurately reflect the favorable impact the International Space
Station project has on Supplier Diversity participation.

**(3.6) Management Responsibilities**

The executive having responsibility for Supplier Diversity programs and
oversight for the program is the Space Station Program manager. The
Program manager has assigned SDB executives at five major Boeing
International Space Station locations; Huntington Beach, California:
Canoga Park, California: Huntsville, Alabama: Kennedy Space Center,
Florida and Houston, Texas. Each location Supplier Diversity Executive
has the responsibility of ensuring that the necessary resources and
attention is leveraged to achieve or exceed the Supplier Diversity goals
to estimated funding at completion. The location Supplier Diversity
Executive will also provide guidance and support to the location
Supplier Diversity Administrator to facilitate achievement of required
goals.

Kevin Howard, the Supplier Diversity Administrator in Houston, Texas is
assigned prime ISS interface for all issues regarding Boeing's Supplier
Diversity Performance. In this position, they will evaluate all ISS
subcontract changes for impact to the Subcontracting Plan, and process
an update for all modifications exceeding \$500K at the prime level.
They will support administration of the Houston, Texas Supplier
Diversity Goals. In addition, they are the Award Fee Criteria Team
Leaders responding to all Supplier Diversity Performance Award Fee
issues. They are also responsible for all communication with the NASA
customer regarding Supplier Diversity issues.

Other Supplier Diversity Administrators are supporting all sites and are
responsible for implementation of the local Supplier Diversity plan and
forwarding quarterly reports, metrics, and other requested information
to the ISS prime interface. Integrated into these responsibilities is
identification of quality Diverse Suppliers and participation at
national, local and NASA requested procurement conferences.

**SDB Advocate Council**

In support of the ISS Supplier Diversity program, an "Advocate Council",
chaired by NASA, may be conducted to review Boeing's SDB performance.
This meeting takes place as required, at the NASA-JSC facility. The ISS
Boeing and NASA Program Managers, or their representatives will be in
attendance. In addition, the NASA-HQ Associate Administrator, and the
Chair of the NASA Minority Business Resource

Advisory Committee are also invited to participate. These meetings
present a unique opportunity for the Boeing Supplier Diversity programs
to receive visibility for the outstanding efforts toward integrating
Diverse Suppliers in the procurement mainstream.

**(3.7) Indirect Costs**

The initial subcontracting goals include a proportionate share of
products or services whose costs are normally allocated as indirect or
overhead expenses. Indirect and overhead costs are allocated
proportionally across direct awards commitments of the same business
size (e.g., SB, SDB and large businesses).

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**(3.8) Reports and Surveys**

Boeing will provide semi-annual reporting of procurement commitments and
percentage metrics against the Supplier Diversity Goals as outlined in
this plan. Additionally, Boeing will review the Supplier Diversity Plan
and update it periodically as required by subcontract changes or
modifications.

Boeing will monitor and report Boeing ISS Subcontracting Plan
performance on the Government Standard Form 294 (SF294) within 30 days
subsequent to the end of each six-month reporting period. Boeing also
will monitor and report lower-tier Subcontractor Plan performance within
45 days after the end of each six-month reporting period. NASA has
requested quarterly Supplier Diversity performance reports from Boeing
within 30 days after the end of each quarter. (Fiscal year)

**(3.9) Records**

Boeing will maintain the following records:

1.  Records in the form of automated Diverse Suppliers data systems and
    manual reference files which were described in "Methods Used to
    Identify Prospective Sources" that are used to find potential
    Diverse subcontractors

2.  Records of organizations contacted in attempt to locate Diverse
    Suppliers which were also described in under "External Sources"

3.  Records of each subcontract solicitation resulting in a purchase
    contract award over \$100,000 which documents the efforts to
    maximize Diverse Suppliers bidding opportunities

4.  Records of any person to person outreach efforts to contact Diverse
    Supplier trade associations, business development and
    conference/trade fairs to seek out qualified sources; and

5.  Records to support internal Supplier Diversity awareness, guidance
    and motivation training classes provided to Boeing Team Members and
    technical/procurement personnel through workshops/seminars

6.  Records to support award data submitted by the offeror to the
    Government, including the name, address, and business size of each
    subcontractor.

In an effort to effectively implement this plan to the extent consistent
with efficient contract performance, Boeing shall.

1.  Assist Diverse Suppliers by arranging solicitations as to facilitate
    the participation by such concerns. When the bid lists are
    excessively long, reasonable effort shall be made to give all such
    Suppliers an opportunity to compete over a period of time.

2.  Provide adequate and timely consideration of all business concerns
    in all "make-or-buy" decisions.

3.  Counsel and discuss subcontracting opportunities with Diverse
    Suppliers.

4.  Provide notice to subcontractors concerning penalties and remedies
    for misrepresentations of business status as a Diverse Supplier for
    the purpose of obtaining a subcontract that is to be included as
    part or all of a goal contained in our subcontracting plan.

**SECTION 4.0 Goals for the International Space Station**

Under this plan, two distinct sets of goals have been established to
satisfy both FAR and NASA requirements. The FAR section is to describe
Supplier Diversity Goals, which are measured against the subcontracting
scope. The NASA section is to describe Supplier Diversity Goals measured
against the total estimated contract cost with inputs from lower tier
suppliers.

Boeing will issue subcontracts to the original equipment manufacturers
(OEM) for sustaining engineering, post production support, Orbital
Replacement Unit (ORU) repair, and depot maintenance. This commits a
substantial portion of the subcontracted dollars to large businesses.
Consequently,

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these large business obligations reduce the opportunity for Supplier
Diversity participation. However, a significant effort has been
established to integrate Diverse Suppliers. This process was established
in Government Fiscal Year 2001 and subcontracts were issued to several
Diverse Suppliers to support Boeing Space Station requirements. It is
Boeing's intent to execute existing contract options in GFY 02 to GFY 04
with current incumbent suppliers to support the International Space
Station program requirements.

In discussions with NASA, Boeing has attempted to communicate the
difficulty and challenges with the HBCU/MI goal of 1%. Today, Boeing
does not have an infrastructure or method to contract with HBCU/MI's to
support the Boeing Statement of Work in GFY02 to GFY 04 period of
performance and "outsourcing scope" to HBCU/MI's would introduce
additional risk to the ISS Program.

**FAR** - The goals in revision #15 reflect Boeing's outstanding
performance. Boeing will use its best efforts to award a minimum of 12%
of the total International Space Station subcontract dollars to Small
Businesses and institutions qualifying under the U.S. Small Business
Administration (SBA) company size criteria. Of this total, Boeing will
expend its best efforts to the fullest extent consistent with efficient
contract performance to award 4.0% of the subcontracts to Diverse
Suppliers. The SDB percent goal, including Historically Black colleges
and universities, minority (educational) institutions (HBCU/MI) and
Women-owned SB's, where applicable, while stated separately as a
percentage of subcontract value, is included in the SB goal and
constitutes a subset thereof. Revision-R1also sSupplier Diversity A 1.0%
goal is applied to HBCU/MI's.

Boeing has established the following goals for subcontract awards to
Diverse Suppliers businesses to satisfy FAR requirements: These goals
are reported on Standard Form 294 and will cover all first-tier
subcontracts issued/placed in the performance of the prime contract.

> [Dollar Goal]{.underline} [Percent]{.underline}

Small Business Concerns (includes SDB, WOSB, HBCU/MI) \$855,444,774
12.0%

Large Business Concerns \$6,233,756,522 88.0%

**TOTAL** \$7,089,201,296 100%

Small Disadvantaged Business (SDB) Concerns \$283,568,052 4.0%

Women-Owned Small Business (WOSB) Concerns \$155,962,429 2.2%

\*HUBZone \$1,468,202 .02%

# \*Vet-Owned Small Business \$25,380,000 .4%

# \*Service Disabled Vet-Owned Small Business \$25,380,000 .4%

### \*HBCU/MI \$250,000 .003%

\* These are new Supplier Diversity categories incorporated within
revision #12.

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**NASA** - Boeing is committed to expend its best efforts to the fullest
extent consistent with efficient contract performance on the contract to
achieve the various goals of Supplier Diversity participation for the
total estimated contract cost. T he Boeing Company, as the Prime
contractor, will summarize commitments by the Boeing ISS site's and
other major subcontractors at all tiers. Performance against these goals
are submitted in the form of a "Quarterly Roll-Up Report" submitted to
the NASA Small Business Specialist.

[Dollar Goal]{.underline} [Percent]{.underline}

Total Estimated Cost (Through Mod 1153) \$10,205,792,095 100%

# Small Business \$ 1,326,752,972 13.0%

Small Disadvantaged Business \$826,463,368 8.0%

*(SDB dollars are included in the SB dollars)*

# Woman Owned (W/O dollars included in SDB dollars) \$306,173,763 3.0%

\*HUBZone \$26,009,143 .3%

\*Vet-Owned Small Business \$26,009,143 .3%

# \*Service Disabled Vet-Owned Small Business \$26,009,143 .3%

### \*HBCU/MI \$250,000 .002%

\*These Supplier Diversity goals were incorporated at the Integration
and Operational phase of the program (revision #12). The contract base
was \$846,000,000. This revision includes changes to the I&O portion and
the total estimated contract (through modification 1153) of
\$20,971,427. The forecast for the new Diversity categories are 3% of
the total I&O. For the purpose of historical consistency, the new
Supplier Diversity category percentages are calculated against the total
contract value.

### 

Boeing contracts awarded to Women-Owned Business are included as a
subset of the SDB dollars for this NASA contract. HUB Zone and
Veteran-Owned Small Businesses are included as a subset of the SB & SDB
dollars where applicable**.** Lower-tier subcontractors are also
reporting the aforementioned performance data, which will be rolled up
to achieve a resultant cumulative dollar and percentage subcontracting
performance. Moreover, first tier subcontracted cumulative dollars and
percentages are also being reported in the semi-annual Standard Form 294
(SF294).

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[List of Acronyms]{.underline}

HBCU/MI Historically Black Colleges and Universities/Minority

Institutions

FAR Federal Acquisition Regulations

IPT Integrated Product Team

ISS International Space Station

NASA National Aeronautics and Space Administration

NAWBO National Association of Women Business Owners

NMSDC National Minority Supplier Development Council

OEM Original Equipment Manufacturer

QA Quality Assurance

R & D Research and Development

SB Small Business

SBA Small Business Administration

SBIR Small Business Innovation Research

S & C Space and Communication Group

SDB Small Disadvantaged-Owned Business

SD Supplier Diversity

SDP Supplier Diversity Program

VSP Vision Support Plan

WOSB Woman-Owned Small Business

Small Business (SB) and Small Disadvantaged Business (SDB) program,
Woman Owned Business (W/O), Historically Black Colleges and Minority
Institutions (HBCU/MI), Historically Underutilized Business Zone
(HUBZone) and Veteran Owned Business (Vet). These categories will be
referred to in this document as Supplier Diversity goals.