# Presentation: 059823

## DCMA Transformation

**DCMA Transformation**
**Small Business Update **
**Presented By:**
**Gary L. Miconi, PhD**
**Assistant Director, Small and Disadvantaged Business Utilization**
**Date  January 2004**

## Mission Objective

Why So Much Change

What The Changes Are  

Watch Outs For SADBU’s and Commanders

Final Thoughts

**Why So Much Change**
**What The Changes Are  **
**Watch Outs For SADBU’s and Commanders**
**Final Thoughts**

**Outline**

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**Mission Objective**

**DCMA's objective is to promote the activities of prime contractors to ensure that small businesses receive a fair proportion of and a maximum practicable opportunity to participate in prime contractors' subcontracts.  Our strategy to achieve this objective is to actively assist our customers in developing aggressive but reasonable subcontracting plans for their contractors, promote the competitive viability of small business concerns and facilitate contractor compliance with subcontracting plans.  By doing this, the Agency helps foster business innovation and new technology, supports the war fighter, strengthens and sustains the military and economic industrial base and promotes private enterprise. **
** **
**Achievement of DCMA's objective is at risk (Risk Management) when prime contractors fail to comply with the declared policy of Congress which is to maintain a viable small business program.**

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**Why So Much Change**

- 		CUSTOMER DESIRES
**Hold contractors accountable**
**Visibility of their program dollars**
**Visibility of contractor performance by Service**
**	****	****	****AND**
**OSD AT&L Top Priority**

##     WHY SO MUCH CHANGE

**DEPARTMENT OF DEFENSE GRADE **
**FY 02:  C- **
**RESULTS ON NEXT CHART **

## Slide 6

## Strategy

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***Strategy***
***Negotiate realistic goals***
***Ensure consistent ratings***
***Develop SB Annual Report***
***Establish a Working Council***
***Renegotiate MOU with SBA***
***Develop One Book Chapter***
***Modify 640 Report***

**The Changes **

## Another Major Change 

**Another Major Change**** **

-    #1-- **Continuous improvement in all small business categories from the previous fiscal year for Comprehensive Plans**
- 	#2 --**100% Feedback to PCOs on Individual Plans**

## Where the Changes Are 

**Where the Changes Are **

**Ratings Criteria **
**	**

## Rating Flow Chart (MOU w/SBA 5/9/03)

## The Rating Criteria

**Old DLAM 9100.1**
**OUTSTANDING:  **In addition to _***meeting ***_all the elements for the rating “Highly Successful,” the contractor must have taken exceptional extra contractual efforts to assist, promote and utilize small, small disadvantaged and women-owned businesses in its subcontracting program.  The contractor must be an active participant and have demonstrated a record of success in two or more optional socio-economic programs and/or initiatives such as, but not limited to, the MPP, Indian Incentive Program, HBCU/MI and NIB/NISH.

## The Rating Criteria

**New DCMA Rating Criteria**
**OUTSTANDING:  **_***Exceeded  ***_ all negotiated goals or exceeded at least one goal and met all of the others.  Has exceptional success with initiatives to assist, promote and utilized small business (SB), small disadvantaged business (SDB), women-owned small business (WOSB), HUBZone small business, veteran-owned small business (VOSB), and service-disabled VOSB (SDVOSB).  An outstanding rating signified that the company has an exemplary program that could be used as a model by other contractors in similar industries.

## The Rating Criteria

**Old DLAM 9100.1**
**HIGHLY SUCCESSFUL:  **In addition to _***meeting ***_all the elements for the rating “Acceptable,” the contractor must have taken significant extra contractual efforts to assist, promote and utilize small, small disadvantaged and women-owned businesses in its subcontracting program.  Additionally, the contractor must be an active participant and have demonstrated a record of success in two or more optional socio-economic programs and/or initiatives such as, but not limited to, the MPP, Indian Incentive Program, HBCU/MI and NIB/NISH.

## The Rating Criteria

**New DCMA Rating Criteria**
**HIGHLY SUCCESSFUL:  **_***Met ***_ all negotiated goals in the traditional socio-economic categories (SB, SDB, and WOSB) and met at least one of the newer-socio-economic goals (HUBZone, VOSB, SDVOSB) for each contract that contains two or more of those goals.  Has significant success with initiatives to assist, promote and utilize SB, SDB, WOSB, HUBZone, VOSB and SDVOSB.  Makes an effort to go above and beyond the required elements of the program and can provide documentation and success stories to support such efforts.

## The Rating Criteria

**Old DLAM 9100.1**
**ACCEPTABLE:  **An acceptable rating is given when the contractor _***meets***_ the contractual requirements, meets or exceeds the plan goal objectives or has demonstrated efforts in achieving the plan and overall goal objectives, has complied with the reporting requirements, and has complied with all other features of the subcontracting plan.  An acceptable rating may be given to a contractor that was previously rated marginal or unsatisfactory and has corrected noted deficiencies.  When determining the acceptability of a contractor’s program, the subcontracting performance is the primary factor and should be given more weight.

## The Rating Criteria

**ACCEPTABLE:  **_***Demonstrated a good faith effort ***_ to meet **all** of its goals, but has not met the rigorous criteria for *Highly* *Successful* or *Outstanding* rating.  Fulfills the requirements of its subcontracting plan and the regulations.  SF 294 and SF 295 reports are complete and accurate.

## The Rating Criteria

**Old DLAM 9100.1**
**MARGINAL:  **A program review determined by the specialist to have at least one but not more than three deficiencies should be considered Marginal.  A marginal rating is given when the contractor is not meeting contractual requirements of DFARS and FAR 52-219-8 and 52-219-9 or any feature of the subcontracting plan requirement. A marginal rating is kept in effect until such time as all deficiencies are corrected.  A follow-up review should be scheduled within 90 days after corrective action is completed by the contractor and shall be documented as a follow-up program review.

## The Rating Criteria

**New DCMA Rating Criteria**
**MARGINAL:  Deficient **in meeting key subcontracting plan elements, the SF 294 and/or SF 295 reports are not correct, or the contractor has failed to satisfy one or more requirements of a corrective action plan currently in place.  However, contractor’s management does show an interest in bringing its program to an acceptable level and has demonstrated a commitment or apply the necessary resources to do so.  A corrective action plan is required, and the Administrative Contracting Officer(s) must be notified.

## The Rating Criteria

**Old DLAM 9100.1**
**UNSATISFACTORY:  **A program review determined by the specialist to have more than three deficiencies should be considered Unsatisfactory. An unsatisfactory rating is given when the contractor is not meeting contractual requirements of DFARS and FAR 52-219-8 and 52-219-9 or any feature of the subcontracting plan requirement or has not developed a corrective action plan as agreed previously in writing. An unsatisfactory rating is kept in effect until such time as all deficiencies are corrected.  A follow up review should be scheduled within 120 days after corrective action is completed by the contractor and shall be documented            as a full program review.

## The Rating Criteria

**Old DLAM 9100.1**
**UNSATISFACTORY: ** If the unsatisfactory performance results from a lack of good faith effort to comply with the terms of the subcontracting plan, the contractor should be considered for recommendation of liquidated damages to the PCO.

## The Rating Criteria

**New DCMA Rating Criteria**
**UNSATISFACTORY:  Noncompliant **with the contractual requirements of DFARS and FAR 52-219-8 and  52-219-9.  Contractor’s management shows little interest in bringing it’s program to an acceptable level or is generally uncooperative.  A corrective action plan is required, and the Administrative Contracting Officer(s) must be notified.

## Where the Changes Are 

**Where the Changes Are **

**July 2003 Change to One Book Chapter 12.2 **
**3.2.3 Risk Planning  **
**3.3 Risk Assessment**
**3.3.5 Risk Monitoring**

## Risk Handling (One Book 8/03)

## Where the Changes Are 

**Where the Changes Are **

**3.2.3 Risk Planning  **
**    ****3.2.3. After Award - The SBS should manage risk associated with the contractor’s small business program and contract/comprehensive plan in accordance with the policies and procedures in this chapter.  Performance risk management planning starts with the receipt of a contract with a subcontracting plan (**_[FAR 19.702)](http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/far/19.htm#P492_106063)__.  Risk planning includes the selecting and scheduling of contractors for plan/program surveillance reviews to determine compliance with contract requirements.  Reviews will be scheduled based on assigned risk._

## Where the Changes Are 

**Where the Changes Are **

**3.3.**_[ Risk Assessment](http://home.dcma.mil/onebook/0.0/0.6/RiskMgmt.htm#Risk%20Assessment)_**    ****3.3.1. Prior to Award - The process of risk assessment begins with the SBS letter to the customer recommending approval or disapproval of a subcontracting plan. This letter assesses the contractor's proposed plan compliance or non-compliance with all applicable Public Laws(PL) and Federal Acquisition Regulation (FAR) provisions.****       **

## Where the Changes Are 

**Where the Changes Are **

**	****	**_[Risk Assessment](http://home.dcma.mil/onebook/0.0/0.6/RiskMgmt.htm#Risk%20Assessment)_**    ****3.3.2. The SBS requires the contractor to identify the root causes for its low performance targets and assists in determining the actions required to maximize contractor small business subcontracting performance.  **
**High Risk****: Past performance data confirms that the contractor has not met its negotiated targets in their entirety and there is no trend toward improvement over the last 3 reported years. **
_**Moderate Risk**_**: Past performance data is unavailable or more than 3 years old or past performance data indicates that the contractor failed to meet at least 2 targets without indicia of improvement. **
**Low Risk****: Past performance data indicates compliance with all aspects of the program and/or continuous positive trends toward improvement in all targeted areas. **
**It is within the authority of the SBS to deviate from these parameters so long as the risk rating rationale is well documented with specific factual support.****   **

## Where the Changes Are 

**Where the Changes Are **

**	****	**_[ Risk Assessment](http://home.dcma.mil/onebook/0.0/0.6/RiskMgmt.htm#Risk%20Assessment)_**3.3.3. After Award - On a yearly basis, the SBS determines by performing a risk assessment whether to review the contractor’s overall small business program and plan(s) performance in accordance with the elements contained in the **_[Review of Contractor Subcontracting Report](http://home.dcma.mil/onebook/12.0/12.2/REVIEW%20OF%20CONTRACTOR%20Subcontractors.doc)_** and performs statistical analysis using SF 294 and/or SF 295. If a review is performed, an overall program performance rating will be assigned in accordance with the criteria set forth below.**
**Outstanding (Low Risk): demonstrated exceptional initiatives over and above compliance with plan(s) requirements **
**Highly Successful (Low Risk):**** demonstrated significant initiatives over and above compliance with plan(s) requirements **
_**Acceptable**_** (Moderate Risk) : compliance with or demonstrated effort toward compliance with plan(s) requirements **
**Marginal (High Risk****): noncompliance with plan(s) requirements and there is agreement on meaningful corrective action **
**Unsatisfactory (High Risk):**** noncompliance with plan(s) requirements with no analysis of performance gaps and no corrective action.**** **
**   **

## Where the Changes Are 

**Where the Changes Are **

**	****	****  **_[Risk Monitoring](http://www.dcma.mil/onebook/0.0/0.6/RiskMgmt.htm#Risk%20Monitoring)_**         3.5.1.  By conducting timely review of the SF 294 and/or SF 295 data, the SBS  tracks progress of prime contractor's subcontracting efforts and can adjust risk monitoring efforts. ****        3.5.2. As subcontracting program performance ratings trend to the negative, the SBS should increase risk monitoring efforts such as having regular meetings with the contractor.  As subcontracting program ratings improve, the SBS should reevaluate risk monitoring measures and decrease them based on a lower assigned risk rating.  As small business programs change due to internal or external corporate restructuring and SBLO turnover, risk assessments and risk handling plans must be reviewed and adjusted.  The risk handling methods must vary based on the results of the risk monitoring efforts and any changes to risk ratings.   No rating should be established or changed without a supporting surveillance review and thorough documentation for establishing or changing the rating.****   **

## THE END STATE

**THE END STATE**

- Continuous program improvement
- Increased accountability
- Decisive DCMA action when objectives are not being met
- Consistent approach

## HOW SADBU’s CAN ENSURE DCMA SUCCESS    

**HOW SADBU’s CAN ENSURE DCMA SUCCESS****   **** **

- Determine which contractors are not meeting DoD objectives and request corrective action
- Ensure risk ratings are done annually and are appropriate
- Discontinue practice of annual reviews unless warranted
- Ensure PCOs are notified of negative trends and at contract completion
- Negotiate positive improvement with Comprehensive contractors each year
- Conduct meaningful value-added reviews

## WHAT YOUR SADBU’s NEED FOR SUCCESS     

**WHAT YOUR SADBU’s NEED FOR SUCCESS ****   **** **

- Help from Districts on Best Practices/What is a Good SBS Program
- Training on Reveal, EDW, MOCAS, E-Tools
- Cross-Functional Rotation/Training
- Assistance from Procurement Techs
- Education of ACOs, DACOs, IS, QAS, Supervisors
- Technical Assistance Visits by Districts
- FTEs and/or timely replacements

##     WHAT I REALLY NEED!!!!! 

**YOUR LEVEL OF ENGAGEMENT IS THE KEY TO SUCCESS OR FAILURE **
**BECOME INITIMATELY FAMILIAR**
**FIND OUT WHAT’S WORKING **

## 

IT STARTS WITH YOU

**                  ****TEAMWORK!!! **

**IT STARTS WITH YOU**

## Questions ?

**Questions ?**

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**Notes:**
We developed individual work plans for each of our programs and initiatives to revamp the program for the agency.  We want to create a more effective and efficient work environment through improved processes.  We are assessing the environment and examining the Agency to improve customer satisfaction.

## Handouts

**Handouts**

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**Notes:**
We developed individual work plans for each of our programs and initiatives to revamp the program for the agency.  We want to create a more effective and efficient work environment through improved processes.  We are assessing the environment and examining the Agency to improve customer satisfaction.

## REVIEW OF CONTRACTOR’S SUBCONTRACTING 

**REVIEW OF CONTRACTOR’S SUBCONTRACTING **
**PROGRAM (640) REPORT**

## Types of Reviews

_**Performance Review**_** - Contractor has performed in an outstanding manner and does not require an annual full program review.  This should be documented on the 640 Form.**
_**Initial Review**_** - This review is conducted on all new contractors.  This review should focus on the program requirements.  All recommendations for corrective action should be provided and a written corrective action plan (CAP) requested.  A follow up may be scheduled 90-120 days of receipt of CAP.  A formal rating may be withheld at this time.**

## Types of Reviews

**Full Program Review**** - Perform a full evaluation and validation of all contractor processes and data as they relate to the elements of the 640 form.  This review should be accomplished on site, at least annually based on risk assessment.  The next review for contractors receiving an outstanding rating will be a statistical desk audit (performance review).  A full program review will be performed every other year for as long as the rating remains outstanding. **
**Follow-up Review**** - A review resulting from a marginal or unsatisfactory rating.  It should be accomplished within 90-120 days from previous review.  It will serve as a replacement for the previous rating and will be in effect for a full year if it is evaluated at an acceptable level or higher.**

## The Rating Criteria

**The contractor’s past  performance is considered a major element in meeting the contractual requirements.  The trend of past performance of overall subcontracting combined with the past performance of meeting planned goals in individual plans is the primary indicator of contractor performance.  When judging the acceptability of the contactor’s subcontracting performance, more weight should be given to the overall subcontracting statistical trend data.**

## The Rating Criteria

**Old DLAM 9100.1**
**OUTSTANDING:  **In addition to _***meeting ***_all the elements for the rating “Highly Successful,” the contractor must have taken exceptional extra contractual efforts to assist, promote and utilize small, small disadvantaged and women-owned businesses in its subcontracting program.  The contractor must be an active participant and have demonstrated a record of success in two or more optional socio-economic programs and/or initiatives such as, but not limited to, the MPP, Indian Incentive Program, HBCU/MI and NIB/NISH.

## The Rating Criteria

**New DCMA Rating Criteria**
**OUTSTANDING:  **_***Exceeded  ***_ all negotiated goals or exceeded at least one goal and met all of the others.  Has exceptional success with initiatives to assist, promote and utilized small business (SB), small disadvantaged business (SDB), women-owned small business (WOSB), HUBZone small business, veteran-owned small business (VOSB), and service-disabled VOSB (SDVOSB).  An outstanding rating signified that the company has an exemplary program that could be used as a model by other contractors in similar industries.

## The Rating Criteria

**Old DLAM 9100.1**
**HIGHLY SUCCESSFUL:  **In addition to _***meeting ***_all the elements for the rating “Acceptable,” the contractor must have taken significant extra contractual efforts to assist, promote and utilize small, small disadvantaged and women-owned businesses in its subcontracting program.  Additionally, the contractor must be an active participant and have demonstrated a record of success in two or more optional socio-economic programs and/or initiatives such as, but not limited to, the MPP, Indian Incentive Program, HBCU/MI and NIB/NISH.

## The Rating Criteria

**New DCMA Rating Criteria**
**HIGHLY SUCCESSFUL:  **_***Met ***_ all negotiated goals in the traditional socio-economic categories (SB, SDB, and WOSB) and met at least one of the newer-socio-economic goals (HUBZone, VOSB, SDVOSB) for each contract that contains two or more of those goals.  Has significant success with initiatives to assist, promote and utilize SB, SDB, WOSB, HUBZone, VOSB and SDVOSB.  Makes an effort to go above and beyond the required elements of the program and can provide documentation and success stories to support such efforts.

## The Rating Criteria

**Old DLAM 9100.1**
**ACCEPTABLE:  **An acceptable rating is given when the contractor _***meets***_ the contractual requirements, meets or exceeds the plan goal objectives or has demonstrated efforts in achieving the plan and overall goal objectives, has complied with the reporting requirements, and has complied with all other features of the subcontracting plan.  An acceptable rating may be given to a contractor that was previously rated marginal or unsatisfactory and has corrected noted deficiencies.  When determining the acceptability of a contractor’s program, the subcontracting performance is the primary factor and should be given more weight.

## The Rating Criteria

**ACCEPTABLE:  **_***Demonstrated a good faith effort ***_ to meet **all** of its goals, but has not met the rigorous criteria for *Highly* *Successful* or *Outstanding* rating.  Fulfills the requirements of its subcontracting plan and the regulations.  SF 294 and SF 295 reports are complete and accurate.

## The Rating Criteria

**Old DLAM 9100.1**
**MARGINAL:  **A program review determined by the specialist to have at least one but not more than three deficiencies should be considered Marginal.  A marginal rating is given when the contractor is not meeting contractual requirements of DFARS and FAR 52-219-8 and 52-219-9 or any feature of the subcontracting plan requirement. A marginal rating is kept in effect until such time as all deficiencies are corrected.  A follow-up review should be scheduled within 90 days after corrective action is completed by the contractor and shall be documented as a follow-up program review.

## The Rating Criteria

**New DCMA Rating Criteria**
**MARGINAL:  Deficient **in meeting key subcontracting plan elements, the SF 294 and/or SF 295 reports are not correct, or the contractor has failed to satisfy one or more requirements of a corrective action plan currently in place.  However, contractor’s management does show an interest in bringing its program to an acceptable level and has demonstrated a commitment or apply the necessary resources to do so.  A corrective action plan is required, and the Administrative Contracting Officer(s) must be notified.

## The Rating Criteria

**Old DLAM 9100.1**
**UNSATISFACTORY:  **A program review determined by the specialist to have more than three deficiencies should be considered Unsatisfactory. An unsatisfactory rating is given when the contractor is not meeting contractual requirements of DFARS and FAR 52-219-8 and 52-219-9 or any feature of the subcontracting plan requirement or has not developed a corrective action plan as agreed previously in writing. An unsatisfactory rating is kept in effect until such time as all deficiencies are corrected.  A follow up review should be scheduled within 120 days after corrective action is completed by the contractor and shall be documented            as a full program review.

## The Rating Criteria

**Old DLAM 9100.1**
**UNSATISFACTORY: ** If the unsatisfactory performance results from a lack of good faith effort to comply with the terms of the subcontracting plan, the contractor should be considered for recommendation of liquidated damages to the PCO.

## The Rating Criteria

**New DCMA Rating Criteria**
**UNSATISFACTORY:  Noncompliant **with the contractual requirements of DFARS and FAR 52-219-8 and  52-219-9.  Contractor’s management shows little interest in bringing it’s program to an acceptable level or is generally uncooperative.  A corrective action plan is required, and the Administrative Contracting Officer(s) must be notified.

## Rating Flow Chart (MOU w/SBA 5/9/03)

## Risk Handling (One Book 8/03)