# Presentation: 665276

## 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

##  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.

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## 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.).

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## 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.