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Subcontracting for the Prime Contractor and the Contracting Officer

Subcontracting for the Prime Contractor and the Contracting Officer. General Services Administration. Janice Keys and Karen Poole Office of Small Business Utilization.

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Subcontracting for the Prime Contractor and the Contracting Officer

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  1. Subcontracting for the Prime Contractor and the Contracting Officer General Services Administration Janice Keys and Karen PooleOffice of Small Business Utilization

  2. “The basic building block of good team building is for a leader to promote the feeling that every human being is unique and adds value.”         - Unknown Office of Small Business Utilization

  3. Subcontracting Plans__________________________:::KAREN POOLE:::

  4. SUBCONTRACTING ASSISTANCE PROGRAM Public Law 95-507 amended Section 8(d) of the Small Business Act and created the foundation for the Subcontracting Assistance Program. It requires that all small businesses have the maximum practicable opportunity to participate in the performance of Federal agency contracts and subcontracts.

  5. SUBCONTRACTING ASSISTANCE PROGRAM“Subcontracting is More than a Subcontracting Plan” Each year, the Federal Government awards billions of dollars in prime contracts for supplies and services to large or “other-than small” businesses. The Subcontracting Program is comprised of activities to ensure small businesses receive a fair and equitable opportunity to participate in requirements awarded by Federal agencies, including subcontracts resulting from award of prime contracts.

  6. SUBCONTRACTING ASSISTANCE PROGRAM Small Business concerns are: Small businesses (SB)Veteran-owned small businesses (VOSB)Service-disabled veteran-owned small businesses (SDVOSB)Historically Underutilized Business Zone (HUBZ) small businessesSmall disadvantaged businesses (SDBWoman-owned small businesses (WOSB)

  7. SUBCONTRACTING ASSISTANCE PROGRAM FAR Subpart 19.7 – The Small Business Subcontracting Program outlines: • Statutory requirements • Eligibility requirements for participating in the program • Subcontracting Plan Requirements • Responsibilities of the contracting officer

  8. SIZE STANDARDSFAR 19.102 • Government-wide • North American Industry Classification System Codes (NAICS) • Number of Employees OR • Annual Revenue/Sales SBA Office of Size Standards Phone: 202-205-6618Web site: www.sba.gov/size Email: SizeStandards@sba.gov

  9. When A Procurement Need is Determined

  10. DETERMINING THE NEED FOR A SUBCONTRACTING PLANFAR 19.705-2 Determine prior to solicitation: • Could the prime contractor be other than small business? • Will the total contract value, including options, exceed $650,000 ($1,500,000 for construction)? • Are there possible subcontracting opportunities?

  11. SUBCONTRACTING PLANS ARE NOT REQUIRED:FAR 19.702(b) • From small business concerns • For personal services contracts • For contracts performed entirely outside the United States • For previous contracts that do not contain clause 52.219-8

  12. DETERMINING THE NEED FOR A SUBCONTRACTING PLAN During solicitation preparation: • Include Subcontracting Plan as a requirement in responding to the solicitation, if applicable • Include a Subcontracting Plan Template in the solicitation to assist contractors (available from GSA’s regional Small Business Technical Advisor) • Include Subcontracting Plan as an evaluation factor, if applicable

  13. SUBCONTRACTING PLAN REQUIREMENTS

  14. WHEN IS A SUBCONTRACTING PLAN REQUIRED TO BE SUBMITTED?FAR 19.702 • New contracts $650,000 or more ($1.5 million for construction). Include all options in determining contract value, whether exercised or not. • Annual Update (Commercial Plans) • Modifications that meet subcontracting threshold

  15. TYPES OF SUBCONTRACTING PLANSFAR 19.701 • Commercial Plan (company-wide) • Individual Plan (contract specific) • Master Plan (when goals/dollars need to be submitted at a later time)

  16. COMMERCIAL PLANFAR 19.701, FAR 19.704(d) & FAR 12 • Submitted and negotiated annually • Company fiscal year (12 month period) • Note: Leasing and construction mostly do not offer commercial items

  17. INDIVIDUAL PLANFAR 19.701 & FAR 19.704(c) • Covers the entire contract period (including options, with goals/dollars stated separately) with options, whether exercised or not • Specific to one contract • Goals are based on the offeror’s planned subcontracting in support of the specific contract, except that indirect costs incurred for common or joint purposes may be allocated on a prorated basis to the contract.

  18. MASTER PLANFAR 19.701 & 19.704(b) • Contains all the required elements of an Individual Plan, except goals/dollars • Eventually evolves into an Individual Plan (when goals/dollars are added), provided the Master Plan has been approved • Include other Agency Approval Document, if applicable

  19. The Eleven Subcontracting Statutory Requirements FAR 19.704 • Identification Data • Type of Plan • Goals • Program Administrator • Equitable Opportunity • Assurances of Clause Inclusion and Flow Down • Reporting and Cooperation • Recordkeeping • Statutory Requirements • Description of Good Faith Effort • Signature Required

  20. CONTRACTOR IDENTIFICATION DATACOMMERCIAL PLAN • Company Name and Address • Date Prepared • Description of Products/Services: General summary of commercial business to be covered by this plan for any government contract, awarded during the same fiscal year • Commercial Plan Period (Insert dates of offeror’s Fiscal Year) • Estimated annual sales

  21. CONTRACTOR IDENTIFICATION DATAINDIVIDUAL PLAN • Company Name and Address • Date Prepared • Description of Product/Service covered by this specific contract • Place of Performance/DUNS Number (under contract awarded) • Solicitation Number • Contract Number (if available) • Individual Plan/Contract Period (stated separately for base and each option period)Base: Date Of Award – ?? Years; Option 1: ________; Option 2: ________; Option 3: ___________; Option 4: (N/A for MAS) • Estimated Contract Value $______ (separate estimates for base & each option)

  22. FISCAL YEAR 2010 & 2011 GSA WIDE SUBCONTRACTING GOALS Goaling CategoryGoal • Small Business30 • Veteran-owned Small Business3 • Service-Disabled Veteran-owned Small Business3 • HUBZone Small Business 3 • Small Disadvantaged Business 5 • Women-owned Small Business 5

  23. TOTAL DOLLARS AND PERCENTAGE GOALSFAR 19.704(a)(1) & (2) Separate Goals (dollars & percentage) for: Small Business Veteran Owned Small Business (VOSB) Service-Disabled Veteran-Owned Small Business (SDVOSB) Historically Underutilized Business Zone (HUBZ) Small Disadvantaged Business (SDB) including HBCU/MI, Hispanic Serving Institution, Tribal Colleges and Universities, 8(a) companies, Alaska Native Corporations (ANC’s) Women-Owned Small Business (WOSB)

  24. CONTINUED GOALSFAR 19.704(a)(2) Subcontracting Amounts: Total Dollars planned to be subcontracted Total Dollars planned to be subcontracted to each business group The dollar amounts planned for subcontracting to each of these categories must be expressed in the subcontracting plan as percentages of the total subcontracting dollars to both large and small businesses.

  25. TOTAL DOLLARS AND PERCENTAGE GOALS INDIVIDUAL PLAN Dollars and goals shall be stated separately for base and each option period.

  26. TOTAL DOLLARS AND PERCENTAGE GOALS COMMERCIAL PLAN 1. Estimated TOTAL dollars planned to be subcontracted; i.e. to all types of business concerns: Annual Commercial Expenditures: $_12,000,000__________= 100% subcontracted 2. Planned subcontracting to large business concerns (those classified as other than small): Annual Commercial Expenditures: $__8,400,000__________ = _70_ % of TOTAL above 3. Planned subcontracting to ALL small business concerns (including ANCs & Indian tribes, VOSB, SDVOSB, HUBZone small, SDB (including ANCs & Indian tribes), and WOSB): Annual Commercial Expenditures: $__3,600,000__________ = _30_ % of TOTAL 4. Planned subcontracting to veteran-owned small business concerns (which includes service-disabled veteran-owned small business): Annual Commercial Expenditures: $____360,000_________ = _3_ % of TOTAL 5. Planned subcontracting to service-disabled veteran-owned small business concerns (also a subset of total VOSB and cannot be higher than VOSB above): Annual Commercial Expenditures: $_____360,000______ = _3_ % of TOTAL 6. Planned subcontracting to HUBZone small business concerns: Annual Commercial Expenditures: $_____360,000____ = _3_ % of TOTAL 7. Planned subcontracting to small disadvantaged business concerns (includingANCs & Indian tribes): Annual Commercial Expenditures: $______600,000_____ __= _5_ % of TOTAL 8. Planned subcontracting to women-owned small business concerns: Annual Commercial Expenditures: $_____600,000_____ = _5_ % of TOTAL

  27. DESCRIPTION OF SUPPLIES/SERVICES FAR 19.704(a)(3) Those to be subcontracted and an identification of types planned for subcontracting to small business (including ANCs and Indian tribes), veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business (including ANCs and Indian tribes), and women-owned small business concerns.

  28. DESCRIPTION OF SUPPLIES/SERVICESExample for Leases

  29. DESCRIPTION OF METHOD USED TO DEVELOP SUBCONTRACTING GOALSFAR 19.704(4) Statement on how the contractor has developed its subcontracting goals, including the review of its prior subcontracting efforts, or previous history on similar contracts.

  30. DESCRIPTION OF METHOD USED TO IDENTIFY POTENTIAL SOURCESFAR 19.704(5) & FAR 52.219(d)(5) Examples: • Attended conferences and networking sessions • Used existing suppliers • Researched minority directories • Central Contractor Register (CCR) at: www.ccr.gov • GSA e-Library web site at:www.gsaelibrary.gov

  31. INDIRECT COSTSFAR 19.704(a)(6) • Provide a statement as to whether or not the offeror included indirect costs in establishing subcontracting goals, and • Provide a description of the method used to determine the proportionate share of indirect costs to be incurred with all small business concerns.

  32. EXAMPLES OF INDIRECT COSTSFAR 19.704(a)(6) Landscaping Janitorial Printing Graphics Advertising Signage Business Cards Promotion Items Photography Telephone Education Training Travel Agency Office Supplies Office Equipment Office Furniture Courier Service Security Service Temporary Service Consulting Audit services Food service Cleaning/Laundry Freight Office repairs Legal services Conference/Trade shows Equipment Rental

  33. NAME OF PROGRAM ADMINISTRATOR AND DUTIESFAR 19.704(a)(7) & 52.219-9(e) Description of Possible Duties • Assist SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation by such concerns. Where the Contractor’s lists of potential SB, VOSB, SDVOSB, HUBZone, SDB and WOSB subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time. • Provide adequate and timely consideration of the potentialities of SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns in all “make-or-buy” decisions. • Counsel and discuss subcontracting opportunities with representatives of SB, VOSB, SDVOSB, HUBZone, SDB and WOSB firms. • Confirm that a subcontractor representing itself as a HUBZone small business concern is identified as a certified HUBZone small business concern by accessing the Central Contractor Registration (CCR) database or by contacting SBA. • Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as SB, VOSB, SDVOSB, HUBZone, SDB and WOSB for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the Contractor’s subcontracting plan.

  34. NAME OF PROGRAM ADMINISTRATOR AND DUTIESFAR 19.704(a)(7) & 52.219-9(e) Description of Possible Duties (cont’d) • Develop/promote company/division policy statements that demonstrate the company’s/division’s support for awarding contracts and subcontracts to SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns. • Develop and maintain bidders’ lists of SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns from all possible sources. • Ensure periodic rotation of potential subcontractors on bidders’ lists. • Ensure that SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns are included on the bidders’ list for every subcontract solicitation for products and services they are capable of providing. • Ensure that subcontract procurement “packages” are designed to permit the maximum possible participation of SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns • Review subcontract solicitations to remove statements, clauses, etc., which might tend to restrict or prohibit SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns. 

  35. NAME OF PROGRAM ADMINISTRATOR AND DUTIESFAR 19.704(a)(7) & 52.219-9(e) Description of Possible Duties (cont’d) • Ensure that the subcontract bid proposal review board documents its reasons for not selecting any low bids submitted by SB concerns. • Oversee the establishment and maintenance of contract and subcontract award records. • Attend or arrange for the attendance of company counselors at Business Opportunity Workshops, Minority Business Enterprise Seminars, Trade Fairs, etc. • Directly or indirectly counsel SB, VOSB, SDVOSB, HUBZone, SDB and WOSB concerns on subcontracting opportunities and how to prepare bids to the company. • Conduct or arrange training for purchasing personnel regarding the intent and impact of Section 8(d) of the Small Business Act on purchasing procedures. • Develop and maintain an incentive program for buyers that support the subcontracting program. • Monitor the company’s performance and make any adjustments necessary to achieve the subcontract plan goals. • Prepare and submit timely reports.  • Coordinate the company’s activities during compliance reviews by Federal agencies.

  36. EQUITABLE OPPORTUNITY FAR 19.704(a)(8) Provide a description of the efforts the offeror will make to ensure that small business, have an equitable opportunity to compete for subcontracts. • Outreach events to locate sources • Internal efforts to guide and encourage purchasing personnel to subcontract with small business concerns

  37. ASSURANCES THAT THE OFFEROR WILL INCLUDE CLAUSE FLOWDOWNFAR 19.704(a)(9) • FAR Clause 52.219-8, Utilization of Small Business Concerns • FAR Clause 52.219-9, Small Business Subcontracting Plan

  38. REPORTING REQUIREMENTS AND ASSURANCES THAT THE OFFEROR WILL: FAR 19.704(a)(10) • (i) Cooperate in any studies or surveys as may be required; • (ii) Submit periodic reports so that the Government can determine the extent of compliance by the offeror with the subcontracting plan; • (iii) Submit the Individual Subcontract Report (ISR), and the Summary Subcontract Report (SSR) using the Electronic Subcontracting Reporting System (eSRS) (http://www.esrs.gov), following the instructions in the eSRS; • (iv) Ensure that its subcontractors with subcontracting plans agree to submit the ISR and/or the SSR using the eSRS;

  39. THE OFFEROR WILL (cont’d) FAR 19.704(a)(10) • (v) Provide its prime contract number and its DUNS number and the e-mail address of the Government or Contractor official responsible for acknowledging or rejecting the reports, to all first-tier subcontractors with subcontracting plans so they can enter this information into the eSRS when submitting their reports; and • (vi) Require that each subcontractor with a subcontracting plan provide the prime contract number and its own DUNS number, and the e-mail address of the Government or Contractor official responsible for acknowledging or rejecting the reports, to its subcontractors with subcontracting plans.

  40. RECORDKEEPINGFAR 19.704(a)(11) & 52.219-9(d)(11) Provide a Description of the Types of Records, the company will maintain concerning procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of efforts to locate SB (including ANCs and Indian tribes), VOSB, SDVOSB, HUBZone, SDB (including ANCs and Indian tribes), and WOSB concerns and award subcontracts to them. Details in the FAR references provided.

  41. STATUTORY REQUIREMENTSFAR 19.702 • Ensure indication of compliance with all requirements • Maximum practicable opportunity • Timely payment • Failing to comply in good faith • Failure to make a good faith effort shall result in the imposition of liquidated damages

  42. GOOD FAITH EFFORTFAR 19.705-5(a)(5) and U.S.C. 637(d)(4)(F) Maximum practicable utilization of SB, SDB, HUBZone, WOSB, VOSB and SDVOSB concerns as subcontractors in Government contracts is a matter of national interest with both social and economic benefits. When a contractor fails to make a good faith effort to comply with a subcontracting plan, these objectives are not achieved, and the above regulations directs that liquidated damages shall be paid by the contractor.

  43. ALL PLANS MUST BE SIGNED AND DATED BY A COMPANY OFFICIAL Plans must be signed and dated by a company official who, at a minimum, is a higher level than the Plan Administrator. This ensures company “buy-in” of Plan contents and administration of those contents.

  44. LIQUIDATED DAMAGESFAR 19.702(c) and 19.705-7 Maximum practicable utilization of small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns as subcontractors in Government contracts is a matter of national interest with both social and economic benefits. When a contractor fails to make a good faith effort to comply with a subcontracting plan, these objectives are not achieved, and 15 U.S.C. 637(d)(4)(F) directs that liquidated damages shall be paid by the contractor.

  45. CHECKLIST FOR REVIEW OF SUBCONTRACTING PLAN • Guides Contracting Officers (CO) through the plan to ensure that each of the eleven required elements have been included • Where the CO, Small Business Technical Advisor, and the Small Business Administration review/sign • Note: The checklist does not currently have a form number (formerly GSA Form 3584). Your SBTA can provide to you. • Watch for Acquisition Letters and GSAM Updates

  46. EVALUATING THE SUBCONTRACTING PLAN Subcontracting plans and associated goals should: • Be realistic and achievable • Provide a challenge (and build upon prior achievements) • Include positive goals • Reflect good faith efforts and maximum practicable opportunities

  47. EVALUATING THE SUBCONTRACTING PLAN UPON RECEIPT OF A SUBCONTRACTING PLAN, CO MUST REVIEW TO ENSURE ADEQUACY AND THAT IT MEETS THE REQUIREMENTS OF FAR AND GSAM (SEE CLAUSE 52.219-9) • Ensure goals and dollar amounts are calculated correctly • Find that Small Business Concerns are included in all applicable categories (allowed to double & triple count $$) • Require an Offeror to justify or explain why their proposed goals are lower than the agency goals or the government-wide goals. If you cannot negotiate higher goals due to a unique situation, the plan should state how this reflects their best faith effort and what their challenges reside.

  48. EVALUATING THE SUBCONTRACTING PLAN • Also consider past subcontracting history and goal attainment --overall compliance & efforts should be considered, not merely whether goals were met • Obtain SBTA review, advice & recommendations • Obtain SBA’s Procurement Center Representative (PCR) review and concurrence • Ensure the CO finds the Subcontracting Plan acceptable and incorporates it into and makes it a material part of the contract.

  49. SUBCONTRACTING PLAN IS A MATERIAL PART OF THE CONTRACT • Subcontracting Plans must be: • Approved prior to award • Made a material part of the contract at the time of award • Failure to submit an acceptable Subcontracting Plan to CO makes the offeror ineligible for award. • File APPROVED plan with Checklist (formerly called GSA Form 3584) under Tab 23(b)

  50. DETERMINED THAT NO SUBCONTRACTING POSSIBILITIES EXIST?FAR 19.705-2(c) • FAR advises waivers to the subcontracting plan must be approved at a level above the contracting officer and placed in the contract file. • Look for agency supplemental guidance

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