Small Business Subcontracting Program

Amy Kim, Commercial Market Representative (CMR)Area 2, OFFICE OF GOVERNMENT CONTRACTING

Subcontracting Program – What’s New?

Developing and Managing an Effective

Compliance Program

Compliance Review Issues Pursuant to

Government Contracting      

Agenda

Subcontracting Program – What’s New

SBA amended its regulations to implement the Small Business Jobs Act of 2010.

Size and Status Integrity (Effective August 27, 2013)

Small Business Subcontracting (Effective August 15, 2013)

Regulatory Updates

Presumption of loss based on total contract value for misrepresentation

Certifications Deemed Affirmative, Willful and Intentional Proposal or bid submission for contracts/subcontracts

reserved, set aside, or classified as intended for SB award Proposal or bid submission which encourages agencies to

classify bid/proposal as SB award Registration on Federal electronic database for SB award

consideration

Effective August 27, 2013

Size and Status Integrity 13 CFR 121.411

Signature Requirement: Authorized official must sign certification on same page containing size status

Limitation of Liability: Primes acting in good faith not be held liable for sub misrepresentation

Penalties for Misrepresentation: Suspension or debarment; civil and criminal penalties

Size and Status Integrity 13 CFR 121.411

Subcontracting 13 CFR 125.3General

Credit cannot be taken for lower-tier subcontract awards.

Exclusions from the subk base: Purchases from affiliates (Note: Subcontracts by first-tier

affiliates should be included.) Internally-generated costs, taxes and charitable

contributionsCO may establish additional subk goals as

percentage of total contract dollars. History of unjustified untimely or reduced

payments – three incidents in a 12 month period.

Effective August 15, 2013

Prime may not prohibit sub from discussing any payment or utilization issues with CO.

SSRs must include indirect costs on a prorated basis.

Prime must assign each subcontract the NAICS code and size standard.

Prime may rely on SAM IF subcontract contains a clause (similar to FAR 52.204-8(d)). However, primes may not require the use of SAM.

When ISR or SSR is rejected by CO, prime is required to revise report within 30 days.

Subcontracting 13 CFR 125.3 Prime Contractors’ Responsibilities

Prime must represent that it will make a good faith effort to utilize the SB subs in the same scope, amount or quality used in preparing bid or proposal.

Prime must notify CO in writing whenever the prime contractor does not utilize a SB sub in the same scope, amount or quality used in preparing its proposal prior to final invoice submission or contract close-out. (Section 1322 of the SB Jobs Act)

Subcontracting 13 CFR 125.3Prime Contractors’ Responsibilities

Offeror used a SB in preparing bid or proposal if:1) SB was referenced in bid or proposal or subk plan; 2) Subcontract or agreement in principle to subcontract with SB to

perform contract; or3) SB drafted bid or proposal or its pricing or technical information

was used in preparing bid or proposal, with written evidence of intent or understanding that SB would perform related work if offeor receives award.

Responding to RFQ does not constitute use in preparing bid or offer.

Subcontracting 13 CFR 125.3Prime Contractors’ Responsibilities

Prime is required to notify CO in writing of any reduced or late (90 days past due) payments to a SB subcontractor. (Section 1334 of the SB Jobs Act)

Prime must provide CO with explanation for goal shortfalls at contract completion.

Subcontracting 13 CFR 125.3 Prime Contractors’ Responsibilities

CO is responsible for reviewing all ISRs and SSRs in eSRS within 60 days after reporting period ends.

CO must evaluate whether prime has made a GFE to comply with SB subk plan.

CO is responsible for evaluating prime’s written explanation concerning its failure to utilize a SB sub for past performance purposes.

CO must record identity of prime with history of unjustified untimely or reduced payments in FAPIIS.

Subcontracting 13 CFR 125.3 CO’s Responsibilities

CO has discretion to request an updated subk plan in connection with an option.

CO must require prime to submit a subk plan if mod causes contract value to exceed $650K. (except for commercial plan holders).

CO has discretion to request a subk plan if prime’s size status changes to other than small as a result of size recertification.

Subcontracting 13 CFR 125.3 CO’s Responsibilities

CO may include evaluation factor in solicitation to consider: Prime’s subk plan compliance (either part of past

performance factor or stand-alone evaluation factor) Prime’s commitment to pay SB subs within specific

number of days after payment receipt from Gov’t May apply to solicitations for orders against MAS

contracts, GWACs, or MACs, BPAs or BOAs.

Subcontracting 13 CFR 125.3 Subk Consideration in Source Selection

Ordering agency should receive credit towards its SB subk goals for orders awarded under another agency’s contract.

Contracting agency will still be responsible for subk plan for underlying IDIQ contract.

Contractors are required to submit subk reports for individual orders to funding agency. (eSRS and FAR will have to be revised.)

Funding agency may establish SB subk goals for individual orders, BPAs and BOAs.

Subcontracting 13 CFR 125.3 MAC Reporting

FAR Final Rules – SDB Preference Program Some FAR clauses have been removed.

Monetary incentives for SB subcontracting and consideration of SB subcontracting as evaluation factor remain.

Primes under DoD and Coast Guard contracts can no longer count subcontracts with HBCU/MI towards SDB goals; only allowed under NASA contracts.

Effective October 14, 2014

Regulatory Updates

FAR Clauses Description

FAR 52.219-22 through 219-26 SDB price evaluation & participation targets

FAR 52.219-9(l)(2)(iii) YE SDB report

FAR 53.302-312 SDB Participation Report

NDAA 2014 – Credit for Subcontractors Allows single award prime contractors with one

agency to count all tier small business subcontractors.

Prime contractors with more than one contract with one or more agencies may only count first tier subcontractors.

Primes are required to make a good-faith effort to achieve first tier subcontracting goals.

Regulatory Updates

Developing and Managing an Effective Compliance Program

Management Support An active SBLO An acceptable Subcontracting Plan SB training Meeting SB goals and objectives A good outreach program Connection to assistance providers such as PTAC Active procurement staff participation Utilization of SAM and DSBS Accurate and on-time reporting

Ten Key Elements of Effective Small Business Program

Management Support

SCORE GUIDE

1 = No Management Support

3 = Management has minimal program knowledge.

My company score is: 5 = Management knows about the program.

1 2 3 4 5 6 7 8 9 10 7 = Management actively endorses the program.

9 = Management endorses, monitors, and participates in the program.

Mark Score Here: __________

An Active SBLO

SCORE GUIDE

1 = Our company does not have an SBLO.

3 = Our SBLO performs very limited duties.

My company score is: 5 = Our SBLO is involved in at least 5 of the success elements.

1 2 3 4 5 6 7 8 9 10 7 = Our SBLO is involved in 7 of the success elements.

9 = Our SBLO does all 10 elements.

Mark Score Here: __________

An Acceptable Subcontracting PlanSCORE GUIDE

1 = My company does not have a subcontracting plan.

My company score is: 3 = Our subcontracting plan was not approved by the agency.

1 2 3 4 5 6 7 8 9 10 5 = Our subcontracting plan is current and approved by the agency.

7 = Same as 5 and we are actively working on our goals.

Mark Score Here: __________ 9 = Same as 5 and we are meeting our plan goals.

10= Same as 5 and we are exceeding our plan goals.

SB Counseling and TrainingSCORE GUIDE

1 = My company does not have a SB counseling and training program.

My company score is: 5 = We have scheduled SB counseling and training in the next 6-12 months.

1 2 3 4 5 6 7 8 9 10 10= We have an on-going SB counseling and training program.

Mark Score Here: __________

Meeting SB Goals & ObjectivesSCORE GUIDE

1 = My company has no goals or objectives for small business.

My company score is: 3 = Employees are aware of subcontracting goals.

1 2 3 4 5 6 7 8 9 10 5 = Management has established company small business goals.

7 = Company goals are established and metrics reported.

Mark Score Here: __________ 9 = Same as 7; most goals are being met.

10= Same as 7; all goals are being met or exceeded.

A Good Outreach ProgramSCORE GUIDE

1 = Our company does not do outreach.

My company score is: 3 = Our company does limited outreach.

1 2 3 4 5 6 7 8 9 10 5 = Our company has an active outreach program.

7 = Our company has an active outreach program and has participated in one or more matchmaking events.

Mark Score Here: __________ 9 = Same as 7; we have connected to sources through this process.

Connection to SBA, Agency Small Business Office or PTAC

SCORE GUIDE

1 = What is a PTAC?

My company score is: 3 = How do I connect with SBA, Agency Small Business Office or PTAC?

1 2 3 4 5 6 7 8 9 10 5 = Our company occasionally contacts SBA, Agency SB Office or PTAC.

7 = Same as 5, and we work with our state PTAC.

Mark Score Here: __________ 9 = Same as 7 and we are on matchmaking sub-committees hosted by these organizations.

Active Procurement Participation

SCORE GUIDE

1 = Procurement staff is untrained.

My company score is: 3 = Procurement staff is aware.

1 2 3 4 5 6 7 8 9 10 5 = Procurement staff is active.

7 = Procurement staff is making tangible efforts to expand opportunities for SB.

Mark Score Here: __________ 9 = Same as 7 and procurement is meeting the goals.

Utilization of SAM or DSBS

SCORE GUIDE

1 = What are SAM or DSBS?

My company score is: 3 = How do I use SAM or DSBS?

1 2 3 4 5 6 7 8 9 10 5 = SAM and DSBS are used to identify SB sources and verify certifications.

7 = Our staff uses SAM/DSBS to identify SB sources and checks our database against SAM/DSBS regularly.

Mark Score Here: __________ 9 = Same as 7 and we are compliant.

Accurate and On-Time Reporting

SCORE GUIDE

1 = Reporting… What reporting?

My company score is: 3 = What is an ISR?

1 2 3 4 5 6 7 8 9 10 5 = ISRs and SSRs are submitted.

7 = Same as 5 and all data is accurate.

Mark Score Here: __________ 9 = Same as 7 and reports are submitted on time.

How did your company rate?

SCORE CHART

1. _____ 10 – 29 points Unacceptable

2. _____ 30 – 49 points Marginal

3. _____ 50-69 points Acceptable

4. _____ 70 – 90 points Highly Successful

5. _____ 91 – 100 points Outstanding

6. _____

7. _____ Note: This approximate score rating is subject to other factors and a formal review by Federal agencies. Individual results may vary.

8. _____

9. _____

10. _____

Total: ______

Compliance Review Issues Pursuant to Government

Contracting

Small Business Sourcing

Validation of the ISR/SSR reports

Five-Year Trend Analysis

Overall Evaluation of Small Business Program

Analysis on Goal Achievements

Sampling of PO’s to Large Business

Follow-up prior SBA recommendations

Elements of a Compliance Review

Size Standards and Self-certifications Size self-certification definitions must be correct.

(FAR 52.219-8) Must have a size self-certification for every

business you are counting small on ISR/SSR. • No reliance on SAM• SBA certification required for HUBZone SB

Size and socio-economic status determined at initial offer that includes price – Good for contract duration

Foreign business must meet the definition of SB in order to count small (13 CFR 121.105)

Most Common Review FindingsAdobe Acrobat

Document

eSRS Reporting (Overall) May count a SB that meets subset definitions in all

categories that apply. What not to include:

• Subcontracts performed exclusively overseas (State Dept – exempt from this requirement)

• Inter-company transactions What to include:

• Customer-directed purchase• First-tier subcontractor spend• Subcontracts to non-profit organizations

Do not see a contract? – Contact the CO to revise FPDS records

When options are exercised, revise goal dollars and goal percentages.

Most Common Review Findings (Continued)

5 Year Base Goals

Option Year One

5 Year Base + 1 YR Option Goals

Total Subcontracting

$100,000 100% $25,000 100% $125,000 100%

SB $30,000 30% $3,000 12% $33,000 26.4%($30,000+

$3,000)

SDB $15,000 15% $1,000 4% $16,000 12.8%($15,000+

$1,000)

WOSB $15,000 15% $2,000 8% $17,000 13.6%($15,000+

$2,000)

HUBZone SB $5,000 5% $500 2% $5,500 4.4%($5,000+

$500)

VOSB $3,000 3% $500 2% $3,500 2.8%($3,000+

$500)

SDVOSB $2,000 2% $1200.48

%$2,120 1.7%

($2,000+$120)

ISR Reporting for Option Years

eSRS Reporting (ISR) Submit ISR although no subcontracting with SB

has been done. No task order reporting Final ISR needs to be submitted within 30 days

of contract completion. Provide explanation for goal shortfalls in the

“Remarks” section – CPARS

Most Common Review Findings (Continued)

eSRS Reporting (SSR) Maintain separate accounting if your company

has a combination of individual and commercial plans.

Must include a proportional share of indirect costs incurred with socio-economic category.

Must be signed by the most senior executive of the organization.

Most Common Review Findings (Continued)

Effectiveness of Small Business Program Procedures and up-to-date CEO policy memorandum

regarding the Small Business Program must be in place. Documentation of training, outreach efforts, and SB

assistance

Non-Compliance with FAR 52.219-9(d)(11)(iii) and 52.219-9(d)(9) Subcontracts to LB over $150K are not documented to show

prime’s efforts to solicit and make award to SB Obtain a subcontracting plan & ISR from LB subs when the

subcontract exceeds $650K. (Not required if the prime contract contains FAR 52.212-5 or 52.244-6).

Most Common Review Findings (Continued)

Adobe Acrobat Document

Amy Kim (Covering MD and DC primes) E-mail: amy.kim@sba.gov Phone: (202) 205 - 6895

Anita Perkins (Covering VA, DC, eastern PA and DE primes) E-mail: anita.perkins@sba.gov Phone: (202) 205 - 7319

Other CMRs (Geographic Coverage): http://www.sba.gov/content/government-contracting-field-staff-directory

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