Course # 27 Small Business and AT&L Better Buying Power Initiatives Wendy Despres Associate Director, Policy Management DoD Office of Small Business Programs

Course # 27Small Business and AT&L Better Buying

Power Initiatives

Wendy Despres Associate Director, Policy Management DoD Office of Small Business Programs

Janice BufflerAssociate Director, Subcontracting

DoD Office of Small Business Programs

Agenda

• Current Requirements• On-going Initiatives• Subcontracting Plan Requirements• Subcontract Reporting Requirements• Evaluation of Small Business (SB)

Participation in Source Selections

CURRENT REQUIREMENTS

Current Requirements

• DoDD 5000.1, The Defense Acquisition System– Requires Acquisition Strategies to facilitate SB

participation throughout a program’s life cycle through direct participation (prime contracts) or teaming with SB concerns

– Forms the basis for SB Specialist to assist in acquisition planning

• DoDD 4025.01, DoD Small Business Programs, contains duties of SB specialists related to acquisition planning


• DoDI 5000.2 further requires consideration of: – Technologies developed under the Small

Business Innovative Research (SBIR) Program– A diversified range of large and small

businesses– Opportunities to implement socio-economic

programs• FAR/DFARS Part 7 also cover acquisition

planning and consideration of SB concerns


• Understand Defense Acquisition Guidebook, Chapter 2 – Acquisition Program Baselines, Technology Development Strategies, and Acquisition Strategies– Paragraphs 2.2.10 and 2.3.10 cover SBIR

program and small business participation– DoD OSBP is a reviewer of Technology

Development Strategy and Acquisition Strategy documents requiring DoD level approval


• Acquisition strategy reviews look for :– Market research completed – If SBs will perform any prime contracts under

program and why or why not– If SB participation is maximized through

subcontracting– If SBIR technologies were considered/will be used

in the program

SMALL BUSINESS SPECIALIST MUST GET INVOLVED EARLY IN THE ACQUISITION

PLANNING PROCESS

INITIATIVES

Initiatives

• USD(AT&L) memo, September 14, 2010, Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending– Requires increasing small business role in defense

market place competition and directs CAEs to institute on all competitive and non-competitive procurements emphasis on small business utilization through weighting factors in past performance and in fee construct

– Directs DoD OSBP to review acquisition plans for services >$1 billion and to be members of the OSD Peer Reviews of services acquisitions

Initiatives

• Senior Integration Group (SIG) established to implement efficiency initiatives – approved subcontracting initiatives 14 Dec 2010

• President’s Interagency Task Force on Federal Contracting Opportunities for Small Businesses – Established April 2010– Report issued Jan 2011– Established Small Business Procurement Group in order

to give White House and Co-Chairs of Task Force an opportunity to meet regularly with senior agency leadership and discuss the steps taken to increase small business contracting

• Small Business Jobs Act, P.L. 111-240

12

Task Force Recommendations

Jobs Bill

4. Strengthen subcontracting

a. Review regulations and policies on subcontracting to determine where improvements needed

b. Compliance reviews of PPIRS submissions should consider whether agency assessments of contractor performance provide useful performance information on prime contractors’ achievement of subcontracting plan goals that can be used for future source selections

c. SBA and IAE should improve eSRS to allow linking information with other govt-wide systems, such as PPIRS

d. SBA should update or issue new policies to address submission and review of subcontracting reporting to better capture subcontracting at all tiers

10. Share best practices across the agencies to maximize successful strategies

1321. Subcontracting Misrepresentations – strengthens enforcement and requires definitions of roles and assignment of responsibilities

1322. Small Business Subcontracting Improvements -- addresses “bait-and-switch” issue

1334. Payment of Subcontractors

1347. Small Business Subcontracting Parity -- establishes statutory federal subcontracting goal of 3% for HUBZone Small Business

Task Force Recommendations for Subcontracting

Jobs Bill – Part II Subcontracting Integrity

The SBJA overlaps with SB Task Force and Dr. Carter’s efficiency initiatives (memos 14 Sep 10 and 3 Nov 10) on some subcontracting initiatives.

Institute in all competitive and non-competitive procurement actions emphasis on small business utilization through weighting factors in past performance and in fee construct

1. Source Selection and Incentive Fees evaluate small business utilization

2. Draft Best Practices Guide for small business utilization

3. Maximize CPARS feedback regarding SB utilization

Dr. Carter’s Efficiencies Initiatives – SB Utilization

Efficiencies Initiatives

OVERLAP

Overlap: General areas-Evaluation of Plans in source selection-Review of regs/policies, develop best practices-Past Performance evaluations for SB utilization (CPARS/PPIRS)-Content and enforcement of subcontracting plans/contract requirements

The SBJA overlaps with SB Task Force and Dr. Carter’s efficiency initiatives (memos 14 Sep 10 and 3 Nov 10) on some subcontracting initiatives.

SUBCONTRACTING PLANS

Subcontracting Plans

• Regulatory Requirements• Overview of Subcontracting Plans– Types– Contents (highlights)– Pre-Award Responsibilities (Who does what?)– Post-Award Responsibilities (Who does what?)

• Reporting Requirements

Subcontracting PlansRegulatory Requirements

Authority

• Section 8(d) SB Act – 15 USC 637(d): SB have max practicable opportunity to participate in contract performance consistent with efficient performance

• Section 15(g) SB Act – 15 USC 644(g): Gov’t wide goals for SBs (prime contracts and subcontracts)

Regulations

• FAR 19.7 / DFARS 219.7, SB Subcontracting Program

• FAR 52.219-8, Utilization of SBs

• FAR 52.219-9 / DFARS 252.219-7003, SB Subcontracting Program (Deviation)

• FAR 52.219-16, Liquidated Damages

• DFARS 252.219-7004, Test Program (Deviation)

Subcontracting PlanRequirements

When?• Contracts > $650K ($1.5M construction) AND subcontract opportunities

exist• Modifications > $650K ($1.5M construction) with new work AND

subcontract opportunities exist• Multi-year contracts / contracts with options

• Cumulative value of base contract & all options• SEPARATE goals for base & each option

Who? ALL other than SB• LBs• State & local gov’t• Non-profit organizations

May also include:• Public Utilities• Educational institutions• Foreign-owned firms

When Not?

• From SBs• Personal services • Contracts / mods

performed entirely outside US & outlying areas

• Mods to contracts in general scope of contract that do not contain FAR 52.219-8 (or equal prior clauses)

• If no subcontract opportunities (approval required at level above CO / placed in contract)

Elements• Total Planned subcontract $ • Goals (% and $) for each category based on

total planned subcontract $ • Indirect costs (included/not included) &

method used to determine %• Descriptions– Principal types supplies/services subcontracted– Method used to develop goals– Method used to identify potential SB sources– Efforts to ensure SBs have equitable opportunity to

compete for subcontracts


Elements (cont.)• Company POC administering subcontracting & duties• Record Keeping: description / procedures / records• Flow-down FAR 52.219-8 and 9 & related DFARS clauses• Assurances– Cooperate in studies / surveys– Submit reports, as required– Submit subcontracting reports in Electronic Subcontracting

Reporting System (eSRS) as required– Subcontractors submit subcontracting reports in eSRS as

required– Provide its prime contract #, DUNS #, email address to all

first-tier subs who also do same for their next-tier subs



• Master Subcontracting Plan– Can be developed on plant/division basis– Effective 3 yrs after Administering Contracting

Officer approval (IAW DFARS)– Contains all elements of subcontracting plan

(except goals)– Goals negotiated for each applicable contract– Approved master plan with goals becomes

Individual Subcontracting Plan upon contract award


• Individual Subcontracting Plan– 1 plan – 1 contract– Goals (% and $ based on planned

subcontracting)– Covers entire contract period– Requires Individual Subcontracting Reports

(ISRs) and Summary Subcontracting Reports (SSRs) semiannually


• Commercial Subcontracting Plan– Preferred for contractors furnishing commercial

items– Applies to entire production of commercial

items sold by either entire company or a portion thereof (division, plant, or product line)

– Based on contractor’s fiscal year– Annual plan (applies to all government

contracts in effect)– Contains mandatory elements– Requires SSR annually


• DoD Comprehensive Subcontracting Plan Test Program (CSP)– Test program for negotiation of comprehensive

subcontracting plan– May be for a division, plant, or corporation– Annual plan (applies to all DoD contracts in

effect during FY)– Only DCMA is delegated authority to negotiate

plan and perform surveillance review functions (with input from departments/agencies)

– Requires SSR semiannually


• Reviewing the Subcontracting Plan– CO reviews for adequacy ensuring required

information, goals and assurances are included– Ensure goals are attainable in relation to• Subcontracting opportunities available to

contractor based on market research (efficient/economical performance of contract)

• Pool of eligible subcontractors available– PCO/ACO evaluate past performance in

subcontracting to Small Businesses


• Procuring/Awarding CO’s Responsibility– Pre-award• Consider contractor’s compliance with plans

submitted on previous contracts as a factor in determining responsibility (CPARS and eSRS)

• Give agency small business specialist and SBA Procurement Center Representative (PCR) opportunity to review plan

• Ensure acceptable plan is incorporated into and made a material part of the contract


• Procuring/Awarding CO’s Responsibility– Post-award• Send SBA (Area Director, Office of Government

Contracting & Procurement Center Representative) copy of contract

• Initiate action to assess Liquidated Damages, when justified

• Enforce terms of the contract (feedback from administering contracting officer)

• Ensure that contract in FPDS indicates Subcontracting Plan is required

• Acknowledge receipt of or reject ISRs and/or SSRs in eSRS


• Administering Contracting Officer’s Responsibility– Assist in:• Evaluating subcontracting plan prior to approval• Monitoring, evaluating and documenting

contractor performance against subcontracting plan

– Furnish documentation/information on contractor’s performance/compliance with plans under previous contracts (needs to be documented in CPARS)


• Assessment of performance/compliance against subcontracting plans includes:– Extent to which contractor is meeting goals in plan– Whether contractor’s efforts to ensure participation are

in accordance with subcontracting plan– Whether contractor is requiring its subcontractors to

adopt similar plans – Whether contractor is submitting ISRs and SSRs and

reviewing ISRs submitted by its subcontractors– Whether contractor’s failure to comply resulted from a

lack of “good faith effort” – Whether contractor met goals at contract completion

(if not, why)

SUBCONTRACT REPORTING REQUIREMENTS


• Individual Subcontracting Reports (ISRs):– Awarding CO responsible for acknowledging

receipt/rejecting ISRs submitted by prime contractor • Prime contractor responsibility for its lower-tier

subcontractors

– ISR contains 2 sections:• Goals ($ and %): Contractor inputs based on Subcontracting

Plan• Actuals (inception of contract end of reporting period): – Contractor inputs $– System calculates % based on total actual subcontracting $

– Failure to meet goals is not reason to reject ISR • Contractor must provide explanation and plan for corrective

action


• SSRs for Individual Subcontract Plan:– Contractor submits consolidated SSR encompassing

all subcontracting under prime contracts awarded by the departments/agencies and/or subcontracts awarded by DoD prime contractors, except construction, • Contractor submits to department/agency which

administers majority of its subcontracting plans– For construction and related maintenance repair type

contracts, contractor submits separate report to each department/ agency which awarded such contracts

– SSR Agency Coordinator has responsibility to acknowledge receipt of or reject SSR


• SSRs for Commercial Subcontract Plan:– Contractor submits SSR encompassing all subcontracting

under the commercial plan in effect during the government’s fiscal year• Includes federal government contracts AND non-federal

government contracts– If performing work for more than one federal government

agency, contractor must specify the percentage of total subcontracting $ attributable to each agency

– Contractor indicates the federal agency or DoD department/agency contracting office that approved its Commercial Subcontracting Plan• Approver of Plan has responsibility to acknowledge receipt of

or reject SSR


Categories FY 11 DoD Goals

FY 09 DoD Actuals

Small Business (SB) 31.7% 34.2%Historically Underutilized Business Zone Small Business (HUBZone)

3% 2.0%

Service-Disabled Veteran-Owned Small Business (SDVOSB)

3% 1.4%

Small Disadvantaged Business (SDB) 5% 4.1%Women-Owned Small Business (WOSB) 5% 5.6%

Veteran-Owned Small Business (VOSB) * NA NA

* While there is not a federal VOSB subcontracting goal, FAR 52.219-9 requires each subcontracting plan to include a VOSB goal.

EVALUATION OF SMALL BUSINESS PARTICIPATION IN DOD SOURCE

SELECTIONS

Evaluation of SB Participation

• Acquisition strategies should achieve maximum practicable opportunity for SBs to be primes or subcontractors:– Market research must address SB participation at

the prime and subcontract level– For unrestricted acquisitions source selection

evaluation must include a separate factor for SB participation and past performance as it relates to SB utilization

– Outline plan for measuring the achievement of socioeconomic goals and evaluating performance as it relates to SB utilization


• References– FAR 15.304(c)(3) and 5 • Evaluate past performance for subcontracting• Include SB participation as an evaluation factor for

solicitations involving bundling

– DFARS 215.304(c)• SB participation shall be evaluated in best value

source selections when a subcontracting plan is required

– DFARS 215.305• Evaluate past performance regarding SB participation


• DFARS PGI 215.304 provides example evaluation criteria:– Extent to which SB firms are specifically

identified in proposals– Extent of commitment to use such firms– Complexity and variety of work– Realism of the proposal– Past performance of complying with

subcontracting requirements– Extent of participation of SB firms in terms of

the value of the total acquisition


What is the difference between FAR/DFARS Subpart 19.7 and DFARS 215.3?

Subpart 19.7 Subpart 215.3Plan is pass/fail Evaluates overall SB (all categories)

participation and is a rated evaluation factor

Requires 11 items in accordance with FAR 19.704

Requires evaluation of extent to which offerors identify & commit to SB and may be separate from Subpart 19.7 plan

Based on total subcontracted dollars

May be based on total subcontracted dollars or the value of the total acquisition

Does not apply to SB Should apply to SB


• Review and evaluation of the subcontracting Plan and the SB participation factor are separate:– Subcontracting plan is evaluated against requirements

of FAR 52.219-9 included in the solicitation– SB participation is evaluated against the criteria

contained in the solicitation (e.g. Sections L and M)• But both:– Consider past performance on prior plans and contracts

and rely on current market research– Utilize input from ACO, SB Specialists, and SBA– Must show the same total subcontracted dollars and

subcontracted dollars to SB (note goals will be different if evaluation was based on total value of the acquisition)


• Reporting required– ISR (SF 294), SSR– Additional reporting may be needed when SB

subcontracting is based on TCV (be reasonable)– Don’t forget about SB primes – they don’t report in

eSRS:• Small Business Act prohibits requiring a small business to

submit a subcontracting plan or report in eSRS

– The Government must ensure that SB participation proposed by a SB and included in the contract is monitored for compliance so separate reporting requirements are required that must be tailored for small businesses and are not overly burdensome


• Contract– Incentives should include SB participation– Contractors must be held accountable for SB

participation performance -- what happens if contract requirements are not met

– Consent to Subcontract – if specific small business subcontractors are indentified in proposals they should be listed in the contract and the prime contractor should be required to notify the Contracting Officer if a change needs to be made so that the Contracting Officer can assess the impact to SB participation and negotiate the change before granting approval


• For SB participation evaluation to be effective, the Government must:– Ensure eSRS reports are completed– Ensure all other reports required for SB

participation are completed– Utilize the Contractor Performance

Assessment Reporting System (CPARS) – SB specialists assists technical and contracting personnel


• Small Business Specialists should:– Participate in acquisition planning– Ensure that SB participation is an evaluation

factor in best value source selection as required by DFARS 215.304

– Advise and assist with monitoring of performance related to SB subcontracting plan and SB participation requirements of the contract

– Become knowledgeable on CPARS SB Utilization Evaluation and advise contracting activity and COTR


• A complete source selection will:– Highlight how the evaluation of the

subcontracting plan (FAR 19.7) will differ from the evaluation of SB participation

– Explain how offers from SB prime contractors must be structured and how they will be evaluated

– State that SB participation evaluation applies to Comprehensive Subcontracting Plan participants


• A complete source selection evaluation will:– State SB targets for the contract as a

baseline• For each socioeconomic category • State if based on total contract value (TCV)– Define TCV– If based on TCV, explain how percentages and

dollars should be stated in subcontracting plan (FAR 19.7)


• A complete source selection evaluation will:– Give large business offerors a higher evaluation

rating for exceeding the RFP targets provided the other information shows the targets proposed are reasonable and realistic

– Require offerors to:• List subcontractors and principal supplies or services

to be provided• Describe complexity of supplies and services to be

provided


• A complete source selection evaluation will:– Examine binding/enforceable subcontracting

agreements if documentation is provided– Evaluate past performance as it relates to

small business participation in addition to the overall past performance evaluation (DFARS 215.305)

– Review eSRS reports (ISRs/SSRs or SF 294s)


• A complete source selection evaluation will:– State the basis for award• Describe how offerors will be rated• Describe how SB offerors will be rated

– Include contract language to prevent “bait and switch” (consent to subcontract)

– VERY IMPORTANT!! – The SB participation evaluation factor should be a factor (not subfactor) with meaningful weight

Summary

• Current DoD policy and regulations require consideration of SB concerns during acquisition planning

• It is important to involve Small Business Specialist and SBA early in the acquisition process

• Subcontracting plans are mandatory for certain acquisitions and have 11 elements

• Awarding Contracting Officer reviews ISRs• SSR Agency Coordinator reviews SSRs (Contracting

Officer who approved Commercial Subcontract Plan)• In addition, DoD regulation requires SB participation

to be evaluated in best value source selection when the value >$650,000

Resources

• [email protected]• [email protected]• http://www.acq.osd.mil/osbp/• http://www.acq.osd.mil/dpap/• http://www.esrs.gov/• http://www.dau.mil/default.aspx

mailto:[email protected]

mailto:[email protected]

http://www.acq.osd.mil/osbp/

http://www.acq.osd.mil/dpap/

http://www.esrs.gov/

http://www.dau.mil/default.aspx

Resources

• For a copy of the SB task force report:

http://www.sba.gov/content/interagency-task-force-federal-contracting-opportunities-small-businesses

• For DoD Directives and Instructionshttp://www.dtic.mil/whs/directives/

• For Dr. Carter’s efficiencies memo:http://www.acq.osd.mil/

• For Small Business Jobs Act:http://www.gpo.gov/fdsys/




http://www.dtic.mil/whs/directives/

http://www.acq.osd.mil/

http://www.gpo.gov/fdsys/

QUESTIONS?

Documents

Course # 27 Small Business and AT&L Better Buying Power Initiatives Wendy Despres Associate Director, Policy Management DoD Office of Small Business Programs