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SUB-CONTRACTING: A PRIME STRATEGYNATIONAL 8(A) SUMMER CONFERENCEANCHORAGE, ALASKA, JUNE 18, 2014
RONETTA KEETER BRIGGS & LEIGH A. MCGEE CO-FOUNDERS, OSIYO CONSULTING
2Prime/Sub = Win/WinGBS OSIYO NNI
Strategic Partners – Sitnasuak Native Corporation’s GBS LLC, OSIYO Consulting, and Native Nations Institute
Teaming Objective – Align a team with past experience and multiple specialized skills to capture an 8(a) set-aside contact
Contract Awarded – Department of Treasury’s CDFI Fund awarded GBS LLC a contract for eight Tribal consultations, research, and writing an “Access to Capitol and Credit in Native Communities” Study
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Participant PollingQuestionsHow many prime contractors?
How many sub-contractors?
How many of you would consider sub-contracting as a prime strategy?
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To Prime or Not to Prime – That is the question?WHAT'S YOUR BEST STRATEGY? WHAT SHOULD YOU CONSIDER?
5It’s Your Strategic Choice!
The firm that undertakes complete contract responsibility
May employ Sub-contractors to carry out specific work
Act As Prime
The firm engaged by Prime to carry out a specific piece of the contract
Mandatory requirement set by federal government to ensure small business gets government work
Support As Sub
6To Prime or Sub: 4 Big Questions?
What choice aligns best with our vision and
long-term strategic plan?
Is our company familiar with all
aspects of government contracting?
Do we want to?
Can our company manage
administrative support and compliance concerns?
Do we want to?
Can our company afford
the time and cost of the proposal process?
Do we want to?
7SBA’s 2012 Scorecard on Small Business Spending
AGENCY Total Eligible $ Small Business Spend $
SB Goal Prime %
SB Goal Sub %
FY12 Score %
FY12 Grade
Gov-Wide $404,180,126,266
$ 89,923,198,457
23.0 / 22.3 36.0 / 33.6 96.8 B
Defense $274,991,402,519
$ 56,118,704,966
22.5 / 20.4 36.7 / 35.5 91.7 B
Energy $ 24,566,940,887
$ 1,264,427,440
10.0 / 5.2 52.0 / 47.5 51.9 F
Education $ 2,051,328,059
$ 406,841,727
18.5 / 19.8 43.5 / 29.8 89.0 C
Commerce $ 3,266,301,029
$ 1,204,849,919
39.0 / 36.9 30.0 / 46.7 104.8 A
Science $ 288,932,808
$ 44,426,514
20.0 / 15.4 19.0 / 27.9 84.41 C
8Government’s Subcontracting $ Goals
23% of federal contract dollars awarded to small businesses
5% of federal contract and subcontract dollars awarded to women-owned small businesses
5% of federal contract and subcontract dollars awarded to small disadvantaged businesses
3% of federal contract and subcontract dollars awarded to service disabled, veteran-owned small businesses
3% of federal contract and subcontract dollars awarded to HUBZone small businesses
9Prime or Sub? General Rules & Considerations
The Prime Contract is a Federal Procurement Contract
The Subcontract is a Commercial Contract
There are very few mandatory flow down clauses
The government is very concerned about how primes manage subcontracts
The government can partially terminate a contract
No one reads the contract, but you better
Most prime/sub contracts and relationships fail because they do not properly plan, and in particular, they fail to baseline the contract from the outset
Primes and subs must perform as totally integrated partners with exceptional execution
10Risks in the Prime/Sub Affiliation Division of Work - The larger the subcontractor’s share of work, the greater
the risk of affiliation concerns
Incumbency - SBA is more likely to question a subcontractor relationship if the subcontractor was previously the incumbent for the contract work
Management - The larger the management role played by the subcontractor and its employees, the greater the likelihood of affiliation issues
Proposal Terminology – If the terminology and content of the proposal suggest that the subcontractor is an equal partner, or worse, the lead partner, repeated references to the subcontractor can backfire
Relative Experience - When an inexperienced small prime teams with a large, experienced subcontractor, SBA may decide that the prime could never have been awarded the contract without the subcontractor’s experience
Source * Contract Management Article by Steven Kopeince
11Required Federal AgencySubcontracting Plans The Small Business Act requires the prime contractor to:
(1) make a “good faith effort” to acquire goods and services from the small businesses “used” in the bid/proposal and “in the same amount and quantity”
(2) notify the contracting officer in writing if paying a reduced price to a subcontractor, or if payment to a subcontractor is more than 90 days past due (for which the government has paid contractor)
Requires agencies to collect and report data on the extent to which prime contractors meet the goals in their subcontracting plans
A prime’s failure to comply with a subcontracting plan may be considered in the evaluation of past performance for future contracts
12Why Sub-Contract as a Prime Strategy?
Fewer administrative obligations & less risk
Lower business development costs
Ability to focus on your core capability and specialize
Gaining past performance and reputation of success
13Finding a Prime Contractor
1. LOCKHEED MARTIN $11,741,679,392
6. GENERAL DYNAMICS $2,700,939,446
2. THE BOEING COMPANY $6,067,839,786
7. MCKESSON CORPORATION $2,521,942,237
3. RAYTHEON COMPANY $3,669,029,992
8. BABCOCK & WILCOX CO $2,194,804,627
4. UNITED TECHNOLOGIES CORPORATION $3,002,125,097
9. LOS ALAMOS NATIONAL SECURITY LLC $1,914,227,930
5. BECHTEL GROUP INC. $2,789,433,157
10. UNITED LAUNCH ALLIANCE L.L.C. $1,835,927,952
Marketing and Relationships
Top 10 Federal Contractors FY 2014 YTD
Government Agencies
Business Development Organization
s
Industry Resources
Major Players
The Internet
Network
14Marketing to the Prime Contractor
Entrance Tickets: Credentials
Quality Core Capabilities Reputation & Past Performance Licenses & Professional
Certifications Insurance & Worker's
Compensation Certificates Reputable References &
Contacts
Game Changers: Added Value
We do it BETTER, CHEAPER, FASTER We have CAPACITY We are ABLE: Reliable, Dependable,
Flexible, Can-doable, and valuable We are cost-saving, money-adding
PARTNERS. We bring future opportunities, relationships, and capabilities.
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Leigh A. McGee| 410-330-7484 | [email protected] K. Briggs| 972-720-9953 | [email protected]
Innovative tools and methods
helping organizations adapt, grow, and prosper.
- Visioning & Strategic Planning- Organizational Assessment- Leadership Development- Facilitation & Mediation
- Board Governance
www.osiyo.biz
O S I Y O
Est 2003
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