1. New Rules and Regulations for Small Business Programs PIP Level 1 Julie Rivera October 3, 2011

2. AGENDA 1.Purpose 2.Background 3.New Rules and Regulations 8(a) Business Program WOSB Program Socioeconomic Parity 4.Recommendations 5.Conclusion 6.Questions 2

3. PURPOSE Discuss major changes in Small Business Programs… To create awareness in the Procurement Community in order to maximize opportunities for Small Businesses at NASA GSFC. 3

4. FACTS Why are Small Businesses Important to the U.S. Economy? Small Firms:  Represent 99.7% of all employer firms.  Employ just over half of all private sector employees.  Pay 44% of total U.S. private payroll.  Have generated 64% of net new jobs over the past 15 years.  Hire 40% of high tech workers (such as engineers, scientists, and computer programmers) 4

5. BACKGROUND FAR Part 19.201- FAR Part 19.201- In its acquisition activities, it is the Government’s policy to provide the maximum opportunities practicable to…  Small Businesses  Veteran-Owned Small Businesses (VOSBs)  Service-Disabled Veteran- Owned Small Businesses (SDVOSB)  Historically Undeserved Business Zones (HUBZones) Small Businesses  Small Disadvantaged Businesses (SDBs)  Woman-Owned Small Businesses (WOSBs) 5

6. BACKGROUND FAR PART 19.501: FAR PART 19.501: A “set-aside for small business” is the reserving of an acquisition exclusively for participation by small business concerns. FAR Part 19.502-2: FAR Part 19.502-2: The Contracting Officer SHALL set-aside any acquisition over $150,000 for small business participation when there is a reasonable expectation that…  Offers will be obtained from at least two responsible small business concerns offering the products of different small business concerns. (RULE OF TWO)  Award will be made at fair market prices. 6

7. BACKGROUND Small Business Act of July 30, 1953: Congress created the Small Business Administration Mission: To maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters Function: “Aid, counsel, assist, and protect the interests of small business concerns” 7

8. BACKGROUND FY 2012 and FY 2013 Small Business Improvement Plan (SBIP) Initiatives 1.Advocacy: Develop a small business advocacy program, which fosters a collaborative environment increasing the level of engagement of NASA program, technical, and procurement organizations. 2.Knowledge Management: Improve the collection, management, and effective communication of small business data, information, and processes. 3.Outreach: Develop an innovative, NASA-wide small business outreach program with quantifiable outcomes. 8

9. BACKGROUND SDB 8(a) WOSB HUBZone VOSB SDVOSB SMALL BUSINESS ED- WOSB 9

10. 8(a) Business Program  February 11, 2011: SBA made significant rule changes to the 8(a) Joint Venture Program. (13CFR Part 124) Joint Ventures (JV) are now limited to three contracts in a two- year period. Same members in a JV can form additional JVs and be awarded three ADDITIONAL contracts for the new JV. JVs no longer have to seek approval for a 2 nd or 3 rd 8(a) contract from the SBA. 8(a) firm will receive profits from the JV commensurate with the work performed by the 8(a) firm. The 8(a) company must perform 40% of the work done by the JV. 10

11. WOSB Program  On October 7, 2010, the U.S. Small Business Administration (SBA) published a final rule, effective February 4, 2011, to expand federal contracting opportunities for Women-Owned Small Businesses (WOSBs).  What is the WOSB Program?  What is the purpose of the WOSB Program?  Who runs the program? 11

12. WOSB Program- RAND Report  Kauffman-RAND Institute for Entrepreneurship Public Policy-completed a study of underrepresentation of WOSBs in Federal Prime Contracts by Industry Code.  Study determined underrepresentation is expressed in a “disparity ratio.”  “Disparity Ratio”= utilization of WOSBs in Federal contracting vs. availability of such contracts in particular Industries. Disparity Ratio of 1= NOT UNDERREPRESENTED Disparity Ratio of < 0.5= SUBSTANTIALLY UNDERREPRESENTED (EDWOSB) Disparity Ratio of ≥0.5 and ≤ 0.8= UNDERREPRESENTED (WOSB)  SBA designated 83 4-digit (Industries) NAICS Codes for the WOSB Program  38 NAICS Codes for Substantially Underrepresented WOSBs  45 NAICS Codes for Underrepresented EDWOSBs 12

13. Requirements for WOSB and EDWOSB Set-Asides CO’s may set aside contracts for WOSB and ED-WOSB if they meet the following criteria: WOSB Set-AsideED-WOSB Set-Aside Industries The NAICS code assigned to the solicitation is an industry in which WOSBs are substantially underrepresented. The NAICS code assigned to the solicitation is an industry in which WOSBs are underrepresented. Rule of Two The CO has a reasonable expectation that two or more WOSBs will submit offers. The CO has a reasonable expectation that two or more ED-WOSBs will submit offers. Award Price The anticipated award price of the contract does not exceed $6.5M in the case of manufacturing contracts and $4M in the case of all other contracts. The CO believes the contract can be awarded at a fair and reasonable price. 13 A complete list of applicable NAICS codes can be found at www.sba.gov/wosb

14. PARITY Socioeconomic Parity- Effective March 16, 2011  Public Law 111-0240: Small Business Jobs Act of 2010- Signed by President Obama September 27, 2010  FAR Part 19-203: Permits the Contracting Officer to use discretion when determining which small business program to set-aside(HUBZone, 8(a), SDVOSB or WOSB). There is no order of precedence. CO’s SHALL consider the use of one of these programs before considering a small business set- aside when the acquisition is > the SAT ($150,000).  Exception- if a procurement is currently in the 8(a) Program, it must remain in the Program unless released by the SBA. 14

15. PARITY Order to Follow with Procurements Expected to Exceed $150,000 Procurements Valued OVER $150,000 #1 Consider HUBZONE OR 8(a) OR SDVOSB OR WOSB/EDWOSB first #2 Small Business Set-Aside #3 Full and Open Competition 15

16. Recommendations 1.Conduct detailed market research 2.Use the 8(a) and WOSB Programs 3.Use “Parity” SBS to communicate where NASA and GSFC is progressing in SB Goal achievement in order to assist CO with determination of a set-aside 4.Take advantage of IAO SB Training Modules. 16

17. Conclusion In order to maximize opportunities for small businesses at NASA GSFC, it is important for the procurement community to have knowledge of the new changes in rules and regulations for small business programs. 17

18. QUESTIONS? 18

19. THANK YOU! 19

20. Backup Slides 20

21. BACKGROUND What is A Small Business? 21  Entity Organized for Profit  Place of Business in the U.S.  Contributes to the U.S. economy— Taxes, Employment  Meets the Size Standard  Procurement – NAICS code assigned  Other – Primary Industry  Independently Owned & Operated

22. BACKGROUND NAICS CODES 22  North American Industry Classification System  Common System of U.S., Canada, & Mexico  Replaced Standard Industrial Classification (SIC) system in 1997  U. S. Census Bureau’s responsibility http://www.census.gov/epcd/www/naics.html  Classification System to ID industries  Groups Establishments Producing Similar Goods & Services  Developed to collect Economic Data

23. BACKGROUND What NAICS Code to Choose? 23  Select the NAICS code which best describes the Principal Purpose of the product or service being acquired. Work Statement Labor Categories Scope of Work

24. BACKGROUND Structure of NAICS Codes Economic Sector First 2 digits Sectors Represented the highest level of aggregation- there are 20 sectors representing broad levels of aggregation. Subsector1 st -3 rd digits Subsectors represent the next, more detailed level of aggregation- there are 99 sub-sectors. Industry Group 1 st -4 th digits Industry groups are more detailed than subsectors- there are 313 Industry groups. NAICS Industry 1 st -5 th digits NAICS industries are the level that, in most cases, represents the lowest level of comparability across the three countries participating in NAICS (the U.S., Canada, & Mexico)- there are 721 five-digit industries. National Industry 1 st -6 th digits National Industries are the most detailed level of NAICS. These industries represent the national level detail necessary for economic statistics in an industry classification. The six-digit level allows the U.S., Canada, & Mexico each to have country- specific detail- there are 1175 U.S. industries in NAICS United States. 24

25. Summary of Socioeconomic Programs Small Business Category Representation /Certification Description Small BusinessSelf RepresentThe SBA defines a small business concern as one that is located in the U.S., independently owned and operated, organized for profit, and is not dominant in its field. It also has to meet the SBA’s size standard included in the solicitation. Small Disadvantaged Business (SDB) Self RepresentIf the business is AT LEAST 51% owned by one or more individuals who are both socially and economically disadvantaged AND managed and controlled by one or more SUCH INDIVIDUALS; THEN the business is eligible to participate under the Small Business Disadvantaged Business Program. 8(a) Small Disadvantaged Business SBA CertifiedIn order to be SBA certified under the 8(a) Program the firm has to be owned and controlled by AT LEAST 51% of socially and economically disadvantaged individuals. The 8(a) Program offers a broad scope of assistance to disadvantaged firms. Once certified, the firms can ONLY BE in the Program for 9 years. During these 9 years, they are supposed to be growing their capabilities as a business. HUBZone Small Business SBA CertifiedTo qualify for the program, a business (except tribally owned concerns) must be a small business by SBA standards; it must be owned and controlled at least 51% by U.S. citizens OR a Community Development Corporation, and agricultural cooperative, OR and Indian Tribe; its principal office must be located within a “Historically Underutilized Business Zone”; and at least 35% of its employees must reside in a HUBZone 25

26. Summary of Socioeconomic Programs (Cont.) Small Business Category Representation /Certification Description Veteran-Owned Small Business (VOSB) Self RepresentFor a firm to be eligible as a VOSB, it has to be AT LEAST 51% owned and controlled by one or more veterans. The Department of Veterans Affairs VERIFIES this ownership and control, and they are the only ones with the authority to issue a VOSB set-aside limiting competition to VOSBs. However, VOSB firms are eligible to compete on small business set-asides. Service-Disabled Veteran-Owned Small Business (SDVOSB) Self RepresentIn order to be eligible as a SDVOSB, the firm must also be VOSB. The firm must have a service-connected disability that has been determined by the Department of Veterans Affairs or Department of Defense; the SDV must uncondionally own 51% of the SDVOSBC; the SDV OWNER must control the management and daily operations of the SDVOSBC; and the SDV must hold the HIGHEST OFFICER POSITION in the SDVOSBC Women-Owned Small Business (WOSB) Third Party Certified To be eligible, a firm must be AT LEAST 51% owned and controlled by ONE OR MORE WOMEN, and primarily managed by WOMEN. The women MUST BE U.S. citizens, AND the firm MUST BE “small” in its primary industry in accordance with SBA’s size standards for that specific industry. Economically Disadvantaged Women-Owned Small Business (EDWOSB) Third Party Certified In order for a WOSB to be deemed “economically disadvantaged,” its owners must demonstrate an even MORE economic disadvantage in accordance with SBA’s requirements. The WOSB has to be AT LEAST 51% owned by one or more women who are “economically disadvantaged.” A woman is presumed economically disadvantaged if she has a personal net worth of less than $750,000; her adjusted gross yearly income averaged over the three years after the certification as a WOSB to be less than $350,000; and the fair market value of all her assets is less than $6million. 26

27. BACKGROUND FY 11 Prime Contract Goals Socioeconomic Category Government- Wide Prime Contract Goal NASA Prime Contract Goal GSFC Prime Contract Goal Small Business (SB) 23%15.9%21% Small Disadvantaged Business (SDB) 5% 13% Historically Underutilized Business Zone (HUBZone) 3% 0.14% Women-Owned Small Business (WOSB) 5% 3% Service-Disabled Veteran-Owned Small Business (SD-VOSB) 3% 2% 27

28. LAW SMALL BUSINESS JOBS ACT OF 2010: Signed by President Obama on September 27, 2010 Most significant piece of small business legislation in over a decade. Extended the successful SBA enhanced loan provisions while offering billions more in lending support, tax cuts, and other opportunities for entrepreneurs and small business owners. Expands Training and Counseling Strengthens Small Businesses' ability to compete for and win contracts on Federal contracting opportunities for Small Business. Reaffirmed “parity” among federal small business contracting programs. 28

29. PARITY Order to Follow with Procurements Expected to Exceed $3,000 and NOT to Exceed $150,000 Procurements Valued from $3,000 to $150,000 #1 Small Business, which includes HUBZONE OR 8(a) OR SDVOSB OR WOSB/EDWOSB first #2 Full and Open Competition * Acquisitions Valued from $3,000 to $150,000 are AUTOMATICALLY reserved exclusively for small business concerns. 29