1. Understanding Small Business Subcontracting Plans

2. Stephanie Lewis Size Specialist & Commercial Market Representative U.S. Small Business Administration Office of Government Contracting (817) 684-5303 stephanie.lewis@sba.gov Presenter:

3. Hosts: Dwight A. Johnson, Procurement Center Representative SBA Office of Government Contracting, Area IV, Omaha sbalearning@sba.gov (402) 221-7206 Jan Kaiser, Procurement Center Representative SBA Office of Government Contracting, Area IV, Chicago janis.kaiser@sba.gov (312) 353-7442

4. Reminders: 1.SBA approves joint ventures of 8(a) firms only. Do not ask any other small business JVs for evidence of SBA approval. 2.See the full lists of the 2016 6-digit NAICS codes designated for EDWOSB and for WOSB set-asides under the WOSB Program at https://www.sba.gov/contracting/government-contracting- programs/women-owned-small-businesses. https://www.sba.gov/contracting/government-contracting- programs/women-owned-small-businesses 1.Size protestsFAR Part 19.3 2.SBA staff FAR Part 19.4 3.Certificates of Competency FAR Part 19.6 4.Subcontracting plans FAR Part 19.7 SBA Government Contracting Area Directors, Office of Government Contracting (https://www.sba.gov/content/pcr-area-directors) (https://www.sba.gov/content/pcr-area-directors

5. 1. Questions answered during the final 10 minutes. AT&T Connect Support at 1-888-796-6118 2. Technical problems? Contact the moderator with a note or call AT&T Connect Support at 1-888-796-6118. 3. Page numbers stated for those working of hard copies of the program. 4. We cover the “SBA Quick Reference” as time allows. 5. Find your nearest Procurement Technical Assistance Center at http://www.aptac-us.org Welcome to “SBA Virtual Learning 2016”

6. Check this link for past programs: http://www.aptac-us.org/for-contracting-officers- http://www.aptac-us.org/for-contracting-officers- sba-webinar-library/ Contracting officer resources: “How PTACs partner with federal agencies”: http://www.aptac-us.org/federal-partners/ Association of Procurement Technical Assistance Centers posts past “First Wednesday” programing

7. 1.There are firms that offer fee for services to assist small businesses in a variety of ways. Registration in SAM, proposal preparations, certifications (not authorized by SBA) assistance in getting on GSA Federal Supply Schedules and so forth. 2.No government official should be promoting any individual business’ services or products as this implies endorsement of one firm over all others. The government has to remain impartial. If you come across something that you think is great, encourage that firm to market itself, but do not market on their behalf. 3.The government, through the Department of Defense established the Procurement Technical Assistance Program (PTAP) who have centers throughout the country that do provide this and many other services – most of which are at no cost to a firm.” CAUTION – Do not recommend fee for service firms for SAM registration

8. FY 2016 TopicPresentersSBA Area 1October 7, 2015 8(a) Business Development Jackquline Robinson- Burnette HDQTRS 2November 4, 2015 Women-Owned Small Business Ken SilviaIII 3December 2, 2015 SBA Surveillance Reviews 2016 Valerie ColemanV 4January 6, 2016 Consolidation/Bundling Jan KaiserIV 5February 3, 2016SDVOSBKeith WayeI 6March 2, 2016Strategic SourcingTom KrusemarkIV 7April 6, 2016 Market Research: Dynamic Small Bus Search Valerie ColemanV 8May 4, 2016HUBZones Mariana Pardo/Alison Mueller HDQTRS 9June 1, 2016SBA Size StandardsDavid GordonIV 10July 13, 2016Nonmanufacturer RuleJanice NietesVI 11August 3, 2016 Understanding SB Subcontracting Plans Stephanie LewisV To be rescheduled 1102 FIRST WEDNESDAY VIRTUAL LEARNING SERIES 2016” 9:30 to 10:30 Central Time

9.  Self-service: Fill in your name on the certificate slide and save.  Phoning in only? Send an email immediately to the link at sbalearning@sba.gov to verify your participation. If you listen in groups, send emails of participants in an excel document. sbalearning@sba.gov  Post program email. This contains a time sensitive.wmv recording, a transcript of the program, along with another copy of the program PowerPoint. One Continuous Learning Point

10.  In FY14, SBs received $91.7 billion in prime contracts (roughly 25% of $366.8 billion) and $75.0 billion in subcontracts (33.0% of $227.0 billion).  Maximizes small business participation at all performance tiers  Increasing importance on agency SCORECARD  Final Rule issued July 14, 2016 “Small Business Subcontracting Improvements” effective Nov 1, 2016. Importance of the Subcontracting Program

11.  FAR 52.219-8 (over SAT) Utilization of Small Business Concerns  FAR 52.219-9 (“Other than Small”) Small Business Subcontracting Plan  Contract or modification over $700,000 ($1.5 million for construction)  “Maximum Practicable Opportunity”  “Good Faith Effort” Subcontracting Plans

12. Modification (MOD) Is a subcontracting plan required? (FAR19.702(a)(1) & (2)) Contractor is “Other Than Small Business” (OTSB) For the Contract? For the Modification? Contract>$700K and MOD>$700K Yes Yes; however, it is not necessary to obtain another subcontracting plan for a modification exceeding the applicable threshold if the contract already includes a subcontracting plan. The original plan must be modified to adjust the goals to account for the new effort. FAR 19.705-2(e) Contract>$700K and MOD<$700K YesNo Contract $700K No Yes, per 13 CFR 125.3(d)(8) – & FAR proposed rule Contract $700K NoYes

13.  Breaking out contract work items into economically feasible units, as appropriate, to facilitate small business participation;  Conducting market research to identify small business subcontractors and suppliers through all reasonable means, such as performing online searches via SAM, posting opportunities on SBA's SUB-Net, participating in Business Matchmaking events, and attending pre-bid conferences;  Soliciting small business concerns as early in the acquisition process as practicable to allow them sufficient time to submit a timely offer for the subcontract;  Providing interested small businesses with adequate and timely information about the plans, specifications, and requirements for performance of the prime contract to assist them in submitting a timely offer for the subcontract;  Assisting interested small businesses in obtaining bonding, lines of credit, required insurance, necessary equipment, supplies, materials, or services;  Utilizing the available services of small business associations; local, state, and Federal small business assistance offices; and other organizations; and  Participating in a formal mentor-protégé program with one or more small-business protégés that results in developmental assistance to the protégés. Maximum Practicable Opportunity

14.  Small Businesses  No Subcontracting Opportunities Exist  Approved one level above the CO, placed in contract file  Performed Exclusively Outside the United States Subcontracting Plan Not Required

15.  Any agreement (other than one involving an employer-employee relationship) entered into by a Government prime contractor or subcontractor calling for supplies and/or services required for performance of the contract or subcontract (including modifications).  First Tier Only Subcontract

16. A goal without a plan is just a wish. Antoine de Saint-Exupery Types of Subcontracting plans

17.  Plan for a specific contract  1 contract = 1 plan  Covers entire contract period, including separate goals for each option period  Contains required plan elements  Choose whether or not to include indirect costs incurred for common or joint purposes (allocated on a prorated basis)  ISR is used to determine whether goals are met Individual Subcontracting Plan

18.  Plant or division wide basis  Boiler plate plan  Effective for 3 years after approved  Goals negotiated for each contract (and rationale)  Master plan + goals are married and become an individual plan effective for the life of the contract  ISR is used to determine whether goals are met Master Plan

19. 19  Preferred type for “commercial items” (FAR 2.101)  Annual plan based on Contractor’s fiscal year  Applies to the entire production of commercial items on a corporate, plant, division, or product line basis  Covers all subcontracting (govt. and commercial)  Contains required elements (FAR 19.704)  Plan and SSR include indirect costs  SSR used to determine whether goals are met  Remains in effect during the contractor's fiscal year for all Federal government contracts in effect during that period Commercial Subcontracting Plan

20.  Once a contractor’s commercial plan has been approved, the Government shall not require another subcontracting plan from the same contractor while the plan remains in effect  As long as providing a commercial item. Commercial Plans

21.  DoD Test Program, DFARS 219.702  Annual plan for all DOD subcontracting  Government fiscal year  Corporate, plant, or division basis  DCMA administers program  Contains required elements (FAR 19.704)  Has additional elements  Submit SSR annually (used to determine whether goals are met) Comprehensive Subcontracting Plan (DoD contracts only)

22.  A contract may have no more than one subcontracting plan  CO’s discretion, require a plan if the contractor’s size changes from SB to LB at time of recertification Rules

23.  Individual & Master Plans  Contracting Officer  Commercial Subcontracting Plans  First Approval – CO for first federal contract  Subsequent Annual Approvals - CO responsible for the uncompleted contract with the latest completion date.  Contractor provides a copy of the approved plan to each CO responsible for an ongoing contract that is subject to the plan  DoD Comprehensive Subcontracting Plans  Negotiate with DCMA annually How are plans reviewed?

24.  Established as total dollars subcontracted and as a percentage of total subcontract dollars. SB SDB WOSB HUBZONE VOSB SDVOSB  A CO may also establish goals as a percentage of total contract dollars  Option years broken out separately Goals

25.  Prime contractor decides the appropriate NAICS code/size standard  Describes the principal purpose of the subcontract  Puts it on the subcontract Size

26.  Primes must collect written size certifications from subcontractors, or use SAM  Goal Categories  Small Business – self-certifying  SDB – self-certifying  WOSB – self-certifying  HUBZone – SBA certified  VOSB – self-certifying  SDVOSB – self-certifying * ANCs and Indian Tribes are counted as SB & SDB * NIB/NISH counted toward SB (DoD Only) Who can a prime count?

27.  Internally generated costs, such as salaries and wages  Employee insurance; other employee benefits  Payments for petty cash  Depreciation, interest  Income taxes, property taxes  Lease payments,  Bank fees, fines, claims, and dues  Original Equipment Manufacturer relationships during warranty periods (negotiated up front with product)  Utilities such as electricity, water, sewer, and other services purchased from a municipality or solely authorized by the municipality to provide those services in a particular geographical region  Philanthropic contributions Excluded from subcontracting

28.  Total subcontracting$100,000  Small Business$30,000 30%  SDB$ 8,000 26.7%  8a$ 3,000 10%  WOSB$ 0 0%  EDWOSB$ 1,500 5%  Foreign$ 9,000 30%  HUBZone$ 3,500 11.7%  VOSB$ 2,000 6.7%  SDV$ 3,000 10% TEST YOURSELF:

29. 29  Total subcontracting$100,000100%  Small Business$30,00030%  SDB$ 11,00011%  WOSB$ 1,5001.5%  HUBZone$ 3,5003.5%  VOSB$ 5,000 5%  SDV$ 3,000 3% CORRECT METHOD

30.  Minimum goals/floors  Statutory goals  Agency subcontracting goals  Realistic goals  How do we know what realistic goals are? Are goals acceptable?

31.  REASONABLE LEVEL  expend good faith efforts to the maximum practicable extent  SHOULDN’T LOW BALL GOALS  To minimize exposure to liquidated damages  To avoid the administrative burden of substantiating good faith efforts.  SHOULDN’T NEGOTIATE UPWARD  If a higher goal will significantly increase the Government’s cost or seriously impede the attainment of acquisition objectives. GOALS

32.  No detailed standards apply to every subcontracting plan.  Goals should be attainable  Consider circumstances:  Previous involvement of SBs in similar acquisitions  Availability of SBs in socio-economic groups  Contractor’s own past performance  Reasonableness of the goals  Methods the contractor intends to use to meet the goals GOALS

33.  A subcontracting plan must include:  Goals based on total planned subcontracting dollars expressed as a % Options expressed separately Optional (indiv plans only): ALSO as % of total contract value  Total dollars to be subcontracted  Types of supplies/services to be subcontracted  Method used to develop goals  Method used to identify potential SBs  Indirect costs included/not included FAR 19.704 Mandatory Plan Elements

34.  Name of individual administering the plan  Efforts to ensure SB have equitable opportunity to compete  Assurances that required clauses and provisions will flow down to subcontractors  Assurances that reporting will be done  Recordkeeping procedures FAR 19.704 Mandatory Plan Elements

35.  PCRs review the solicitation and the subcontracting plan  Submit advisory recommendations PCR Advisory Recommendations

36. REPORTING

37.  Assess whether the prime contractor made a good faith effort to comply with its SB Subcontracting Plan  Assess the prime contractor’s written explanation concerning the prime contractor’s failure to use a small business concern in the performance of the contract in the same scope, amount, and quality used in preparing and submitting the bid/proposal Post Award Responsibility of CO FAR 19.705-6 (proposed rule)

38.  www.esrs.gov www.esrs.gov  ISR:  Semi annual (March 31 and Sept 30)  30 days after reporting period  30 days after contract completed (FINAL)  Due even if no subcontracting has occurred  Option Year Goals: rolled in as options are exercised  SSR:  Annual (end Sept 30)  30 days after reporting period ISR and SSRs

39.  www.esrs.gov www.esrs.gov  CMRs have superuser access  Approved by: Contracting Officers or higher tier prime contractor  Accept or Reject within 60 days  Reject – errors, omissions, or incomplete data provide explanation to contractor  Review Goals and Remarks 39 ISR Reporting

40. Commercial Plans:  Approved by CO who approved the commercial plan  One SSR - includes % of dollars attributable to each agency Individual Plans  Approved By Agency Representative  Separate report to each agency covering only that agency’s contracts (that has a subcontracting plan) Content:  All subcontracting under prime contracts and subcontracts with the awarding agency, regardless of the dollar value of the subcontracts.  May be submitted on a corporate, company or subdivision  For DoD a consolidated report shall be submitted (except for construction, a separate report shall be submitted for each DoD component) SSR Reporting

41. MONITORING POST AWARD

42.  SBA  Subcontracting Orientation and Assistance Review (SOAR)  Performance Review (Desk Review)  Program Compliance Review  Follow-up Review  DCMA (MOU)  Program Compliance Review  Agency Reviews  Surveillance Review Post Award Monitoring

43.  Exceptional  Very Good  Satisfactory  Marginal  Corrective Action Plan  Unsatisfactory  Cannot substantiate its claimed achievements  Corrective Action Plan LIQUIDATED DAMAGES  considered by CO  upon written recommendation from CMR  willful or intentional failure to perform in accordance with the requirements of the subcontracting plan or willful/intentional action to frustrate the plan. SBA reviews

44.  Agency funding the order “may” establish SB subcontracting goals for individual orders, BPAs or BOAs.  Submit SB subcontracting reports for individual orders to the CO on an annual basis.  Agency funding the order shall receive credit towards its SB subcontracting goals.  More than one agency may not receive credit towards its subcontracting goals for a particular subcontract. Orders under IDIQ contracts (task or delivery order contracts, GWACs, MACs, and FSS)

45.  I mplements NDAA of 2014  In individual subcontracting plans, the contractor may receive credit for small business concerns performing as first tier subcontractors or subcontractors at any lower tier  Proposed Rule 80 FR 60300 (10/06/15), Comment period closed 12/07/2015  Draft Final Rule in review Credit for Lower Tier Subcontracting

46.  Prime contractors must incorporate the subcontracting plan goals of their lower tier OTSB subcontractors in their individual subcontracting plans.  Lower tier OTSB subcontractors must have their own individual subcontracting plans if the subcontract is at or above the subcontracting plan threshold, and are required to meet their subcontracting plan goals. Credit for Lower Tier Subcontracting

47.  The actual subcontracting dollars are only reported once for the same award to avoid double counting the dollars, notwithstanding the fact that a small business subcontract may be reported under more than one subcontracting plan. Credit for Lower Tier Subcontracting

49. Dynamic Small Business Search

50. SBA size regulations13 CFR Part 121 HUBZone regulations13 CFR 126.616 SBA Certificate of Competency13 CFR 125.5 Service-disabled veteran13 CFR 125.15(b) 8(a) and SDB regulations13 CFR 124.513 Small disadvantaged business13 CFR 124.1002(f) WOSB Program13 CFR 127 SBA Prime Contracting13 CFR 125.2 SBA Subcontracting13 CFR 125.3 Summary of CFR regulations

51. A. SBA Government Contracting Area Offices B. SBA Procurement Center Representatives (PCRs) C. SBA Commercial Market Representatives (CMRs) D. SBA District Offices E. SBA Headquarters FIVE TYPES OF SBA CONTACTS & OFFICES

52. Six SBA Government Contracting Areas at hyperlink: https://www.sba.gov/content/pcr-directory

53. 1. Size protests (with recertification) FAR 19.302 13 CFR 121.1001 13 CFR 121.1010 2. Locating nearest SBA stafferFAR 19.4 3. Certificate of CompetencyFAR 19.6 13 CFR 125.5 4. COC Limitations on Subcontracting Compliance FAR 19.601 13 CFR 125.6(f) 5. Receiving copies subcontracting plans FAR 19.705-6 A. SBA Quick Reference - SBA Area Offices

54. FAR 19.402 Small Business Administration procurement center representatives. (a)(1) The SBA may assign one or more procurement center representatives to any contracting activity or contract administration office to carry out SBA policies and programs… (2) If a SBA procurement center representative is not assigned to the procuring activity or contract administration office, contact the SBA Office of Government Contracting Area Office….. (b) Upon their request and subject to applicable acquisition and security regulations, contracting officers shall give SBA procurement center representatives….access to all reasonably obtainable contract…. B. SBA Quick Reference SBA Procurement Center Representatives (PCRs)

55. 1. SBA PCR coordination recordsFAR 19..501(b) 13 CFR 125.2 2. Small business set-aside appealsFAR 19.505 13 CFR 125.2(b)(7) 3. HUBZone set-aside appealsFAR 19.1305 FAR 19.1306 13 CFR 126.61 4. SDVOSB set-aside appealFAR 19.1405 FAR 19.1406 13 CFR 125.22 5. Reporting bundling to SBA (MATOCs)FAR 19.202-1(e)(1) 13 CFR 125.2 6. SBA subcontracting plan reviews-copies FAR 19.705-5(3) 13 CFR 125.2(b)(6)(iii) FAR 19.705-6(c) 13 CFR 125.2(b)(6)(iii)(C) 7. SBA subcontracting program reviewFAR 19.707(4) 13 CFR 125.2(b)(6)(iii)(C) 8. Small business TFDFAR 49.402-3 (e)(4)) (Termination for default) 9. Surveillance review of agency contracting B. SBA Quick Reference SBA PCRs, cont.

56. AgencyFormTitle 1CommerceCD 570Small business set-aside review 2Defense2579Small business coordination record 3Energy4220.2 Small Business Review form 4GSA2689Small Business Analysis Record 5HHS653Small business review form 6Homeland Security700-22Small business review form 7Interior1886Acquisition screening and review form 8Labor DL1- 2004 Small Business Procurement Determination. 9NASANF 1787Small business review sheet 10StateDS-1910Small Business Clearance Form 11Transportation4250Small Business Program Review Form 12USDAAD-1205 Small Business Program – Procurement Review 13VA2268 Procurement Request Review For Small Business… Small business coordination forms sent to SBA PCRs

57. 19.705-6 Postaward responsibilities of the contracting officer. …: (a)Notifying the SBA of the award by sending a copy of the award document to the Area Director, Office of Government Contracting, in the SBA area office where the contract will be performed. (c) Giving to the SBA procurement center representative….a copy of— (1) Any subcontracting plan submitted in response to a sealed bid solicitation; and (2) The final negotiated subcontracting plan that was incorporated into a negotiated contract or contract modification. (d) Notifying the SBA procurement center representative…. of the opportunity to review subcontracting plans in connection with contract modifications. Document that you have provided SBA Area Directors with copies of subcontracting plans

58. 1. Prime contractor portfolio management13 CFR 125.3 2. Reviews of subcontracting plan holders 13 CFR 125.3 3. Matchmaking13 CFR 125.3 4. SBA SUB-Net link at: http://www.sba.gov/content/sub-nethttp://www.sba.gov/content/sub-net 5. SBA Subcontracting Opportunities Directory link at: http://www.sba.gov/subcontracting-directory http://www.sba.gov/subcontracting-directory 6. “SBLO Handbook” link at: http://www.sba.gov/content/small- business-liaison-officer-handbookhttp://www.sba.gov/content/small- business-liaison-officer-handbook C. SBA Quick Reference - SBA Commercial Market Representatives (CMRs) link at: (https://www.sba.gov/content/cmr-directory)https://www.sba.gov/content/cmr-directory

59. Link to district offices at: http://www.sba.gov/about-offices-list/3 http://www.sba.gov/about-offices-list/3 D. SBA Quick Reference – SBA Regional and District Offices

60. To locate SBA 8(a) business development servicing office, check Dynamic Small Business Search at the link: http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm and then local resources at the link http://www.sba.gov/tools/local- assistance/districtoffices http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfmhttp://www.sba.gov/tools/local- assistance/districtoffices D. SBA Quick Reference - SBA District Offices, cont.

61. 1. HUBZone status protests FAR 19.306 13 CFR 126.801 2. NAICS code appealFAR 19.30 3 13 CFR 121.1103 3. Non-manufacturer rule waivers FAR 19.102(f)(1)-(7) 13 CFR 121.1204 4. SDVOSB status protest FAR 19.307 13 CFR 125.23 5. WOSB Program status protestFAR 19.308/13 CFR 1275.600 E. SBA Quick Reference - SBA Headquarters

62. FAR 19.102 (f ): No class waiver to NMR? Check out an individual waiver*

63. B. A B. A WAIVER FOR A SET-ASIDE IS NOT NEEDED WHEN: 1. ONE SMALL BUSINESS MANUFACTURER: * SMALL BUSINESS SET-ASIDE 2. SMALL BUSINESS MANUFACTURER, BRAND SPECIFIC OF ANY DOLLAR SIZE WITH FAR 6 JUSTIFICATION: * SMALL BUSINESS SET-ASIDE 3. LARGE BUSINESS, BRAND SPECIFIC (OR BRAND EQUIVALENT) REQUIREMENT $25,000 OR LESS WITH FAR 6: * SMALL BUSINESS SET-ASIDE C. GSA SCHEDULE: USE THE CLOSEST CODE LISTED ON THE SCHEDULE. THEN SAME AS ABOVE IF NO CLASS WAIVER. D. EXCEPTION TO “NMR” IF PROCUREMENT $25,000 OR LESS. (FAR 19.102 (F)(7)(B))  A. If you find no class waivers, an SBA individual waiver to the Nonmanufacturer Rule (NMR) may help you to achieve small business goals if*:

64. NMR Program Office The preferred and most expeditious method for asking questions and submitting waiver requests is by e-mail to nmrwaivers@sba.gov nmrwaivers@sba.gov