1. SUB-CONTRACTING: A PRIME STRATEGY NATIONAL 8(A) SUMMER CONFERENCE ANCHORAGE, ALASKA, JUNE 18, 2014 RONETTA KEETER BRIGGS & LEIGH A. MCGEE CO-FOUNDERS, OSIYO CONSULTING

2. Prime/Sub = Win/Win 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 2

3. Participant Polling Questions How many prime contractors? How many sub-contractors? How many of you would consider sub- contracting as a prime strategy ? 3

4. To Prime or Not to Prime – That is the question? WHAT'S YOUR BEST STRATEGY? WHAT SHOULD YOU CONSIDER? 4

5. It’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 5

6. To 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? 6

7. SBA’s 2012 Scorecard on Small Business Spending AGENCYTotal Eligible $Small Business Spend $ SB Goal Prime % SB Goal Sub % FY12 Score % FY12 Grade Gov-Wide$404,180,126,266$ 89,923,198,45723.0 / 22.336.0 / 33.6 96.8B Defense$274,991,402,519$ 56,118,704,96622.5 / 20.436.7 / 35.5 91.7B Energy$ 24,566,940,887$ 1,264,427,44010.0 / 5.252.0 / 47.5 51.9 F Education$ 2,051,328,059$ 406,841,72718.5 / 19.843.5 / 29.8 89.0C Commerce$ 3,266,301,029$ 1,204,849,91939.0 / 36.930.0 / 46.7104.8A Science$ 288,932,808 $ 44,426,51420.0 / 15.419.0 / 27.9 84.41C 7

8. Government’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 8

9. Prime 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 9

10. Risks 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 10

11. Required Federal Agency Subcontracting 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 11

12. Why Sub-Contract as a Prime Strategy? 12 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

13. Finding 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 13 Government Agencies Business Development Organizations Industry Resources Major Players The InternetNetwork

14. Marketing 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. 14

15. Closing Comments and Questions THANK YOU FOR SHARING YOURSELF AND TIME WITH US! 15

16. 4 4 4 4 4 4 4 Leigh A. McGee| 410-330-7484 | lamcgee@osiyo.biz Roni K. Briggs| 972-720-9953 | rbriggs@osiyo.biz Innovative tools and methods helping organizations adapt, grow, and prosper. - Visioning & Strategic Planning - Organizational Assessment - Leadership Development - Facilitation & Mediation - Board Governance www.osiyo.biz Est 2003 16

17. Sources  15 U.S.C. §644(g)(1)  Contract Management | September 2011 Article by Steven Koprince  Congressional Research Service www.crs.gov  http://www.sba.gov  http://www.onvia.com/business-resources/find-prime-contractors-subcontracting  The Federal Market Group Daniel M. Jacob www.fmg-ltd.com 17