Overview: CON 260A. The Small Business Program Part A

Transcription

1 Overview: CON 260A The Small Business Program Part A

2 Lesson 1: Overview and Historical Perspective Contributions of small businesses to our national economy warrant inclusion of small businesses to the greatest extent possible when making federal contract award decisions. Innovation, job creation, efficiency, increased competition, reduced prices, quality sources of supply

3 Overview and Historical Perspective Small Business Mobilization Act 1942 Congress effort to incorporate the utilization of small businesses in federal contracting opportunities. Since then, increased emphasis has been placed on specific subsets of small businesses.

4 Overview and Historical Perspective Example of a significant law: Public Law (1978) Required federal agencies to set small business goals Established SADBU office within each federal agency Required small business subcontracting plans

5 Overview and Historical Perspective The CFR and the FAR and its supplements and agency directives ensure proper implementation of socio-economic programs in federal acquisition Court cases affect how the government enforces and implements programs aimed at increasing small business opportunities

6 Overview and Historical Perspective Court cases such as the Adarand decision have major impacts on small business programs Small business managers and contracting officers need to ensure they are following current regulations and guidance

7 Lesson 2: Duties and Responsibilities of Small Business Officials Establish challenging small business targets that aggressively support achievement of small business program goals. To develop goals, must know both acquisition history and forecast. Monitor performance against goals monthly.

8 Duties and Responsibilities of Small Business Officials Agencies are required to adopt small business goals, annually, in consultation with the SBA. 60 days after the end of each fiscal year, report to the SBA on goal achievements, justification for failure to meet goals, planned actions for increasing participation.

9 Duties and Responsibilities of Small Business Officials Example of corrective action: Based on inability to meet SB goals, a Rapid Improvement Team was established by DoD (2002). Key initiatives were: a process for establishing goals, installing a Scorecard, and increasing senior leadership accountability for developing and executing SB improvement plans creating shared responsibility.

10 Duties and Responsibilities of Small Business Officials Determine goals based mainly on past performance. Accommodates purchasing pattern and anticipates product mix. Each component of agency should be expected to contribute a fair share of contract awards to small businesses.

11 Duties and Responsibilities of Small Business Officials Objective of Subcontracting Program Promote maximum possible use of small businesses by the nation s large contractors. Small Business Act requires the President to establish annual subcontract goals of not less than 5% of the total value of all subcontract awards each fiscal year for both SDBs and WOSBs and 3% for SDVOSBs.

12 Duties and Responsibilities of Small Business Officials Objective of Subcontracting Program No minimum percentage goal for prime contractors subcontracting with small businesses. Government-wide, generally ranges between 35% and 42%. Goal in any subcontracting plan should reflect maximum practicable opportunity.

13 Duties and Responsibilities of Small Business Officials DFARS (d): Small Business Manager should challenge subcontracting plan that does not include goals and does not consider HBCU/MIs. DFARS (a)(1): Goal for SDBs includes HBCU/MIs.

14 Duties and Responsibilities of Small Business Officials Outreach Programs Engage with internal and external customers. Talk with other Small Business program managers! Raise awareness and offer support to SBs. Deliver info about contract opportunities. Identify capable SBs to match with agency requirements.

15 Duties and Responsibilities of Small Business Officials Small business set-asides: Making recommendations on all acquisitions over $10,000. Reviewing before solicitation is issued. Referring rejected recommendations to the SBA s procurement center representative (PCR).

16 Duties and Responsibilities of Small Business Officials Provide training for external stakeholders, internal stakeholders, contracting officers / administrators. How-to s and opportunities. Small business capabilities and availability. Goals, outreach, market research.

17 Lesson 3: Small Business Laws Facts: 97% of all U.S. businesses are small. Small businesses account for 48% of GNP. 55% of the U.S. labor force is employed by firms with fewer than 100 employees. Account for 2/3rds of all new jobs created in last 10 years. Produce 24 times as many major innovations as large businesses. Win more than $1 out of $2 in open competition.

18 Small Business Definitions As defined by the FAR, a small business is a concern, including its affiliates, that is: Independently owned and operated. Not dominant in the field of operation in which it is bidding on government contracts. Qualified as a small business under the criteria and size standards in 13 CFR Part 121.

19 Small Business Definitions A concern is: Any business entity organized for profit with a place of business in the U.S. Includes individuals, partnerships, corporations, joint ventures, associations, and cooperatives.

20 Small Business Definitions Small Disadvantaged Business (SDB) Self-certifies in SAM for the size standard applicable to the acquisition. The net worth of each individual upon whom the certification is based cannot exceed $750,000 (after taking into account exclusions in 13 CFR (c)(2)).

21 Small Business Definitions Socially Disadvantaged Individuals who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control.

22 Small Business Definitions Economically Disadvantaged Individuals whose ability to compete in the free-enterprise system has been impaired due to diminished capital and credit opportunities, as compared to others in the same or similar line of business that are not socially disadvantaged. =

23 Small Business Definitions Socially and Economically Disadvantaged Groups Include: Black Americans Hispanic Americans Native Americans Asian-Pacific Americans Subcontinent Asian Americans (Asian-Indian) Others as defined by the SBA

24 Small Business Definitions 8(a) SDBs Section 8(a) of the Small Business Act establishes the SBA s business development program for socially and economically disadvantaged SBs. Owned and controlled by one or more persons who can provide evidence of having been deprived of the opportunity to develop and maintain a competitive position in the economy because of their social and economic disadvantage. Engaged full-time in the day-to-day business operations and management. Must apply for certification to the SBA.

25 Small Business Definitions Historically Underutilized Business Zone (HUBZone) Concerns American owned and controlled. Principle office located in a HUBZone. 35% of employees reside in a HUBZone. Must apply for certification by the SBA. SBA publishes List of Qualified HUBZone SBCs

26 Small Business Definitions Veteran-Owned Small Business Concern Small business concern in which one or more veterans owns no less than 51% of the business (38 U.S.C. 101(2)). In the case of a publicly owned business, one or more veterans owns no less than 51% of the stock, and one or more veterans control management and daily operations. May self-certify per FAR

27 Small Business Definitions Service Disabled Veteran-Owned Small Business Concern Small business in which one or more servicedisabled vets owns no less than 51% of the business (38 U.S.C. 101(2)). In the case of any publicly-owned business, one or more service-disabled vets control management and daily operations. May self-certify per FAR

28 Small Business Definitions Woman-Owned Small Business Concern Small business in which one or more women owns at least 51% of the business. In the case of any publicly-owned business, one or more women owns at least 51% of the stock and one or more women control the management and daily business operations (FAR 2.101). Self-certification in SBA Repository and in SAM.

29 Small Business Laws Armed Services Procurement Act of 1947 a fair proportion of contracts be placed with SBs. Small Business Act of 1953 Authorized the SBA to enter into contracts with agencies and sublet to 8(a) firms. Public Law (1978) Defined SDBs and reserved awards <$25K.

30 Small Business Laws Executive Order (1979) Established WOSB program. Public Law (1994) Enacted $2,500 micro-purchase threshold, simplified acquisition threshold at $100,000, and automatic small business reservation became $2,500-$100,000. Public Law (1997) Enacted HUBZone Empowerment Contracting Program.

31 Small Business Laws Public Law Established VOSB and SDVOSB program. Veterans Public Law , HR 2297, Sec 36, of 2003 Established set-asides for SDVOSBs. Section 807 of the Reagan National Defense Authorization Act (FY05) Increased simplified acquisition threshold to $150,000 and automatic SB reservation became $150,000.

32 Small Business Laws Current National Policy - FAR (a): It is the policy of the Government to provide maximum practicable opportunities in its acquisitions to small business, VOSBs, SDVOSBs, HUBZone firms, SDBs, and WOSB concerns. Such concerns also must have the maximum practicable opportunity to participate as subcontractors... The SBA counsels and assists small business concerns and assists contracting personnel to ensure that a fair proportion of contracts for supplies and services is placed with small businesses.

33 Representation by the Offeror Offerors may self-certify their status as: VOSB SDVOSB WOSB SDB Formal SBA certification is required of: 8(a) concerns HUBZone concerns 33

34 Representation by the Offeror FAR and covers small business self-certification by the Offeror. Contracting Officer is to accept an Offeror s representation in a bid or proposal unless: Another offeror or interested party challenges the small business representation. The Contracting Officer has a reason to question the representation and refers matter to the SBA. 34

35 Annual Size Certification Each business must annually certify its SB size status in SAM. For all contracts, a firm must represent its size status for the contract s NAICS code. Including novation agreements and all mergers and acquisitions. For long-term contracts (>5 years, including options) Within 60 to 120 days prior to end of 5 th year and any option exercise after 5 years. 35

36 Size Standards Define whether a business entity is small and, thus, eligible for programs and preferences. The SBA determines small business size standards on an industry-by-industry basis. Uses NAICS code industry categories. Size standards are on SBA s web site. For commodities, size standard is based on number of employees. For construction or services, size standard is based on average annual receipts for past 3 years. 36

37 Size Standard for Specific Requirement The Contracting Officer determines the appropriate NAICS code for an acquisition. The Small Business Manager and the SBA have the opportunity to comment on NAICS code. For consolidated requirements: If SOL calls for all or none, use the NAICS code related to the principal nature of the product or service. If the SOL allows offers on any of the items, the Offeror must meet the size standard for each item it offers to furnish. 37

38 NAICS Appeals In accordance with FAR : An appeal of the NAICS code and applicable size standard may be filed with SBA within 10 calendar days of issuance of initial solicitation. After being notified, the Contracting Officer has 10 calendar days to respond. If SBA s decision is received before due date, the solicitation is to be amended. If received after the due date, decision will apply to future solicitations of same product/service. 38

39 Impact on Size Determinations by Teams, JVs and Affiliations FAR 9.6 defines Teams to mean: 2 or more companies form a partnership or joint venture to act as a potential prime. A potential prime agrees with one or more other companies to have them act as its subcontractors. Most common form of teaming arrangement is prime/subcontractor relationship. The firm serving as the prime must be a SB to participate in a SB set-aside. 39

40 Joint Ventures A joint venture is formed when one or more business concerns decide to join to form a new business entity for the one-time purpose of pursuing a specific requirement. The combined receipts, or employees, of all of the JV partners of the new business entity must meet the size standard for that NAICS code. 40

41 Affiliations As defined in 13 CFR : Affiliations are associations between businesses where: One concern controls or has the power to control the other, or A 3 rd party or parties control(s) or has the power to control both. The SBA makes the determination whether an affiliation exists based on ownership, management, previous relationships, contractual relationships. 41

42 Affiliations The Exceptions There are 3 exceptions to combining the business concerns receipts and employees: Non 8(a) Competitive 8(a) Mentor-Protégé 13 CFR

43 Teaming and Joint Ventures Should complement team members capabilities. Offers the government best combination of performance, cost and delivery. Accommodates large, consolidated contracts. Can be business strategy. Can be key to breaking into gov t market. 43

44 Lesson 4: Conducting Market Research What is market research? Process of collecting, organizing, maintaining, analyzing and presenting data that enables activities to achieve the best value acquisition. Products, Market capabilities, and Business practices associated with them. 44

45 Strategic vs. Tactical Market Research Strategic: Ongoing process involves activities acquisition personnel perform continuously to stay current and includes statistical data and expenditure analysis. Could include visits to SB facilities, informal system/product/process demonstrations, informal technical presentations on capabilities. Tactical: Conducted in response to a specific need. Focuses on unique requirement or RFP. 45

46 Market Research Requirements FAR Part 10: Small Business Managers should be involved to: Maximize small businesses as primes by matching capabilities with work. Minimize impact of bundling. Develop comprehensive subcontracting strategy. 46

47 Factors to Consider Market conditions that affect SBs Distribution and support practices Potential problems and risks Competition and performance history Price reasonableness Delivery requirements Terms such as warranty, financing, discounts Laws and regulations 47

48 3 types: Integrated Product Teams Over-arching IPTs focus on strategic guidance. Working-level IPTs identify and resolve issues. Small Business Manager should be a member, along with technical, budget, legal, customer, CO Program IPTs focus on program execution. 48

49 Lesson 5: Acquisition Strategies Acquisition strategy is the development of an acquisition plan giving consideration to small business preference programs, method of acquisition, socio-economic considerations, and subcontracting plan requirements. 49

50 8(a) Business Development Small Business Act, 13CFR124 and FAR 19.8: Authorizes contracting officers at their discretion to award contract to the SBA who arranges for performance by subletting the contract to certified 8(a) firms. Two-stage, 9-year program: First 4 years, emphasis on sole source contracts, strengthen financial and managerial skills. Last 5 years, emphasis on competition, overcoming remaining elements of economic disadvantage. 50

51 8(a) Business Development SBA Search Letter Introduces a specific 8(a) firm seeking acquisitions in support of firm s business plan. SBA Requirements Letter Identifies specific 8(a) firm for a specific requirement and asking for 8(a) set-aside. Agency Offering Offers a requirement to the SBA. 51

52 8(a) Business Plan Required Includes: Description of current products/services Primary NAICS Analysis of market potential Analysis of strengths/weaknesses Specific targets, goals and objectives Estimate of 8(a) and non-8(a) awards needed to reach objectives 52

53 When Does an 8(a) Receive a Contract? Unit has a successful 8(a) contractor; continues to offer the firm work. Conducts market research to identify 8(a) firms. Identifies firms from Capabilities Briefings, Dynamic SB Search, outreach events. Early involvement in acquisition planning. 53

54 8(a) Competition Reasonable expectation that 2 or more 8(a) firms will submit offers. Award can be made at reasonable price. Anticipated award, including options: Exceeds $6.5 million for manufacturing Exceeds $4 million for all other acquisitions Exception: Native American Tribal-Owned and Alaskan Native Corporations are not limited by threshold. 54

55 8(a) Direct Awards Simplified Acquisition (<$150,000): No offering letter for orders. PCO provides SBA with copy of signed PO. 8(a) firms begins work automatically unless SBA notifies PCO within 2 days that firm is ineligible. 55

56 8(a) Direct Awards Non-Simplified Acquisition (>$150,000 ): Offering letter to SBA for sole-source awards. SBA acceptance/rejection within 5 work days. PCO will solicit, negotiate and award directly to 8(a) firm. Offering letter to SBA for competitive 8(a) award. SBA acceptance/rejection within 5 work days. 56

57 SBA Remains Prime Contractor on 8(a) Contracts Any problems and poor performance should be reported to SBA district office. Agencies are to provide copy of contract. Include task orders, modifications, purchase orders. 57

58 How 8(a) Helps Agencies Lock-tight sole source (subject to competitive thresholds). Justification and Approval (J&A) only required for sole source awards over $20 million. (FAR and ) No requirement for synopsis for sole source. Can continue to use firm for follow-on work. Helps achieve small business goals. 58

59 HUBZone Program 3% set aside goal and subcontracting requirements. Set-aside and sole-source awards permitted. Awards through full and open competition after application of a price preference in favor of the HUBZone firm. 10% factor applied to all offers except those from HUBZone firms, small businesses, offers under Trade Agreements and international trade. 59

60 HUBZone Program Only 1 HUBZone firm needed to justify solesource. Award must be made at fair and reasonable price. SBA can appeal CO s decision to not make solesource award Anticipated price of contract cannot exceed: $8 million for manufacturing. $4 million for other contracts. 60

61 Service Disabled Veteran-Owned Award contracts on the basis of restricted competition if there is a reasonable expectation that 2 or more SDVOSBs will submit an offer and an award can be made at a fair market price. Award sole-source contracts to a SDVOSB if there is not a reasonable expectation that 2 or more SDVOSBs will submit an offer and contract will not be greater than $6 million (manufacturing) or $3.5 other. 61

62 Service Disabled Veteran-Owned A joint venture may be considered a SDVOSB if: At least 1 member of the JV is a SDVOSB. Each other concern is small under the NAICS code assigned to the procurement. The JV meets the requirements of Affiliation (FAR ). 62

63 Historically Black Colleges and Universities and Minority Institutions Institutions founded primarily for the education of minorities. DoD interested in enabling these institutions to increase the number of minority grads in physical sciences, math and engineering. 63

64 Historically Black Colleges and Universities and Minority Institutions 10 USC 2323 Directs federal agencies to develop and report to Congress approaches taken to expand the role of HBCU/Mis in DoD programs. FAR Encourages HBCU/MI representation in solicitations for institutions of higher learning. 64

65 Historically Black Colleges and Universities and Minority Institutions Consider: Areas of expertise, major skills Size of institution, faculty, student, dollar value. Previous grants and contracts. Unique equipment and facilities. Assist by: Teaching to brief capabilities, creating profile, direct contact with decision-makers. 65

66 Traditional Small Business Set-Asides Small business set-asides involves the reservation of an acquisition exclusively for participation by small businesses. Unilateral Determination made by CO. Joint Recommended by SBA PCR and concurred in by CO. 66

67 Traditional Small Business Set-Asides Individual A single requirement Class Selected products or services - all Total Partial A portion of a requirement that can be divided into 2 or more production runs. 67

68 Woman-Owned Small Business Authorizes set-asides in certain industries (based on specific NAICS codes) for WOSBs and Economically Disadvantaged Woman- Owned Small Businesses (EDWOSBs). Rule of 2 applies. 68

69 Lesson 6: Special Programs and Initiatives Indian Incentive Program provides a 5% financial incentive on the total amount subcontracted to an Indian-Owned Economic Enterprise or Indian Organization. 69

70 Special Programs and Initiatives DoD Mentor-Protégé Program encourages major DoD prime contractors to develop the technical and business capabilities of eligible protégés. 70

71 Special Programs and Initiatives Small Business Innovation Research Program makes use of innovative talents of nation s small technology companies for the benefit of the U.S. Military and the U.S. economy. 71

72 Lesson 7: SBA s Role Key SBA Officials: Procurement Center Representative Commercial Market Representative Certificate of Competency Representative 72

73 PCRs: SBA s Role Aid, counsel, protect and assist SBs. Interface with federal buying offices. Review and analyze planned acquisitions and make set-aside recommendations. Review agency acquisition plans. Appeal agency decisions to not set-aside. more... 73

74 PCRs: SBA s Role Submit Secretarial appeals through SBA HQ if PCRs appeal is rejected. Review bundling requirements. Review subcontracting plans, coordinate with CMR, and submit comments to CO. Identify qualified small business sources. more... 74

75 PCRs: SBA s Role Coordinate SBA Surveillance Reviews Comprehensive assessment of a contracting activity s small business program. Management of program. Compliance with rules and procedures. Assess effectiveness, goal achievement. Training, industry outreach. more... 75

76 PCRs: SBA s Role Promote SB subcontracting through Subcontracting Assistance Program If contract exceeds $650,000 ($1.5 million for construction). Provides an evaluation factor for SDB participation and a monetary incentive to contractors that exceed their SDB target. 76

77 CMRs: SBA s Role Facilitates matching large businesses with small business subcontractors. Counsel small businesses on marketing to large businesses. Perform compliance reviews of subcontracting plans. 77

78 CoC Representatives: SBA s Role A Certificate of Competency certifies that one or more small business concerns possess the responsibility to perform a specific government procurement. Conduct reviews of SBs found nonresponsible for an award by a CO for a specific solicitation. 78

79 SBA s Role CoC Representatives: When the SBA issues a CoC on behalf of a small business, COs are required to award the contract without requiring the business to meet any other requirement with respect to responsibility. 79

80 End of Overview: CON 260A The Small Business Program Part A