Individual Subcontracting Reports (ISRs)

As a reminder, Other Than Small Businesses (OTSB) {also known as large businesses eSRS Home Page(LB)} are required to submit their Individual Subcontract Reports via the Electronic Subcontract Reporting System (eSRS) by 30 April 2015 (prime contractors and applicable large business first tier subcontractors).  Throughout the course of my blog I have posted several articles on the reporting requirements, you can review the following posts for further guidance:

For addition information you can visit the eSRS site for training guides and sample reports.

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Mid-Year Individual Subcontract Reports

This is a quick reminder for Federal contractors holding a contract that includes a subcontracting plan.  This month the mid-year Individual Subcontract Reports (ISRs) are due for large businesses.  As with previous reports, ISRs are submitted via the Electronic Subcontract Reporting System (eSRS).  You can refer to another article I posted on May 21st 2013, highlighting Small Business Utilization Monitoring and Reporting requirements.

Quick Tips:

  • The ISR reporting period is 1 October 2013 – 31 March 2014 and the project team (or group responsible for managing reporting) should have collected and categorized all of the subcontract awards.
  • Collect and organize all of the subcontract award data (business name, award date, and amount) made during the period sorting by business type, OTSB, WOSB, SDVOSB, etc.  This can be accomplished using Excel, Access, some contract / project management databases, or paper and pencil.
  • Ensure the required self-certification forms, 8(a), and HUBZone certifications are collected and reviewed for accuracy.  Self-certifications are acceptable for: Small Businesses, Small Disadvantaged Businesses, Woman Owned Small Businesses, Veteran Owned Small Businesses, and Service Disabled Veteran Owned Small Businesses.
  • Ensure the correct subcontracting plan goals are entered into the ISR being submitted.
  • Enter the required data in the eSRS ISR reporting tool.  There are several useful step by step guides with detailed instructions (http://www.esrs.gov/).  Of note the ISR tool will calculate the participation rate percentages for you, although I prefer to calculate the small business (SB) participation rates prior to beginning the process.
  • If required, enter an appropriate remark explaining why goals have not been met.  Regardless if the goals are or are not being met, the team buying out the subcontracts should keep detailed notes on the bidding for each bid package.  This is very valuable information to use for remarks in the ISR in addition to any future contract work in the same region.
  • Even if a contractor did not have any subcontracting activity during the reporting period they are still required to submit a report.  See eSRS FAQs for details.

Summary:

  • Don’t procrastinate starting the reporting process and make sure time is left to review the data for accuracy and completeness.
  • If you have delegated the responsibility for data entry of the ISR, make sure you review the material before it is submitted.  Any errors will find their way back to you.
  • Mid-year Summary Subcontract Reports are not required any longer for DoD.

 

Government Agency Small Business / Mentor Protégé Programs (MPP)

The first two posts in this three part series discussed small business mentoring and development programs available through private industry and several professional associations in the construction industry.  The focus of this post as the finale is to provide an overview of mentoring programs available through government agencies.  Most government agencies have a Mentor-Protégé program that encourages agreements between large and small business prime contractors and eligible small business protégés.  Mentor-Protégé Programs are designed to motivate and encourage firms to assist small businesses with business development.  Also, many of the agency MPP websites include links to:

  • The necessary documents for applying
  • An overview of the application process
  • Benefits to the mentor and protégé
  • Lists of existing mentors, portages, and/or current program agreements

Please refer to the list at the end of acronyms and terms.

Small Business Administration 8(a) MPP

SBA Image

The 8(a) Business Development (BD) MPP is designed to enable successful firms to provide various forms of business development assistance. The goal of the 8(a) BD Mentor-Protégé Program is to enhance the capability of 8(a) Program Participants to be competitive and achieve entrepreneurial success.

Protégé Requirements

Mentor Qualifications

Must be an 8(a) BD program member and in good standing. Must possess favorable financial health, including profitability for two years.
Must not have received an 8(a) contract previously. Must possess good character.
Must meet certain size restrictions (see the SBA’s website for details). Must not appear on the federal list of debarred or suspended contractors.
Must be able to impart value to the protégé through practical experience gained through the 8(a) program.

See CFR 124.520 “What are the rules governing SBA’s Mentor/Protégé program?” for additional information.

Department of Defense (DOD)

DoD MP Image

The DoD MPP assists small businesses (protégés) to successfully compete for prime contract and subcontract awards by partnering with large companies (mentors) under individual, project-based agreements.  There are two types of agreements under the DoD program: Direct Reimbursement and Credit (refer to the website for additional information.

Protégé Requirements

Mentor Qualifications

A qualifying organization employing the severely disabled. The Mentor firm must be currently performing under at least one active approved subcontracting plan negotiated with DoD or another Federal agency pursuant to FAR 19.702.
WOSB Eligible for the award of Federal contracts.
HUBZone New Mentor Applications must be approved and may be submitted to and approved by the OSBP of the cognizant Military Service or Defense Agency (if concurrently submitting a reimbursable Agreement) or to the DoD OSBP office prior to the submission of an Agreement.
SDB
SDVOSB
A businesses that are owned and controlled by an Indian tribe or a Native Hawaiian organization.

Department of Veterans Affairs (VA)

VA MPP Image

The purpose of the VA MPP is to provide developmental assistance to Service-Disabled Veteran-Owned Small Businesses and Veteran-Owned Small Businesses that will enhance their capabilities to perform as prime contractors and subcontractors on VA procurements.  If you are interested in applying, the VA program only accepts applications during specified open enrollment periods; refer to the website periodically for updates and announcements.

Protégé Requirements

Mentor Qualifications

Limited to protégés that provide goods or services the VA procures. May be small or large business and either a prime or subcontractor.
Protégés must be verified by CVE as a VOSB or SDVOSB and maintain their status. Must be able to provide appropriate developmental assistance.
VOSB or SDVOSB Financial capacity to provide development assistance to the protégé.
Limited to one VA mentor at a time.

 

General Services Administration (GSA)

GSAlogo

GSA’s MPP is designed to encourage and motivate GSA prime contractors to assist small businesses and enhance their capability of performing successfully on GSA contracts and subcontracts. The goal is to increase the overall number of small businesses receiving GSA prime contract and subcontract awards, resulting from mentorship and refined business practices.

Protégé Requirements

Mentor Qualifications

To be eligible for selection as a protégé, your small business can qualify by simply being a small business (SB, SDB, WOSB, HUBZone, VOSB, SDVOSB). Must be a prime contractor on a GSA Schedule or GSA contracting vehicle, such as a BPA, IDIQ, or GWAC.  If your business is large, that vehicle must include an approved subcontracting plan as required by FAR 19.7
Your business must meet the definition of a small business concern outlined at FAR 19.001. Per this regulation, it is the Small Business Administration that establishes small business size standards on an industry-by-industry basis. As a mentor, you must be able to guarantee that you can provide developmental assistance to enhance the capabilities of protégés to perform as

  • Contractors,
  • Subcontractors, and /or
  • Suppliers
A small business prime contractor is NOT required to have an approved subcontracting plan in place to qualify as a mentor.

Department of State

DoS Image

The DoS MPP is designed to motivate and encourage large business prime contractor firms to provide mutually beneficial developmental assistance to SBs, VOSBs, SDVOSBs, HUBZone small businesses, SDBs, and WOSBs.  The program is formulated to foster the establishment of successful long-term business relationships between State Department, large prime contractors and small business subcontractors thereby improving the performance of both.  The program is intended to strengthen subcontracting opportunities and accomplishments at the State Department.

Protégé Requirements

Mentor Qualifications

Small in the NAICS code for the services or supplies to be provided by the protégé to the mentor Capable of providing appropriate developmental assistance to enhance the capabilities of protégés to perform as contractors and/or subcontractors.
An SB, HUBZone, SDB, WOSB, VOSB, or SDVOSB as those terms are defined in FAR 2.101 May be either a large or small business
Protégés may have multiple mentors. Protégés participating in mentor-protégé programs in addition to DoS’s program should maintain a system for preparing separate reports of mentoring activity for each agency’s program. Will be encouraged to enter into arrangements with protégés and firms with whom they have established business relationships
Mentors may have multiple protégés. However, the DoS reserves the right to limit the total number of protégés participating under each mentor firm for the Mentor Protégé Program

Other Agency Programs

Agency

Link

Department of Homeland Security (DHS) http://goo.gl/56E8mK
Department of Energy http://goo.gl/QuPqMX
Environmental Protection Agency (EPA) http://goo.gl/HQBxMf
Department of Treasury http://goo.gl/BvPwl4
Federal Aviation Administration http://goo.gl/mzAChH
NASA http://goo.gl/3Fnncx
USAID http://goo.gl/Tdy6zm

Acronyms and Terms

CVE – Center for Veterans Enterprise

FAR – Federal Acquisition Regulations

HUBZone – HUBZone Small Business

MPP – Mentor-Protégé Program

NAICS – North American Industry Classification System

OSBP – Office of Small Business Programs

PTAC – Procurement Technical Assistance Center

SDB – Small Disadvantaged Business

SDVOSB – Service Disabled Veteran Owned Small Business

VOSB – Veteran Owned Small Business

WOSB – Women Owned Small Business

Construction Professional Association Small Business Programs

In the last post regarding small business resources I discussed programs offered by general contractors designed to boost small business participation and provide developmental assistance in kind.  This post focuses on programs offered through professional associations targeted at small business utilization and development.  In the construction field one of the most well-known advocates of small business is the Society of American Military Engineers, however this post will cover programs offered through associations as well.  As a reminder, this not an endorsement of one program over another, but it is meant to serve as an awareness tool for small business owners so they are better informed of available resources.  The summaries provided are adapted from the respective associations’ websites, contact the associations below if you would like more information.  Information presented is limited to information readily available on the organizations’ websites.

Sheet Metal and Air Conditioning Contractor’s National Association (SMACNA)SMACNA Logo

SMACNA website outlines several multi-day programs that would be beneficial to all businesses, but small or emerging businesses might benefit the most.

  • Succession Planning – This program touches on the key elements of succession planning and transferring ownership to the next generation such as ownership transfer, defining goals and objectives, leadership development, business valuation, and contingency planning.
  • SMACNA Business Management University – The management program is designed specifically for future managers and owners of SMACNA member companies. The program offers opportunities and training on networking, financial management, strategic planning, negotiation, bonding, and leadership.
  • SMACNA Financial Boot Camp – This program develops the skills and ability of individuals without a financial background, not currently working in finance, or new to contracting with a better understanding of a firm’s financial situation to improve decisions making.

American Subcontractor AssociationASA_Logo

The ASA does not list a specific program targeted at small businesses, but there is an upcoming program featured to occur during the next conference in New Orleans given by a family business owner designed to share challenges and strategies to advance family businesses.

Associated Builders & Contractors, IncABC_Logo

ABC doesn’t list a specific small business program, but several features of membership might be beneficial to some small businesses.  Such as the Accredited Quality Contractors program and the Strategic Partnership Program.  As described by ABC the AQC program honors construction firms which have documented their commitment in five key areas of corporate responsibility: quality, safety, training, community relations, and employee benefits.  The SPP offers select companies the unique opportunity to forge special relationships with ABC members.  (Refer to the AQC hyperlink above for more details)

Washington Building Congress

WBC has a designated Small Business Committee with a charter to expand WBC’s visibility and opportunity to small business and make WBC membership and governance more diverse.  The committee also has specific events focused on networking opportunities for small business to meet and interact with other large business members of WBC.  WBC has a strong membership program making the events well attended.  The committee also conducts periodic training sessions for their small business members.

Society of American Military EngineersSAME_Logo

SAME established a Small Business Council with a detailed charter that outlines the mission and execution of the SBC’s role as an advocate for small businesses.  The national committee and the posts SBC carry out a number of activities and events to advance small businesses, but I will outline a couple.  The biggest event of the year is the annual Small Business Conference held in various locations around the country.  The 2014 conference is scheduled for 8-10 December in Kansas City, MO.  Local posts often host small business events designed to offer education and networking opportunities targeted at small businesses.  The local events are great venues for small or emerging firms to connect with large businesses to learn about subcontracting opportunities in their specific region.

2014 NDAA Allows Prime Contractors to Count Lower Tier Small Businesses

For a quick break in the current series, I want to briefly talk about an upcoming change in small business subcontracting resulting from the 2014 National Defense Authorization Act (NDAA).  On 26 December 2013 President Obama signed the NDAA into law.  While there is much discussion on funding levels for the Department of Defense (DoD) and its programs, there are other features of the NDAA of interest to DoD OSBP Image 2federal small business interest groups.  Specifically, prime contractors will be able to count lower tier small business contractors towards the prime contractor’s small business subcontracting goals.  Based on what is known today, it should be noted the new policy allowing primes to count lower tier small business subcontractors won’t eliminate the prime contractor’s responsibility to make a good-faith effort to meet negotiated 1st tier subcontracting requirements.

The objective of this post is to put this concept in front of prime contractors and 1st tier large business subcontractors to use this lead time to prepare for implementation by the Small Business Administration (SBA).  That said, it will be 18-24 months, or longer, before the change is reflected in the acquisition regulations.  In fact, SBA hasn’t issued many final regulations from the Small Business Jobs Act of 2010, despite statutory deadlines set by Congress.  In the meantime large business contractors can take several steps that will prove beneficial regardless of the exact language in the regulations.  In addition to the points raised in my 21 May 2013 post Small Business Utilization Monitoring and Reporting the attributes of a successful small business program are highlighted below:

  1. Ensure the Small Business Liaison Officer post is filled and has a direct report capability to senior leadership in the organization.
  2. Update small business utilization policies and procedures.
  3. Assess the strength and effectiveness of small business outreach program.
  4. Conduct compliance of the prime’s subcontracting program.  The SBA recommends a five year look back.
  5. Conduct initial (as required) and periodic training for employees involved with subcontracting.  The project manager and support staff will require additional assistance to effectively manage the new requirements.
  6. Update small business source lists.
  7. Ensure the proper flowdown of small business subcontracting clauses.
  8. Ensure adequate controls are in place for 1st tier large business subcontracting plan compliance.

Several questions come to mind as we wait for implementation over the next 18-24 months:

  1. Will this impact subcontracting goals for the agencies and primes?
  2. Will the new requirements change the distribution of subcontracting goals within some of the agencies?

In summary, the change probably won’t happen too quickly and there will most likely be more scrutiny placed on prime contractors for enforcement of the requirements at all tiers.  I believe this change will be manageable, but it will be made easier with advance preparation.

Mentoring and Training Resources for Small Business Federal Subcontractors

My next series of posts will review resources available to small business owners competing for work in the federal subcontracting market.  The primary purpose is to highlight lesser known resources and promote those better known with a focus on the construction industry.  The first article of the series will focus on programs and resources offered by prime contractors designed to assist small business subcontractors.

In FY 2013 the government obligated approximately $17 billion for the construction of “Structures and Facilities”.  With relatively high small business subcontracting goals stipulated by the US Army Corps of Engineers (USACE) and Naval Facilities Engineering Command (NAVFAC) there are numerous small subcontracting opportunities available.  In FY 2013 the NAVFAC small business subcontracting program achieved $6,096,337,865 in small business subcontracting.

Prime Contractor Resources for Small Businesses

Training Programs

Corporate Training Class

The Small Business Administration (SBA) and Procurement Technical Assistance Centers (PTACS) are two training resources available to small business, but a number of prime contractors offer robust training programs for subcontractors as well.  Given the focus on small business utilization, local market knowledge and influence of small businesses, and their ability to positively impact local economies it is not surprising some prime contractors work to cultivate the small business community.  A couple of examples of programs offered by prime contractors include contracting colleges or training programs and subcontractor mentoring programs.

The training programs offered are typically scheduled to meet anywhere from once per week to once per month over a span of six weeks to ten months.  Topics covered in the training provide small businesses with the tools and knowledge to improve business operations.  In addition, many of the prime contractors cover information that is helpful in subcontracting with that particular organization such as the pre-qualification process required for bidding.  Typical training topics included:

  • Estimating
  • Bidding
  • Project Management
  • Bonding/Insurance
  • Risk Management
  • LEED / Green construction
  • Labor laws

Mentoring Programs

Mentoring Picture

There is a fair amount of attention, and rightly so, directed towards government mentor-protégé programs established to promote and grow small businesses.  Over the years the various programs have been instrumental helping participants expand and grow, especially SBA’s 8(a) Business Development Program.  Many small business are not in a position to enter a government sponsored mentor-protégé program, but need a little mentoring and training to become more effective and efficient.  In response several general contractors have established similar corporate programs designed to mentor and train small business subcontractors.  The programs have a structured training curriculum covering specific business and construction related topics and provide mentoring for field, project management, and corporate staff.  In addition, the mentor programs are typically project specific where the targeted small business(es) are paired with an experienced large business subcontractor and must conform to several requirements stipulated in an open and transparent agreement.  Several examples are included below:

  • Perform a specific and meaningful scope of work
  • Develop a training program designed to strengthen the weak areas
  • Provide a quarterly report of self-performed work
  • Provide a quarterly report of training accomplished
  • Agree to periodic program audits

Next post will cover resources offered by several national professional associations that might be beneficial for small business.  Note the information is not intended to serve as an official endorsement or advertisement for any association or business – it is provided to increase awareness within the Federal contracting community.

Federal Small Business Reporting

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Overview

This month Other Than Small Business (OTSB) {also known as a large business (LB)} contractors and subcontractors (those holding a contract or subcontract in excess of $650,000 or $1,500,000 for construction) are required to submit their Individual Subcontract Reports (ISR) and Summary Subcontract Reports (SSR) via the Electronic Subcontract Reporting System (eSRS). For some construction projects this can be a time consuming event given the large number of subcontractors.  My typical client has 30 to 90 subcontractors depending on the size of the project.  On May 21st I authored a piece highlighting Small Business Utilization Monitoring and Reporting requirements.  This post calls into action the tips and techniques covered in that post as 30 September 2013 marked the end of the most recent reporting period.  The ISRs and SSRs are due within 30 days of that date.

Individual Subcontract Plan Reporting

The ISR reporting period is 1 April – 30 September and the project team (or group responsible for managing reporting) should have collected and categorized all of the subcontract awards related to the contract.  It is beneficial to start the reporting process early so it can be broken down into several discreet steps creating a more manageable process reducing interference with regular tasks the project team completes on a daily or weekly basis.  Below is an overview of the basic steps for those reporting on small business to complete:

  • Collect and organize all of the subcontract award data (i.e. business name, award date, and amount) made during the period sorting by business type, OTSB, WOSB, SDVOSB, etc.  This can be accomplished using Excel, Access, certain contract / project management databases, or paper and pencil.
  • Ensure the required self-certifications and HUBZone certifications are collected and reviewed for accuracy.
  • Ensure the correct subcontracting plan goals are entered for the ISR to be submitted.
  • Enter the required data in the eSRS ISR reporting tool.  There are several useful step by step guides with detailed instructions on the eSRS site.  Of note the ISR tool will calculate the participation rate percentages for you, although I prefer to calculate the small business (SB) participation rates prior to beginning the process.
  • If required, enter an appropriate remark explaining why goals have not been met.  Regardless if the goals are or are not being met, the team buying out the subcontracts should keep detailed notes on the bidding for each bid package.  This is very valuable information to use for remarks in the ISR in addition to any future contract work in the same region.

Summary Subcontract Reporting

There are a few differences between the ISR and the SSR in addition to a couple of tips that are worth noting.

  • The SSR is a fiscal year summary of Federal subcontracting activity reported by agency.  The more contracts and agencies a company works with the more complex the process becomes.  A common mistake I see is firms incorrectly totaling all of the ISRs for a particular agency and reporting that number.  ISRs are reports documenting subcontracting activity for the life of a contract.  Using the ISR in this manner will inflate the data in the SSR.
  • SSRs are reported at the agency level which creates one or more confusing aspects of submitting the SSR of “who”  or “where” to send it to from the range of choices available on the drop down menu.  The good thing is most agency personnel are very good at directing reports to the correct destination.
  • Similar to the ISR, there are several guides available on the eSRS site containing detailed instructions.  I recommend using the guides as they are helpful.

DoD Office of Small Business Programs (OSBP) recently updated is policy on SSRs and the Small Disadvantaged Business (SDB) participation report.  Highlights from the notice distributed several weeks ago are included below:

  • Starting in FY 2014 the SSR submission will be submitted once per year matching civilian agency requirements.
  • For FY 2013 reporting, contractors submit their consolidated SSR in eSRS to the Department of Defense (9700) and NOT to the department/agency which administers the majority of their subcontract plans.
  • For FY 2013 contractors should not submit the SDB participation report as they are no longer authorized since 10 U.S.C. 2323 expired.  For further guidance go to: http://www.acq.osd.mil/osbp/sbs/esrs.shtml

Summary:

  • Don’t procrastinate starting the reporting process and make sure time is left to review the data for accuracy and completeness.
  • If you have delegated the responsibility for data entry of the ISR, make sure you review the material before it is submitted.  Any errors will find their way back to you.
  • CEO or Senior VPs are required to sign the SSR, make sure they know the report is being submitted and they are briefed on the contents of the report.  Too often I have seen an electronic signature from the reporting authority used and not back-briefed on the event.

Small Business Utilization Monitoring and Reporting

In previous posts about small business subcontracting I have discussed activities along the small business planning continuum ranging from outreach efforts to putting a subcontracting plan in to action.  After project award the real work of a small business subcontract plan begins and this activity must be documented semi-annually in the Electronic Subcontract Reporting System (eSRS).  This series ends with an article addressing the monitoring and reporting requirements associated with a typical federal construction project.

Monitoring

Typically the Subcontracting Plan is administered by the Administrative Contracting Officer (ACO) for the government and the Small Business Liaison Officer (SBLO) for the prime contractor.  The ACO is responsible for monitoring, evaluating, and documenting contractor performance on behalf of the award agency.  Therefore, establishing an adequate program to monitor your small business program is important so the program is effectively and efficiently run.  Ultimately the success of a company’s small business program is an integral part of a firm’s business development efforts.  Failure to meet small business goals on federal projects can reflect negatively when responding to future proposals.

Feature of an adequate program:

  • Your company has a published policy letter from the Chief Executive Officer supporting the program.
  • The SBLO maintains documentation of meetings with top management on the status of the program.
  • The SBLO reports directly to senior leadership and depicted on the company organizational chart.
  • The small business policies and procedures are published and distributed to project teams.
  • Individuals directly involved with the program have received training on the small business program and the federal requirements.
  • Self-certification are reviewed, tracked to ISRs and SSRs, and retained for compliance reviews.
  • HUBZone Small Business certifications are verified through the SBA (FAR 52.219-8(d)(2).

Reporting

eSRS Home Page

Reporting small business utilization on federal projects is one of several post-award compliance tasks for large businesses (FAR 52.219-9(d)(10)(iii)).  Reporting is accomplished via eSRS.  Two types of reports are required, the Summary Subcontract Report (SSR) and the Individual Subcontract Report (ISR).

The SSRs collects prime and subcontractors award data for a specific agency during the given fiscal year.  Reporting periods:

For Department of Defense (DoD) and NASA:

  • 1 October – 31 March
  • 1 October – 30 September

For Non DoD agencies:

  • 1 October – 30 September

Reports are due 30 days after the reporting period ends.

The ISR collects prime contractor and subcontractor award data on a project basis over the life of the project.  Unlike SSRs the data carries over each year.  Reporting periods:

  • 1 October – 31 March
  • 1 October – 30 September

Reports are due 30 days after the reporting period ends.

Two common techniques to monitor participation include the use of the spreadsheets or a contract management database program.  Either technique is acceptable; the method used is dependent on which is most compatible with the IT maturity of the firm.  Related to my post on 30 January 2013 “Small Business Outreach and Database Management”, the level of effort in fulfilling the reporting requirements is affected by the capabilities, or lack of, with your contract management or small business utilization tracking tool (spreadsheets).

Reporting Tips:

  • A database can reduce the level of effort to complete the reporting requirements.  For example, Primavera Contract Manager and Prolog can both be modified at the company level to facilitate the reporting process.
  • Develop a consistent methodology to help project teams collect, document, and store self-certifications.  Per 13 CFR 121.411(a), a subcontractor must qualify and self-certify as a small business at the time it submits its offer as a small business subcontractor. Do not retroactively apply small business subcontracting accomplishments. (eSRS Quick Reference Guide)
  • Visit the eSRS website, there are numerous guides, step-by-step samples, and instructional videos to assist with the reporting process.
  • Don’t wait until the last minute to start the reporting process.
  • Throughout the reporting period make sure the project team is collecting information on subcontract awards, self-certifications, and the bid history for each subcontract to document good faith efforts.
  • Review self-certification against System for Award Management (SAM) or the SBA Dynamic Small Business Search (DSBS).  Occasionally small businesses will inadvertently check the incorrect subcategory or miss one entirely.  The effort in due diligence will help the large business and the small business.
  • Under current regulations a self-certification form must be collected for each small business for each project. (SBA SBLO Handbook)

Common trends I find during subcontracting programs reviews for clients:

  • Self-certifications are completed incorrectly resulting in missed or inaccurate small business credit for the prime contractor.
  • The tracking tool used has math errors or small businesses are not categorized according to their self-certification.
  • Summary Subcontract Reports (SSRs) contain more than one fiscal year of data.
  • ISRs are not submitted in a timely manner.
  • ISRs contain insufficient information documenting good faith efforts and are rejected by the Contracting Officer or ACO.

Subcontracting Plan Development

The Small Business Act of 1953 established the policy that small businesses shall have the maximum practicable opportunity (MPO) to participate on federal projects.  Specifically, the Act requires that small businesses have the MPO to participate on federal contracts greater than $150,000 and that all contracts greater than $650,000 ($1,500,000 for construction) include a formal subcontracting plan.  Therefore, one avenue for small businesses to participate on federal projects is to serve as a subcontractor.

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In accordance with the Small Business Act and the requirements outlined in FAR 19.702, 19.704, and 52.219-9 large business prime contractors and subcontractors are required to submit and negotiate a subcontracting plan (not to be confused with a small business participation plan required by USACE and NAVFAC).  Typically, the subcontracting plan is submitted with an offeror’s proposal and finalized upon award.  The subcontracting plan is not the most heavily weighted part of the overall proposal, but it plays an important part of the proposal process and becomes a material part of the contract for the successful offeror.  Therefore the subcontracting plan deserves serious consideration prior to proposal submission.

Key Considerations:

  1. It is essential to review and understand the requirements and goals in the RFP during proposal development.  Invariably there are subtle differences and it is important to address any questions through the request for information (RFI) process.  The 11 required elements of the subcontracting plan are outlined in FAR 19.704 and 52.219-9.
  2. Typically, the agencies posting an RFP (USACE, NAVFAC, or GSA), provide a template or some type of guidance for the subcontracting plan reducing the amount of guess work required.  The NAVFAC and GSA templates are posted on their respective websites.
  3. During the subcontracting plan development process it is vital to create a plan that meets or exceeds the proposal requirements or adequately justifies why lower goals are proposed, developed with the project team in mind and the best opportunity for success, and offers small businesses maximum possible opportunity to participate in a wide variety of trades.
  4. While the FAR establishes a regimented program to follow, it does allow for and encourage contractors to be innovative in their methods to increase small business participation.  For example, FAR 15.404-4 (d)(iii) Profit – Federal socioeconomic programs allows for greater profit opportunity for a display of unusual initiative towards increasing small business participation.  The key aspect being the contractor will go above and beyond the average contractor.
  5. As highlighted earlier, large business subcontractors are required to submit a subcontracting plan if their subcontract is greater than $650,000 ($1,500,000 for construction) and has the potential for further subcontracting opportunities.  It is important for the prime contractor to clearly articulate this during proposal development and estimating.  Similarly, every large business trade subcontractor should anticipate this requirement and begin dialogue with the prime contractor.  As a best practice, a prime contractor should develop a standard letter template to distribute to the large business subcontractors outlining the requirements and expectations upon award.

Common mistakes found in subcontracting plan audits:

  1. Check your math, and then check it again.  It is too common I find basic math errors calculating percentages and dollar values in the subcontracting plan.
  2. Improper interpretation of the rules to calculate small business participation.  Small business participation in the subcontracting plan is calculated based on “subcontracted dollars”, not the total contract value.  Using the total contract value lowers the achieved participation rate.  It is worthwhile to note the opportunity confusion as the small business participation plan is calculated based on “total contract value.
  3. Self-certification errors.  Some self-certifications are not completed correctly exposing the prime contractor to risk and possible loss of small business credit.