Foreign Affairs Security Training Center Project (FASTC)

Project Updatefireams_150_1

Contractors interested in pursuing the FASTC project, to be constructed at the Virginia National Guard Maneuver Training Center, Fort Pickett, VA, GSA has announced the availability of the Supplemental Draft Environment Impact Statement (EIS).  An electronic version of the statement and other valuable information related to the project can be viewed at: http://www.state.gov/recovery/fastc/

Key project information available so far:

  • Solicitation documents were made available 5 Jan at fbo.gov
  • The SF 1442 posted indicates step 1 Request For Qualifications are due 4 Feb 2015, 12 PM EST. However this conflicts the 5 Feb 2015 date listed in other documents posted at FBO.
  • The Pre-proposal conference is scheduled for 21 January 2015 at 11:00 AM EST at The Strawbridge Building, Philadelphia, PA. Interested parties must email the Contracting Officer by cob 01/19/15 to confirm their attendance. Only prime contractors may attend this conference.
  • The Public Information Meeting regarding the EIS will held Monday, 26 January 2015 from 7-8 PM EST at the Blackstone Conference and Retreat Center, Blackstone, VA. There will be a 45 day review and comment period which runs from 9 Jan – 23 Feb 2015.  All comments are due by 23 Feb 2015.
  • RFIs for step one should be submitted to the Contracting Officer by 30 Jan 2015.  Responses will be posted to FBO via amendment(s).
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Federal Contracting Subcontractor Payment & Retainage Considerations

After working with a client recently I thought it appropriate to discuss withholding and AIA_Billingretainage considerations for Federal contractors.  Similar to many other facets of government contracting, it is wise to be fully aware of the Federal Acquisition Regulation clauses in your contract and their impact on your business decisions.  So one tool a contractor has to encourage a particular behavior is to withhold payment from a subcontractor.  However, there are a few rules to live by.

Under the Prompt Payment for Construction Contracts Clause (FAR 52.232-27) payment to subcontractors is required within seven (7) days of receipt of funds paid to the Contractor.  Under this clause “Subcontractor Payment Entitlement” the contractor may not request payment from the Government any amount withheld or retained under this clause.  However, this clause does not limit or restrict the right of a contractor or subcontractor at any tier to retain (without cause) payment for work performed without incurring any obligation to pay late payment interest penalty.  The amount (percentage) to be retained is not stipulated in this clause, it is negotiated in the subcontract.  This allows flexibility based on unique factors of each subcontract.

Should this tool become necessary, the general requirements for retainage & withholding payment include:

  1. Provide notice to the subcontractor specifying:
    1. The amount withheld;
    2. The specific causes for the withholding under the terms of the subcontract; and
    3. The remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld.
  2. Provide a copy of the subcontractor notification to the Contracting Officer.

Under extenuating circumstances the determination of the need for retainage, or withholding payment from a subcontractor may be discovered after making a request for payment to the Government, but before making payment to the subcontractor.  If it is determined that all or a portion of the payment due to the subcontractor is subject to withholding under these circumstances, the following must be complied with:

  1. Subcontractor Notice – Provide notice as soon as practicable upon ascertaining cause for withholding, but prior to due date for payment to subcontractor {FAR 52.232-27(g)}.
    1. The amount withheld;
    2. The specific causes for the withholding under the terms of the subcontract; and
    3. The remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld.
  2. Contracting Officer Notice – Provide notice to the Contracting Officer (copy of the subcontractor notification), as soon as practicable {FAR 52.232-27(e)(1)}
  3. Subcontractor Progress Payment Reduction – reduce the subcontractor’s progress payment by an amount not to exceed the amount specified in the notice of withholding furnished to the Contracting Officer and Subcontractor {FAR 52.232-27(e)(1)}.
  4. Subsequent Subcontractor Payment – Pay the subcontractor as soon as practicable after the correction of the identified subcontractor performance deficiency, and;
    1. Make payment within seven (7) days after correction of subcontractor MoneyChangingHands_webperformance deficiency (unless funds must be recovered from the government).
    2. Make payment within seven (7) days after funds are recovered from the government.
    3. Contractor to incur an obligation to pay interest for late payments in accordance with FAR 52.232-27(e)(4)(ii).
  5. Notice to the Contracting Officer, upon:
    1. Reduction of the amount of any subsequent certified application for payment.
    2. Payment to the subcontractor (withheld amounts and corresponding dates of withholding).
  6. Interest to Government – Provide interest payment to the government as stipulated by FAR 52.232-27(e)(6) for late payments.

As with many contractual issues it is always recommended to discuss withholdings and retainage with legal counsel for any questions or concerns.

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

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.