Amy Kim, Commercial Market Representative (CMR)
Area 2, OFFICE OF GOVERNMENT CONTRACTING


Subcontracting Program – What’s New?

Developing and Managing an Effective Compliance
Program

Compliance Review Issues Pursuant to Government
Contracting

 SBA amended its regulations to implement the Small
Business Jobs Act of 2010.
 Size and Status Integrity (Effective August 27,
2013)
 Small Business Subcontracting (Effective August
15, 2013)

 Presumption of loss based on total contract value for misrepresentation
 Certifications Deemed
 Proposal or bid submission for contracts/subcontracts reserved, set aside, or classified as intended for SB award
 Proposal or bid submission which encourages agencies to classify bid/proposal as SB award
 Registration on Federal electronic database for SB award consideration

 Signature Requirement: Authorized official must sign certification on same page containing size status
 Limitation of Liability: Primes acting in good faith not be held liable for sub misrepresentation
 Penalties for Misrepresentation: Suspension or debarment; civil and criminal penalties

 Credit cannot be taken for lower-tier subcontract awards.
 Exclusions from the subk base:


Purchases from affiliates (Note: Subcontracts by first-tier affiliates should be included.)
Internally-generated costs, taxes and charitable contributions
 CO may establish percentage of total contract dollars.
 History of
subk goals as untimely or reduced payments –
incidents in a
month period.
Effective August 15, 2013

 Prime may not prohibit sub from discussing any payment or utilization issues with CO.
 SSRs must include indirect costs on a prorated basis.
 Prime must assign each subcontract the NAICS code and size standard.
 Prime may rely on SAM
subcontract contains a clause (similar to FAR 52.204-8(d)). However, primes may not require the use of SAM.
 When ISR or SSR is rejected by CO, prime is required to revise report within 30 days.

 Prime must represent that it will make a good faith effort to utilize the SB subs in the same
used in preparing bid or proposal.
 Prime must notify CO in writing whenever the prime contractor does not utilize a SB sub in the same
used in preparing its proposal prior to final invoice submission or contract close-out. (Section 1322 of the SB Jobs Act)

 Offeror used a SB in preparing bid or proposal if:
1)
2)
3)
SB was referenced in bid or proposal or subk plan;
Subcontract or agreement in principle to subcontract with SB to perform contract; or
SB drafted bid or proposal or its pricing or technical information was used in preparing bid or proposal, with written evidence of intent or understanding that SB would perform related work if offeor receives award.
 Responding to RFQ does not constitute use in preparing bid or offer.

 Prime is required to notify CO in writing of any reduced or late (90 days past due) payments to a SB subcontractor. (Section 1334 of the SB Jobs Act)
 Prime must provide CO with explanation for goal shortfalls at contract completion.

 CO is responsible for reviewing all ISRs and SSRs in eSRS within 60 days after reporting period ends.
 CO must evaluate whether prime has made a GFE to comply with SB subk plan.
 CO is responsible for evaluating prime’s written explanation concerning its failure to utilize a SB sub for past performance purposes.
 CO must record identity of prime with history of unjustified untimely or reduced payments in FAPIIS.

 CO has discretion to request an updated subk plan in connection with an option.
 CO must require prime to submit a subk plan if mod causes contract value to exceed $650K. (except for commercial plan holders).
 CO has discretion to request a subk plan if prime’s size status changes to other than small as a result of size recertification.

 CO may include evaluation factor in solicitation to consider:
 Prime’s subk plan compliance (either part of past performance factor or stand-alone evaluation factor)
 Prime’s commitment to pay SB subs within specific number of days after payment receipt from Gov’t
 May apply to solicitations for orders against MAS contracts, GWACs, or MACs, BPAs or BOAs.

 Ordering agency should receive credit towards its SB subk goals for orders awarded under another agency’s contract.
 Contracting agency will still be responsible for subk plan for underlying IDIQ contract.
 Contractors are required to submit subk reports for individual orders to funding agency. (eSRS and FAR will have to be revised.)
 Funding agency may establish SB subk goals for individual orders, BPAs and BOAs.

 FAR Final Rules – SDB Preference Program
 Some FAR clauses have been removed.
FAR Clauses Description
FAR 52.219-22 through 219-26 SDB price evaluation & participation targets
FAR 52.219-9(l)(2)(iii)
FAR 53.302-312
YE SDB report
SDB Participation Report
 Monetary incentives for SB subcontracting and consideration of SB subcontracting as evaluation factor remain.
 Primes under DoD and Coast Guard contracts can no longer count subcontracts with HBCU/MI towards SDB goals; only allowed under NASA contracts.
Effective October 14, 2014

 NDAA 2014 – Credit for Subcontractors
 Allows single award prime contractors with one agency to count all tier small business subcontractors.
 Prime contractors with more than one contract with one or more agencies may only count first tier subcontractors.
 Primes are required to make a good-faith effort to achieve first tier subcontracting goals.

 Management Support
 An active SBLO
 An acceptable Subcontracting Plan
 SB training
 Meeting SB goals and objectives
 A good outreach program
 Connection to assistance providers such as PTAC
 Active procurement staff participation
 Utilization of SAM and DSBS
 Accurate and on-time reporting

SCORE GUIDE
1 = No Management Support
3 = Management has minimal program knowledge.
My company score is: 5 = Management knows about the program.
1 2 3 4 5 6 7 8 9 10 7 = Management actively endorses the program.
9 = Management endorses, monitors, and participates in the program.
Mark Score Here: __________

SCORE GUIDE
1 = Our company does not have an SBLO.
My company score is:
3 = Our SBLO performs very limited duties.
5 = Our SBLO is involved in at least 5 of the success elements.
1 2 3 4 5 6 7 8 9 10 7 = Our SBLO is involved in 7 of the success elements.
9 = Our SBLO does all 10 elements.
Mark Score Here: __________

My company score is:
SCORE GUIDE
1 = My company does not have a subcontracting plan.
3 = Our subcontracting plan was not approved by the agency.
1 2 3 4 5 6 7 8 9 10 5 = Our subcontracting plan is current and approved by the agency.
7 = Same as 5 and we are actively working on our goals.
Mark Score Here: __________ 9 = Same as 5 and we are meeting our plan goals.
10= Same as 5 and we are exceeding our plan goals.

My company score is:
SCORE GUIDE
1 = My company does not have a SB counseling and training program.
5 = We have scheduled SB counseling and training in the next 6-12 months.
1 2 3 4 5 6 7 8 9 10 10= We have an on-going SB counseling and training program.
Mark Score Here: __________

My company score is:
SCORE GUIDE
1 = My company has no goals or objectives for small business.
3 = Employees are aware of subcontracting goals.
1 2 3 4 5 6 7 8 9 10 5 = Management has established company small business goals.
7 = Company goals are established and metrics reported.
Mark Score Here: __________ 9 = Same as 7; most goals are being met.
10= Same as 7; all goals are being met or exceeded.

SCORE GUIDE
1 = Our company does not do outreach.
My company score is:
3 = Our company does limited outreach.
1 2 3 4 5 6 7 8 9 10 5 = Our company has an active outreach program.
7 = Our company has an active outreach program and has participated in one or more matchmaking events.
Mark Score Here: __________ 9 = Same as 7; we have connected to sources through this process.

My company score is:
SCORE GUIDE
1 = What is a PTAC?
3 = How do I connect with SBA, Agency
Small Business Office or PTAC?
1 2 3 4 5 6 7 8 9 10 5 = Our company occasionally contacts
SBA, Agency SB Office or PTAC.
7 = Same as 5, and we work with our state
PTAC.
Mark Score Here: __________ 9 = Same as 7 and we are on matchmaking sub-committees hosted by these organizations.

SCORE GUIDE
My company score is:
1 2 3 4 5 6 7 8 9 10
Mark Score Here: __________
1 = Procurement staff is untrained.
3 = Procurement staff is aware.
5 = Procurement staff is active.
7 = Procurement staff is making tangible efforts to expand opportunities for SB.
9 = Same as 7 and procurement is meeting the goals.

SCORE GUIDE
1 = What are SAM or DSBS?
3 = How do I use SAM or DSBS?
My company score is:
1 2 3 4 5 6 7 8 9 10 5 = SAM and DSBS are used to identify SB sources and verify certifications.
7 = Our staff uses SAM/DSBS to identify
SB sources and checks our database against SAM/DSBS regularly.
Mark Score Here: __________ 9 = Same as 7 and we are compliant.

SCORE GUIDE
1 = Reporting… What reporting?
My company score is:
3 = What is an ISR?
1 2 3 4 5 6 7 8 9 10 5 = ISRs and SSRs are submitted.
7 = Same as 5 and all data is accurate.
Mark Score Here: __________ 9 = Same as 7 and reports are submitted on time.

1. _____
2. _____
3. _____
4. _____
5. _____
6. _____
7. _____
8. _____
9. _____
10. _____
Total: ______
SCORE CHART
10 – 29 points Unacceptable
30 – 49 points Marginal
50-69 points Acceptable
70 – 90 points Highly Successful
91 – 100 points Outstanding
Note: This approximate score rating is subject to other factors and a formal review by Federal agencies. Individual results may vary.

 Small Business Sourcing
 Validation of the ISR/SSR reports
 Five-Year Trend Analysis
 Overall Evaluation of Small Business Program
 Analysis on Goal Achievements
 Sampling of PO’s to Large Business
 Follow-up prior SBA recommendations

 Size Standards and Self-certifications
 Size self-certification definitions must be correct.
(FAR 52.219-8)
 Must have a size self-certification for every business you are counting small on ISR/SSR.
• No reliance on SAM
• SBA certification required for HUBZone SB
 Size and socio-economic status determined at initial offer that includes price – Good for contract duration
 Foreign business must meet the definition of SB in order to count small (13 CFR 121.105)

 eSRS Reporting (Overall)
 May count a SB that meets subset definitions in all categories that apply.
 What not to include:
• Subcontracts performed exclusively overseas (State Dept
– exempt from this requirement)
• Inter-company transactions
 What to include:
• Customer-directed purchase
• First-tier subcontractor spend
• Subcontracts to non-profit organizations
 Do not see a contract? – Contact the CO to revise FPDS records
 When options are exercised, revise goal dollars and goal percentages.

Total
Subcontracting
SB
SDB
WOSB
HUBZone SB
VOSB
SDVOSB
5 Year Base Goals Option Year One 5 Year Base + 1 YR Option Goals
$100,000 100% $25,000 100% $125,000
$30,000 30% $3,000 12%
$15,000
$15,000
$5,000
$3,000
$2,000
15%
15%
5%
3%
2%
$1,000
$2,000
$500
$500
4%
8%
2%
2%
$120 0.48%
100%
$33,000 26.4% ($30,000+
$16,000 12.8% ($15,000+
$17,000 13.6% ($15,000+
$5,500 4.4%
($5,000+
$500)
$3,500
$2,120
2.8%
1.7%
($3,000+
$500)
($2,000+
$120)

 eSRS Reporting (ISR)
 Submit ISR although no subcontracting with SB has been done.
 No task order reporting
 Final ISR needs to be submitted within 30 days of contract completion.
 Provide explanation for goal shortfalls in the
“Remarks” section – CPARS

 eSRS Reporting (SSR)
 Maintain separate accounting if your company has a combination of individual and commercial plans.
 Must include a proportional share of indirect costs incurred with socio-economic category.
 Must be signed by the most senior executive of the organization.

 Effectiveness of Small Business Program
 Procedures and up-to-date CEO policy memorandum regarding the Small Business Program must be in place.
 Documentation of training, outreach efforts, and SB assistance
 Non-Compliance with FAR 52.219-9(d)(11)(iii) and 52.219-9(d)(9)
 Subcontracts to LB over $150K are not documented to show prime’s efforts to solicit and make award to SB
 Obtain a subcontracting plan & ISR from LB subs when the subcontract exceeds $650K. (Not required if the prime contract contains FAR 52.212-5 or 52.244-6).

 Amy Kim (Covering MD and DC primes)
 E-mail: amy.kim@sba.gov
 Phone: (202) 205 - 6895
 Anita Perkins (Covering VA, DC, eastern PA and DE primes)
 E-mail: anita.perkins@sba.gov
 Phone: (202) 205 - 7319
 Other CMRs (Geographic Coverage): http://www.sba.gov/content/governmentcontracting-field-staff-directory