NAICS.pdf

NAICS

Q: Ref. FBO Solicitation announcement dated 22 February 2012, in which the Contracting

Office indicated a change in the small business size standard for the USAMS III solicitation.

Discussion: Attached to this announcement was a document from the Small Business

Administration with highlights regarding size standard changes for NAICS 5416 - from

$7M to $14M in average annual revenues. Also, Ref. FBO Solicitation announcement dated

23 July 2012, states the NAICS code change from 541618 with a $14M size standard to

541330 with a $35M size standard as the Government believes the preponderance of work for USAMS falls under the 541330 NAICS code.

“The NAICS code has been changed from 541618 (Other Management Consulting

Services) to 541330 (Engineering Services) with the exception for Military and Aerospace

Equipment and Military Weapons. The NAICS code 541330 best represents the preponderance of the work for the USAMS III requirement.”

We are unclear on how the Government came to that conclusion given the fact that the majority of task orders solicited on USAMS I and USAMS II were under NAICS 541618.

Ref. FBO Solicitation announcement dated 08 March 2012, also states and talks about how

USAMS III is in fact a replacement of USAMS II. All USAMS II Task Orders were awarded under NAICS 541618 with a total value of $546,230,249. Task orders from

USAMS I and USAMS II under NAICS 541618 when measured by contract value make up just over 64% of the value of all the task orders.

Recommendation(s): As a result of our analysis, we recommend that the Government reconsider this change of NAICS code and revert to the originally planned code of 541618 and a $14M size standard. A preponderance of Air Force Advisory and Assistance Service

(A&AS) contracts actually use the 541611 NAICs with a $14M size standard. Our current

IDIQ (CAAS IV) supporting Air Combat Command and the Air Force District of

Washington has a small business set-aside tract with a ceiling of $1.9Billion and utilizes

NAICS 541611. CAAS IV, like the preponderance of A&AS contracts, includes management and professional service requirements; technical and engineering service requirements; and studies, analyses, and evaluations. The current USAMS III PWS specifies that these same A&AS services are required so it is unclear why the Government has selected to use a NAICS for just engineering services. We recommend that the

Government revert back to its original NAICS of 541618 or use 541611 with a size standard of $14Million like the preponderance of Air Force A&AS contracts. This is also supported by the cost analysis of past USAMS I and USAMS II task orders. The average

Task Order value from USAMS I and USAMS II is approximately $3,364,538.76 per task order. Task order values of normally $3-5Million are managed and performed by small businesses that have average revenues of $14Million or less per year. Utilizing the 541611 or 541618 NAICS with a $14Million size standard will also provide the Government with a more manageable number of prime offerors for this competitive solicitation than the exurbanite number of proposals that will be submitted if the Government uses a $35Million size standard. If the Government truly believes that the preponderance of USAMS III task orders will be comprised of just engineering services, then it would be highly recommended that the use of NAICS 541330 with a $14Million size standard be more appropriate given the average value of past task orders, the fact that the IDIQ maximum ceiling value hasn’t significantly changed from USAMS II, and the value of the average task order in the past is no more than approximately $3Million.

A: The USAMS III PWS indentifies the type of work expected under the USAMS program. The

PWS provides greater detail than the standard A&AS definitions found in the FAR. When comparing the USAMS requirement to the CAAS requirement the services supporting

USSTRATCOM are not the same. Reviews of other contracts were also completed as part of the overall market research when preparing the USAMS acquisition.

The USAMS I and USAMS II Advisory and Assistance Support (A&AS) contracts utilized the

NAICS code 541618(Other Management Consulting Services) to identify the preponderance of work performed. In 2002, when the United States Strategic Command and the United States

Space Command merged and formed USSTRATCOM, the Government had a requirement for

A&AS to provide technical assistance for transitioning old mission areas and starting new mission areas. At the time of the USAMS I Blanket Purchase Awards (BPA), it was determined that Product Service Code (PSC) R421 (Technical Assistance) and NAICS Code 541618 represented the preponderance of work performed. USAMS II was the follow-on program to

USAMS I and awarded a Multiple Award Indefinite Delivery Indefinite Quantity to six prime contractors. USAMS II used USAMS I as the benchmark for the NAICS decision. The requirement for technical assistance remained unchanged and the decision was made to continue the use of PSC R421 and NAICS 541618. USAMS I was awarded in 2003 and USAMS II was awarded in 2008. Since 2008, the PSCs have changed and a new manual dated August 2011 provides updated definitions. R421 no longer exists and has been merged with R414 (Systems

Engineering Services) to form R425 (Engineering/Technical). R425 includes: Systems

Engineering, Technical Assistance and Other Services Used to Support The Program Office

During The Acquisition Cycle.

541330 Engineering Services

This U.S. industry comprises establishments primarily engaged in applying the physical laws and principles of engineering in the design, development, and utilization of machines, materials, instruments, structures, processes, and systems. The assignments undertaken by these establishments may involve any of the following activities: provision of advice, preparation of feasibility studies, preparation of preliminary and final plans and designs, provision of technical services during the construction or installation phase, inspection and evaluation of engineering projects, and related services.

Additional information can be found under the U.S. General Services Administration

Professional Engineering Services Solutions. http://www.gsa.gov/portal/content/104337

Additionally the NAICS code 541330 was recently used in award of the NORAD-

USNORTHCOM Technical and Advisory Support Services (TA2S) contract. The services required for theTA2S contract are very similar to the USAMS services.

http://www.gsa.gov/portal/content/104337

Based on market research and the changes to the Product Service Codes and the expanded definition of Engineering Services, the PSC R425 (Engineering/Technical) and the NAICS code

541330 (Engineering Services), with the exception for Military and Aerospace Equipment and

Military Weapons, best represents the preponderance of the work for the USAMS III requirement.

Q: You are requested to consider changing the NAICS code to 541712 – 500 FTEs to that you will get small companies with depth and breadth of expertise and they will be able to cover at least 51% of SOW requirements by themselves versus depending on the larger

Subs

A: NAICS codes are selected based on the preponderance of the work. The NAICS 541712

Research and Development in the Physical, Engineering, and Life Sciences (except

Biotechnology) was included in the NAICS research and was not found to represent the preponderance of the work.

Q: Is that a firm decision on the 541330 NAICS? Or are you considering the 14 M NAICS code?

A: Based on market research and the changes to the Product Service Codes and the expanded

541330 (Engineering Services), with the exception for Military and Aerospace Equipment and

Q. Would you consider using a NAICS smaller than $35.5 M? Smalls at $14M range are performing at AMC, ACC, and AFMC, plus others.

A: Based on market research and the changes to the Product Service Codes and the expanded

541330 (Engineering Services), with the exception for Military and Aerospace Equipment and