SBA M and M 3.5 Industry Day Presentation.ppt

PRESENTATION TO HUD

JULY 18, 2011

Tom Clarke July 15, 2011

Jose L Martinez, PCR, AREA V (jose.martinez@sba.gov), (303) 844-2607 x264

SBA Offices in Colorado Government Contracting Area V Colorado, Texas, New Mexico, Oklahoma, Louisiana, Arkansas Robert Taylor, AREA Director, (robert.c.taylor@sba.gov), (817) 684-5302

SBA Region VIII Administrator Daniel P Hannaher (daniel.hannaher@sba.gov)

Colorado District – includes 8(a) program Greg Lopez, Colorado District Director (greg.lopez@sba.gov) Carolyn Terrell, Lead Business Development Specialists, Colorado District (carolyn.terrell@sba.gov), 303) 844-2607, x260

FAR 19.402 Small Business Administration procurement center representatives.

(b) Upon their request and subject to applicable acquisition and security regulations, contracting officers shall give SBA procurement center representatives (or, if a procurement center representative is not assigned, see paragraph (a) of this section) access to all reasonably obtainable contract information that is directly pertinent to their official duties.

(c) The duties assigned by SBA to its procurement center representatives include the following:

(1) Reviewing proposed acquisitions to recommend—

(i) The setting aside of selected acquisitions not unilaterally set aside by the contracting officer,

(ii) New qualified small, veteran-owned small, service-disabled veteran-owned small, HUBZone small, small disadvantaged, and women-owned small business sources, and

(iii) Breakout of components for competitive acquisitions

What is a small business?

Each North American Industrial Classification System (NAICS) code has a small business size standard (wholesale and retail NAICS are not used in government procurements).

13 CFR 121.105

NAICS Codes and Size Standards NAICS Description Revenue (M) # employees

www.sba.gov/size

Size must include affiliates

13 CFR 121.103

Average Annual Receipts

13 CFR 121.104

Number of Employees

Two Types of Affiliation

Joint Ventures

Joint Ventures

Joint Ventures must be in writing

A Teaming Agreement can be either a joint venture or a prime/sub relationship Joint Ventures vs Teaming Agreements

Joint Venture vs. Prime/Sub Relationship SBA affiliation regulations purposely do not define “teams” or “teaming agreements”

Prime Subcontractor Relationships

Teaming Arrangement: FAR 9.601 “Contractor team arrangement,” as used in this subpart, means an arrangement in which—

Two or more companies form a partnership or joint venture to act as a potential prime contractor;

A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program.

What are the Benefits?

General benefit for all concerns both large and small:

The joint or team is able to compete for larger more technically complex contracts by combining the capabilities and past performance of various team members.

FAR 9.601

General Rule A joint venture is a small business concern when the combined revenue/employees of all joint venture partners do not exceed the small business size standard.

Joint Venture Size Exemptions

JV Size Exemption for “Large” Procurements

For a procurement having a receipts based size standard, the dollar value of the procurement exceeds ½ the size standard; or For a procurements having an employee based size standard, the dollar value of the procurement exceeds $10 million.

Then, the joint venture is small if each joint venture partner is small.

More of a joint venture than a prime-subcontractor relationship Ostensible Subcontracting

What is an Ostensible Subcontractor?

The acid test:

A subcontractor is an ostensible subcontractor if:

The subcontractor performs the primary and vital requirements, or The prime contractor is unusually or unduly reliant upon the subcontractor.

A contractor and its ostensible subcontractor are treated as joint venturers, and therefore affiliates, for size determination purposes.

13 CFR 121.103(h)(4)

What will be used to determine if Teaming Agreement is a JV?

What is an Ostensible Subcontractor?

Points for Prime/Sub Relationships

Limitations on Subcontracting

13 CFR 125.6

ORCA

NOT CCR!

OFFICIAL Certifications on Federal Contracts Or Hard copy

All firms claiming HUBZone status must be certified to bid on HUBZone contracts (set-asides, sole source, and 10% price preference); and prime contractors cannot take credit for subcontracts to HUBZone firms unless they are certified by SBA.

At the prime contract level, SDBs do not have to be certified by SBA unless they are receiving some form of preference (e.g., 10% price preference); however, the rule is more restrictive for subcontracting: prime contractors cannot take credit for subcontracts to SDBs unless they are certified by SBA.

ORCA

Dynamic Small Business Search

A CO can verify the SBA certification of HUBZone firms for awards as prime contractors. PLUS for verification of proposed HUBZone subcontractor listed on a subcontracting plan.

One can verify self certification of SDBs on ORCA BUT remember that for subcontracts the firm must still be Certified check DSBS – October 2008 major rule change on SDB – SBA no longer certifies SDBs except 8(a) – all 8(a)s are SDBs

BUT – FAR clause has not changed 52.219-8 Utilization of Small Business Concerns.

Performance of work clauses

CFR website: http://ecfr.gpoaccess.gov/

Summary of CFR regulations SBA Office of Hearing and Appeals cases: http://www.sba.gov/aboutsba/sbaprograms/oha/ohadecisions/OHA_DECISIONS.html GAO Decisions: http://www.gao.gov/legal/decisions.html Federal Acquisition Regulation – also includes other agency regulations:

http://farsite.hill.af.mil/vffara.htm or http://www.arnet.gov/

"Joint Ventures and Subcontracting" Dwight.Johnson@sba.gov

Where Can I Find the CFR

Size regulations -- 13 CFR Part 121 8(a) & SDB regulations -- 13 CFR Part 124 Government Contracting Programs – 13 CFR Part 125 HUBZone Program – 13 CFR Part 126 Service Disabled Veteran Program – 13 CFR 125.8-28 Women-Owned Small Business Program-13 CFR 127

Small Business Loans

7(a) Loan Program The 7(a) Loan Program includes financial help for businesses with special requirements. For example, funds are available for loans to businesses that handle exports to foreign countries, businesses that operate in rural areas, and for other ...

Microloan Program What is a Microloan? The Microloan Program provides small, short-term loans to small business concerns and certain types of not-for-profit child-care centers. The SBA makes funds available to specially designated intermediary...

CDC/504 Loan Program What is the CDC/504 Program? The CDC/504 loan program is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term,...

(click Loans & Grants ) www.sba.gov/

Surety Bonds (click Loans & Grants ) www.sba.gov/ A surety bond is an instrument that is signed by the Principal (or Contractor) and the Surety Company in order to protect the interests of the Obligee (the buyer, or party issuing the contract) in the event the Principal defaults on the contract. A surety bond is acquired by the Principal from the Surety Company for a fee, as a sort of insurance policy to protect the Obligee. If the Principal defaults, the Surety Company steps in to ensure the contract is completed.

Procurement Technical Assistance Centers http://www.dla.mil/db/procurem.htm PTA Centers are a local resource available at no or nominal cost that can provide assistance to business firms in marketing products and services to the Federal, state and local governments

Colorado: www.coloradoptac.org Small Business Development Centers (SBDCs) http://www.sba.gov/content/small-business-development-centers-sbdcs Some SDBC like Denver or Aurora have some procurement expertise - Small Business Development Centers (SBDCs) are partnerships primarily between the government and colleges/universities administered by the Small Business Administration and aims at giving educational services for small business owners and aspiring entrepreneurs.

MBDA's Business Centers Whether it's financing, organizational growth, bonding, certification or business-to-business partnering, MBDA Business Center staff can determine the right resources for your business. MBDA and the centers serve minority entrepreneurs who are pursuing growth in size, scale and capacity.

Minority Business Development Agency Department of Commerce http://www.mbda.gov/main/offices

The Perils of Finagling Set-Aside Contracts (by Husch Blackwell - Google ) 9.30.10 “Government contractors are familiar with the rules concerning contracts set aside for specific socio-economic groups, such as small businesses, historically underutilized business zone (HUBZone) businesses, service-disabled veteran-owned small businesses, or small disadvantaged (Section 8(a)) businesses. The qualifying small business concern awarded the set-aside contract must perform the "primary and vital requirements" of the contract and at least 50 percent of the labor required.1 A recent case, Morris–Griffin Corp. v. C&L Service Corp., F.Supp.2d, 2010 WL 3221975 (E.D. Va. August 16, 2010), illustrates the perils of trying to finagle these requirements.

In Morris, the U.S. District Court refused to enforce a subcontract between a Section 8(a) business and its non-disadvantaged business teaming partner because the Section 8(a) business did not possess the technical expertise to perform its prime contract and the parties had entered into an arrangement under which the non-small business concern performed more than half the work. The court also declared that the Section 8(a)'s prime contract was void ab initio because it was tainted by fraud. The case presents a cautionary tale for those seeking to circumvent the Small Business Association's ("SBA") restrictions on small business set-asides. . .”

Alaska-connected GTSI cut off from new federal contracts By Robert O'Harrow Jr.

Washington Post Staff Writer Saturday, October 2, 2010 “Federal officials on Friday suspended one of the nation's largest government contractors from receiving new work, alleging that the Northern Virginia company inappropriately went through other firms to gain access to contracts set aside for small companies.

The U.S. Small Business Administration's action imperils hundreds of millions of dollars in revenue for GTSI Corp., a top-50 contractor that has relied on the Pentagon and the rest of the federal government for more than 90 percent of its sales in recent years.

At issue is work GTSI did as a subcontractor for small businesses serving as the prime contractors on government contracts. . .”

Small Business & 8(a) Requirements.

52.219-14 -- Limitations on Subcontracting.

(b) By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for –

(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

(2) Supplies (other than procurement from a nonmanufacturer of such supplies). The concern shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials.

(3) General construction. The concern will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees.

(4) Construction by special trade contractors. The concern will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees.

52.219-3 Notice of Total HUBZone Set-Aside or Sole Source Award.

(JAN 2011) IN PART TO FIT SLIDES

(c) Agreement. A HUBZone small business concern agrees that in the performance of the contract, in the case of a contract for—

(iii) No more than 50 percent of the cost of contract performance to be incurred for personnel will be subcontracted to concerns that are not HUBZone small business concerns; or

(4) Construction by special trade contractors.

(i) At least 25 percent of the cost of contract performance to be incurred for personnel will be spent on the HUBZone prime contractor’s employees;

Questions?

Email:

jose.martinez@sba.gov

Questions on Size and compliance with Subcontracting Plans CMR: karen.klam@sba.gov