When the SBA released new rules in 2013, I noted that if a prime’s Contractor Performance Assessment Reporting System (CPARS) ratings were downgraded because of their subcontracting activity (or lack thereof) it could make a real difference. Today we can see that happening.
The GAO recently made an important decision to deny a business from competing for a contract, in part due to that business’s history of failing to fulfill its subcontracting goals.
Steven Koprince did an excellent job of explaining the situation on his SmallGovCon blog, and gave us permission to reprint his article here:
Large Prime Hit For “Consistent Failure” To Meet Subcontracting Goals
A large prime contractor’s “consistent failure” to meet its small business and socioeconomic subcontracting goals on prior projects resulted in a lower past performance score–and led to the prime’s elimination from the competition.
In a recent bid protest decision, the GAO held that the agency properly eliminated a prospective prime contractor from the competition in part because the large business had not met its subcontracting goals on three recent contracts.
The GAO’s decision in Graybar, B-410866 (Mar. 4, 2015) involved a DLA solicitation for maintenance, repair and operations supply items and services. The contract was to be awarded on a “best value” basis, considering technical merit, past performance, and price.
The technical factor included consideration of socio-economic objectives, that is, the offeror’s goals for subcontracting with small business and socioeconomic subcategories of small businesses. Under the past performance factor, the solicitation provided that the DLA would consider, among other things, the offeror’s performance with respect to its small business and socioeconomic goals under previous contracts.
Graybar was one of several offerors to submit proposals. In evaluating Graybar’s past performance, the DLA noted that Graybar had not submitted information regarding Graybar’s subcontracting goals and its actual performance meeting those subcontracting goals on previous contracts. However, the DLA evaluated CPAR reports for each of the contracts submitted with Graybar’s proposal. The evaluators discovered that Graybar had failed to meet its subcontracting goals on all three of the contracts. For example, on one of the submitted contracts, Graybar’s CPAR for the prior three years all reflected a failure to meet SDB and SDVOSB goals. On another contract, Graybar missed the WOSB and SDB goals all three years.
Based on this review, the DLA assigned Graybar a mere “Satisfactory Confidence” for its past performance. With respect to the technical factor, Graybar received an “Outstanding” for the socio-economic objective sub-factor, but this high sub-factor score did not overcome the lower past performance score (and lower scores on other technical sub-factors). The DLA eliminated Graybar from the competition because Graybar’s was not one of the highest-ranked proposals.
Graybar filed a GAO bid protest challenging the elimination of its proposal. Graybar argued, in part, that the DLA had improperly evaluated Graybar under the past performance factor.
The GAO disagreed. The GAO noted that the evaluators had found “a consistent failure to meet certain small business and socioeconomic contracting goals.” After describing the various areas in which Graybar had fallen short of its subcontracting goals, the GAO write “Graybar has pointed to nothing in this CPAR data regarding socioeconomic subcontracting which warranted a higher past performance rating than satisfactory confidence.” The GAO denied Graybar’s protest.
The Graybar bid protest involves an interesting juxtaposition of small business subcontracting objectives and small business subcontracting performance. Evidently, Graybar submitted an impressive subcontracting plan for the DLA solicitation, earning itself an “Outstanding” for its subcontracting objectives. But when the DLA looked at Graybar’s actual subcontracting performance on three prior contracts, the DLA discovered a pattern of failing to meet subcontracting goals.
I have said it before and I will say it again: with all due respect to the SBA’s initiatives to strengthen subcontracting plan enforcement, the best way to ensure that large primes meet their subcontracting goals is for procuring agencies to do what the DLA did here, and consider large primes’ past subcontracting successes–or failures–as part of the evaluation process. After all, impressive subcontracting goals are a good thing, but only if they are followed by impressive subcontracting.
This post originally appeared on the SmallGovCon website at http://smallgovcon.com/gaobidprotests/large-prime-hit-for-consistent-failure-to-meet-subcontracting-goals/ and was reprinted with permission.
Since your OSDBU reviews all opportunities (trying to make sure things get set aside for small business whenever truly feasible), they can help you identify the proper NAICS code associated with each RFP and the size standard that goes with it.
That is key, because if there’s a contract coming up for competition in a size standard you’re too big for, then having it set aside for small business in that NAICS code does you no good.
Many professional and even administrative services opportunities are run under larger NAICS codes, but if the statement of work is defined as mainly IT work, a sub-set of admin services, that can fit under a smaller size standard that you may qualify for.
By meeting with your OSDBU staff – especially the one for your designated set-aside type, if more than just a “small” business, you can better understand how both the contracting officer and the customer are seeing and classifying the preponderance of the work.
Both parties have decision making authority, but the OSDBU small business person can influence that decision. Ultimately you want the set aside to be in a NAICS code and size standard where you can do the work.
As we’ve discussed, OSDBU’s don’t have any money for you; rather, they serve as a resource, advocate and administrator of the federal contracting small business set-aside process.
(For a clear look at what your OSDBU will and will not do for you as a small business federal contractor, see this list of best practices developed by the Federal OSDBU Directors Interagency Council.)
The reason small businesses need an advocate is because when choosing contractors, government officials see large businesses as safer alternatives then small businesses.
In a perfect circumstance, the statement of work and evaluation criteria of an RFP would be written as if you were the only competitor, or even better, as if you were the only one who could qualify as a competitor.
Even though you want no competition in an RFP, the government wants the opposite. They want to establish that there will be competition – before setting aside a contract for a small business or a specially-certified small business, they want to know that there are multiple qualified resources in that set-aside category.
By meeting regularly with your OSDBU person to review current and upcoming RFPs, you can inform them when this is the case. You can build a case for whether the contract should be set aside for a woman-owned business, a veteran-owned business, a service-disabled veteran owned business, a HUBZone business, an 8(a) business, or a general small business.
Armed with that knowledge, then your OSDBU person can steer the federal agency towards setting aside that contract.
Veterans make great entrepreneurs, and supporting veteran-owned small business is a smart way to address the high unemployment rates facing today’s veterans.
In a hearing last spring, veteran business owners stepped forward to share their experiences and highlight the contributions of groups like the International Franchise Association, the Business and Professional Women’s Foundation, and the U.S. Chamber of Commerce Foundation.
You can read their quotes in this press release or watch the entire hearing below.
I bring this up almost one year later because this year’s Women As Veteran Entrepreneurs (WAVE) 5th annual Women Veterans Small Business Seminar is coming up on March 19, 2015 (8:30 a.m.-4:30 p.m.) at The Women in Military Service Memorial at Arlington National Cemetery, Arlington, VA.
My wife Louisa Jaffe, President/CEO of TAPE, LLC is one of the event’s many prominent and inspirational speakers. In 2014, Louisa was selected as the first Women Vetrepreneur of the Year for the National Association of Veteran Business Owners.
She tells me that the WAVE event is a focused time for veterans who are women entrepreneurs to come together with each other and with government. Veterans, particularly women veterans, are finding more and more opportunities as entrepreneurs.
Their wonderful problem solving, leadership and “get the job done” military skills are perfect preparation for the challenges of running a business. We both highly recommend the WAVE event!
For a business that qualifies for the 8(a) set-aside program (for companies owned by the socially and economically disadvantaged), you can form a joint venture between a protégé and a mentor. If the relationship is approved by the SBA, then the size standard of the protégé applies to the joint venture.
The reason this is important is because otherwise, if any of the partners in a joint venture are a large business, the joint venture team is considered large and does not qualify for any set-asides.
One of the provisions of the FY 2013 National Defense Authorization Act (NDAA) was that the SBA was authorized (but not required) to extend these mentor-protégé joint venture privileges to other set-aside categories like service-disabled veteran-owned, HUBZone or woman-owned businesses, or even general small businesses, as long as they’re in a mentor-protégé relationship.
The DoD’s mentor-protégé program pre-dates this change, but what I didn’t realize until reading last week’s guest post by Alex Levine of PilieroMazza was that it is a pilot program that must be reauthorized in the NDAA every few years.
As we learned from Levine’s post, the DoD intends for this to now be a permanent activity. This is significant, as this is the only mentor-protégé program that has money attached to it. The mentor receives money towards performing the functions of the mentor-protégé agreement – expenses, training, marketing staff or whatever.
The bigger picture here is in trying to make the DoD mentor-protégé program permanent, changes must be made to the Code of Federal Regulations (CFRs). After it’s improved and implemented into the CFR, then the FAR Council can modify all the different FAR regulations and regulating bodies to eventually affect all other types of small businesses.
Right now, SBA has proposed the regulations as a draft and are soliciting comments up until April 6, 2015. From there they may make changes, and publish a final set of new regulations (or possibly another interim version if there are substantial changes).
Keep in mind this is just the start of the process. It may not come into fruition until 2016 or even 2017.
This is a guest post by Alex Levine, Associate, PilieroMazza PLLC
The U.S. Department of Defense (“DoD”) recently announced its intent to request a 10-year extension of its mentor-protégé program. The move is a bid to add more permanence to a program, since its advent in 1991 has been labelled a pilot program that must be reauthorized in a National Defense Authorization Act every few years.
The DoD hopes that the move will encourage participation amongst businesses, participation which the DoD asserts has been “chilled” due to the perception that the pilot program could be ended at any time. Whether this will increase participation in the program, which currently features only 50 or so large firm participants, remains an open question.
Pilot program or not, the DoD program does offer distinct advantages to both large business mentors and small business protégés. These advantages, and the differences between various agency mentor-protégé firm programs, can be seen in this summary chart compiled by PilieroMazza. As the chart indicates, one such advantage of the DoD mentor-protégé program, versus other similar agency programs (with the exception of the SBA’s program), stems from its broad nonaffiliation treatment between mentors and protégés.
Under the DoD’s mentor-protégé program, a protégé firm may not be considered an affiliate of a mentor firm solely on the basis that the protégé firm is receiving assistance from its member under the DoD’s program. Thus, protégé firms can receive assistance from mentor firms without such assistance being considered as an indication of affiliation. This is a vital consideration for many small business government contractors that depend upon revenues from set-aside work and small business subcontracts.
This exemption, however, is not without its limitations. Case law at the SBA’s Office of Hearings and Appeals holds that the SBA will not apply the affiliation exemption when a mentor is providing assistance as a subcontractor to its protégé. While this limitation substantially weakens the benefits to mentors from participating in this program, mentors still derive significant benefits through the program, including through joint ventures, reimbursement for developmental assistance costs, credit towards applicable subcontracting goals, and the opportunity for equity investment, among other items.
Despite its 10-year extension, the DoD’s Mentor-Protégé program may yet lose some of its unique advantages. Under the 2013 National Defense Authorization Act, the SBA is tasked with creating rules that would eliminate the differential treatment of mentors and proteges in disparate federal programs by establishing a single program for all small businesses. The new, government-wide program will likely be based on the one currently in place for participants in the 8(a) program. The new program should extend to all small businesses many of the same benefits that 8(a) protégés and their mentors now enjoy under the SBA’s program, including exemptions from affiliation.
On Feb. 5, SBA released its proposed rule establishing the government-wide program. You can read our analysis on the proposed rule by clicking here. Comments on the proposed rule are due April 6.
This post originally appeared on the PilieroMazza Legal Minute blog at http://www.pilieromazza.com/blog/dod-seeks-to-end-the-25-year-pilot-status-of-the-dod-mentor-protg-program and was reprinted with permission.
Alex Levine is an associate with PilieroMazza in the Government Contracts Group.
Since our four-part series about the acquisition reform report, there’s clearly been a lot of discussion about these issues. The perception is that it’s the acquisition workforce that is the predominant issue – not in terms of competence, but in terms of innovation.
The acquisition workforce tends to focus on following the FAR clauses and getting everything right from a compliance standpoint, yet is not really trained on how to go out of the box in order to foster innovation and obtain better products, solutions and service levels.
I also saw one statistic somewhere that said that pretty close to half of the acquisition workforce has less than five years experience, which means that they’re essentially just learning their craft. That’s a pretty serious matter, given that these are the people who are negotiating and creating acquisitions for literally billions or even trillions of dollars.
So how do we address this perceived deficiency? Is it just a perceived deficiency or is it a real one?
As a sidebar to that, what constitutes adequate training for acquisitions? We can send someone to the Defense Acquisition University for training and certification, but that gets us right back to what we already have – a workforce that has training in FAR clauses, but not training in innovation, new methods and new things.
If we’re not going to just repeat the past, then we need people with training in new stuff. We don’t need the same old same old training. We need something different in order to transform how people are operating.
We’re all in this dilemma. I don’t know how to solve it, but it’s clear that with new people coming on, it’s not enough just to give them the fundamentals of FAR clause and compliance training. That strategy is not working.
Requirements specification is a lost art, and that’s not what the contracting specialists are focusing on. If someone has no proper specifications about what they’re buying, what they want, and what constitutes success after they’ve bought it, than no amount of contracting innovation is going to make a damn bit of difference.
The GSA has a rigorous process for closing out government contracts, which are detailed in the Federal Acquisition Regulation (FAR). In carrying out this process, acquisitions professionals will pore over written contracts with a fine tooth comb.
Now I don’t know how many of you are contracting in the overseas market, especially in what’s called OCO environments (overseas contingency operations). One of the dilemmas of this kind of contracting is that very often the circumstances are highly urgent.
Increasingly, the military is using contractors to “plug the gaps” during these OCOs. No longer do you see, as in the movies, the SeaBees and engineers come in and “build the airstrip” – what they do nowadays is contract that out to someone who does it faster, better, and according to specs, and who specializes in airstrips so knows what works and what doesn’t.
Plus of course it doesn’t hurt that the wheels of commerce (us contractors), get the work and pay our employees.
Contractors are expected to act, even if only on a contracting officer’s word. As we learned recently when working with some agencies regarding contract closeouts from the original overseas actions, you’re going to have some problems if you have no written specific authorizations for what was done during the OCO.
You MUST follow up and get it in writing.
Even when things are urgent, even when actions are done under fire, of course first off follow directions, get the job done, and listen to your customer, but then follow-up and get it in writing. Otherwise they could come back and say, “You weren’t authorized to do that, why did you spend that money?”
You can try saying, “Well, Joe the contracting officer told me to do it,” but if you don’t have it in writing you can get into serious trouble. The problem is, Joe may be gone or not accessible, or have a slightly different memory of what was asked for. Or even a really different memory, clouded by time, and by the same urgency you both experienced.
A federal budget was passed during the lame duck session in mid-December, meaning that with the exception of the Department of Homeland Security (who are still on continuing resolution until the end of February), everybody else now has an official budget.
Under a continuing resolution, Congress authorizes that government agencies can continue their current activities, but cannot start anything new. They can renew old stuff, create a continuing contract (so there might be re-contracting competitions), but can’t do any new stuff.
We didn’t have a budget in 2014, because with the election no one wanted to commit to a budget. So they passed a continuing resolution. In the meantime, the world has changed. There has been action on things like immigration, cyber security, and homeland security.
So now what’s going to happen is that these budgets are going to filter down to the people who have requirements, which will then become contracting actions. We can expect that probably by February or March, people will be issuing new task orders, new contracts, etc.
At this point departments are dividing up their budgets to decide who gets what. Let’s say the Department of the Army got $50, but their original budget was $55. Now they have to split up that new figure amongst all the different sub-functions within their realm. Eventually the money all gets down to the people who are ready to work.
As contractors, now is the time – right now – to talk to your customers (existing and new potential ones). Because if they’re going to get money and commit to new things, you can start laying the groundwork for how they funnel that money.
As it always comes back to in our discussions, success in federal contracting is about building relationships. This is the point when you have to mine those relationships. You’ve got a customer, you have a solution, and they have money – if all these criteria are met, you’re good to go.
The Interservice/Industry Training, Simulation and Education Conference (I/ITSEC) is the world’s largest modeling, simulation and training conference.
TAPE exhibited again at this year’s event. It took a lot of work, but it was a fun and wonderful experience. I/ITSEC is always an interesting show and we got to see a lot of new stuff that’s going on.
Overall attendance was down, not unexpected given government travel restrictions and budgetary constraints. (The federal budget itself wasn’t approved until a couple of weeks after this event.)
It all came down to 45 minutes
For all the preparation, our results at I/ITSEC all came down to about 45 minutes, spent visiting with a very important person for the work we’re doing, and work we’re going after in the future. If we hadn’t been at the event, if we hadn’t been at the booth, that conversation would never have happened. Frankly, while not really “revenue-bearing,” it definitely made the whole exhibit and show worthwhile. It’s this kind of interaction that doesn’t really happen even in an office call – the atmosphere is much more relaxed and open to conversation.
We made other important contacts with different folks as well, and a lot of business-to-business connections.
To get the most benefit from a trade show booth, you always have to be sensitive to what is your goal. For us it was to meet a couple of VIPs in a more private setting, and we were able to do that. We invested a lot of money for those visits, but they could easily pay dividends down the road.
Trade shows are training grounds
One key thing we did at I/ITSEC, and then a week later at National Veterans Small Business Engagement, was to bring some new employees. They got to hear more experienced staff talk about what we’re trying to “sell” and to what audience, and who we think we are at our company.
It’s important for everyone in a trade show booth to hone that message, focus it, get it down on paper, and then deliver it. In a trade show environment, when somebody shows up at your booth you have no idea who they are, what they’re interested in, or even their specific function at their agency.
That means you not only have to have these core messages down, you must be able to adjust and adapt quickly them as you get into the conversation. Sometimes you have literally 20 seconds – a true elevator speech – so you just start talking and hope that you find something that clicks, because that person would just as soon move on and get someone else’s free samples.
Learn more about finding customers at trade shows.