CANCELLED BY PIC 09-07

08-05

Procurement Information Circular


February 20, 2008

SMALL BUSINESS (SB) UTILIZATION SUBFACTOR

                  

PURPOSE:  To provide model clause and provision language to ensure the proper evaluation of small business utilization under competitive negotiated acquisitions. 

 

BACKGROUND:  The NASA FAR Supplement (NFS) 1815.304 (c)(4)(A) has been modified to require that Small Business Utilization (SBU), which includes small business subcontracting and Small Disadvantaged Business (SDB) participation, be evaluated as a single subfactor under the Mission Suitability factor.  NFS guidance further requires that the small business utilization subfactor shall provide for a separate and distinct evaluation of small business subcontracting from SDB participation. 

 

Previously, NASA had evaluated small business subcontracting as part of its evaluation of management under Mission Suitability, and this evaluation was limited to the Small Business Subcontracting Plans offerors are required to submit.  The model Section L and Section M provisions expand the scope of this evaluation for small business subcontracting by also requesting additional information such as the type of work being subcontracted to small business concerns, any phase-in plan to meet subcontracting goals with the small business concerns, an offeror’s past performance working with small business concerns, and on any established/planned procedures for outreach to small business concerns.  Only large businesses are required to complete the Small Business Subcontracting Plan required under Small Business Subcontracting; however, the model provision language requires small business concerns to submit proposals with regard to “other” information to address small business participation to the extent that subcontracting opportunities exist.   

 

The method of evaluation of SDB participation, which is specified in the model provisions,  follows the Federal Acquisition Regulation (FAR) Subpart 19.12  requirements that satisfy the strict scrutiny test articulated in Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995). The model provisions require offerors to provide targets, expressed as dollars and percentage of total contract value, in each applicable, authorized NAICS Industry Subsector.  Use of the NAICS Industry Subsector restricts the evaluation of SDB participation to those concerns where the federal dollars are disproportionately low given the number of SDB firms in that Subsector.  The model provisions also require offerors to identify the SDB firms in the NAICS Industry Subsector in a Section H contract clause and to notify the contracting officer of any substitution of the listed firms that are not SDB concerns.  The SDB participation portion of SBU applies to all offerors except SDB offerors unless the SDB offeror waives the price evaluation adjustment factor by completing paragraph (c) of FAR clause 52.219-23, “Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns.”

GUIDANCE:  Contracting officers should use the enclosed model clause Small Disadvantaged Business Participation – Contract Targets (Offeror Fill In) for inclusion in Section H Special Contract Requirements, and the model provision language for inclusion in Section L Instructions and in Section M Evaluation Factors for Award, to ensure compliance with the procedures set forth at FAR 19.1202 Evaluation factor or subfactor, and NFS 1815.304(c)(4)(A).  The model language is anticipated for use in contracting by negotiations when subcontract plans are required with submission of initial offers.  The model language may be modified to meet the specific requirements of the solicitation.  For example, solicitations for procurement of goods or services on an indefinite-delivery indefinite-quantity basis may substitute “IDIQ MAXIMUM ORDERING VALUE” FOR “TOTAL CONTRACT VALUE” when defining the basis on which subcontracting goals are to be proposed. 

 

EFFECTIVE DATE:  This PIC is effective as dated and will remain in effect until canceled or superseded.

 

HEADQUARTERS CONTACT:  Diane Thompson, Contract Management Division, (202) 358-0514, email: Diane.Thompson@nasa.gov.

 

 

James Balinskas

Director, Contract Management Division

 

Enclosure

 

 

DISTRIBUTION:

   PIC List



Section H

 

H.XX  SMALL DISADVANTAGED BUSINESS PARTICIPATION – CONTRACT TARGETS (OFFEROR FILL IN)

(This clause does not apply to SDB offerors unless the SDB offeror has waived the price evaluation adjustment factor by completing paragraph I of FAR clause 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns in Section I of this solicitation.)

(a)  FAR 19.1202-4(a) requires that SDB subcontracting targets be incorporated in the Contract.  Targets for this contract are as follows:

*NAICS Industry

Subsectors                                           Dollar Target               Percent of Contract Value

 (TO BE PROPOSED BY OFFEROR)                   

Total

*North American Industry Classification System (NAICS) Industry Subsectors as determined by the Department of Commerce

(b)  FAR 19.1202-4(b) requires that SDB concerns that are specifically identified by the offeror be listed in the contract when the extent of the identification of such subcontractors was part of the subfactor on Small Business Utilization.   SDB concerns (subcontractors) specifically identified by the offeror are as follows:

Name of Concern(s):  (TO BE PROPOSED BY OFFEROR)

The Contractor shall notify the Contracting Officer of any substitutions of the firms listed in paragraph (a) if the replacement contractor is not an SDB concern. 

(c)  If the prime offeror is an SDB that has waived the price evaluation adjustment, the target for the work it intends to perform as a prime Contractor is as follows:

Dollars        Percent of Contract Value

(TO BE PROPOSED BY OFFEROR)

(End of clause)

 

Section L

 

“INSTRUCTIONS” LANGUAGE

SMALL BUSINESS UTILIZATION SUBFACTOR

 

All offerors must complete the portion of the instructions under Small Business Subcontracting specific to Small Business Subcontracting Plans.  Although small businesses are not required to submit Small Business Subcontracting Plans, the instructions regarding small business subcontracting requests information more extensive than data about subcontracting plans.  See paragraph (b) “Other” under Small Business Subcontracting.   Small businesses, therefore, shall address small business participation to the extent that subcontracting opportunities exist.  See FAR 52.219-8, Utilization of Small Business Concerns.

 

The instructions regarding SDB participation apply to BOTH large and small business offerors except SDB offerors, unless the SDB offeror waives the price evaluation adjustment factor by completing paragraph I of FAR clause 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns in Section I of this solicitation.  The waiver, if elected, makes the particular SDB offeror INELIGIBLE for the price evaluation factor adjustment but ELIGIBLE for the “evaluation credit” (points) associated with the SDB participation described in Section M.

 

Small Business Subcontracting

 

(a)  Small Business Subcontracting Plan (the Plan) Required by the FAR:

 

(1)  This solicitation contains FAR clause 52.219-9, “Small Business Subcontracting Plan and its Alternate II”.  The Plan described and required by the clause, including the associated subcontracting percentage goals and subcontracting dollars, shall be submitted with your proposal. 


(2)  The Contracting Officer’s assessment of appropriate subcontracting goals for this acquisition, expressed as a percent of TOTAL CONTRACT VALUE (basic and all options combined), is as follows:
 

Small Businesses

 

*Small Disadvantaged Business Concerns (Includes SDB’s in both targeted and non-targeted areas.)

 

Women Owned Small Business Concerns

 

Historically Black Colleges and Universities

 

HUBZone Small Business Concerns

 

Veteran Owned Small Business Concerns

 

Service-Disabled Veteran-Owned Small Business Concerns

 

 

SB – Small Business  WOSB – Women-Owned Small Business SDB – Small Disadvantaged Business HBZ – HUBZone Small Business VO – Veteran-Owned Small Business SDVOSB – Service-Disabled Veteran-Owned Small Business

*Although 15 U.S.C. 637(d) requires subcontracting plans to contain information about  SDB concerns, case law prevents the Government from giving evaluation credit to business types based on race or ethnicity unless those businesses are in under represented industries.  The Section M evaluation for SDB participation ensures that the Government only evaluates participation of SDB’s in industries that are designated by the Department of Commerce as under represented.  For purposes of the Small Business Subcontracting Plan, the proposed subcontracting goal for SDB’s will be evaluated based upon the SDB’s status as a small business.

 

(3)  Offerors are encouraged to propose goals that are equivalent to or greater than those recommended by the Contracting Officer.  However, offerors must perform an independent assessment of the small business subcontracting opportunities and are encouraged to propose goals exceeding the recommended goals where practical. 

 

(4)  The Plan submitted with the proposal shall be incorporated in Section J as Attachment J-X in the resulting contract.  The requirements in the Plan must flow down to first tier large business subcontracts expected to exceed $550,000 or $1,000,000 for construction of a public facility.  Although these first tier large business subcontractors are encouraged to meet or exceed the stated goals, it is recognized that the subcontracting opportunities available to these subcontractors may differ from those suggested in the solicitation based upon the nature of their respective performance requirements. 


(5)  Offerors are advised that a proposal will not be rejected solely because the submitted Plan does not meet the NASA recommended goals that are expressed in paragraph a) (2) above in terms of percent of  TOTAL CONTRACT VALUE (basic and all options combined).  Offerors shall discuss the rationale for any goal proposed that is less than the Contracting Officer’s recommended goal in any category.  In addition, the Offeror shall describe the efforts made to establish a goal for that category and what ongoing efforts, if any, the Offeror plans during performance to increase participation in that category.
 
(6)  In addition to submitting a Small Business Subcontracting Plan in accordance with the Section I FAR clause 52.219-9, Alternate II, offeror’s shall complete Exhibits XX, XX, and XX, SMALL BUSINESS SUBCONTRACTING PLAN GOALS, which provides a breakdown of the offeror’s proposed goals, by small business category, expressed in terms of both a percent of TOTAL CONTRACT VALUE and a percent of TOTAL PLANNED SUBCONTRACTS.  Offerors shall modify the exhibit to show the proposed subcontracting goals for the basic contract requirement and each option separately.
 
(NOTE:  FOR PURPOSES OF THE SMALL BUSINESS SUBCONTRACTING PLAN, THE PROPOSED GOALS SHALL BE STATED AS A PERCENT OF TOTAL SUBCONTRACTS, NOT AS A PERCENT OF TOTAL CONTRACT VALUE, REFER TO THE BELOW EXAMPLE)

 

(1)    Example of Subcontracting Goals as expressed in both Contract Value and Subcontract Value for a contract proposed at $100M and estimated subcontracts of $50M.

 

 

Column A

Contract Value Goal

Column B

 

Column C

Subcontract Value Goal

Category

Percent of Contract Value

Dollar Value

Percent of Subcontracting Value

Small Business Concerns

25 percent

$25,000,000

50 percent

 

 

 

 

The following subcategories are inclusive of the above Small Business percentage

Women Owned Small Business Concerns

9 percent

$9,000,000

18 percent

Small Disadvantaged Business Concerns

5.5 percent

$5,500,000

11 percent

Veteran Owned Small Business Concerns

2.5 percent

$2,500,000

5 percent

Service-Disabled Veteran-Owned Small Business Concerns

1.5 percent

$1,500,000

3 percent

HUBZone Small Business Concerns

1.5 percent

$1,500,000

3 percent

Historically Black Colleges and Universities

1.5 percent

$1,500,000

3 percent

 

The Offeror proposes small business subcontracting goals as a percentage of contract value in column A.

 

Then based on the $100 million contract value, the resulting statement of dollars that the Offeror would include in the Subcontracting Plan, as required by paragraph (d)(2) of FAR clause 52.219-9, would be as indicated in column B.

However, the Small Business Subcontracting Plan shall also express goals as a percent of total planned subcontracts.  Assuming total subcontracting of $50M, the resulting percentage goals, expressed as a percent of total subcontract dollars, and which would be stated in the Small Business Subcontracting Plan as required by paragraph (d)(1) FAR clause 52.219-9 would be recorded in column C. 
 

[Paragraph (b) of this section on “Other” requirements may be tailored to better fit the requirements of the procurement.]

 

(b)  Other: 

 

Large businesses are required to complete this section to further support proposed goals in their Small Business Subcontracting Plan.  Small businesses are required to complete this section to the extent that subcontracting opportunities exist in their proposal.   

 

(1)  Offerors who are large businesses shall provide rationale to substantiate the proposed goals in the Small Business Subcontracting Plan.

(2)  Offerors who are small businesses shall provide a breakdown of anticipated subcontracting, in terms of total contract dollars (basic requirement and each option separately) for both small business concerns and large businesses.  Small businesses shall provide rationale to substantiate the anticipated subcontracting. 

 

(3)  Offerors must briefly describe work that will be performed by the small business subcontractor(s).  Information could also include the identification of any work to be subcontracted considered “high technology.” [Contracting Officer may include a definition of “high technology” appropriate to the solicitation.]    If the subcontractor(s) is known, tie the work to the subcontractor and specify the extent of commitment to use the subcontractor (s) (enforceable vs. non-enforceable commitments).

 

(4)  Provide the Offeror’s record of past participation of small business concerns in subcontracts and the type of work subcontracted such as production, engineering services, research, development, etc. over the past three full government fiscal years.  Copies of Summary Subcontracting Reports and Individual Subcontracting Reports (on relevant contracts) used to meet Federal reporting requirements may be part of the supporting information submitted.

(5)  If appropriate, proposals should discuss any plans to phase in contracting to SB concerns explaining the rationale for the phase-in plan.

 

(6)  Offerors should provide information that demonstrates the extent of commitment to utilize small business concerns and to support their development.  Information provided may include a brief description of established or planned procedures and organizational structure for Small Business outreach, assistance, counseling, market research and Small Business identification, and relevant purchasing procedures.  (For Large Business Offerors, this information should conform to applicable portions of your submitted Small Business Subcontracting Plan.)

 

Small Disadvantage Business (SBD) Participation: 

 

(a)  Small Disadvantaged Business Participation – Contract Targets: 

 

(1)  The targets only include subcontracts with SDB concerns in those industries designated by the Department of Commerce as under represented areas by NAICS Industry Subsector. The General Services Administration has posted this Department of Commerce determination at http://www.arnet.gov/References/sdbadjustments.htm.    

 

(2)  After completing an independent assessment of the opportunities available for subcontracting with small disadvantaged firms, Offerors shall propose a target for SDB participation by completing the Section H clause at H.XX., Small Disadvantaged Business Participation – Contract Targets.  The target for SDB participation in clause H.XX shall be expressed as a percent of TOTAL CONTRACT VALUE (basic and all options combined).   If the Offeror is an SDB that has waived the SDB price evaluation adjustment in accordance with FAR 52.219-23, it shall provide with its offer a target for the work that it intends to perform in the authorized subsectors as the prime contractor.

For additional information on under represented areas by NAICS Industry Subsectors, Offerors may reference the following website: http://www.arnet.gov/References/sdbadjustments.htm.

 

 

[Paragraph (b) of this section on “Other” requirements may be tailored to better fit the requirements of the procurement.]

 

(b) Other:

 

The information below is only requested to the extent that it pertains to SDBs in the authorized NAICS Industry Subsectors.  Each Offeror shall:

 

(1)  Provide rationale to substantiate the proposed targets for SDB participation.

 
(2)  Briefly describe work that will be performed by SDB subcontractor(s).  Identify any work considered “high technology”. [Contracting Officer may include a definition of “high technology” appropriate to the solicitation.]  If the subcontractor(s) is known, tie the work to the subcontractor and ensure consistency with H.XX Small Disadvantaged Business Participation – Contract Targets (Offeror Fill In).  Additionally, specify the extent of commitment to use the subcontractor(s) (enforceable vs. non-enforceable commitments).

(3)  If appropriate, discuss any plans to phase in contracting to SDB concerns explaining the rationale for the phase-in plan.

 

(4)  Provide the Offeror’s record of past participation of SDB concerns in subcontracts and the type of work subcontracted such as production, engineering services, research, development, etc. over the past three full government fiscal years.  Copies of Summary Subcontracting Reports and Individual Subcontracting Reports (on relevant contracts) used to meet Federal reporting requirements can be part of the supporting information submitted.  
  
(5)  Provide a brief description of the Offeror’s established or planned procedures and organizational structure for SDB outreach, assistance, counseling, market research and SDB identification, and relevant purchasing procedures. For large business Offerors, this information should conform to its submitted Small Business Subcontracting Plan. 

 

(6)  Identify, by contract number and contracting agency, any SDB subcontracting incentives earned under any Government contract(s) in the last three years.  If incentives were available, but not earned, so state.

 

Section M

 

“EVALUATION FACTORS FOR AWARD” LANGUAGE

 

SMALL BUSINESS UTILIZATION SUBFACTOR

 

The evaluation of Small Business Subcontracting applies to all Offerors.  Although small business concerns are not required to submit a Small Business Subcontracting Plan as required by FAR clause 52.219-9, Small Business Subcontracting Plan and its Alternate II, NASA will evaluate small business subcontractor participation to the extent that subcontracting opportunities exist. 

 

The evaluation of SDB participation applies to all Offerors except SDB offerors unless the SDB Offeror has waived the price evaluation adjustment factor by completing paragraph (c) of FAR clause 52.219-23.  The waiver, if elected, makes the particular SDB offeror INELIGIBLE for the price evaluation factor adjustment but ELIGIBLE for the “evaluation credit” (points) associated with the SDB participation described in Section M.

 

Small Business Subcontracting  

 

The Small Business Subcontracting Plan will be evaluated in terms of the Offeror’s proposed subcontracting goals (overall subcontracting goals and individual subcontracting goals by category) in comparison to the Contracting Officers assessment of the appropriate subcontracting goals for this procurement.  The Small Business Subcontracting Plan will also be evaluated in terms of the reasonableness and soundness of the Offeror's independent assessment to achieve the proposed overall subcontracting goals and the individual subcontracting goals by category.  The evaluation will include the reasonableness of rationale for any goal that is less than the Contracting Officer’s recommended goal for any category, the reasonableness of efforts made to establish a goal for that category, as well as on-going efforts, if any, the Offeror plans during performance to increase participation in that category.  This evaluation of the Small Business Subcontracting Plan will be on the basis of total contract value.  The Small Business Subcontracting Plan will also be evaluated in terms of meeting the requirements of FAR 19.704 Subcontracting Plan Requirements.

 

Additionally, NASA will evaluate: 

 

(1)  The reasonableness and quality of the rationale provided to substantiate the proposed goals in the Small Business Subcontracting Plan. 

 

(2)  For small businesses not required to submit a Small Business Subcontracting Plan, the extent, reasonableness, and quality of small business subcontracting participation to the extent that subcontracting opportunities exist.

 

(3)  The reasonableness and quality of the rationale specific to work that will be performed by the small business subcontractor(s).  NASA will also evaluate the extent to which SB concerns are specifically identified and the extent of commitment to use SB firms (for example, enforceable commitments vs. non-enforceable commitments.)  

 

(4)  The reasonableness and quality of any proposed plans to phase in contracting to SB concerns.

 

(5)  The quality of Offeror’s past performance in small business utilization as an indicator of commitment to utilize small business concerns. 

 

(6)  The reasonableness and quality of information demonstrating the extent of commitment to utilize small business concerns and to support their development.

 

SDB Participation

 

Separately from Small Business Subcontracting, NASA will evaluate SDB Participation.

 

NASA will evaluate the reasonableness of proposed target SDB participation in the approved NAICS Industry Subsectors against total contract value. 

 

Additionally, NASA will evaluate other information as follows only to the extent that it pertains to SDBs in the authorized NAICS Industry Subsectors:   

 

(1)  The reasonableness and quality of the rationale provided to substantiate the proposed targets for SDB participation.   

 

(2)  The reasonableness and quality of the rationale specific to work that will be performed by the SDB(s).  This will include favorable consideration of work subcontracted to qualified SDB(s) in high technology areas. NASA will also evaluate the extent to which SDB concerns are specifically identified and the extent of commitment to use SDB firms (for example, enforceable commitments vs. non-enforceable commitments.)  

 

(3)  The reasonableness and quality of any proposed plans to phase in contracting to SDB concerns.

 

(4)  The quality of the Offeror’s past performance in SDB utilization as an indicator of commitment to utilize SDBs. 

 

(5)  The reasonableness and quality of the Offeror’s planned procedures and organizational structure for SDB outreach, assistance, counseling, market research and SDB identification, and relevant purchasing procedures.  Procedures and structure will also be evaluated from the standpoint of ensuring attainment of the SDB targets.     

 

(6) Any SDB subcontracting incentives earned as an indicator of commitment to utilize SDBs. 

(End of clause)