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11-01

Procurement Information Circular

April 11, 2011

 

  CLASS DEVIATION TO SUSPEND THE USE OF SUBPART 19.12 SMALL DISADVANTAGED BUSINESS (SDB) PARTICIPATION EVALUATION FACTOR AND SUBFACTOR CONSIDERATION FOR THE DESIGNATED NAICS AND SDB SUBCONTRACTING INCENTIVES, REMOVAL OF THE SMALL DISADVANTAGED BUSINESS PARTICIPATION – CONTRACT TARGETS (OFFEROR FILL IN) CLAUSE, AND REVISION OF SMALL BUSINESS (SB) UTILIZATION RFP LANGUAGE

 

PURPOSE:  To provide a class deviation suspending the use of subpart 19.12 of the Federal Acquisition Regulation (FAR) regarding SDB participation evaluation factors and subfactors in Department of Commerce designated NAICS and subcontracting incentives with small disadvantaged business concerns, pending cancellation of the subpart in the FAR.  This action also modifies existing SB Utilization language to implement the class deviation.

 

BACKGROUND:  The Rothe Development Corporation (Rothe) challenged the constitutionality of 10 U.S.C. § 2323 in a suit against the Department of Defense and the Department of the Air Force.  On November 4, 2008, the United States Court of Appeals for the Federal Circuit issued Rothe Development Corp. v. Department of Defense and Department of Air Force, 545 F.3d 1023 (Fed Cir. 2008) “declaring Section 1207 as enacted in 2006 (i.e., the current 10 U.S.C. § 2323) facially unconstitutional” and “enjoining application of the current 10 U.S.C. § 2323.”   As a result of this decision, FAR 19.11 was suspended by PIC 09-03 until it is removed from the FAR.  FAR 19.12 contains evaluation factors or subfactors, considerations, and associated incentives which because of their inference to preference are no longer available to contracting officers.  In light of the Rothe decision, all small disadvantaged business preferences are now questionable if they cannot pass the “strict scrutiny” standard called out in the Rothe case. NASA would have difficulty defending a challenge to the SDB participation evaluation preference.

 

 Procurement Information Circular (PIC) 09-07 provided a model clause, Small Disadvantaged Business Participation – Contract Targets (Offeror Fill In), for inclusion in Section H, Special Contract Requirements, and 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).  Due to changes in procurement policy, small business policy, and case law, the FAR 19.12 requirements are unsupportable.  Consequently, the model clause has been removed and the model provision and evaluation instructions have been rewritten. 

 

This PIC provides model language and instructions that: 

   1.  Clearly indicate how small business utilization is to be incorporated into NASA evaluation plans;

   2.  Confirm that small businesses are to complete the chart displaying planned small business utilization even though a Small Business Subcontracting Plan is not required;

   3.  Change the flow down implementation thresholds to match the 52.219-9 thresholds; and

   4.  Require small business utilization past performance relative to subcontracting plans be considered as part of the the Past Performance factor rather than under the Small Business Utilization portion of the Mission Suitability factor.

   5. Remove the Section H clause entitled “Small Disadvantaged Business Participation – Contract Targets (Offeror Fill In)”.

 

GUIDANCE:  This deviation precludes NASA contracting officers from providing an SDB utilization evaluation factor or subfactor for the designated Department of Commerce SIC codes or SDB Utilization Incentives under the authority in subpart 19.12 of the FAR. Model SB Utilization Section L and M language is enclosed for contracting officers with references to the FAR Part 19.12 SDB evaluation preferences removed. 

 This action addresses proposed small business subcontracting plans and targets that are evaluated as part of the Mission Suitability factor.  Contractor compliance with existing subcontracting plans and targets found in previous contracts is a past performance consideration and shall be considered under the Past Performance factor. Contracting officers shall ensure the suggested goal for Small Disadvantaged Business utilization targets does not exceed 5 percent.  Firms may propose greater than 5 percent but the NASA suggested goal cannot be greater than 5 percent. 15 U.S.C. 637 contains a Government-wide goal of 5 percent for SDBs. The Rothe case did not invalidate this goal.  However, to go beyond the 15 U.S.C. 637 SDB 5 percent goal would be difficult to support. 

 

This class deviation applies to all solicitations released after the effective date of this PIC.  If the contracting officer is planning to utilize a SDB Evaluation Factor or Subfactor or SDB Utilization Incentive on solicitations issued prior to the effective date of this PIC, the contracting officer shall notify Craig Bowers, Contract Management Division, (202) 358-2235, e-mail: craig.w.bowers@nasa.gov.

    

EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until this change is implemented in FAR, or otherwise rescinded.

 

CANCELLATION:  This PIC supersedes PIC 09-07.

 

HEADQUARTERS CONTACT:  Craig Bowers, Contract Management Division, (202) 358-2235, e-mail: craig.w.bowers@nasa.gov.

 

/s/ S. Goddard for

William P. McNally

Assistant Administrator for Procurement

 

 

Enclosure


DISTRIBUTION:

  PIC LIST

 

Section L

“INSTRUCTIONS” LANGUAGE

SMALL BUSINESS UTILIZATION SUBFACTOR

All Offerors, except small businesses, must complete the portion of the instructions under Small Business Subcontracting specific to the Small Business Subcontracting Plan.  Small businesses are not required to submit Small Business Subcontracting Plans; however, small businesses are required to indicate the amount of effort proposed to be done by a small business either at the prime level or at the first tier subcontract level.  

All Offerors are required to respond to the Commitment to the Small Business Program.

 (a) Small Business Subcontracting

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

 (i)  This solicitation contains FAR clause 52.219-9, “Small Business Subcontracting Plan with 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. 

(ii)  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 (SB)

 

Small Disadvantaged Business Concerns (SDB)

 

Women Owned Small Business Concerns (WOSB)

 

Historically Black Colleges and Universities (HBCU)/Minority Institutions(MI)

 

HUBZone Small Business Concerns (HBZ)

 

Veteran Owned Small Business Concerns (VOSB)

 

Service-Disabled Veteran-Owned Small Business Concerns (SDVOSB)

 

 

(iii) The numbers above reflect the Contracting Officer’s assessment of the appropriate subcontracting goals to be achieved at the completion of contract performance.  If it is anticipated that the proposed small business goals will not be met by the submission of the first Individual Subcontracting Report (ISR) for this effort as required by 52.219-9 Small Business Subcontracting Plan, the Offeror should discuss their approach to include timeline for meeting these goals and the rationale for it.

(iv) 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. 

(v)  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 $650,000 or $1,500,000 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. 

 

(vi)  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).  NASA will consider the amount of work being retained for performance by the prime contractor in-house when determining whether a subcontracting plan is acceptable. 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.

 (vii)  In addition to submitting a Small Business Subcontracting Plan in accordance with Section I, FAR clause 52.219-9, Alternate II, Offerors shall complete Exhibit X, 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.  [Contracting officers may tailor the references in this paragraph to conform to the method of exhibits used in the solicitation.]

Example of Subcontracting Goals, expressed in both contract value and subcontract value, for a contract proposed at $100M with estimated subcontracts of $50M:

 

 

Column A

Column B

Column C

Business Category

Goal as Percent of Contract Value

Dollar Value to be subcontracted per Category

Goal as Percent of Subcontracting Value

Small Business Concerns

25 percent

$25,000,000

   50 percent

Large Business Concerns

       n/a

$25,000,000

       50 percent

Total Dollars to be Subcontracted

       n/a

$50,000,000

     100 percent

 

 

 

 

The following small business subcategories do not necessarily add up to the percentage and dollar amount in the “Small Business Concerns” category above, since some small businesses do not fall into any of the subcategories below, while others will fall into more than one subcategory below.

Subcategories of Small Business Concerns

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/Minority Institutions

1.5 percent

$1,500,000

3 percent

It is recommended that Offerors first complete Column B by entering the dollar amount the Offeror proposes to subcontract to each business category and subcategory.

To complete Column A, divide the dollar amount in Column B by the total offered price of the proposal (that is, total contract value).  In the example above, Column A for Veteran Owned Business Concerns = $2,500,000 divided by $100,000,000, or 2.5 percent.

To complete column C, divide the corresponding amount in Column B by the amount in the “Total Dollars to be Subcontracted” cell in Column B.  In the example above, Column C for Women-Owned Small Businesses = $9,000,000 divided by $50,000,000, or 18percent.  

Note: the “Total Dollars to be Subcontracted” amount in Column C will always be that category divided by itself (100percent if any dollars are subcontracted). 

[Paragraph (2) of this section on “Commitment to the Small Business Program” requirements may be tailored to better fit the requirements of the procurement.]

(b) Commitment to the Small Business Program

(1)  All Offerors shall briefly describe work that will be performed by small businesses.   Proposals should also identify any work to be subcontracted that is considered “high technology.” High Technology is defined as research and development efforts that are within or advance the state-of-the-art in technology discipline and are performed primarily by professional engineers, scientists, and highly skilled and trained technicians or specialists.[Contracting Officer may modify the above  definition of “high technology.]   

(2)  If the subcontractor(s) is known, Offerors must connect the work to the subcontractor and specify the extent of commitment to use the subcontractor (s) (enforceable vs. non-enforceable commitments). (Small Business Offerors shall provide this information to the extent subcontracting opportunities exist in their approach to performing the requirement.)

 (3)  All Offerors shall provide information demonstrating the extent of commitment to utilize small business concerns and to support their development.  Information provided should include a brief description of established or planned procedures and organizational structure for Small Business outreach, assistance, participation in the Mentor Protégé program, counseling, market research and Small Business identification, and relevant purchasing procedures.  For Other than Small (Large) Business Offerors, this information should conform to applicable portions of the submitted Small Business Subcontracting Plan. Small Business Offerors shall provide this information to the extent subcontracting opportunities exist in their approach to performing the requirement.)

(End of provision)

Section M

“EVALUATION FACTORS FOR AWARD” LANGUAGE

SMALL BUSINESS UTILIZATION SUBFACTOR

The evaluation of Small Business Subcontracting and Commitment to the Small Business Program applies to all Offerors, except that Small Businesses are not required to submit a Small Business Subcontracting Plan. 

 (a) Small Business Subcontracting  

(1) 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 small business category) in comparison to the Contracting Officers assessment of the appropriate subcontracting goals for this procurement.  The Offeror's Small Business Subcontracting Plan will also be evaluated in terms of meeting the requirements of FAR 19.704, Subcontracting Plan Requirements.  The evaluation of the Small Business Subcontracting Plan will be on the basis of total contract value. 

(2) Small businesses are not required to submit subcontracting plans. NASA will only evaluate the amount of work proposed to be performed by the small business prime and any small business at the first tier subcontract level.  The proposed amount of work to be done by the prime small business and first tier small business subcontractors will be evaluated against the Contracting Officer’s assessment of the overall subcontracting goal for this procurement.  Individual subcontracting goals by small business categories will not be evaluated for small business primes and their first tier subcontractors.

 (b) Commitment to Small Businesses

(1)  NASA will evaluate the extent to which any work performed by a small business subcontractor(s) is identified as “high technology.”   NASA also will evaluate the extent of commitment to use the subcontractor(s) (enforceable vs. non-enforceable commitments.)

 

(2) NASA will evaluate the extent to which the identity of the small business subcontractor is specified in the proposal as well as the extent of the commitment to use small businesses.  (For small business Offerors, NASA will evaluate this only if subcontracting opportunities exist.)


(3)  NASA will evaluate the Offeror’s established or planned procedures and organizational structure for small business outreach, assistance, participation in the Mentor Protégé program, counseling, market research and small business identification, and relevant purchasing procedures. (For large businesses Offerors, this information should conform to its submitted Small Business Subcontracting Plan.  For small business Offerors, NASA will evaluate this only if subcontracting opportunities exist.)

(End of provision)