subcontracting | The Contracting Education Academy

July 6, 2020 By cs

GAO: Oversight of contractor compliance with subcontracting plans needs improvement

Half of the contracts recently examined by the Government Accountability Office (GAO) didn’t contain evidence of compliance with small business subcontracting requirements.

The subcontracting report submission system is web-based. *Photo credit: GAO file photo*

Federal agencies are supposed to notify Small Business Administration (SBA) representatives about proposed contracts that contain small business subcontracting plans for possible review. But for about half of the 26 contracts we examined, agencies couldn’t show whether that happened.

Agencies also didn’t ensure that contractors submitted subcontracting reports, or that the reports were accurate.

Certain federal contracts that go to large businesses must have small business subcontracting plans. Under these plans, contractors have to make a good-faith effort to offer subcontracting opportunities to small businesses.

GAO Report Details

GAO, in its report publicly released on June 29, 2020, found that selected agencies did not consistently follow all required procedures for oversight of small business subcontracting plans, both before and after contracts were awarded. GAO reviewed 26 contracts with a subcontracting plan at four agencies — Defense Logistics Agency (DLA), General Services Administration (GSA), National Aeronautics and Space Administration (NASA), and the Department of the Navy (Navy).

For about half of the 26 contracts, agencies could not demonstrate that procedures for Procurement Center Representative (PCR) reviews were followed. These SBA representatives may review small business subcontracting plans and provide recommendations for improving small business participation. When an agency is awarding a contract that includes a subcontracting plan, contracting officers are required to notify these representatives of the opportunity to review the proposed contract. Without taking steps to ensure these opportunities are provided, agencies may not receive and benefit from suggestions for increasing small business participation.

For 14 of the 26 contracts, contracting officers did not ensure contractors submitted required subcontracting reports. After a contract is awarded, contracting officers must review reports contractors submit that describe their progress towards meeting approved small business subcontracting goals. In some cases, contracting officers accepted reports with subcontracting goals different from those in the approved subcontracting plans, with no documentation explaining the difference. Without complete and accurate information about a contractor’s subcontracting goals, an agency cannot adequately assess a contractor’s performance in meeting its subcontracting plan responsibilities.

The SBA encourages agency compliance with small business subcontracting plan requirements by providing training to contracting officers and contractors, and by conducting reviews. For instance, SBA Commercial Market Representatives conduct compliance reviews to evaluate a large prime contractor’s compliance with subcontracting program procedures and goal achievement. However, SBA could not provide documentation or information on almost all compliance reviews conducted in fiscal years 2016–2018. SBA has developed new procedures for conducting compliance reviews, but as of mid-March 2020, had yet to fully implement them. SBA has conducted fiscal year 2019 compliance reviews that reflect a first phase of their new procedures. SBA has draft guidance on the new compliance review process, including some specific information regarding what Commercial Market Representatives are to record as part of the compliance review. SBA has begun to conduct compliance reviews in accordance with the guidance, but does not have clearly documented and maintained records for the first phase of these reviews. Without consistent, clear documentation and records that will be maintained going forward, SBA’s ability to track contractor compliance and agency oversight efforts will be limited.

Why GAO Did the Review

Certain federal contracts must have a small business subcontracting plan if subcontracting opportunities exist. But recent Department of Defense Inspector General reports raised concerns about agency oversight of subcontracting requirements. GAO was asked to review oversight of subcontracting plans. Among its objectives, GAO’s report discusses: 1) the extent to which selected agencies (DLA, GSA, NASA, and Navy) oversee small business subcontracting plans, and 2) how SBA encourages agency compliance with subcontracting plan requirements.

GAO reviewed data and documentation for a non-generalizable sample of 32 federal contracts (including 26 contracts with a subcontracting plan) at four agencies, selected to include contracts over $1.5 million at both civilian and military agencies awarded in fiscal years 2016–2018. GAO also reviewed the Federal Acquisition Regulation, SBA and selected agency documentation, and interviewed agency officials.

What GAO Recommends

GAO made 10 recommendations to strengthen oversight of these plans. GAO’s recommendations address ensuring that procedures for PCR reviews are followed, contractor subcontracting reports are monitored and reviewed for accuracy, and SBA compliance reviews are clearly documented and maintained. DLA, GSA, NASA, and Navy concurred with all of GAO’s recommendations. SBA partially concurred with the recommendation pertaining to that agency’s operation, although GAO maintains that its recommendation is warranted.

View GAO’s full report at: https://www.gao.gov/assets/710/707231.pdf.

July 18, 2019 By AMK

2019 NDAA analysis: Enhancing IDIQs and other provisions

Over the past several months, this blog has analyzed several key provisions of the Fiscal Year 2019 National Defense Authorization Act (NDAA) that impact government contractors. This post briefly summarizes a variety of other government contracts-related provisions of the FY 2019 NDAA that we have not yet discussed, including several that reflect a congressional intent to enhance the use of multiple-award, indefinite-delivery/indefinite-quantity (IDIQ) contracts and encourage commercial item contracting, several that concern subcontracting and supply-chain considerations, and assorted other issues.

Awarding IDIQ Contracts Without Considering Price to Increase Order-Level Competition.

Section 876 provides a limited exception to the general requirement in 41 U.S.C. § 3306 that agencies must include cost or price to the government as an evaluation factor in evaluating proposals. The exception applies to task-order contracts (i.e., IDIQ contracts) for services that are priced on the basis of hourly rates. Specifically, agencies need not consider price as an evaluation factor for such contracts if:

the agency will award a base contract to every “qualifying offeror”—meaning a responsible source whose proposal conforms to solicitation requirements, meets all technical requirements, and is otherwise eligible for award; and
the agency will consider cost or price to the government in competitions for individual task orders.

This provision applies to non-defense agencies. Defense agencies had previously been granted a similar exception in the FY 2017 NDAA. See 10 U.S.C. § 2305(a)(3)(C).

Congress’s goal, as evidenced by the title to section 876, is “Increasing Competition at the Task Order Level.” By awarding base IDIQ contracts to all compliant proposals, without discriminating between them based on price, agencies are likely to have more contract-holders available to compete for specific work at the task-order level. Use of this mechanism should reduce an important barrier to entry to many potential competitors—not holding the necessary IDIQ contract to compete for work solicited under task order solicitations—and, by increasing competition, could result in lower pricing and better technical offerings at the task order level.

Keep reading article at: http://www.mondaq.com/article.asp?articleid=810088

December 12, 2017 By AMK

Changes to supply chain management and commercial item contracting in FY 2018 NDAA

For Department of Defense (DoD) acquisitions, the Conference Report for Fiscal Year 2018 NDAA includes provisions that simplify and others that complicate contractor responsibilities.

On November 8, 2017, the U.S. Senate and House Armed Services Committees announced that they had reached agreement to reconcile the different versions of the National Defense and Authorization Act (NDAA) for Fiscal Year 2018 passed by the Senate and House earlier in the year.

The Senate unanimously approved the compromise legislation on November 16, sending it to President Trump to sign into law. The 2018 National Defense and Authorization Act Conference Report sent to the President includes proposed changes to supply chain management, to the definition of a “subcontractor” and to commercial item contracting that may impact your business.

Keep reading this article at: https://www.lexology.com/library/detail.aspx?g=238f078d-5398-4cba-ba7b-8fdb3e308575

September 25, 2017 By AMK

Senate passes $700 billion 2018 NDAA, including procurement reforms

On September 18, 2017 the Senate passed its version of the National Defense Authorization Act for Fiscal Year 2018.

The Senate version of the NDAA authorizes defense spending at close to $700 billion for Fiscal Year 2018, which begins on October 1. The Senate NDAA’s $700 billion total is more than President Donald Trump requested, and also exceeds the caps set by the Budget Control Act of 2011. In order to provide the authorized $700 billion level through appropriation bills, Congress will need to address the limits of the Budget Control Act and eliminate the threat of sequestration.

As is the case each year, the NDAA will include significant procurement reform provisions. Although it remains to be seen which of these provisions will be included in the final version of the NDAA passed by Congress and signed into law by the president, the Senate and House versions both contain notable reforms that would impact the laws and regulations applicable to government contractors. For example, the Senate version contains reforms to the debriefing and bid protest process and the House version would permit and promote Department of Defense (DoD) purchases through online commercial marketplaces. Both versions contain significant potential reforms to the regulation of commercial items.

In its recent vote, the Senate was acting on H.R. 2810, the House version of the 2018 NDAA, and voted on Amendment #1003, which included the Senate version of the NDAA. This version was further modified by numerous bipartisan amendments, including an amendment that incorporated the Modernizing Government Technology (MGT) Act. The MGT provisions would establish information technology working capital funds at 24 federal agencies and set up a separate $500 million modernization fund within the Department of the Treasury, to be administered by the General Services Administration, for the purpose of improving information technology and cybersecurity across the federal government.

Below is a summary of several significant procurement reform provisions in the Senate and House versions of the NDAA, each of which contain more than 50 separate sections related to procurement policies and reform.

Keep reading this article at: https://www.lexology.com/library/detail.aspx?g=6e11bc94-e1ca-42a7-ae21-b96f2965ad02

March 2, 2017 By AMK

Evaluation of subcontractor past performance not required for FSS procurements

For Federal Supply Schedule (FSS) procurements, agencies are not required to evaluate past performance references of subcontractors, unless the solicitation provides otherwise.

As one offeror recently discovered in Atlantic Systems Group, Inc., B-413901 (Jan. 9, 2017), unlike negotiated procurements, where agencies “should” evaluate the past performance of subcontractors that will perform major or critical aspects of the contract, offerors bidding under FSS solicitations should not assume that a subcontractor’s past performance will be considered.

Atlantic Systems involved a solicitation for technical, engineering, management, operation, logistical, and administrative support for the Department of Education’s cybersecurity risk management program. The solicitation was set aside for SDVOSB concerns that held Schedule 70 contracts.

Pursuant to the solicitation, offerors were to be evaluated for both corporate experience and past performance. In order to enable the agency to conduct the past performance/experience evaluation, each “offeror” was to provide evidence of the experience “of the organization” with similar projects or contracts.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/evaluation-of-subcontractor-past-performance-not-required-for-fss-procurements/