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Subcontracting Plan Dilemma
By Anonymous on Wednesday, February 05, 2003 - 01:23 pm:

Our program staff wants A&E firms that are able to perform all required work in-house, i.e., without using subcontractors. They reason that firms that perform all work themselves will lessen possible prime-sub problems during the performance. To me, this creates a problem because most of our A&E work is valued over $500K and any large business reciving an award is required to submit a SB subcontracting plan.

If we used such a factor during evaluations, then we would give higher rankings to firms not having subcontractors. But, wouldn't the use of such a factor conflict with the SB subcontracting plan requirement for large businesses? On one hand we'd be saying LB's are to submit subcontracting plans, but on the other hand we'd be saying if you submit a 255 for a sub you'll receive a lower rating.

By Anonymous on Wednesday, February 05, 2003 - 03:41 pm:

Anonymous, subcontracting plans do not prohibit total self performance of the work. They only address work intended to be subcontracted.

The problem with your program staff's position is that small business A-E firm's would not be able to compete for new contracts. That is contrary to public policy. happy sails! joel hoffman

By joel hoffman on Thursday, February 06, 2003 - 07:58 am:

Anonymous, my answer assumes that you are planning to contract for federally funded A-E work. As I stated above, a subcontracting plan applies to the share of the contract effort that the prime contractor intends to subcontract. Nothing prohibits a prime from performing 100% of the effort with its own resources. That part of the answer is simple.

When a Government agency adopts an overall policy that favors selection of primes that will perform 100% of A-E work with their own forces, the agency is essentially discriminating against small business design firms. While the need for 100% self performance MIGHT be okay for a particular acquisition, a flat selection bias toward 100% self performance flies in the face of public policy that small business be provided the maximum opportunity to compete for prime and subcontracts. As a rule, small business A-E firms don't have a full range of in-house expertise. They routinely partner with other firms to provide those services. My firm did, when I was a consulting engineer. We didn't have any problems with the quality or timing of our sub's work.

Anonymous, did I answer your question or would you like more detail? You can read FAR Part 19 and supplements for more on public policy. You can also check out the Code of Federal Regulations for the Small Business Administration.
happy sails! joel hoffman

By Anonymous on Thursday, February 06, 2003 - 09:23 am:

A quick reading of Subpart 19.201 was all it took to get the message through to my pea brain. Thanks Joel, you've more than answered my question...again.

By Anonymous on Thursday, February 06, 2003 - 09:41 am:

A quick reading of Subpart 19.201 was all it took to get the message through to my pea brain. Thanks Joel, you've more than answered my question...again.

By Anonymous on Thursday, February 06, 2003 - 10:18 am:

Joel, what if after evaluation the two top ranked firms are considered equal in all aspects, but Firm-A is subcontracting 50% of the work and Firm-B is performing 100% in-house (assuming both firms are LB's and procurment estimated above $500K). Because of the in-house capability could the board consider Firm-B over Firm-A?

Would Firm-A have a grounds for protest if, during debriefing, you tell them they were weak because they were subcontracting out some of the work?

By Anonymous on Thursday, February 06, 2003 - 10:55 am:

Also, we have typically used in-house capability as our primary means of evaluating "Capacity to accomplish work". What are some other things we can use under the capacity factor?

By joel hoffman on Thursday, February 06, 2003 - 11:35 am:

1st question - I don't think an A-E firm is necessarily "weak" because it intends to subcontract out 50% of the work. There may be valid reasons (scheduling of the workforce, etc.) , plus the work will get done, even with subs. You might rate it an "advantage" in a trade-off analysis, all other factors equal, that for purposes of efficient management, it will be easier to manage and economical if all work is done in house.

I think the "capacity to accomplish work" factor has to be broader than simply rating in-house capability. I'll send this to my A-E contracting proponent in USACE Headquarters for some advice. gotta go to a telecon, right now. happy sails!

By formerfed on Thursday, February 06, 2003 - 01:03 pm:

Joel brings up a good point. In addition a firm may sub to bring in the highest caliber of expertise. They do this to better posture themselve for award but also to provide the best possible solution to the agency.

That's often why evidence of succesful completion of similar jobs including past performance feedback is so critical and benefical to any selection.

By joel hoffman on Friday, February 07, 2003 - 09:08 am:

Anon of Feb 6 at 10:18:

Here is the guidance I received from our A-E Contracting Proponent at USACE Headquarters. happy sails! joel

"1. It's very narrow-minded and unduly restrictive to have an A-E selection factor concerning in-house performance. In fact, we prohibit it in the Corps of Engineers. See Engineer Pamphlet 715-1-7, A-E Contracting, para. 3-4.d(3), which is excerpted below:

'Do not include criteria that are not directly related to project requirements or that unnecessarily restrict competition, such as: .......
(3) specifying disciplines, capabilities or a percentage of work (except the prime firm in a small business set-aside) that must be performed "in-house";'

In the modern world of virtual work environments, it doesn't make sense. Let's say you have a 2,000 person national firm with 20 offices. Sure, they probably have every discipline "in-house" but spread over many states. Would they necessarily do a better job than a local architect firm who has been working with the same engineering firm down the street for the last 20 years. What we need to focus on is teams with demonstrated effectiveness, no matter how they are legally related.

2. If you are down to Firms A and B being considered technically equal, the selection would actually favor Firm A that was subcontracting 50% of the work if some of the subs are small business, since we have a secondary A-E selection criteria in DoD concerning small business participation. But, if Firm A's subs are all large businesses, you may be able to argue that Firm B has a more efficient structure.

3. I would not consider in-house capability in evaluating "capacity to accomplish the work." What should be considered is current workload of the prime and subs (but we usually don't have complete information on this, so don't put much weight on it), experience of the prime and subs in similar size projects (that's the main consideration), and availability of an adequate number of personnel in the key disciplines."

By alexreb on Friday, February 07, 2003 - 03:15 pm:

Thanks for taking the time to get that information Joel. You've helped my understanding tremendously. happy trails!