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weissmana

(FAR) clause 52.219-8 (Utilization of Small Business Concerns)

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My company, who primarily deals in subcontracts for commercial items, does not have a sophisticated diversity supplier program. I recognize that our subcontracts do not subject us to developing a small business subcontracting plan, (FAR) clause 52.219-9 (Small Business Subcontracting Plan)

yet I was wondering if anyone had any thoughts as to how we should be documenting that we have made our best efforts to comply with (FAR) clause 52.219-8 (Utilization of Small Business Concerns)?

Also, is there a risk that the prime and/or gov't end customer can request that we substantiate our small business subcontracting efforts?

Thanks in advance.

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My company, who primarily deals in subcontracts for commercial items, does not have a sophisticated diversity supplier program. I recognize that our subcontracts do not subject us to developing a small business subcontracting plan, (FAR) clause 52.219-9 (Small Business Subcontracting Plan)

yet I was wondering if anyone had any thoughts as to how we should be documenting that we have made our best efforts to comply with (FAR) clause 52.219-8 (Utilization of Small Business Concerns)?

Also, is there a risk that the prime and/or gov't end customer can request that we substantiate our small business subcontracting efforts?

Thanks in advance.

Just an observation, 52.219-8 is not a mandatory flow down clause. Therefore, whether it is included in your subcontracts is a matter for negotiation between you and the prime.

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Just an observation, 52.219-8 is not a mandatory flow down clause.

Emphasis added.

Retread:

Are you sure? See FAR 52.212-5(e)(1)(ii) and 52.244-6( c)(1)(iii). How do you interpret those clauses?

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Emphasis added.

Retread:

Are you sure? See FAR 52.212-5(e)(1)(ii) and 52.244-6( c)(1)(iii). How do you interpret those clauses?

I missed the part in the original post stating that the company primarily provides commercial items. My comment was based upon the language of 52.219-8 which does not require the clause to be inserted in subcontracts.

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I was under the impression that 52-219-8 required flowdown if the subcontract offered additional subcontracting opportunities. Supposing that it does, how can we exemplify that we are making an effort to promote small business concerns?

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I was under the impression that 52-219-8 required flowdown if the subcontract offered additional subcontracting opportunities. Supposing that it does, how can we exemplify that we are making an effort to promote small business concerns?

If you look at the language of 52.219-8, you will find that it does not require prime contractor's to include that clause in subcontracts. However, there are at least three other FAR clauses that do require prime's to include that clause in subcontracts under certain conditions. First, a clause requiring the prime to insert 52.219-8 into subcontracts must be in the prime contract. Second, the subcontract must offer further subcontracitng opportunities.

Let's go back to your original post for a clarification. You stated that you are not required to establish a small business subcontracting plan under 52.219-9. Can you explain why that is so?

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I was under the impression that 52-219-8 required flowdown if the subcontract offered additional subcontracting opportunities. Supposing that it does, how can we exemplify that we are making an effort to promote small business concerns?

  • Add small business outreach to someone's job description and give that person some time and tools to do bona fide outreach. Make sure that person gets enough training to understand the undertaking and to document it.
  • Research the probable NAICS codes and size standards associated with your major purchases;
    • Search them on SBA's Dynamic Small Business Search tool;
    • Many small businesses aren't aware of the SBA, size-standards or government contracting regulations; develop a simple script and follow-up sheet to help walk them through it; the best time to do this is before a purchase is made - a "vendor preference" program for small vendors or vendors who answer is an incentive; there's no incentive for a small business to trouble itself with the complication if the purchase has already been made;

    [*]If you have the resources, create a link on your website for potential vendors - it's content and use should be pretty simple, an overview of the commodities you use and maybe size standards for the major ones - with contact information for your outreach specialist.

    [*]Keep a hard or electronic record of each contact and response, and each small business actually used; if you have someone who uses ACCESS or some other database, that could be helpful if you want to get really serious about it; an Excel spreadsheet might be as good for your purposes;

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Retreadfed,

I based that statement on the fact that Paragraph (j) of the contract clause at FAR 52.219-9 indicates that subcontracing plans are not required from subcontractors when the prime contract includes the clause at FAR 52.212-5 or when the subcontractor provides a commercial item subject to the clause at FAR 52.244-6 under a prime contract.

Please let me know if I am missing something.

Thanks so much heretalearn!

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Retreadfed,

I based that statement on the fact that Paragraph (j) of the contract clause at FAR 52.219-9 indicates that subcontracing plans are not required from subcontractors when the prime contract includes the clause at FAR 52.212-5 or when the subcontractor provides a commercial item subject to the clause at FAR 52.244-6 under a prime contract.

Please let me know if I am missing something.

Thanks so much heretalearn!

No you have not missed anything. I think Herfeto learn has given you good advice. As a follow on to that advice, look at items 5, 8 and 11 in 52.219-9.

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retread,

So I understand that a subcontractor who provides a commercial item is exempt from having to formally prepare a Small Business Subcontracting Plan. What would happen if that subcontractor chose to negotiation directly with the government to supply commercial items and become the prime contractor. Would we then be required to submit a plan or does the commercial exemption still apply? Sorry if I am making little sense....

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The requirement for a subcontracting plan is in 52.219-9. That clause should be in a contract for commercial items if the contract exceeds the dollar threshhold, is with a large business, offers subcontracting possibilities and contains 52.219-8. If those requireents are met, the contractor would be required to submit a commercial subcontracting plan. See, FAR 19.704(d).

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So retread......In our case we (subcontractor) sells a commericial item through a reseller to the government. Their contract exceeds the dollar threshold, has further subcontracting opportunities, obviously, and has 52-219-8 within it. According to what you have written they would be subject to providing a formal subcontracting plan. We, the subcontractor, would be exempt from such requirement......based on the fact that Paragraph (j) of the contract clause at FAR 52.219-9 indicates that subcontracing plans are not required from subcontractors when the prime contract includes the clause at FAR 52.212-5 or when the subcontractor provides a commercial item subject to the clause at FAR 52.244-6 under a prime contract.

Sorry for my lack of understanding......but can you confirm?

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weissmana:

Your inquiries are confusing me. Are you concerned about your obligations as a commercial item subcontractor, or are you concerned about what your obligations would be as a commercial item prime contractor?

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I am sorry Vern as I am confusing myself as well. Currently my company is in a commercial item subcontracting capacity and as such we are exempt from having to create a formalized subcontracting plan. My MGT has indicated that they may want to engage future customers as a commercial item prime contractor and I was wondering if our requirements for formalizing a subcontracting plan would change as a result of doing so....... Is there a commercial item exception for the prime or would we simply determine if we meet the requirements for the formalization of a plan (threshold and further subcontracting opportunities) to determine our requirements as a Prime?

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Let me rewrite your post:

Your firm sells a commercial item as a subcontractor under a government prime contract. Your firm is thinking of selling its commercial item directly to the government as a prime contractor. You want to know if you would have to submit a small business subcontracting plan if you become a prime contractor.

The answer is yes if the contract meets the criteria in FAR 19.702(a) -- exceeds $650,000 and has subcontracting possibilities.

The statute that requires submission of small business subcontracting plans is 15 U.S.C. 637(d). The statute is implemented by 13 CFR Subpart 125.3, which in turn is further implemented by 48 CFR (FAR) Subpart 19.7 and FAR 52.219-9. Neither the statute nor the regulations exempt prime contractors selling commercial items from the requirement to submit a small business subcontracting plan. See also FAR 12.503, which does not include 15 U.S.C. 637(d) among the laws that do not apply to prime contracts for commercial items. See too FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items, paragraph (B)(15)(i), which requires application of FAR 52.219-9 to prime contracts for commercial items when otherwise required by the criteria in FAR 19.702(a) and the clause prescription at FAR 19.708(B)(1).

However, you may qualify for submission of a commercial subcontracting plan. See FAR 19.701, 19.704(d), and 52.219-9(B) and (g).

A suggestion: If you are going to sell directly to the government, buy a FAR and learn how to use it. A company named ESI International provides FAR training in conjunction with The George Washington University. Spend the money and sign up for the course named Federal Contracting Basics.

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weissmana,

Vern is not the type to promote his own training in the discussion forum, so I will. Instead of the courses he recommended, take The FAR Bootcamp. It's the best FAR training I've ever taken.

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