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dkubis

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Our SBA just notified us that:

"If the contract is modified and the dollar value goes up or down the subcontracting plan goals need to be renegotiate to reflect the dollar change and the percentages that may be effected do the change. This will also be reflected in the eSRS reports."

This doesn't make sense to me. My interpretation of FAR 19.705-2 and 19.702 leads me to believe that it must meet a certain dollar threshold and subcontract opportunites must exist.

That means we would be negotiating the SB goal dollars on a $3k mod.

Background on our contract, $232M CPIF.

Am I missing something or is the SBA right?

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Paragraph (i) of the contract clause at FAR 52.219-9, Small Business Subcontracting Plan is the authority for requiring an updated subcontracting plan after a modification. In pertinent part, it says the plan must be updated "[w]hen a modification meets the criteria in [FAR] 19.702".

You aleady know what FAR 19.702( a ) says.

If your $3k modification doesn't meet the criteria in FAR 19.702( a ), then you don't need to update your plan.

//removed by author as improvidently submitted; see no. 7 below//

But here is your biggest out -- FAR 19.702( b )( 4 ) says that subcontracting plans are not required for modifications to contracts within the general scope of the contract that do not contain the clause at FAR 52.219-8, Utilization of Small Business Concerns. I'm supposing that your contract contains that -8 clause -- and I'm supposing that your modification is within the general scope of your contract -- so you don't need to update the subcontracting plan. If these suppositions are true, you wouldn't need an updated plan even if the modification value was a few million dollars.

That's how I read it.

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But here is your biggest out -- FAR 19.702( b )( 4 ) says that subcontracting plans are not required for modifications to contracts within the general scope of the contract that do not contain the clause at FAR 52.219-8, Utilization of Small Business Concerns. I'm supposing that your contract contains that -8 clause -- and I'm supposing that your modification is within the general scope of your contract -- so you don't need to update the subcontracting plan. If these suppositions are true, you wouldn't need an updated plan even if the modification value was a few million dollars.

That's how I read it.

I'm not following. Here's what FAR 19.702( b )(4) says:

Subcontracting plans (see subparagraphs (a)(1) and (2) of this section) are not required --

[...](4) For modifications to contracts within the general scope of the contract that do not contain the clause at 52.219-8, Utilization of Small Business Concerns (or equivalent prior clauses, e.g., contracts awarded before the enactment of Public Law 95-507).

Are you saying that the exception would apply because the contract, rather than the contract modification, contains FAR 52.219-8?

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Paragraph (i) of the contract clause at FAR 52.219-9, Small Business Subcontracting Plan is the authority for requiring an updated subcontracting plan after a modification. In pertinent part, it says the plan must be updated "[w]hen a modification meets the criteria in [FAR] 19.702".

You aleady know what FAR 19.702( a ) says.

If your $3k modification doesn't meet the criteria in FAR 19.702( a ), then you don't need to update your plan.

But here is your biggest out -- FAR 19.702( b )( 4 ) says that subcontracting plans are not required for modifications to contracts within the general scope of the contract that do not contain the clause at FAR 52.219-8, Utilization of Small Business Concerns. I'm supposing that your contract contains that -8 clause -- and I'm supposing that your modification is within the general scope of your contract -- so you don't need to update the subcontracting plan. If these suppositions are true, you wouldn't need an updated plan even if the modification value was a few million dollars.

That's how I read it.

So wouldn't that mean that a subcontracting plan would be required since it contains the -8 clause?

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If I understand him correctly, I think ji20874 has a novel interpretation of FAR 19.702( b )(4). Here's the language:

Subcontracting plans (see subparagraphs (a)(1) and (2) of this section) are not required --

[...](4) For modifications to contracts within the general scope of the contract that do not contain the clause at 52.219-8, Utilization of Small Business Concerns (or equivalent prior clauses, e.g., contracts awarded before the enactment of Public Law 95-507).

I originally interpreted this to mean that, for the exception to apply, the contract modification had to be within the scope of the contract and the contract being modified had to NOT contain FAR 52.219-8. However, if you examine the sentence structure, that's not what it says. Both "within the general scope of the contract" and "that do not contain the clause at 52.219-8" qualify "modifications to contracts." A literal interpretation would be that, for the exception to apply, the contract modification would have to be within the general scope of the contract AND the contract modification would have to not include FAR 52.219-8.

Sloppy writing? Maybe. But it says what it says. I encourage you to read it more closely. Forget how you interpreted it in the past and what your practice has been.

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I think my earlier comment was improvidently issued -- regarding the -8 clause and FAR 19.702( b ) -- and I need to retract it.

How about that? When the Supreme Court issues a writ of certiorari, and later decides it makes a mistake, it doesn't admit a mistake but merely says its previous writ was issued improvidently...

Anyway, the $3k mod surely doesn't require an update to the subcontracting plan because of paragraph (i) of the contract clause at FAR 52.219-9 and FAR 19.702( a ).

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OK, just to make sure everything's straight, the limit is $550K vice $650K and we don't literally mean the contract clause contains the -8 clause but we mean the contract.

You're right about the threshold. As far as interpreting the meaning of FAR 19.702( b )(4), we need to begin with what it says. A literal interpretation does not support the position that "within the general scope of the contract" qualifies "modifications to contracts", but "that do not contain the clause at 52.219-8" qualifies the contract being modified. The next question we need to ask--is there any reason to believe that FAR 19.702( b )(4) does not mean what it says? I don't know of any. Maybe someone in the forum knows of a reason.

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Am I missing something here? Why is everyone getting wrapped around the axle over 19.702 (b )? That paragraph isnt applicable to this contract. There is a dollar threshold for revising the plan due to a modification. Whether it be $550k or $650k, the mod in question is only for $3k.

I inferred that there are no subcontracting opportunities involved in the modification. Subcontracting goals are based upon the amount of subcontracting. There would obviously be no reason to adjust the Subcontracting Plan then.

Here is the requirement for a revision to an existing plan from contract clause 52.219-9 -- Small Business Subcontracting Plan.

"...(i) A contract may have no more than one plan. When a modification meets the criteria in 19.702 for a plan...the goals associated with the modification...shall be added to those in the existing subcontract plan."

And here is the pertinent criteria for the plan with respect to a contract modification from FAR 19.702

"(a ) Except as stated in paragraph ( b ) of this section, Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) imposes the following requirements regarding subcontracting with small businesses and small business subcontracting plans:

(1) In negotiated acquisitions, each solicitation of offers to perform a contract or contract modification, that individually is expected to exceed $650,000 ($1.5 million for construction) and that has subcontracting possibilities, shall require the apparently successful offeror to submit an acceptable subcontracting plan. If the apparently successful offeror fails to negotiate a subcontracting plan acceptable to the contracting officer within the time limit prescribed by the contracting officer, the offeror will be ineligible for award.

(2) In sealed bidding acquisitions, each invitation for bids to perform a contract or contract modification, that individually is expected to exceed $650,000 ($1.5 million for construction) and that has subcontracting possibilities, shall require the bidder selected for award to submit a subcontracting plan. If the selected bidder fails to submit a plan within the time limit prescribed by the contracting officer, the bidder will be ineligible for award."


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If I accumulate several $500k mods I could easily have several million outside the subcontract plan. The SBA is stating all those dollars should go towards the subcontract goals. There's another problem too with reporting in eSRS which automatically includes total contract dollars from FPDS. Would I just explain in the remarks section the difference between the subcontract dollars in the plan and the dollars outside the plan? Otherwise I'll never get the numbers to match up. The lead CO wants to adjust the percentages downward in eSRS to accommodate for the missing subcontract dollars.

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Guest Vern Edwards

Our SBA just notified us that:

"If the contract is modified and the dollar value goes up or down the subcontracting plan goals need to be renegotiate to reflect the dollar change and the percentages that may be effected do the change. This will also be reflected in the eSRS reports."

Did the SBA "notify" you in writing on SBA stationary, or did the "notice" come by telephone or email? And who at SBA made the "notification"?

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If I accumulate several $500k mods I could easily have several million outside the subcontract plan. The SBA is stating all those dollars should go towards the subcontract goals. There's another problem too with reporting in eSRS which automatically includes total contract dollars from FPDS. Would I just explain in the remarks section the difference between the subcontract dollars in the plan and the dollars outside the plan? Otherwise I'll never get the numbers to match up. The lead CO wants to adjust the percentages downward in eSRS to accommodate for the missing subcontract dollars.

In addition to what Vern asked - which are valid questions - what do you mean by "all those dollars should go towards the subcontract goals?" Regardless of the threshold or the contract amount, the subcontracting plan itself only addresses goals concerning the planned subcontracting portion of the total contract amount. Is all the work in these mods to be subcontracted?

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We received the information via email from the Procurement Center Representative in Florida. He was passing the information on from another person working with the Area Director. The SBA is both saying that any dollar mod requires a subcontract plan mod and that the change in contract value will apply to the small business goals in eSRS reporting. I'm trying to make the arguement that only mods $650K and above with subcontracting opportunities will modify the subcontract plan and those dollars will be reported in eSRS.

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The SBA issued a proposed rule in FR Vol 76 No 193. One of the proposed changes was that any modification that caused the contract value to exceed the subcontract plan threshold would require a subcontracting plan. A final rule has not been issued. Sounds like some PCR's may be jumping the gun and misinterpreting what was in the proposed rule.

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The email only said this:

Ms. A,

The answer below came from Mr. S.

Let me know if you get any guidance that goes against this.

Answer from Mr. S:

If the contract is modified and the dollar value goes up or down the

subcontracting plan goals need to be renegotiate to reflect the dollar

change and the percentages that may be effected do the change. This will

also be reflected in the eSRS reports.

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Guest Vern Edwards

We received the information via email from the Procurement Center Representative in Florida. He was passing the information on from another person working with the Area Director. The SBA is both saying that any dollar mod requires a subcontract plan mod and that the change in contract value will apply to the small business goals in eSRS reporting. I'm trying to make the arguement that only mods $650K and above with subcontracting opportunities will modify the subcontract plan and those dollars will be reported in eSRS.

Tell them to put the information in a letter and to cite the applicable regulation(s).

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The SBA issued a proposed rule in FR Vol 76 No 193. One of the proposed changes was that any modification that caused the contract value to exceed the subcontract plan threshold would require a subcontracting plan. A final rule has not been issued. Sounds like some PCR's may be jumping the gun and misinterpreting what was in the proposed rule.

Turns out a final review was issued. It gives the CO an opportunity to establish additional goals as a percentage of total contract dollars. So you would have two comparisons, one in terms of the total dollars subcontracted and as a percentage of total subcontract dollars and the other goal as a percentage of total contract dollars. When you do a mod >$650K with subcontracting opportunites, you'll adjust your subcontracting plan. When you do a mod of any amount, it will affect your total contract dollars goals. The two will need to be maintained separately. eSRS however, allows you to make both comparissons when a contractor submits their ISR.

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