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Award Fee evalution of small business subcontracting goals

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Type of Contract and Performance Period:

  • Cost plus award fee (CPAF) services contract with IDIQ task orders.
  • Contract has a 10 year base period and 5 one-year options.
Background information: Contract includes the following:
  • FAR 52.219-8 Utilization of Small Business Concerns (May 2004)
  • FAR 52.219-9 Small Business Subcontracting Plan (July 2013), Alternate II (October 2001) with Deviation
  • Contract includes a negotiated Small Business Subcontracting Plan
  • Contractor is required to meet the 5 small business negotiated subcontracting goals
Award Fee Evaluations:
  • Annual award fee evaluations are performed
  • Evaluation factors include Small Business Subcontracting Evaluation Factor, with 5% as part of the award fee score
  • Award Fee Adjectival Ratings, percentages and definitions included the award fee plan are consistent with FAR subpart 16.401(e)(3)
Contractor Performance Assessment Reporting System (CPARS):
  • FAR subpart 42.1500 states "the fee amount paid to contractors should be reflective of the contractor's performance and the past performance evaluation should [b ]closely parallel
  • and be consistent with the fee determinations”.
  • FAR subpart 42.1503( B )(2)(v) states, "Evaluation factors for each assessment shall include, at a minimum... Small business subcontracting (as applicable, see Table 42-2)."
  • FAR subpart 42.1503( B )(4) states, "The ratings and narratives must reflect the definitions in the tables 42-1 or 42-2 of this section."
  • FAR subpart 42.1503(c )(2) states, "When the contract provides for award fee, the award fee-contract performance adjectival rating as described in 16.401(e)(3) shall be entered into CPARS.”
  • When is the contractor required to meet the small business subcontracting goals, at the end of the 10 year base period or every year of the contract?
    • If the contractor is not required to meet them annually, then how does the Government assess the contractor during the annual award fee evaluation?
      • For example, say the Government gave the contractor the maximum 5% toward small business factor for years 1 through 9 of the base period, but at the end of year 10 the contractor never even met any of the goals, yet the Government paid maximum fee during the first 9 years.
  • Is there a grey area for the Government to evaluate the contractor’s small business subcontracting goals?
    • If the award fee plan only includes adjectival ratings, percentages and definitions consistent with 16.401(e)(3), and does not include those in FAR 42.1503, Table 42-2, then can the Government issue an adjective rating of Excellent or Very Good when the contractor has not even met or exceeded any of the goals?
      • Table 42-2 “Exceptional” (Excellent) definition is for exceeding all statutory goals or goals as negotiated”
      • Table 42-2 “Very Good” definition is for meeting all statutory goals or goals as negotiated
  • If there is a grey area, then how can the Government provide one rating in the award fee evaluation report, in order to incentive the contractor, but provide a different (lower) rating in CPARS consistent with the definition under Table 42-2?
    • FAR subpart 42.1500 states, “This subpart…does not apply to procedures…in determining fees under award…fee contracts.” (Grey area?)
    • If the Government provided one adjectival rating in the award fee determination and then provided a different adjectival rating in CPARS, then the contractor would likely dispute this since CPARS is used for future source selection purposes.
    • If the award fee report said one thing and CPARS said another, then it would not “[b ]closely parallel” and be consistent with the fee determination…
  • If FAR subpart 42.1503©(2) states, "When the contract provides for award fee, the award fee-contract performance adjectival rating as described in 16.401(e)(3) shall be entered into CPARS, then does the Government need to follow 42.1503(B )(2) and (B )(4), which points to Table 42-2 definitions?
    • It seems more appropriate for the Government to follow Table 42-2, but provide the appropriate adjectival rating in the award fee plan (i.e., convert it from Table 42-2 to the award fee plan adjectival rating), which would help ensure the past performance evaluation closely parallels and is consistent with the fee determination.

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It's too late now, but if you had asked earlier, you might have received advice not to include subcontracting achievements in your award fee plan.

You said the contractor is REQUIRED to meet the five goals in its subcontracting plan. Really? Are you sure? Sometimes, subcontracting plans establish goals that a contractor tries to achieve. If your goals are REQUIRED, then failing to meet a goal might be a failure to meet a material term of the contract and be a basis for termination for default or cause?

The answers to your questions are probably going to come from within the four corners of your contract.

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gov321, how can you have "5 small business negotiated subcontracting goals" if the contractor is required to meet them? If the contractor is required to meet them, they are no longer goals but requirements. What is the significance of the "requirement" other than compliance with a contract term? Is the contractor subject to liquidated damages if it does not meet the "requirement?" Did you get a deviation to 52.219-9(k) or 52.219-16 which only require the contractor to make a good faith effort to meet the goals. You should read FAR 19.704© which addresses the applicability of subcontracting plans to contracts with base periods and option periods.

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