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Hey everyone!

Background: I'm fairly new to the contracting world and working in a recently-large prime contractor in the healthcare sector.

I've been helping prepare ourselves for our first bid season as a Large contractor and now under the pressure of compliance with FAR 52,219-8 & -9, etc. For a while I was under the impression that our small business subcontracting goals were to subcontract out roughly 30% of the total contract dollars to smalls...I am recently been corrected (and now it I see my mistake everywhere) that we are only under an obligation that 30% of our dollars subcontracted must go to smalls.

First off, my new understanding is correct, right? Goals are in terms of total subcontracting dollars? (Ie. $1,000,000 contract, $100,000 subcontracted, $30,000 to smalls). Second, do any of you have any general practice tips as far as what percentages of TOTAL dollars should be subcontracted? I know that is extremely tough to even ballpark given the various subject matter and scope of Prime contracts...but wasn't sure if there was sort of a "floor" that you want to avoid, for example, subbing less than 10% of your total dollars out if you want to keep the SBA away.

Thanks for your time! Like I said, I'm new to this whole thing (as is my company) so any help is appreciated.

nebraska

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nebraska,

You are correct, the goals are expressed as a percentage of subcontracting dollars available. Generally, the Agency to which you submit proposals will have clear guidance that tells bidders what its commitments are, which are also its expectations. If you want a favorable reception, you should plan to support the Agency's overall commitments.

That being said, we recently helped a newly large pharma company with its first master plan. For various good reasons, there was absolutely no way for the company to meet its Agency's commitments/expectations. We looked at the indirect spend, which helped, but still wasn't sufficient to meet the expected commitments. At that point we needed to clearly explain the company's story and why its goals were significantly less than what was expected of the Agency's contractors.

Please note that a contractor is expected to make good faith efforts to reach its goals. Companies that consistently miss their goals, without evidence of trying to meet them, can get marked-down in future competitions. So it's not just a matter of making a plan. It's also a matter of assigning roles, responsibilities, and accountability within your company ... and then executing.

Hope this helps.

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Thank you here_2_help! That is very helpful...a lot of our uncertainty stems from us simply not knowing how this process works and what to expect. At this point, we are currently lining up a bid with approximately 4 subcontractors working with us...all of them are small. One is HUBZone and a couple are WOSB. We do not have any that are veteran or service disabled owned.....I can't tell you exactly how big of slices these subs will be getting of the whole pie, but they are likely to be the only subs we work with. What are your thoughts on our situation? Should we be reaching out for some VOSBs, etc.? I think we are all on edge and not sure how we are doing, and unfortunately there isn't a CMR in our region to really get in contact with to ask questions. Any suggestions for me?

Thanks again for your help; I really do enjoy these forums they are a huge help for people new to the arena.

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nebraska,

I'm a big fan of planning the work to optimize execution first, and then seeing what you can do in terms of socioeconomic categories second. As I posted, there are Agency goals in each category. When you plan your work and figure out what you are likely to subcontract out (and to whom) you will have a good idea of where you stack up against your Agency's goals. Then you can make a plan to close those gaps.

The fundamental thing (it seems to me) is the good faith effort: the outreach and the creation of "on-ramps" for businesses in all categories. To me, it's important not to subcontract solely to attain a commitment, but to ensure the work is done the way you planned. The actuals will be the actuals.

Good luck; hope this helps.

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Someone please correct me but I don't think that the government is quantifying the overall % of total dollars actually spent on SB subs (yet?) . They are supposed to track performance against the approved subcontract plan. That seems to be why the traditional goals have been based upon percent of work subcontracted not % of total contract amount

There seems to be a move afoot to establish goals based upon % of total contract, not % of dollars subcontracted. So be sure to carefully read the solicitation requirement

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Yes, read the solicitation. Some solicitations will use subcontracting achievements as an evaluation factor, and those are sometimes written for percent of total contract dollars.

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On the other hand, if you subcontract more than 70% of the total contract value, you are at risk of having "excessive pass-through costs" which can be disallowed.

As is the case with so many things in this crazy environment, read the expectations carefully and make sure you understand them.

H2H

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Isn't it great how coordinated the government is in its social engineering - NOT.

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This is great! I think we are on the right track then. Thanks everyone!

here_2_help...just for clarification, When you state: "Generally, the Agency to which you submit proposals will have clear guidance that tells bidders what its commitments are, which are also its expectations. If you want a favorable reception, you should plan to support the Agency's overall commitments" (emphasis added)...are those commitments in terms of a percentage of subcontracting dollars, or in total amount of money given to smalls?

At this point, at least in the current bid, we should reach any overall smalls percentage they throw at us...but I just want to ensure we don't need to be going out and looking to subcontract more work because we potentially haven't planned to sub enough of the work out in general.

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Nebraska,

In my experience the agency publishes its commitments to the various socioeconomic categories in terms of percentages, not dollars. But those percentages are expressed in terms of the awards the agency will make to contractors (such as your company).

Your company, being a large, will be expected to support the agency's commitments or justify the reason why you cannot do so. So their percentages of award dollars become your percentages of subcontract award dollars.

Make sense?

H2H

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