Jump to content

Accountability of prime to include sub-contractors on IDIQ


Recommended Posts

How would you recommend working with government to hold the prime accountable on a full and open/unrestricted IDIQ contract, that has a goal, but not a requirement for the prime to include small business/sub-contractors in work share? Do you know of any previous contracts where this situation occurred? Without the government requiring the prime to include work share for sub-contractors, and only goals, it is going to be very difficult to find any prime that is willing to split their work share. Any advice, or examples of previous contracts that held prime's accountable for small business/sub-contractor participation goals would be highly appreciated! 

Link to comment
Share on other sites

Thanks for the recommendation, I'll check it out! 

The difference is that with a requirement, there are actual consequences a prime will see; whether it's not being considered for award, financial penalty, or bad feedback on their past performance scores. With a goal, there's no actual consequence.

Link to comment
Share on other sites

3 hours ago, JIR17 said:

Thanks for the recommendation, I'll check it out! 

The difference is that with a requirement, there are actual consequences a prime will see; whether it's not being considered for award, financial penalty, or bad feedback on their past performance scores. With a goal, there's no actual consequence.

I disagree - if a contractor does not show good faith in complying with the contract's subcontracting plan, there are consequences (breach & liquidated damages).

I'm not familiar with the requirements you mention.  I'm only aware of the statutory requirements outlined in FAR 19.702 (which are implemented contractually by the clauses I previously referenced)...(emphasis added below).

Quote

19.702 -- Statutory Requirements.

Any contractor receiving a contract with a value greater than the simplified acquisition threshold must agree in the contract that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance. It is further the policy of the United States that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns.

(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 that is expected to exceed $700,000 ($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 that is expected to exceed $700,000 ($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.

(3) Each contract modification that causes the value of a contract without a subcontracting plan to exceed $700,000 ($1.5 million for construction), shall require the contractor to submit a subcontracting plan for the contract, if the contracting officer determines that subcontracting opportunities exist.

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

(1) From small business concerns;

(2) For personal services contracts;

(3) For contracts or contract modifications that will be performed entirely outside of the United States and its outlying areas; or

(4) For modifications that are within the scope of the contract and the contract does not contain the clause at 52.219-8, Utilization of Small Business Concerns. 

(c) As stated in 15 U.S.C. 637(d)(8), any contractor or subcontractor failing to comply in good faith with the requirements of the subcontracting plan is in material breach of its contract. Further, 15 U.S.C. 637(d)(4)(f) directs that a contractor’s failure to make a good faith effort to comply with the requirements of the subcontracting plan shall result in the imposition of liquidated damages.

(d) As authorized by 15 U.S.C. 637(d)(11), certain costs incurred by a mentor firm in providing developmental assistance to a protégé firm under the Department of Defense Pilot Mentor-Protégé Program, may be credited as if they were subcontract awards to a protégé firm for the purpose of determining whether the mentor firm attains the applicable goals under any subcontracting plan entered into with any executive agency. However, the mentor-protégé agreement must have been approved by the Director, Small Business Programs of the cognizant DoD military department or defense agency, before developmental assistance costs may be credited against subcontract goals. A list of approved agreements may be obtained at http://www.acq.osd.mil/osbp/mentor_protege/.

Why/how are those insufficient for your agency's needs?

Link to comment
Share on other sites

The question in the initial post appeared to me to be how to require the prime to subcontract ("split their work share") versus self performing all the work in ID/IQ contract task orders .  Is that correct, JIR17?  

Or,  were you referring to "splitting" work in task orders that is subcontracted? 

What specifically do you mean by the term "work share"? 

The subcontracting requirements and goals, etc. in the contract clauses and the Statutes primarily pertain to work that includes "subcontracting possibilities". There is some language in the regulations that allows the government to encourage or perhaps persuade  the contractor to subcontract portions of the work, such as:

"19.702 -- Statutory Requirements.

Any contractor receiving a contract with a value greater than the simplified acquisition threshold must agree in the contract that small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns will have the maximum practicable opportunity to participate in contract performance consistent with its efficient performance."

If you are sole source negotiating a task order, the government may negotiate some degree of subcontracting in the overall work and, of course, within the subcontracted share of the work.  

Link to comment
Share on other sites

Joel, I was mentioning the first thing you said. Right now this contract doesn't seem to require the prime to actually assign any task orders with teaming partners on the IDIQ. I guess it would be more accurate to say that they won't sub contract out any of the task order's rather than split "work share".  We are not sole source negotiating. At the moment we are trying to decide if we want to find teaming partners, and the worry is that because the prime isn't being held accountable with a requirement (i'll have to look more into the FAR's everyone sent), that it might not even be worth are time as we might see any actual work. We've seen a lot of that going on with industry. 

Link to comment
Share on other sites

JIR17, thanks for the clarification.  

Since you mentioned "teaming partners" are you referring to a solicitation for a new ID/IQ contract or is this an existing contract? I'm not sure what role you want to play - "teaming" as a joint venture on a prospective contract? You couldn't team as a joint venture partner on task orders under an existing contract.  You could be a sub on an a task order, if the prime subs out your type of work.  

I remember that there was an earlier discussion thread in this Forum where an organization wanted to change the subcontracting requirement from a percentage of subcontracted dollars to a percentage of the total contract or task order dollar amount  I don't know if this has been adopted anywhere  

 

 

 

Link to comment
Share on other sites

This is a new IDIQ contract. Right now we have two goals. First off, we recently had an industry day and government released a request for whitepaper asking SB to recommend any incentives or ways to hold the prime accountable to including sub-contractors on task orders. I need to find previous contracts where FAR's were used to justify  why requirements to include small business should be added. The second goal is to decide on teaming partners, but without convincing government to add SB participation as a requirement to the prime, I dont know that it would even be worth our time, as the prime would have no reason to sub-contract out any of the task orders that they can do themselves. 

Link to comment
Share on other sites

It's frustrating when folks dribble out information describing the scenario, which essentially revises the original question or our perception of the question.  I know why lawyers resist answering broad or vague questions - the answer depends upon the specific facts. 

I spent some time trying to obtain clarification from you and Matthew's advice is based upon goals for work that is to be subcontracted, if any, not with respect to requiring certain amount of work to be subcontracted or incentivizing a prime to subcontract rather than self-perform the work.  

Now we discover that the government is seeking ideas from small business on how to incentivize subcontracting and/or how to "hold the prime accountable " for including subs in some way in task orders.  I don't know what you mean by "including subs in task orders" .  By subbing out a specified amount or type of work?  By proposing certain subs and then actually using those specific firms?

What is the government's performance goal or requirement with respect to subcontracting? If that is clear there should be ways to hold them accountable through substantiation during the proposal stage and during performance stage  

 

Link to comment
Share on other sites

Guest PepeTheFrog
18 hours ago, Matthew Fleharty said:

I disagree - if a contractor does not show good faith in complying with the contract's subcontracting plan, there are consequences (breach & liquidated damages).

Showing good faith in this context is a very easy bar to clear. The same boilerplate in the subcontracting plan (look on SAM/other databases, attend industry trade shows, solicit in appropriate networks) will be used to determine good faith. Not hard to do. Also, very easy to explain why you didn't meet your goals ("They were goals, for the future, based on assumptions-- things changed"). Finally, consider that this only happens when the contracting officer actually takes the time to hold the prime contractor accountable. Don't hold your breath on that one.

The reality is that it is rare to actually trigger (this type of) liquidated damages. It's an effectively toothless provision.

Link to comment
Share on other sites

15 minutes ago, PepeTheFrog said:

Showing good faith in this context is a very easy bar to clear. The same boilerplate in the subcontracting plan (look on SAM/other databases, attend industry trade shows, solicit in appropriate networks) will be used to determine good faith. Not hard to do. Also, very easy to explain why you didn't meet your goals ("They were goals, for the future, based on assumptions-- things changed"). Finally, consider that this only happens when the contracting officer actually takes the time to hold the prime contractor accountable. Don't hold your breath on that one.

The reality is that it is rare to actually trigger (this type of) liquidated damages. It's an effectively toothless provision.

Exactly, and that's the biggest problem. It almost doesn't seem worth it to spend the time and effort to go for this contract if they won't change to requirements. There isn't any work that the prime will be incapable for doing, it's just a lot of work. But they will more than likely just see that as a good thing, and why spread the wealth when you can have it all. I have only been in industry for a short period of time, but it seem's like this has been a growing problem over the years. 

Link to comment
Share on other sites

Guest PepeTheFrog
5 minutes ago, JIR17 said:

It almost doesn't seem worth it to spend the time and effort to go for this contract

JIR17: Now, PepeTheFrog understands your inquiry better. Forget about

23 hours ago, JIR17 said:

working with government to hold the prime accountable

As a subcontractor, you do not have privity with the Government. Thinking about the Government as the protector and enforcer of your (subcontractor) rights is a fool's errand.

Instead, negotiate and sign binding teaming agreements that are enforceable under your state law, or the forum/venue chosen in the teaming agreement. This usually requires specific statements of work and details about work share, percentages, etc. This is an area of the law (teaming agreements) that differs by state. Pay the money for a good attorney's services. Otherwise, you will get smoked like a cheap cigar.

Link to comment
Share on other sites

5 minutes ago, PepeTheFrog said:

negotiate and sign binding teaming agreements that are enforceable under your state law

I live in VA and from what i've looked up, its pretty hard to get anything solid that will be enforceable under our state law as teaming agreements have been ruled out as not being a "contract". Initially we we're going to just move on, but recently government came back and asked small business to submit white papers on how to hold the prime accountable..... flat out, the only way is through making it a requirement. So since they are asking for the feedback we think it's worth giving it to them, and if they don't take it we will likely just move on to the next opportunity. Luckily we're pretty busy so it will give us more resources for our other opportunities. 

Link to comment
Share on other sites

22 minutes ago, PepeTheFrog said:

JIR17: Now, PepeTheFrog understands your inquiry better. Forget about

As a subcontractor, you do not have privity with the Government. Thinking about the Government as the protector and enforcer of your (subcontractor) rights is a fool's errand.

Instead, negotiate and sign binding teaming agreements that are enforceable under your state law, or the forum/venue chosen in the teaming agreement. This usually requires specific statements of work and details about work share, percentages, etc. This is an area of the law (teaming agreements) that differs by state. Pay the money for a good attorney's services. Otherwise, you will get smoked like a cheap cigar.

JIR, I agree with ol' Froggy, here.  I thought the government intended to put teeth into the contract when you said that it was seeking ideas from the SB industry.  But Pepe and you returned me from idealism to the reality that I wouldn't bet my life on the government as a protector OR an enforcer of a sub's rights -even when they are clear and strongly stated. 

Link to comment
Share on other sites

It's a shame really. Well thank you both for clarifying that I really am not going to be able to rely on government if they dont make it a requirement for sub-contractors to be included in a % of sub $ or a % of the task orders. 

With that being said i'm going to have to make my case to the government on why they should change their mind and make this a requirement; something that they seem to POSSIBLY be open to. Using the information everyone here has given me, do you know of any resources I can use to find past examples where a contract has used a small business requirement to enforce sub-contracting on task orders? Any suggestions going forward would be appreciated! 

Link to comment
Share on other sites

JIR17,

The way the Government holds contractors accountable is through terms and conditions in the contract.  Short of a deviation to the required T&Cs I've already referred you to, I don't know where this so-called requirement with teeth is going to come from or what it would look like.  Maybe a small business office or expert knows better than I do - have you tried contacting the SBA?

Link to comment
Share on other sites

That's on my to do list for the day. I think they will be the best resource. The requirement would have to come from the agency's decision to include the % of task orders that are sub-contracted, as a major factor of evaluation on the contract. 

Link to comment
Share on other sites

11 minutes ago, JIR17 said:

That's on my to do list for the day. I think they will be the best resource. The requirement would have to come from the agency's decision to include the % of task orders that are sub-contracted, as a major factor of evaluation on the contract. 

How is that substantively different from the requirement of FAR 19.702(a)(1) which requires that "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"?  Subcontracting plans include a % of dollars that are to be subcontracted to various small business concerns.  That plan, short of a deviation, is then governed by the clauses already provided and, therefore, only requires a good faith effort...maybe I'm missing something, but I don't know how that proposed requirement is substantively different.

If an agency wants/needs to motivate small business participation, they could use  a carrot rather than stick approach by incorporating FAR 52.219-10 "Incentive Subcontracting Program" (refer to FAR 19.708(c)(1)) into the contract.

Link to comment
Share on other sites

Because the  pitfall is the "good faith effort" aspect.  As Pepe mentioned, its pretty easy to jump over the hurdle and claim you made a good faith effort, based on very minimal evidence. If it is not a proposed requirement that will be evaluated, than its pretty much a useless condition. But if they are evaluated on it, than there is an actual repercussion for failing to comply, as it's a "requirement" and not a "goal"

Link to comment
Share on other sites

1 hour ago, JIR17 said:

Because the  pitfall is the "good faith effort" aspect.  As Pepe mentioned, its pretty easy to jump over the hurdle and claim you made a good faith effort, based on very minimal evidence. If it is not a proposed requirement that will be evaluated, than its pretty much a useless condition. But if they are evaluated on it, than there is an actual repercussion for failing to comply, as it's a "requirement" and not a "goal"

You miss my point - they are evaluated on it in the status quo, both prior to award (establishing an acceptable subcontracting plan and even evaluating their past performance related to achieving small business goals) and during performance (via compliance with the T&Cs as well as through CPARS), neither of which establishes the requirement you seek.  Your only way around the "good faith effort" language under the required FAR clauses is a deviation (see FAR Subpart 1.4).

Link to comment
Share on other sites

Matthew, I think that one of us is missing the most basic point.  The prime could state that it will self-perform the task order. That is the concern that JIR 17 has been expressing.

Technically, unless specifically stated in the task order or base ID/IQ contract, there is no requirement for a prime contractor to subcontract ANY work on a task order.  As far as I know, the government's goals for subcontracting to the various SB subsets are still normally expressed as percentages of subcontracted dollars, not as a percentage of total task order dollars. I looked up DOD's prime contracting  and subcontracting goals and I didn't find specific subcontracting goals for a percentage of total contracted dollars.

 

Link to comment
Share on other sites

JIR17,

Having worked for a prime for several years as the SB Plan administrator and the mentor-protege coordinator (we won one of the early Nunn-Perry Awards, if that means anything) ... let me tell you a basic fact. If you want work from a prime, you have to bring something to the party. You have to bring a capability, an expertise, local knowledge, past performance quals, key personnel quals, low-cost business model, or some other kind of competitive advantage. If you have something to offer the prime that the prime wants, then you will get work. If not, then the prime will self-perform or look elsewhere.

It's really that simple.

Hope this helps

Link to comment
Share on other sites

On ‎11‎/‎30‎/‎2016 at 8:12 PM, joel hoffman said:

Matthew, I think that one of us is missing the most basic point.  The prime could state that it will self-perform the task order. That is the concern that JIR 17 has been expressing.

Technically, unless specifically stated in the task order or base ID/IQ contract, there is no requirement for a prime contractor to subcontract ANY work on a task order.  As far as I know, the government's goals for subcontracting to the various SB subsets are still normally expressed as percentages of subcontracted dollars, not as a percentage of total task order dollars. I looked up DOD's prime contracting  and subcontracting goals and I didn't find specific subcontracting goals for a percentage of total contracted dollars.

 

Joel,

I understand the concern - the way that subcontracting is specifically stated in the base contract is through the subcontracting plan.  Sure the plan has goals, not "requirements," but (a) the plan still has to be approved by the Contracting officer and (b) the Contractor has to make a good faith effort to follow it.  I know that Pepe has alleged that the good faith requirement is a low hurdle to jump, but I don't think that a Contractor could merely choose to self-perform any/all task orders and ignore the agreed to subcontracting plan.  It has teeth if agencies care about the subcontracting plan and proper contract administration.

I've still yet to see/hear of an alternative that would impose these so called "requirements."  What are they and where does their authority stem from?

Link to comment
Share on other sites

But- does a subcontracting plan for an ID/IQ base or task order have to require the contractor to subcontract parts of the work?  Put differently , does the prime have to agree subcontract work on any and all task orders, if it can efficiently or more efficiently self perform all work itself on some types of tasks?    

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...