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NenaLenz

DoD SBIR Phase II Contractor ability to Subcontract to Foreign Firm

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As a contractor holding a Phase II SBIR Contract from Army, can we subcontract a portion of the R&D to a foreign company to have their workers perform that work in another country? I understand the E-Verify requirements, but they don't apply to work done outside the US. I also understand the limits on the amount of work we can subcontract. But I am not seeing an actual prohibition on having a foreign subcontractor. What am I missing?

The contract deliverable at issue is to do a first production run of a product that we will use for testing, evaluation and improvement. I've concluded that we can use a foreign supplier to make a first production run. The product is not a contract deliverable, but it is an element of the SOW for that deliverable. The research results are the deliverable.

Thanks for any guidance or input!

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This is an extract from the SBIR Policy Statement put out by the SBA. 

American-Made Equipment and Products.  Congress intends that the awardee of a funding agreement under the SBIR Program should, when purchasing any equipment or a product with funds provided through the funding agreement, purchase only American-made equipment and products, to the extent possible, in keeping with the overall purposes of this program.  Each SBIR agency must provide to each awardee a notice of this requirement.

Notice the last sentence.  Check your award to see what it says in this regard.

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44 minutes ago, Retreadfed said:

This is an extract from the SBIR Policy Statement put out by the SBA. 

American-Made Equipment and Products.  Congress intends that the awardee of a funding agreement under the SBIR Program should, when purchasing any equipment or a product with funds provided through the funding agreement, purchase only American-made equipment and products, to the extent possible, in keeping with the overall purposes of this program.  Each SBIR agency must provide to each awardee a notice of this requirement.

Notice the last sentence.  Check your award to see what it says in this regard.

Thanks for the response. The award does include that clause, but does not elaborate.

I do not read this as an outright prohibition, but rather a "do your best" provision. My client is seeking bids from several companies and hopes to use a domestic one. But if that falls through, their backup option is a foreign firm. If this is the only requirement in the contract, then I think they are okay to use the foreign firm if domestic is not available. 

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NenaLenz, please pause a moment. 

 

SBIR Policy Directive, Section 6(a)(2) states, in part, "For Phase I, a minimum of two-thirds of the research or analytical effort must be performed by the awardee.  For Phase II, a minimum of one-half of the research or analytical effort must be performed by the awardee."  I'm only pointing this out because you really don't say how much of the effort, if any, is being subcontracted.

 

Here comes the kicker.  SBIR Policy Directive 6(a)(4) states, "For both Phase I and Phase II, the R/R&D work must be performed in the United States (emphasis added).  However, based on rare and unique circumstances, agencies may approve a particular portion of the R/R&D work to be performed or obtained in a country outside of the United States, for example, if a supply or material or other item or project requirement is not available in the United States.  The funding agreement officer must approve each such specific condition in writing."

 

As a Contracting Officer for SBIR contracts, I'd be hesitant to approve a foreign subcontractor.  Additionally, you don't address any ITAR restrictions, if applicable.  I would have to consider availability (using a foreign subcontractor because it's cheaper or the only available source?), percentage of the effort, etc.  Keep in mind, the intent of the program is to assist U.S. small businesses.

 

Randy Jewett

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Bob,

 

As far as I've been able to determine, that's the most current and the same I was quoting from.  Thank you for adding the link; as you can tell from my number of posts, I certainly haven't mastered the system.

 

Randy

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Randy:

Quote

as you can tell from my number of posts, I certainly haven't mastered the system.

I haven't either but I'm still working at it.

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To be as clear as possible, ”isn’t available” doesn’t necessarily mean “isn’t the lowest priced subcontract” available.  

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Thanks for all the responses. They were helpful to connect the underlying policy to practice. This makes much more sense than my original conclusion. 

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Also-  Will you probably have to certify the following as part of your SBIR certification?

”(10) During the performance of award, it will perform the applicable percentage of work unless a deviation from this requirement is approved in writing by the funding agreement officer (check the applicable line and fill in if needed):
 SBIR Phase I: at least two-thirds (66 2/3%) of the research.
 SBIR Phase II: at least half (50%) of the research.
 Deviation approved in writing by the funding agreement officer: %

(11) During performance of award, the research/research and development will be performed in the United States unless a deviation is approved in writing by the funding agreement officer.
Yes No Waiver has been granted

(12) During performance of award, the research/research and development will be performed at my facilities with my employees, except as otherwise indicated in the SBIR application and approved in the funding agreement.
Yes No”

Edit: The funding agreement program office should have the criteria available for determining compliance and considering waiver requests. 

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