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Evaluation of Subs/Individual JV Members for IDIQs


Freyr

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Reading through the Small Business Act I came across the following language on page 233. 

(q) REPORTS RELATED TO PROCUREMENT CENTER REPRESENTATIVES.— (1) TEAMING AND JOINT VENTURE REQUIREMENTS.— (A) IN GENERAL.—Each Federal agency shall include in each solicitation for any multiple award contract above the substantial bundling threshold of the Federal agency a provision soliciting bids from any responsible source, including responsible small business concerns and teams or joint ventures of small business concerns. (B) TEAMS.—When evaluating an offer of a small business prime contractor that includes a proposed team of small business subcontractors for any multiple award contract above the substantial bundling threshold of the Federal agency, the head of the agency shall consider the capabilities and past performance of each first tier subcontractor that is part of the team as the capabilities and past performance of the small business prime contractor.

 

It looks like this would have wide implications for all Multiple Award Contracts/Schedules as the above language applies to solicitations for multiple award contracts above the "substantial bundling threshold" rather than simply to bundled or consolidated requirements. The FAR itself (15.305(a)(2)(iii)) only says that evaluations should take into account subs that perform major or critical parts of the requirement. For a lot of multiple award contracts/IDIQs/schedules specific requirements and therefore what subs would best perform those requirements are unknown. If it's required to take the past performance of a sub "the past performance of the small business prime contractor" wouldn't that enable otherwise unqualified contractors to win awards based on subcontractor experience (who they may not necessarily use in performance of task orders)?

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Thank you.  Note that this is from 15 U.S.C. 644(q)(1)(B).  This section of the statute has not been implemented by SBA.  Accordingly, the FAR has not been amended to reflect this requirement.

However, note 644(q)(1)(c) which deals with evaluating past performance of JVs.  The SBA has implemented this requirement in various sections of its rules, such as 13 CFR 125.8(e).  This was done in July 2016.  However, the FAR again has not been amended to account for this change in rules. 

Thus, your concerns seem to be premature.

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Thanks Retreadfed, I guess that brings me to the question of FAR 1.602-1 where contracting officers must ensure "that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met." In the absence of a regulations, how would a contracting officer deal with a law that appears to apply to their procurement? I'm not sure I feel that a lack of regulation is a proper excuse to not ensure that a contract is awarded with all requirements of the law, EO, etc are met, unless there's evidence to the contrary that I don't have. 

I guess my other question is whether or not 644(q) applies to ALL multiple award contracts above an agency's substantial bundling threshold or if it only applies to bundled requirements above that threshold?

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The Small Business Act gives the SBA Administrator the responsibility for issuing regulations that implement the Act.  Individual government employees are given no authority to implement the Act.  Thus, contracting officers have no individual authority to implement the Act on a contract by contract basis.

644(q)  applies to multiple contracts above the agency's substantial bundling threshold, not just to bundled procurements.

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23 hours ago, Freyr said:

I'm not sure I feel that a lack of regulation is a proper excuse to not ensure that a contract is awarded with all requirements of the law...  

You raise an interesting point, Freyr. I am not taking anything away from what Retreadfed said about contracting officers. Just FYI, in supplier management world, some prime contractors apply United States Code provisions to supplier contracts as soon as they in effect, others wait until there is an implementing FAR/Agency Supplement regulation before applying it to subcontracts, and still others will apply the implementing FAR/Agency regulation to supplier contracts only when the implementing regulation (dated clause or provision) was included in the applicable prime contract.   

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So doing a little scenario here...Solicitation gets protested with a company saying "you need to evaluate my sub performance as mine per this USC!" GAO likely goes to the SBA to get their opinion on it. My bet is SBA says that sub past performance needs to be evaluated as the USC applies to that procurement. Has there been any instances where the SBA says "don't worry about it, no regulations about that law have been made"?

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SBA has issued such a statement in regard to the change in the number of years used to determine a concern's size using a revenue based size standard.  While congress has said that 5 years will be used to make that determination, SBA has said the 5 year period does not apply until it amends its regulations to reflect the change.

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6 hours ago, Freyr said:

So doing a little scenario here...Solicitation gets protested with a company saying "you need to evaluate my sub performance as mine per this USC!" GAO likely goes to the SBA to get their opinion on it. My bet is SBA says that sub past performance needs to be evaluated as the USC applies to that procurement. Has there been any instances where the SBA says "don't worry about it, no regulations about that law have been made"?

See Ekagra Partners, LLC B-408685.18: Feb 15, 2019 which is related but does not answer your Q.    Here is my beef with the interpretation that 15 USC 644(q)(1)(B)'s 

"(B) Teams

When evaluating an offer of a small business prime contractor that includes a proposed team of small business subcontractors for any multiple award contract above the substantial bundling threshold of the Federal agency, the head of the agency shall consider the capabilities and past performance of each first tier subcontractor that is part of the team as the capabilities and past performance of the small business prime contractor."

is equal to 

"(C) Joint ventures

When evaluating an offer of a joint venture of small business concerns for any multiple award contract above the substantial bundling threshold of the Federal agency, if the joint venture does not demonstrate sufficient capabilities or past performance to be considered for award of a contract opportunity, the head of the agency shall consider the capabilities and past performance of each member of the joint venture as the capabilities and past performance of the joint venture."

When I say "equal to" I mean that the "Prime" in (B) is treated the same as the  "JV Itself" in (C).   In other words, the prime need no experience as "...the head of the agency shall consider the capabilities and past performance of each first tier subcontractor that is part of the team as the capabilities and past performance of the small business prime contractor..."

See bold underlined difference. I have three questions: 

1.  Do you believe the "prime" in (B) is analogous to the "JV itself" in (C)?   If so, why? 

2. If the "prime" in (B) was meant to be analogous to the "JV itself" in (C) then why do you believe it is not written to have parity with (C) to include the same bold underline text like this? 

(B) Teams

When evaluating an offer of a small business prime contractor that includes a proposed team of small business subcontractors for any multiple award contract above the substantial bundling threshold of the Federal agency,  if the prime does not demonstrate sufficient capabilities or past performance to be considered for award of a contract opportunity, the head of the agency shall consider the capabilities and past performance of each first tier subcontractor that is part of the team as the capabilities and past performance of the small business prime contractor.

3.  Do you believe that a solicitation subject to 15 USC 644(q)(1)(B) could mandate the "Prime" have demonstrated at least one experience project?  Why or Why not? 

 

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Shika, 1. Yes, the JV itself can be a Prime contractor as it's a legal entity itself. If I understand the link provided it says that JVs should be treated as such. 2. If the JV submits by itself only (C) would apply to it. If the JV submits as part of a team with subcontractors then both B and C would apply simultaneously. Including the underlined would change it substantially to say that you must look to the Prime first before looking at subcontractors. 3. No, it reads to me that when looking at subcontractor capabilities and past performance you shall consider it as if it were the Prime's. Though I think I recall seeing some past GAO cases where an agency required experience from the prime itself due to the nature of the requirement. I think this is what I was talking about-- https://www.gao.gov/decisions/bidpro/405365.htm From before the update Retreadfed mentioned though. 

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Freyr.  Thanks for the response.  Sorry if I was not clear in my Qs.  Was not asking if JV is prime.  Know that. Was asking in the statute if  a "Prime" in a FAR 9.601(2) prime/sub CTA is being treated the same as the "JV itself" in a FAR 9.601(1) JV CTA.  If so, then a Prime in a FAR 9.601(2) CTA with ZERO experience (like a JV itself with Zero experience, since the JV itself is the Prime in a FAR 9.601(1) CTA) can submit an offer using only the experience of the first tier subs.  The statute makes pragmatic sense for JVs.  Requiring experience from the JV itself is challenging since the JV itself is generally not long term and now must be "un-populated."  However, it makes no sense to me that a "Prime" in a FAR 9.601(2) CTA be given the same "needs zero experience" privilege as the "JV itself."  

Thanks so much for B-405365, Valor Construction Management, LLC, October 24, 2011.  However, that case was prior to the change in statute See  PUBLIC LAW 114–92—NOV. 25, 2015  look to top of page (around page 209) 129 STAT. 933.  Be interesting to see how GAO would rule on B-405365, Valor Construction Management, LLC, October 24, 2011 today

 

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Completely agree that it makes no sense . As I read it the Prime (whether that be a single entity or a JV) may submit projects from subcontractors without submitting any itself due to "shall consider  the capabilities and past performance of each first tier subcontractor that is part of the team as the capabilities and past performance of the small business prime contractor." So what's the point of a multiple award contract if you can be awarded a contract with zero experience? Aside from letting companies make money on selling their past performance to other contractors.

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Well said Freyr.  Interesting Scenario: An all small business CTA  Prime/Sub  or JV submits an offer to the Professional Services Schedule when the prime (single entity with subs or JV itself) has zero experience.  The solicitation  requires the prime to have Two Years of corporate experience as a go/no go factor.  The offer is highly likely to be rejected.  Assume the Offeror is smart enough to estimate their annual sales at 125K in their offer (125K X 20 years=.$2.5M which reaches GSA's Substantial Bundling Threshold FAR 7.107-4(a)(1)(iii) thereby invoking 15 USC 644(q)(1)), they may be able to protest and win.  Such a case would be an entertaining read indeed. 

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On 2/25/2019 at 1:24 PM, Retreadfed said:

SBA has issued such a statement in regard to the change in the number of years used to determine a concern's size using a revenue based size standard.  While congress has said that 5 years will be used to make that determination, SBA has said the 5 year period does not apply until it amends its regulations to reflect the change.

See http://smallgovcon.com/statutes-and-regulations/say-what-sba-says-the-runway-extension-act-doesnt-apply-to-sba/ Interesting article on the topic. 

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