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Subcontracting Plan with Goal of Zero?

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Client is applying to get on VA Schedule to sell medical devices. There is no way to engage small businesses is any part of performance of the contract. VA will not accept a individual plan with a goal of zero. What should the company do?

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@Don Mansfield a fair response to a vague question.

I’m trying to figure out whether the VA can require the company to submit a plan that includes goals that are not zero. As I read the rules, there will not be any “subcontracts” involved in performance of the contract. Therefore, putting any goal other than zero is not attainable and I don’t even know what good faith efforts toward meeting the goal would look like. 

The company has its supply chain established with long-term agreements in place with the suppliers for the materials that the company uses to self-manufacture the products. None of this will change for performance of this contract. The company has no other federal contracts under which it could pick up credit using a commercial plan. 

This can’t be a unique situation. How do other companies handle this?

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See FAR 19.702(a)(1).  Submit the plan, and then let the government open negotiations on the plan.  At the table, convince the government that your approach is reasonable.  

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22 hours ago, NenaLenz said:

VA will not accept a individual plan with a goal of zero

Has the VA issued a solicitation for companies to respond to when trying to get on the schedule?  If so, what does the solicitation say about subcontracting plans?  It is not uncommon for agencies to provide goals that they expect contractors to incorporate in their plans.  I am particularly interested in whether the VA has listed submission of an acceptable plan as an evaluation factor.

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On 5/16/2019 at 1:36 PM, NenaLenz said:

@Don Mansfield a fair response to a vague question.

 Therefore, putting any goal other than zero is not attainable and I don’t even know what good faith efforts toward meeting the goal would look like.  

The company has its supply chain established with long-term agreements in place with the suppliers for the materials that the company uses to self-manufacture the products. None of this will change for performance of this contract. 

You might wish to consider proposing subcontracting goals for overhead items and subcontracting goals for the long terms agreement subcontractors, as your company's goals.

Edited by Neil Roberts
delete redundant sentence. typo

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On 5/16/2019 at 1:36 PM, NenaLenz said:

@Don Mansfield a fair response to a vague question.

As I read the rules, there will not be any “subcontracts” involved in performance of the contract. 

The company has its supply chain established with long-term agreements in place with the suppliers for the materials that the company uses to self-manufacture the products. None of this will change for performance of this contract.

NenaLenz, unsure what is meant by the above. What rules require that there be no subcontracts? Isn't a long term agreement a subcontract? Isn't the company gong to place orders for requirements under the long term contracts to fulfill the end product manufacturing needs and/or if the parts are in stock, requisition the parts and then replace the parts with new orders to the long term subcontractors to make sure their inventory is at the required level? Are any of these long term subcontracts eligible under the small business subcontracting categories?

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On 5/18/2019 at 2:14 PM, Neil Roberts said:

What rules require that there be no subcontracts? Isn't a long term agreement a subcontract? Isn't the company gong to place orders for requirements under the long term contracts to fulfill the end product manufacturing needs and/or if the parts are in stock, requisition the parts and then replace the parts with new orders to the long term subcontractors to make sure their inventory is at the required level? Are any of these long term subcontracts eligible under the small business subcontracting categories?

@Neil Roberts - There is no rule precluding subcontracts. Yes, the company does have long-term agreements with material suppliers. It is my understanding that none of these agreements are with small businesses. Because those are long-standing agreements that pre-date this government contract and will not be modified for the performance of this government contract, I do not believe those long-term agreements are necessarily government subcontracts.

I suppose we could propose that when those supply agreements are up for renewal, the company could use good faith efforts to identify and contract with small business suppliers. But my understanding is that we already know there aren't any small businesses that make the specific items that will need to be purchased under those supply agreements. Therefore, I am not sure what subcontracting goals make sense to propose--the company most likely won't hit any targets we set. 

On 5/18/2019 at 12:40 AM, Neil Roberts said:

You might wish to consider proposing subcontracting goals for overhead items and subcontracting goals for the long terms agreement subcontractors, as your company's goals.

For overhead item goals, could we include them in the individual plan or would those need to go in a commercial plan? 

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See FAR 19.702(a)(1).  Submit the plan, and then let the government open negotiations on the plan.  At the table, convince the government that your approach is reasonable.  

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8 minutes ago, ji20874 said:

See FAR 19.702(a)(1).  Submit the plan, and then let the government open negotiations on the plan.  At the table, convince the government that your approach is reasonable.  

Yes, sound advice, but to implement that advice, we need a plan. This conversation is about what makes sense to put in the plan. 

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1 hour ago, NenaLenz said:

But my understanding is that we already know there aren't any small businesses that make the specific items that will need to be purchased under those supply agreements.

Then your goals for all of the categories will be zero.

If the contracting officer thinks that is unreasonable, he or she may open negotiations to arrive at reasonable figures.

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1 hour ago, NenaLenz said:

This conversation is about what makes sense to put in the plan.

Can you answer the question I asked on Friday May 17?

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As others have pointed out, the FAR requirement for a subcontracting plan is contingent upon a contract over a certain dollar threshold...

"and that has subcontracting possibilities" (FAR 19.702(a)(1))

You say your situation has no subcontracting possibilities. If the government believes you, the contracting officer may execute a memo saying there are no subcontracting possibilities (and therefore no plan or a plan with zero goals).

You may have missed the point of Donald Mansfield's post:

On 5/16/2019 at 3:42 PM, Don Mansfield said:

Propose a goal that is acceptable to them and make a good faith effort to meet it.

The emphasis is on good faith.

Do the research on the "teeth" (enforcement) of the "good faith" effort part of subcontracting plans. You'll find that the government has a very steep hill to climb because "good faith" effort can be satisfied despite failure to meet the goals. They are goals, although some in the government do not understand what that actually means. You strive for goals, but you are not (necessarily) required to meet goals, in this example.

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A prime contractor's purchase contracts should include a provision that the subcontractor will provide maximum opportunities for small business plan category purchases by the subcontractor. Propose that your goal will include the subcontractors' accomplishments to meet the goal. You will have to do some work identifying the prime contractor's purchases and the subcontractors and contact them to ask how they are doing.

Edited by Neil Roberts
sp.

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