Establishing the total contract amount to base small business subcontracting goals midway through an IDIQ award.

[JackSparrow]

Hi Wifcon,

My company won an IDIQ contract back in 2014. The contract Period of Performance was from 2014-2024. At the time of the award we were a small business. The IDIQ was awarded us an administrative task order every year and 3 additional task orders to run clinical trials. In 2017, the company was acquired by a large business and we lost our small business status through rules of affiliation. The 3 additional task orders were awarded after we were acquired. At this time we did not have a small business subcontracting plan and we notified the Contracting Officer and Specialist that we were no longer a small business and updated our SAM registry. Recently, the contracting specialist conducted an audit and noticed we did not have a small business subcontracting plan and requested us to put one in place. We are currently doing so. I reached out to the contracting specialist regarding the base amount on which to base our small business subcontracting goals. He responded that we would use the actuals of the previous awarded Task Orders and the projected estimate of the remaining three years of the contract. I have no problem with estimating the remaining three years. What I don't see as correct is basing the goal of the actuals of the awarded Task Orders that were not subject to a small business subcontracting plan. I feel this will set us up for failure as all of that work has already been performed by other than small businesses. From reading FAR 52.219-9 (c)(1) it states [T]he Offeror, upon request by the Contracting Officer, shall submit and negotiate a subcontracting plan, where applicable, that separately addresses subcontracting 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. I feel the correct time period to consider is future task orders, not previous ones awarded prior to the request. The proposed goal percentage is 33% small business. Any thoughts or advice would be welcome. Thank you for your consideration.

[Don Mansfield]

9 hours ago, JackSparrow said:

I reached out to the contracting specialist regarding the base amount on which to base our small business subcontracting goals.

That was a mistake. It's your responsibility to propose an acceptable plan--you should have done your own research. Don't assume that the Government knows better than you. Most contract specialists wouldn't know the answer to your question, but that wouldn't stop them answering anyway. Don't rely on Government officials to tell you what your rights and responsibilities are under a contract.

Now, see FAR 19.705-2(f):

Quote

If a subcontracting plan has been added to the contract due to a modification (see 19.702(a)(1)(iii)) or a size re-representation (see 19.301-2(e)), the subcontracting goals apply from the date of incorporation of the subcontracting plan into the contract and the contractor's achievements must be reported on the ISR (or the SF-294, if applicable) on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.

Also, see FAR 52.219-9(l)(1)(ii)(B).

[joel hoffman]

8 hours ago, Don Mansfield said:

Also, see FAR 52.219-9(l)(1)(ii)(B).

For the benefit of future readers:

FAR 52.219-9(l)(1)(ii)(B)

”(B) If a subcontracting plan has been added to the contract pursuant to 19.702(a)(1)(iii) or 19.301-2(e), the Contractor's achievements must be reported in the ISR on a cumulative basis from the date of incorporation of the subcontracting plan into the contract.”

[Neil Roberts]

21 hours ago, JackSparrow said:

He responded that we would use the actuals of the previous awarded Task Orders and the projected estimate of the remaining three years of the contract. I have no problem with estimating the remaining three years. What I don't see as correct is basing the goal of the actuals of the awarded Task Orders that were not subject to a small business subcontracting plan.

As I understand your situation, your large business received prior task orders over a 3 year period and did not have a small business subcontracting plan. I am not in agreement with you that a small business contracting plan was not required during that 3 year period if that is your position, unless the small business subcontracting requirement was excluded from your contract. And, if it is still not included, not sure what contractually requires your company to have a small business subcontracting plan now. But, did your company solicit or procure anything from a small business category firm? You should find out that fact. Suggest you quickly try estimating how to position your company to solicit a high % of future procurement from the required businesses. To do so, you may consider buying some subcontracting work your company is presently accomplishing in house but do not exceed the FAR % of subcontracting limit that may be included as a contract provision. It also may be possible to include in your goal, subcontracting work your subcontractors do. In the past I am aware that some contractors also include overhead buys in the goal. I do not know right now without further research if those are still permitted. There are others on this site that do. If you can come up with a plan for more than 33%, you should include include some narrative applying that delta % to the 3 prior year period. Finally, in my experience, there are sometimes subcontracted work types like non-competitive justified large business subcontracting sources. Those should be dollarized and explained in the narrative. 

Edited December 18, 2020 by Neil Roberts
add qualifiers to 2nd sentences

[JackSparrow]

Thanks for all the help. Appreciated

[Retreadfed]

Jack, notice that you were not required to establish a small business subcontracting plan when you made your recertification.  13 CFR 121.404(g) says "a contracting officer may require a subcontracting plan if a prime contractor's size status changes from small to other than small as a result of a size recertification."  Far 19.301-2 contains similar language "However, the contracting officer may require a subcontracting plan for a contract containing 52.219-9, Small Business Subcontracting Plan, if a prime contractor's size status changes from small to other than small as a result of a size rerepresentation."  These authorities clearly require a contractor to submit a small business subcontracting plan after rerepresentation as other than small, if a contract contains the clause at FAR 52.219-9 and the contracting officer exercises his/her discretion to require the submission of a subcontracting plan.  This raises the question as to whether the contracting specialist had the authority to "request" that you prepare a plan, whether this "request" was the same as a "requirement" mandated by the contracting officer and whether you are entitled to an equitable adjustment to the contract as a result of having to prepare and implement the plan.

[JackSparrow]

Thanks Retreadfed!

[Retreadfed]

I should add that I have not been able to find a clause that permits the contracting officer to request a subcontracting plan as a result of recertification.  It may exist, and I may have missed it.

[Don Mansfield]

45 minutes ago, Retreadfed said:

I should add that I have not been able to find a clause that permits the contracting officer to request a subcontracting plan as a result of recertification.  It may exist, and I may have missed it.

Why would there have to be a clause to permit the contracting officer to request a subcontracting plan?

[Retreadfed]

1 hour ago, Don Mansfield said:

Why would there have to be a clause to permit the contracting officer to request a subcontracting plan?

I don't necessarily think that there has to be although it would be cleaner if there were one.  This was merely an observational statement.  I think 13 CFR 121.404(g) is sufficient to inform the contractor of this possibility and to give the contracting officer authority to require a plan.  FAR 19.301 is more problematic since it is not binding on contractors in the absence of a contract clause.

[Don Mansfield]

11 minutes ago, Retreadfed said:

I don't necessarily think that there has to be although it would be cleaner if there were one.

I agree. I think just adding a paragraph to FAR 52.219-9 that addresses this circumstance would be sufficient.

[Neil Roberts]

If 52.219-9 were included in the contract, I think an argument can be made that a plan was required by this clause when contractor ceased to be a small business. No specific request needed by the contracting officer. That would be because one could say the clause is self-executing with respect to all contractors that are not small businesses, whenever that occurs during the performance of the contract period. Many flowdown clauses are similar when they are conditional, and when that condition occurs, it applies immediately.