Small Business Subcontract Reporting

[LeighHar]

This is probably a stupid question, but are contractors required to (ISR or SSR) report or should contractors be reporting on funds that go to non-U.S. entities for a project that is implemented in an overseas country but also have an U.S. based team working on it?  Would non-U.S. entities fall into the other than small business category?  I've never also really understood the idea of performed "entirely outside the U.S.".  How does this work if its mostly/largely performed in a host country but was awarded to a U.S. based entity with operations and HQ in the continental U.S.

[ji20874]

18 hours ago, LeighHar said:

I've never also really understood the idea of performed "entirely outside the U.S.".  How does this work if its mostly/largely performed in a host country but was awarded to a U.S. based entity with operations and HQ in the continental U.S.

It means what it says.  If the contract is FFP for janitorial services, for example, are the floors to be swept and the toilets to be cleaned entirely outside the U.S.?  This is a YES or NO question; please choose one.  

• YES - If all the floors to be swept and toilets to be cleaned are entirely outside the U.S., well then, there you go, that is entirely outside the U.S.  
• NO - If some of the floorspace or toilets are in the U.S. and some is in foreign country, then it is not entirely outside the U.S.  

The location of the contractor's headquarters is wholly irrelevant to the question of whether the contract work is or is not performed entirely outside the U.S.  

If the contractor sources its brooms and brushes in the U.S., and sends them to a foreign country for use by its employees there, and all the sweeping and brushing occurs entirely outside the U.S., then the performance occurs entirely outside the U.S.

If the answer above is not satisfactory, you might consider providing additional information -- better questions generally allow for better answers.

[FAR-flung 1102]

6 hours ago, LeighHar said:

 Would non-U.S. entities fall into the other than small business category?  

 

It seems that they might fall into the other than a "concern" category for your purposes. See:

"FAR 19.001 Definitions.

As used in this part-

Concern means any business entity organized for profit (even if its ownership is in the hands of a nonprofit entity) with a place of business located in the United States or its outlying areas and that makes a significant contribution to the U.S. economy through payment of taxes and/or use of American products, material and/or labor, etc. "Concern" includes but is not limited to an individual, partnership, corporation, joint venture, association, or cooperative. For more information, see 13 CFR 121.105."

[Neil Roberts]

4 hours ago, ji20874 said:

• If the contractor sources its brooms and brushes in the U.S., and sends them to a foreign country for use by its employees there, and all the sweeping and brushing occurs entirely outside the U.S., then the performance occurs entirely outside the U.S.

 

@ji20874, I am having different thoughts about "performance." I think that if the brooms and brushes were included in the proposed price of the work as direct costs, for example, and the value exceeds the $ threshold for a small business subcontract plan requirement, there should be a small business subcontracting plan for that work (unless the contractor was otherwise exempt) because that portion of the work is performed in the U.S.

What are your thoughts? 

[ji20874]

I disagree.  If the work is for janitorial services, the brooms and brushes not part of the contract performance -- they are never delivered to the Government -- they remain the contractor's property -- it's a service contract, not a supply contract.  Performance is sweeping and brushing -- services with no supplies.  Zero performance occurs in the U.S., even though the contractor sources its own supplies in the U.S.  Performance is what the contractor (1) does for the agency (services) or (2) delivers to the agency (supplies). 

The contractor might internally record the costs for its own supplies as direct costs to the contract in its internal books, but the Government does not reimburse the contractor for its costs in a firm-fixed-price contract.  The Government pays for work performed (floors swept or toilets brushed), not for costs incurred.

[Neil Roberts]

Thanks for your view, @ji20874. What if it is a cost type contract?

[ji20874]

I'd prefer not to imagine a cost-reimbursement janitorial services contract.  But if I did, I would still say that if all the floors to be swept and all the toilets to be brushed were outside the U.S., then performance is "entirely outside the U.S."

[C Culham]

19 hours ago, Neil Roberts said:

What are your thoughts? 

 

6 hours ago, Neil Roberts said:

Thanks for your view

But is it not a Subcontract Plan?  Are not the suppliers of the brooms etc. subcontractors?  

[ji20874]

I learned (and I still read in the FAR) that subcontracting plans are not required for contracts that will be performed entirely outside the U.S. and its outlying areas.

See FAR 19.702(b)(3).

[C Culham]

10 hours ago, ji20874 said:

I learned (and I still read in the FAR) that subcontracting plans are not required for contracts that will be performed entirely outside the U.S. and its outlying areas.

See FAR 19.702(b)(3).

Yep but what escapes me is an authoritative reference that provides what "entirely" means in the context of the statute that is the lynch pin to the FAR.   Clearly from the definition of "entirely" a contract for janitorial services overseas where some or all of the supplies for the contract are purchased in the US suggests strongly that via such supply subcontracts the work is not being performed entirely outside the US.  

entirely   https://www.merriam-webster.com/dictionary/entirely  1: to the full or entire extent : COMPLETELYI agree entirely you are entirely welcome 2: to the exclusion of others : SOLELY entirely by my own efforts

 

[Vern Edwards]

FAR 19.708: 

Quote

 

(a) Insert the clause at 52.219-8, Utilization of Small Business Concerns, in solicitations and contracts when the contract amount is expected to exceed the simplified acquisition threshold unless-

           (1) A personal services contract is contemplated (see 37.104); or

           (2) The contract, together with all of its subcontracts, will be performed entirely outside of the United States and its outlying areas.

      (b) (1) Insert the clause at 52.219-9, Small Business Subcontracting Plan, in solicitations and contracts that offer subcontracting possibilities, are expected to exceed $750,000 ($1.5 million for construction of any public facility), and are required to include the clause at 52.219-8, Utilization of Small Business Concerns, unless the acquisition is set aside or is to be accomplished under the 8(a) program. 

 

Performance is what must be entirely outside the U.S. and its outlying areas.

Is it unreasonable to say that performance is what the contract statement of work or specification expressly requires the contractor to do—the performance that the government must accept or reject in accordance with FAR Part 46?

Does the contract expressly require the contractor to buy brooms?

Does the government receive and accept brooms?

Does the contractor buy brooms for particular contracts or does it buy them for stock?

Is a company that sells brooms to the contractor for stock—not for a particular contract—a subcontractor?

[Neil Roberts]

On 10/15/2021 at 1:12 PM, LeighHar said:

...are contractors required to (ISR or SSR) report

or should contractors be reporting on funds that go to non-U.S. entities for a project that is implemented in an overseas country but also have an U.S. based team working on it? 

Could you please clarify the contract language/clause that is causing your concern? I note that FAR 52.219-9(l), if included in the contract reads as follows:

Only subcontracts involving performance in the United States or its outlying areas should be included in these reports with the exception of subcontracts under a contract awarded by the State Department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the United States and its outlying areas.

I take this to mean that contractor ISR/SSR reports should include subcontracts that "involve" the subcontractor's performance in the United States regardless of whether or not there is other work being performed by the contractor outside the United States or being performed by other subcontractors outside the United States. I believe that if such a subcontract includes performance both in the United States and elsewhere, only the involved performance in the United States seems to be required.

I am not familiar with the exact reporting requirement you have in mind regarding contractor reporting funds that go to non-U.S. entities. 

[LeighHar]

I think I'm more confused now.  If we are a U.S. based entity, having staff working in the United States, but the place of performance as listed in the task order is say....the African country of Zamunda.  We have an office in Zamunda for implementation, but also staff in the U.S. that are on the project payroll.  Are we required to report funds going to Zamundan entities as part of our small business reporting?  Would they fall under "other than small business"?

[ji20874]

1 hour ago, LeighHar said:

we are a U.S. based entity

Irrelevant.

1 hour ago, LeighHar said:

staff working in the United States

Irrelevant.

1 hour ago, LeighHar said:

staff in the U.S. that are on the project payroll

Irrelevant.

If the contract lists the place of performance as Zamunda, then a subcontracting plan is not required (FAR 19.702(b)(3)) and the contract clause at FAR 52.219-9 will not be included in the contract (FAR 19.708(a)(2) and (b)(1)).  If a subcontracting plan is not required, then ISR or SSR reporting via eSRS is not required, because eSRS is covered by the clause at FAR 52.219-9.  Right?

If you insist on doing eSRS reports, para. (l) of the clause at FAR 52.219-9 (previously quoted by Neil) says, in pertinent part, "Only subcontracts involving performance in the United States or its outlying areas should be included in these reports..."

Unless, you are with the State Department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the United States and its outlying areas.  Are you?

[Vern Edwards]

2 hours ago, LeighHar said:

I think I'm more confused now.  If we are a U.S. based entity, having staff working in the United States, but the place of performance as listed in the task order is say....the African country of Zamunda.  We have an office in Zamunda for implementation, but also staff in the U.S. that are on the project payroll.  Are we required to report funds going to Zamundan entities as part of our small business reporting?  Would they fall under "other than small business"?

@LeighHarI'm going to say to you what others have been too kind to say.

It's YOUR contract.

Read it and do the necessary follow-up research. Figure it out. All the information you need is available online. Heard of Google?

It's unreasonable for you to ask someone to educate you via back and forth online posting and incomplete communication. You should be doing professional research.

Your question is not stupid, but your conduct of your inquiry is. Your question is incoherent.

Do your homework! Think!