Jump to content






Socioeconomic Considerations in Navy Solicitation

Posted by PhilBail, 04 April 2011 · 1,611 views

A recent solicitation issued by the U.S. Navy for design-build of bachelor or enlisted quarters included Small Business Utilization as one of the evaluation factors for award. Nothing so unusual about this as most government requests for proposals (RFPs) include some sort of evaluation of each offeror?s intention to provide opportunities for small businesses to compete for its subcontracts in support of the government contract. In this RFP however, the Navy may have crossed the line of reasonableness. Let?s initially look at the requirements of the solicitation and then discuss the appropriateness of the requirements.

First, the solicitation ??established subcontracting goals of at least 67.75% of the subcontracted effort to small businesses?? The predetermined goals established by the Navy also included 14.70% for Women-Owned Small Business participation, 16.51% for Small Disadvantaged Businesses, 8.5% for Hub-Zone Small Businesses, 3.0% for Veteran-Owned Small Businesses; and, 3.0% for Service Disabled Veteran Owned Small Businesses.

Secondly, as part of this evaluation factor, prospective offerors were also required to provide copies or photos of awards received showing company support to HUBZone, SB, SDB, WOSB, VOSB, SDVOSB; and if applicable, Historically Black College or University/Minority Institutions (HBCU/MI). If an offeror received no such awards, it was required to specify that none were received.

Thirdly, offerors, both large business and small business, were required to submit a Small Business Subcontracting Plan.

Finally, the solicitation required offerors not intending to subcontract, to provide a detailed explanation why subcontracting would not result in efficient contract performance. If offerors didn?t commit to the goals established by the Navy, they were required to provide an explanation why the recommended Navy goals couldn?t be achieved.


Navy Established Subcontracting Goals:As pointed out in an October 2009 article[2] in Contract Management magazine subcontracting efforts are typically very different from one contractor to another simply because of the makeup of each company?s employee base and its internal resources. Therefore, recommended goals should never be part of a proposal evaluation factor. A 15% small business goal might be very aggressive for one company while another company would have to propose 40% for a small business goal to be as aggressive.

Small Business Program Awards:A company could have an outstanding small business program and never receive an award or plaque validating its achievements. Another firm could create its own library of good deeds that make its small business program look viable and worthwhile, but the documentation might be nothing more than a ?dog and pony show?.

Small Business Subcontract Plan Submission from both large and small business offerors: This requirement, for starters, contradicts the requirements of FAR 19.708 B which specifically excludes small businesses from preparing Small Business Subcontracting Plans.

Why subcontracting would not result in efficient contract performance:Instead of requiring a contractor to explain why subcontracting would not result in efficient contract performance, a contractor should be expected to explain why its approach to performing the work required by the contract, including its subcontracting efforts, would result in efficient contract performance.

The Small Business Utilization factor then discusses how the Navy will evaluate the responses it receives for Small Business Utilization. First, small business goals proposed by prospective offerors will be compared to the Navy recommended goals. Secondly, offerors ?will? be evaluated based on their Corporate Support initiatives for small businesses such as policies, outreach effort, in-house small business program training opportunities, mentor-prot?g? agreements, assistance programs, business development conferences, support of Community Rehabilitation Programs, and use of organizations certified under the Javits-Wagner-O-Day (JWOD) Act by AbilityOne.?

The Navy?s evaluation scheme for small business utilization isn?t the best way to look at small business utilization for a best value award. As stated previously ?recommended goals? don?t take into account the makeup or internal strengths and capabilities of often very different offerors. So comparing an offeror?s small business plan goals against goals established by the Navy simply makes no sense. The second part of the evaluation of offerors small business utilization involves an evaluation of each contractor?s small business support initiatives. The evaluation of offeror ?support initiatives? outlined in the solicitation is more comprehensive than a Defense Contract Management Area audit of a Contractor?s Small Business Program using the DCMA Form 640 Defense Contract Management Agency (DCMA) Review of Contractor?s Subcontracting Program. These kinds of reviews typically don?t occur more frequently than every 3-5 years and might take 3-5 business days to complete. It therefore isn?t likely than any contractor?s small business program support initiatives would be fairly evaluated by a contracting agency not skilled in small business program reviews as part of a response to a single solicitation.

Contracting Agencies are attempting to make small business utilization a viable part of each best value award decision as they should. However, contracting agencies have to become more knowledgeable about the federal government small business program. That knowledge should come from training in FAR Subpart 19.7, The Small Business Subcontracting Program, and its associated clauses such as 52.219-8, Utilization of Small Business Concerns, and FAR 52.219-9, Small Business Subcontracting Plan. Until this occurs, protests against best value award decisions will continue to increase and large businesses proposals may be unfairly evaluated.




Phil,

You wrote:

QUOTE
Navy Established Subcontracting Goals:As pointed out in an October 2009 article[2] in Contract Management magazine subcontracting efforts are typically very different from one contractor to another simply because of the makeup of each company?s employee base and its internal resources. Therefore, recommended goals should never be part of a proposal evaluation factor. A 15% small business goal might be very aggressive for one company while another company would have to propose 40% for a small business goal to be as aggressive.


There's nothing inherently wrong with an agency stating their desired subcontracting goals in a solicitation, provided that the goals are reasonable for the acquisition. That a 15% goal may be as difficult for one company to achieve as it is for another company to achieve 40% is irrelevant when evaluating small business participation. All things being equal, the Government prefers to contract with the company that will provide more opportunities for small business concerns. An agency's performance in implementing the small business subcontracting program is measured by comparing the actual subcontracting achievements of its prime contractors with the agency's subcontracting goals. If an agency fails to meet its assigned goals, Congress will not buy "well, our small business subcontracting achievements are actually quite good if you consider the makeup of our contractors' employee base and their internal resources."
  • Report
Hi Don, the closest we are going to come to agreeing on this issue is to probably say we both have an opinion...and it is different.

The difficult issue for a contracting agency when deciding on "reasonable" subcontracting goals in a solicitation is to know what goals are reasonable?

I also don't think government contracting agencies "prefer" to contract with company's that MAY provide more opportunities for small business concerns. The goal of most contracting agencies is to award to a responsive and responsible contractor who is most likely to perform on time and provide a product or service that meets the statement of work requirements. Socioeconomic issues including small business subcontracting plan goals are often part of a best value award decision, but agencies should recognize that small business goals may be very different between competitors and the firm projecting the most dollars to small business vendors doesn't necessarily represent the best value.
  • Report
Phil,

This is what I said:

QUOTE
All things being equal, the Government prefers to contract with the company that will provide more opportunities for small business concerns.


In other words, if two offerors are virtually equal in all other respects, the Government will view the offeror that provides more opportunities for small business as a better value if using a participation of small business factor. If you think that you can refute that, have at it. I didn't suggest that the Government is willing to forego best value in order to obtain more small business participation, so there's no use in arguing against such a proposition.

Determining what reasonable subcontracting goals would be for a particular acquisition isn't necessarily complicated. FAR 19.705-4(a) contains the following guidance:

QUOTE
No detailed standards apply to every subcontracting plan. Instead, the contracting officer shall consider each plan in terms of the circumstances of the particular acquisition, including?

(1) Previous involvement of small business concerns as prime contractors or subcontractors in similar acquisitions;

(2) Proven methods of involving small business concerns as subcontractors in similar acquisitions; and

(3) The relative success of methods the contractor intends to use to meet the goals and requirements of the plan, as evidenced by records maintained by contractors.
  • Report
Don, I agree that if two offeror's are virtually equal in all other aspects of a source selection that socioeconomic considerations could determine the awardee even if I don't agree that this should be the result.

As a matter of fact I tested the premise with the GAO several months ago by asking one of their attorney's what the GAO would decide under the following scenario.

Award was to be made to the offeror whose proposal represented the best-value considering the following evaluation factors:

technical approach,
business experience/history,
past performance,
small disadvantaged business participation,
small business participation, and
price.

The technical approach factor was the most important technical factor, followed by the equally weighted business experience/history and past performance factors, followed by the least and equally weighted small disadvantaged business participation and small business participation factors.

Assume that Vendor A was downgraded during the evaluation of its proposal because it didn't propose to use any small disadvantaged businesses. The reason being it had all the in-house resources necessary to perform the task.

Vendor B identified 50% of the estimated cost to a disadvantaged business because it didn't have internal resources. All other evaluation factors were rated the same.

Would it be fair to Vendor A that Vendor B was selected because it scored higher during the source evaluation because of the socioeconomic criteria?
FAR 19.705-4(a) should be followed by all contracting agencies

Here is the GAO attorney's answer: ?Given that this is purely hypothetical and is not an opinion of the office, it may not be "fair" in the social sense, but if that is what the solicitation provides and the agency follows the instructions we would find it reasonable because agencies are the one's who define their requirements.?

I also agree with you that FAR 19.705-4(a) should be followed by all contracting agencies. If it was, my concerns would go away.
  • Report
Phil,

The way I understand your scenario, the Government would be evaluating SDB participation as a percentage of the total acquisition. While this approach is common, I am not a fan of it. Besides the objection you raise, it is not necessary to achieve Congressionally mandated goals, which are expressed as a percentage of subcontracting dollars.

Having said that, the Navy solicitation that you wrote about intends to evaluate goals expressed as a percentage of subcontracting dollars. That's different. Under this evaluation scheme, an offeror proposing to subcontract a larger percentage of the total acquisition to small business does not necessarily have an advantage over an offeror proposing to subcontract a smaller percentage. While I agree that requesting information about awards is silly and requiring subcontracting plans from small business concerns is against regulation, I find nothing wrong with stating desired subcontracting goals expressed as a percentage of subcontracting dollars. This way the agency stays out of an offeror's make or buy decision while still paying attention to its mandated subcontracting goals.
  • Report
Don, we should meet some day. I will be speaking at the NCMA World Congress in Denver on Monday July 11.
  • Report
Phil,

I won't be attending the conference. However, if you are ever going to be in San Diego, I'd be happy to meet with you. I look forward to your next blog entry.
  • Report

August 2014

S M T W T F S
      1 2
3456789
10111213141516
17181920212223
24252627282930
31