Government Certifications

Sherry RoseLKE-SBR August 13, 2015

Sherry RoseLKE-SBR August 13, 2015

Procurement Technical Assistance Center

ByBy

Presents

Presents

PROCUREMENT TECHNICAL

ASSISTANCE PROGRAM

The Procurement Technical Assistance Program (PTAP) was authorized by Congress in 1985 in an effort to expand the number of businesses capable of participating in the government marketplace. It is a non-profit program funded under a Cooperative Agreement between the federal government and local state governments or universities, administered by the Department of Defense, Defense Logistics Agency

NATIONAL PTAP Approximately 98 Centers covering

U.S., Puerto Rico and Guam Almost 500 counselors experienced

in government contracting Training Individual Counseling Technical Assistance Marketing Link between small businesses and

government/large business offices

NJIT – PTAC

One of 12 original Centers Covers State of New Jersey

w/exception of Union County Headquartered in Newark Local office: Atlantic Cape

Community College, Atlantic City Advice on selling goods & services

to Federal, State, local governments and large businesses

Over $1 Billion in prime & subcontracts received by our clients

NJIT/PTAC WEBSITE

WWW.NJIT.EDU/PTAC

Provides links to numerous government websites, additional contract information and contacts, regulations, listing of upcoming events, etc.

FREE SERVICES Training workshops,

seminars, classes One-on-one

counseling Advice on

Government buying process

Government regs (FAR/DFAR)

Solicitation review and analysis

Bid and proposal preparation

Federal specifications and standards

Small business size regulations and standards

Registrations and certifications

System for Award Management (SAM)

Pre-award surveys Post-award

administration Key government and

industry codes Procurement history Prime contract

procurement opportunities

Subcontract opportunities

Electronic bid matching

Marketing

“BE CARFUL WHAT YOU PAY FOR”

There are many commercial enterprises that target small business owners unfamiliar with – or confused by – the various government registration and certification processes. They market their services energetically, sending official-looking emails directing small business owners to sign-up for their services – for a hefty fee, of course. Commercial websites (.com websites) are just that – commercial. When a commercial website advertises to help you with the process of registering to do business with the government, there is almost always going to be a fee involved.

Government websites (designated as .gov) offer free advice and registration.

Paid Services

Of course, there are circumstances in which it makes sense for a small business to pay a consultant for specialized assistance, and there are many qualified professionals to choose from. You should research qualifications, costs, expectations, and deliverables. Never be pressured into decisions; careful due diligence is always the best investment you can make.

SPECIAL PROGRAMS

SMALL BUSINESS REGULATIONS

FAR PART 19

13 CFR Part 121, 124, 125, etc.

SMALL BUSINESS PREFERENCE

Goal of 23% of government contracts awarded to small business

Automatic set-asides Micro purchases Simplified acquisition Small purchases

Rule of two Types of contracts Evaluation factors: “Low price

technically acceptable”

SMALL BUSINESS Self certification based on size standards

established by SBA

Every NAICS code has a size standard assigned

-Service: Revenue based, average annual receipts for last three completed fiscal years from all sources

-Supply: Average number of employees for last 12 month period

Solicitations are classified by the Contracting Officer in the most appropriate NAICS code that best describes what is being purchased; may be appealed.

SOCIO-ECONOMIC PROGRAMS

8(a) – Socially & Economically Disadvantaged

HUBZone – Historically Underutilized Areas

WOSB/EDWOSB – Woman-owned Small Business/Economically Disadvantaged WOSB

VOSB/SDVOSB – Veteran-owned Small Business/ Service Disabled Veteran-owned Small Business

MUST BE SMALL BUSINESS FOR ALL

SBA PRE-CERTIFICATION

Requires formal application to SBA Must be a small business

8(a) Program: Must be unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of US; must demonstrate potential for success; presumptive groups of social disadvantage; economic (net worth, excluding primary residence and interest in business nte $250,000 for initial eligibility/$750,000 continued eligibility; total assets $4.0 million initial eligibility; $6.0 million continued eligibility)

HUBZone (Historically Underutilized Zones) – zones determined by Census, updated every 10 years: concern must be owned and controlled by U.S. citizens, Community Development Corporations or Indian Tribes; principal office of concern must be located in a HUBZone; at least 35% of the concern’s employees must reside in a HUBZone.

Site map: http://map.sba.gov/hubzone

8(a) PROGRAM

Citizen of US; social & economic disadvantage

Unconditionally owned and controlled (51%)

Net worth nte $250,000/$750,000 Personal assets nte $4.0/$6.0 Personal income $250,000/$350,000 Hold highest officer position and

compensation Good character Potential for success 9 year term

HUBZONE PROGRAM

Owned and controlled by US citizen, Community Development Company, Indian Tribe

Principal office must be located in HUBZone

35% of employees must reside in HUBZone

Must be pre-certified by SBA

WOMAN-OWNED(WOSB and EDWOSB)

83 NAICS codes At least 51% owned, controlled and

actively managed by woman/women EDWOSB – personal net worth $750,000;

income $350,000; assets $6.0 million Highest position/compensation; full time Resume justifies ability to run firm Self-certify or certified by 3rd party* Data must be uploaded in SBA repository

www.sba.gov/wosb

RECENT CHANGES 2015 NDAA

Sole source authority added Self-certification eliminated Third-Party certifiers approved by

SBA: El Paso Hispanic Chamber of Commerce US Women’s Chamber of Commerce National Women Business Owners

Corporation Women’s Bureau Enterprise National

Council $225.00 - $1,000.00 ($100 - $1,000 yearly

renewal)

VETERAN FIRST PROGRAM

Owned, controlled and actively managed by veteran

Set-aside preference for Service Disabled Veteran (SDVOSB); goals for veterans (VOSB) except awards from Veterans Administration

Verified by Center for Veterans Enterprise and listed in VetBiz www.vip.vetbiz.gov

SDVOSB

Must have service-connected disability determined by VA or DOD

One or more SDVs must unconditionally own 51% of business, control management (long-term and daily operations), hold highest officer position, highest compensation, managerial experience

Direct ownership (not through another business)

SIZE REGULATIONS

The size status of a firm that has received preference as a small

business may be protested by any interested party.

Affiliation

Some General Principles of Affiliation

(13 CFR 121.103) Power to Control Common Managers Common Stockholders Identical Business Interests Contractual Relationships Joint Venture Arrangements

General AffiliationHow does SBA determine

affiliation? Concerns and entities are

affiliates of each other when one controls or has the power to control the other, or a third party (or parties) controls of has the power to control both

It does not matter whether control is exercised, so long as the power to control exists

Factors: ownership, management, previous relationships or ties; contractual relationships.

Control may be positive or negative (e.g., negative control where shareholder has ability to prevent quorum or otherwise block actions of board or directors)

Totality of circumstances, even though one single factor is insufficient for finding of control.

In determining size, SBA counts the receipts or employees of the concern and all of its domestic and foreign affiliates, regardless of whether organized for profit.

What is a Joint Venture?

A joint venture is…an association of individuals and/or concerns with interests in any degree or proportion by way of contract, express or implied, consorting to engage in and carry out no more than three specific or limited-purpose business ventures for joint profit over a two-year period, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally.

What is a Joint Venture?This means that…

The joint venture entity cannot submit more than three offers over a two-year period, starting from the date of the submission of the first offer.

A joint venture may or may not be in the form of a separatelegal entity.

The joint venture is viewed as a business entity in determining power to control its management.

SBA may also determine that the relationship between a prime contractor and its subcontractor is a joint venture, and that affiliation between the two exists.

Parties to a Joint Venture are considered to be affiliates if submitting offers on a particular procurement.

SBA may also determine that the relationship between a prime

contractor and its subcontractor is a joint venture, and that affiliation between the two exists. Affiliation could result in finding that firm is

no longer a small business.

A contractor and subcontractor are treated as joint venturers if the ostensible subcontractor will perform primary and vital requirements of a contract or if the prime contractor is unusually reliant upon the ostensible subcontractor.

All requirements of the contract are considered in reviewing such relationship, including contract management, technical responsibilities, and the percentage of subcontracted work.

Ostensible Subcontracting: 13 CFR 121.103 (h)(4)

What is Ostensible Subcontracting?

1. Which party chased the contract?

2. What degree of collaboration was there between the prime contractor and subcontractor on the proposal?

3. Which party possesses the requisite background and expertise to carry out the contract?

4. Who will manage the contract?

5. Are there discrete tasks to be performed by each party, or is there commingling of personnel and materials?

6. What is the amount of work to be performed by each party?

7. Which party performs the more complex and costly contract functions?

Seven-Factors Test

The “seven factors” test is only one tool used by SBA to evaluate whether the relationship is a true prime/subcontractor relationship or a joint venture under the ostensible subcontractor regulations.

It is not the exclusive test of the presence of unusual reliance. Ultimately, a finding of unusual reliance, which rises to the level of a joint venture affiliation, must be a reasonable conclusion based on the totality of the circumstances.

Seven-Factors Test

There is an Exception to Every Rule!

Exclusion from Affiliation

A joint venture arrangement of two or more business concerns may submit an offer as a small business for a Federal procurement without regard to affiliation provided…

Exclusions1) Each concern is small under the size standard

corresponding to the NAICS code assigned to the contract, provided:

A) The procurement qualifies as a “bundled” requirement, at any dollar value; or…

B) The procurement is other than a “bundled” requirement and:For a procurement having a revenue-based size standard, the

dollar value or the procurement, including options, exceeds half the size standard corresponding to the NAICS code assigned to the contract…or…

Exclusions

For a procurement having an employee-based size standard, the dollar value of the procurement, including options, exceeds $10 million.

Bundled requirement or bundling refers to the consolidation of two or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business.

What is a Bundled Requirement?

Mentor – Protégé – 8(a)

ProgramTwo firms approved by SBA to be a mentor and protégé under 13 CFR 124.520 may joint venture as a small business for any Federal Government procurement, provided…

…the protégé qualifies as small for the size standard corresponding to the NAICS code assigned to the procurement,

…and, for purposes of 8(a) sole source requirements, has not reached the dollar limit set forth in 13 CFR 124.519.

8(a) BD Participants

A joint venture or teaming arrangement of at least one 8(a) Participant and one or more other business concerns may submit an offer for a competitive 8(a) procurement without regard to affiliation under so long as the requirements of 13 CFR 124.513(b)(1) are met.

Requirements of 13 CFR 124.513(b)

(1)The requirements of 13 CFR 124.513(b)(1) include the following:

A joint venture of at least one 8(a) Participant and one or more other business concerns may submit an offer as a small business for a competitive 8(a) procurement so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract, provided…

1) The size of at least one 8(a) Participant to the joint venture is less than one half the size standard corresponding to the NAICS assigned to the contract; or

2) For a procurement having an employee-based size standard, the procurement exceeds $10 million;

Requirements of

13 CFR 124.513(b)(1)

Service Disabled Veteran-Owned

13 CFR 125.15 (b) An SDVOSB may enter into a joint venture

agreement with one or more other small businesses for the purpose of performing an SDVOSB contract – Joint venture of at least one SDVOSB and one or more

other business concerns may submit an offer for a competitive SDVOSB procurement so long as each concern is small under the applicable NAICS code and size standard, provided:

- For a revenue-based size standard, the procurement exceeds half the size standard corresponding to the applicable NAICS code;

-For an employee-based size standard, the procurement exceeds $10 million.

- The joint venture must contain provisions set forth in the regulations.

-For sole source and competitive SDVOSB procurements that do not exceed dollar levels, an SDVOSB entering into a joint venture agreement with another concern is considered to be affiliated with respect to performance of the SDVOSB contract (annual receipts or employees must meet applicable size standard). SDVOSB must Be managing partner of jv and project

manager Receive at least 51% of net profits of jv The jv must perform applicable percentage of

work

Why Partner?

1) Increase Competitive Edge

2) Enhance Capabilities

3) Diversify

4) Compete with Large Firms

5) Subcontract, team, joint venture

PROPOSED CHANGES

SBA has proposed to amend its regulations concerning mentor-protégé agreements to allow such arrangements for all programs under the small business umbrella. The new regulation would apply to all preference programs and be similar to the 8(a) program requirements. The proposed regulation was published in the Federal Register for comment. It has not been finalized.

Prime Contractor Performance Requirements

(Limitations On Subcontracting) (13 CFR 125.6) In order to be awarded a full or partial small business set-aside

contract, 8(a) contract, or other small business preference , a small business concern must:

In the case of a contract for services (except construction), perform at least 50 percent of the cost incurred for personnel with its own employees

In the case of a contract for supplies or products (other than procurement from a non-manufacturer of such supplies or products), perform at least 50 percent of the cost of manufacturing the supplies or products (not including the cost of materials)

In the case of a contract for general construction, perform at least 15 percent of the cost of the contract with its own employees (not including cost of materials)

In the case of a contract for construction by special trade contractors, perform at least 25 percent of the cost of the contract with its own employees (not including cost of materials)

An SDVOSB – same percentages apply, except percentages may be met by the SDVOSB prime contractor or the employees of other SDVOSB’s.

A HUBZone small business – same percentages; however, service and manufacturing percentages may be met by one or more qualified HUBZone small businesses.

NEW LIMITATIONSIn early 2013, Congress amended the statute to simplify the limitations on subcontracting; the new FAR clauses provide:

Services: “…may not expend more than 50 percent of the amount paid to the concern under the contract”

Supplies: “…may not expend on subcontractors more than 50 percent of the amount, less the cost of materials, paid to the concern under the contract”

Construction: Same percentages – cost of contract excluding material

“Similarly situated entities” are not to be considered subcontractors when applying the limitations.

Penalties for non-compliance. Many problems with interpretation, responsibilities, administration, enforcement, baseline (final amount, task orders, IDIQ contracts, etc.). These issues are still being resolved.

Supply of Manufactured Products (13 CFR

121.406)

On a small business set-aside or other preference contract, a small business must –

Be the manufacturer of the end item being procured (end item must be manufactured in the U.S), or –

Qualify as a non-manufacturer, kit assembler, or supplier under Simplified Acquisition Procedures.

Non-Manufacturer

Does not exceed 500 employees Is primarily engaged in retail or wholesale

trade and normally sells type of item being supplied

Will supply the end item of a small business manufacturer or processor made in the United States (unless a waiver has been granted by SBA)

EXCEPTIONS: Processed under Simplified Acquisition procedures; waiver issued by SBA.

NOTE: THERE ARE NO WAIVERS TO THE NON-MANUFACTURING RULE FOR HUBZONE CONTRACTS (13 CFR 126.601(e)(1))

Kit Assembler

Where the manufactured item is a kit of supplies or other goods provided for a special purpose, the small business offeror must –

Have fewer than 500 employees, AND

50 percent of the total value of the components of the kit must be manufactured by U.S. small businesses under the size standard for the applicable NAICS code

The offeror need not itself be the manufacturer of any of the items assembled

If the Government has specified an item for the kit which is not produced by U.S. small business concerns, such item shall be excluded for calculation of total value.

What is a Manufacturer?

There can be only one manufacturer of the end item being acquired –

With its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired.

End item must possess characteristics which, as a result of mechanical, chemical or human action, it did not possess before original substances, parts or components were assembled or transformed.

Firms that add substances, parts or components to an existing end item to modify its performance will NOT be considered end item manufacturer where those identical modifications can be performed by and are available from manufacturer.

What are the Evaluation Factors? Evaluation factors:

Proportion of total value added by efforts of the concern, excluding costs of overhead, testing, quality control, and profit;

Importance of the elements added to the function of the end item, regardless of relative value;

Concern’s technical capabilities; plant, facilities and equipment; production or assembly line processes; packaging and boxing operations; labeling of products; and product warranties.

Computer Assemblers

Firms that provide computer and other information technology equipment primarily consisting of components parts (such as motherboards, video cards, network cards, memory power supplies, storage devices, and similar items) who install components totaling less than 50% of the value of the end item are generally NOT considered the manufacturer of the end item.

QUESTIONS

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1535 Bacharach Blvd.Atlantic City, NJ 08401

Phone 609-343-4845 Fax: 609-343-4710

SHERRY ROSE

Procurement Technical Assistance Center

E-mail: srose@njit.edu