Get documents about "Business Proposal Letter Affiliation
W
Description
Business Proposal Letter Affiliation document sample
Document Sample
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
The National Congress of American Indians (NCAI), the Native American Contractors Association (NACA), and
the National Center for American Indian Enterprise Development (NCAIED) provide these draft
recommendations to provide input into the Tribal consultation initiated by the Small Business Administration
(SBA) announced in the October 11, 2007 and October 25, 2007 Federal Register Notice. The Federal
Register notices state that the SBA is considering changes to its rules for all participants in the 8(a) Business
Development Program, and particularly those rules affecting tribally-owned and ANC-owned 8(a) companies in
response to the recommendations made in the Government Accountability Office Report (GAO-06-399), and
other 8(a) SBA IG Reports which recommend improved oversight. NCAI, NACA, and NCAIED provide these
recommendations to be considered and included as part of SBA’s administrative record. We will continue to
refine these recommendations and provide further input as the consultations and the rulemaking progress.
1. Subcontracting Plan Requirement
The basic proposal is for the addition of a requirement for a subcontract plan for certain 8(a) contracts.
A. Covered Contracts:
1. Required for all sole-source 8(a) contract awards over threshold.
B. Threshold:
1. Contract revenue: $ 20 million annually.
2. Contract specific including IDIQ for any contract expected to exceed the threshold.
3. CO determines whether subcontracting plan is required, as currently done with large contractors.
C. Enforcement:
1. Same enforcement as currently used for large contractors.
2. Performance is reviewed as a portion of the annual update of an 8(a) firm. Non-compliance could result in (a)
adoption of remedial strategy; (b) suspension of ability to receive direct award contracts over subcontracting
plan threshold; (c) suspension of ability to receive sole source contracts; or (d) suspension or termination from
the 8(a) program.
3. Positive incentive: compliance tied to award fees.
4. Flow down requirement.
Authority:
1
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
Statutes:
15 USC 637(d)
15 USC § 644
10 USC § 2323
Regulations:
FAR Subpart 19.7
SBA SOP:
6003 06 – Subcontracting Program
Implementation:
Section 8(d) of the Small Business Act (15 U.S.C. 637 (d)(7)) is amended by –
(1) striking the “.” at the end ; and
(2) inserting in lieu thereof the following proviso: “; Provided, That the provisions of
paragraph (4) and (6) shall apply to any contract awarded pursuant to subsection (a)(1)(A)
or (B) with an anticipated award price expected to exceed $20 million.”
Corresponding change to regulation:
FAR Subpart 19.7
2
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
2. Self Performance Requirement: Prime Contractor Performance Requirement
(Limitations on Subcontracting)
The basic proposal is for some type of reporting and monitoring mechanism for compliance with 8(a) prime
contractor performance requirements.
A. Covered Contracts:
1. Required for all sole-source award 8(a) contracts including IDIQ contracts, regardless of size of contract.
B. Type of Reporting:
1. Detailed subcontracting plan required prior to award, including the type and percentage of work to sub-
contractors.
2. CEO Certification
a. annual report of contract specific self performance as part of 8(a) annual report.
b. Bi-Annually on IDIQ (task order/deliver order contracts).
3. Web-based reporting
C. Enforcement:
1. Performance is reviewed as a portion of the annual update of an 8(a) firm. Non-compliance could result in: (a)
adoption of remedial strategy; (b) suspension of ability to receive sole source contracts over subcontracting plan
threshold; (c) suspension of all ability to receive sole source contracts; or (d) suspension or termination from (a)
program.
2. Performance is reviewed by contracting officer and reported to SBA. SBA should develop a form for
performance requirement reporting to ensure consistency.
3. Performance is reviewed by SBA and reported to contracting office.
4. Compliance rewarded with positive incentive such as recognition/award by the SBA.
3
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
Authority:
Statutes:
There is no specific statutory authority for the requirement.
Regulations:
FAR 19.508
19.811
52.219.14
13 CFR 124.510 (attached)
13 CFR 125.6
SBA SOP:
6003 06 – Subcontracting Program
8005 03 – 8(a) Program
Implementation:
SBA SOP
Policy Guidance
Web based Report
Sec. 124.510 What percentage of work must a Participant perform on an
8(a) contract?
(a) To assist the business development of Participants in the 8(a) BD program, an 8(a) contractor must
perform certain percentages of work with its own employees. These percentages and the requirements relating
to them are the same as those established for small business set-aside prime contractors, and are set forth in
Sec. 125.6 of this title.
(b) A Participant must certify in its offer that it will meet the applicable percentage of work requirement. SBA
will determine whether the firm will be in compliance as of the date of award of the contract for both sealed bid
and negotiated procurements.
(c) Indefinite quantity contracts. (1) In order to ensure that the required percentage of costs on an indefinite
quantity 8(a) award is performed by the Participant, the Participant must demonstrate semiannually that it has
performed the required percentage to that date. For a service or supply contract, this does not mean that the
Participant must perform 50 percent of the applicable costs for each task order with its own force, or that a
Participant must have performed 50 percent of the applicable costs at any point in time during the contract's life.
Rather, the Participant must perform 50 percent of the applicable costs for the combined total of all task orders
issued to date at six month intervals.
(2) Where there is a guaranteed minimum condition in an indefinite quantity 8(a) award, the required
performance of work percentage need not be met on task orders issued during the first six months of the
contract. In such a case, however, the percentage of work that a Participant may further contract to other
concerns during the first six months of the contract may not exceed 50 percent of the total guaranteed minimum
4
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
dollar value to be provided by the contract. Once the guaranteed minimum is met, the general rule for indefinite
quantity contracts set forth in paragraph (c)(1) of this section applies.
(3) The applicable SBA District Director may waive the provisions in paragraphs (c)(1) and (c)(2) of this
section requiring a Participant to meet the applicable performance of work requirement at the end of any six-
month period where he or she makes a written determination that larger amounts of subcontracting are
essential during certain stages of performance, provided that there are written assurances from both the
Participant and the procuring activity that the contract will ultimately comply with the requirements of this section.
Where SBA authorizes a Participant to exceed the subcontracting limitations and the Participant does not
ultimately comply with the performance of work requirements by the end of the contract, SBA will not grant
future waivers for the Participant.
5
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
3. Joint Venture Milestones and Reporting
The basic proposal is to establish milestones and reporting for all sole source 8(a) joint ventures. It is assuming
that the primary focus will be on Mentor-Protégé Joint Ventures.
A. Covered Contracts:
1. Required for all sole-source 8(a) joint venture contracts approved by the SBA.
B. Types of Reporting and Milestones:
1. Ownership interest of Mentor
2. Direct and indirect [ownership] profits to Mentor. This report will include both the Mentor’s profits from the
joint venture and any subcontracts let by the joint venture to the Mentor. The sum of these must not exceed
49%
3. Direct and indirect [ownership] profits to Protégé
4. Prime [JV] and subcontracting performance by Mentor.
a. measure hours/tasks by mentor
5. Prime and subcontracting performance by Protégé. What experience and resources is the protégé
contributing to complete its portion of the contract.
6. Targets and goals for increased protégé participation.
Manner of Reporting:
1. Detailed plan outlining milestones and reporting required prior to award, including type and percentage to be
performed by each JV partner
2. Annual status report to contracting officer and an annual update to SBA
3. Periodic certification by 8(a) CEO (annually as part of 8(a) annual report and bi-annually for IDIQ task
order/delivery order contracts)
6
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
C. Enforcement:
1. Performance is reviewed a portion of annual update of 8(a) firm. Enforce with tools that are already in place.
Non-compliance could result in (a) adoption of remedial strategy; (b) suspension of ability to receive sole source
contracts over subcontracting plan threshold; (c) suspension of all ability to receive sole source contracts; (d)
suspension or termination from 8(a) program.
2. Performance is reviewed by contracting officer and reported to SBA.
3. Performance is reviewed by SBA and reported to contracting office.
4. Compliance rewarded with positive incentive: SBA should show case good examples through Best Practices
Award.
Authority:
Statutes:
15 USC § 637(a)
Regulations:
FAR Subpart 19.3
13 CFR § 121.103 (small business affiliation rules
13 CFR 124.513 (8(a) joint venture rules)
13 CFR 124.520 (8(a) mentor-protégé rules)
SBA SOP:
8005 03 – 8(a) Program
7
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
4 . Mentor-Protégé Program Improvements
The basic proposal is to strengthen the mentor-protégé program so that the emphasis is on mentoring and not
merely joint venture opportunities.
A. Mentoring Agreement Requirements:
1. Detailed description of mentoring activities.
2. Designation of single point of contact in Mentor company who is responsible for managing and implementing
the MP Agreement and is the focal point for all activities involving the protégé.
3. Mentor required to ensure that protégé meets its percentage of work requirement on any mentor/protégé joint
venture contract.
4. Milestones or benefits provided to the Protégé by the Mentor may include a combination of the following:
a. Transfer of technology, business development, or business infrastructure assistance.
b. Creation or expansion of a market niche.
c. Preferred supplier to the Mentor.
d. Establishing a long-term relationship with a trusted business partner or associate.
e. Products or services meeting all Mentor requirements for quality, schedule and price.
f. Enhanced competitiveness.
g. Subcontracting opportunities.
5. These benefits can be measured in terms of:
a. Commitment to minimum commitment of hours by Mentor.
b. Commitment of minimum expenditure for mentoring.
c. Commitment of technical assistance/resources by mentor.
6. Look to other agencies and how they have defined milestones.
7. Small Business credit provided only for portion of work done by protégé.
B. Types of Reporting and Milestones:
1. Mentoring by categories.
2. Mentoring by hours.
3, Mentoring by expenditure.
8
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
C. Manner of Reporting:
1. Detailed plan required prior to approval of agreement.
2. Portion of annual update. Track percentage of work and profits.
3. Periodic certification by CEO of Mentor and Protégé.
4. Detailed report with names and values.
D. Enforcement:
1. Performance is reviewed as a portion of the annual update of the 8(a) firm and/or annual review of the mentor
protégé agreement. In addition, non-compliance could result in subjecting the protégé to the (a) adoption of a
remedial strategy; or (b) suspension of ability of the mentor firm to participate in future contracts with the mentor
protégé program to receive sole source contracts over subcontracting plan threshold; (c) suspension of all ability
to receive sole source contracts; (d) suspension or termination from 8(a) program.
2. Performance is reviewed by contracting officer and reported to SBA.
3. Performance is reviewed by SBA and reported to contracting officer.
4. Compliance rewarded with positive incentive.
Authority:
Statutes:
No specific statutory authority.
Regulations:
13 CFR § 121.103 (small business affiliation rules
13 CFR 124.513 (8(a) joint venture rules)
13 CFR 124.520 (8(a) mentor-protégé rules)
SBA SOP:
8005 03 – 8(a) Program
9
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
5. Improvements to Joint Venture Requirements
The proposed amendment would add the following language to 124.513(d):
Summary of proposed change. For any sole source contract awarded to a joint venture between an
8(a) concern owned and controlled by an Indian Tribe or Alaska Native Corporation (ANC) and a concern
which is other-than-small and qualified as a mentor to the 8(a) under Sec. 124.520, the 8(a) participant in
such a joint venture must itself perform the percentage of work required by 124.510 by the conclusion of
the 24th month of the contract performance period, and must, in the aggregate, perform at least the
percentage of work required by 124.510 over the entire contract period, including options.
In addition, the proposed change defines how each party to a joint venture receives “percentage of work”
credit for “populated” and “unpopulated” joint ventures, and clarifies that the Mentor’s 49% profit includes
the sum of their profit from the joint venture and any subcontracts received from the joint venture.
Subpart A 8(a) Business Development
[Revised text with proposed additions included Subsections (c)(3) and (d)(2):]
Sec. 124.513 Under what circumstances can a joint venture be awarded an 8(a) contract?
(a) General. (1) If approved by SBA, a Participant may enter into a joint venture agreement with one
or more other small business concerns, whether or not 8(a) Participants, for the purpose of performing
one or more specific 8(a) contracts.
(2) A joint venture agreement is permissible only where an 8(a) concern lacks the necessary
capacity to perform the contract on its own, and the agreement is fair and equitable and will be of
substantial benefit to the 8(a) concern. However, where SBA concludes that an 8(a) concern brings very
little to the joint venture relationship in terms of resources and expertise other than its 8(a) status, SBA
will not approve the joint venture arrangement.
(b) Size of concerns to an 8(a) joint venture. (1) 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 SIC code
assigned to the contract, provided:
(i) The size of at least one 8(a) Participant to the joint venture is less than one half the size
standard corresponding to the SIC code assigned to the contract; and
(ii)(A) For a procurement having a revenue-based size standard, the procurement exceeds half
the size standard corresponding to the SIC code assigned to the contract; or
10
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
(B) For a procurement having an employee-based size standard, the procurement exceeds $10
million;
(2) For sole source and competitive 8(a) procurements that do not exceed the dollar levels
identified in paragraph (b)(1) of this section, an 8(a) Participant entering into a joint venture agreement
with another concern is considered to be affiliated for size purposes with the other concern with respect to
performance of the 8(a) contract. The combined annual receipts or employees of the concerns entering
into the joint venture must meet the size standard for the SIC code assigned to the 8(a) contract.
[[Page 402]]
(3) Notwithstanding the provisions of paragraphs (b)(1) and (b)(2) of this section, a joint venture
between a protégé firm and its approved mentor (see Sec. 124.520) will be deemed small provided the
protégé qualifies as small for the size standard corresponding to the SIC code assigned to the
procurement and has not reached the dollar limit set forth in Sec. 124.519.
(c) Contents of joint venture agreement. Every joint venture agreement to perform an 8(a)
contract, including those between mentors and protégés authorized by Sec. 124.520, must contain a
provision:
(1) Setting forth the purpose of the joint venture;
(2) Designating an 8(a) Participant as the managing venturer of the joint venture, and an
employee of the managing venturer as the project manager responsible for performance of the 8(a)
contract;
(3) Stating that not less than 51 percent of the net profits earned by the joint venture will be
distributed to the 8(a) Participant(s); however, nothing should preclude the 8(a) participant from
subcontracts let by the joint venture;
(4) Providing for the establishment and administration of a special bank account in the name of
the joint venture. This account must require the signature of all parties to the joint venture or designees
for withdrawal purposes. All payments due the joint venture for performance on an 8(a) contract will be
deposited in the special account; all expenses incurred under the contract will be paid from the account
as well;
(5) Itemizing all major equipment, facilities, and other resources to be furnished by each party
to the joint venture, with a detailed schedule of cost or value of each;
(6) Specifying the responsibilities of the parties with regard to contract performance, source of
labor and negotiation of the 8(a) contract;
(7) Obligating all parties to the joint venture to ensure performance of the 8(a) contract and to
complete performance despite the withdrawal of any member;
11
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
(8) Designating that accounting and other administrative records relating to the joint venture be
kept in the office of the managing venturer, unless approval to keep them elsewhere is granted by the
District Director or his/her designee upon written request;
(9) Requiring the final original records be retained by the managing venturer upon completion
of the 8(a) contract performed by the joint venture;
10) Stating that quarterly financial statements showing cumulative contract receipts and
expenditures (including salaries of the joint venture's principals) must be submitted to SBA not later than
45 days after each operating quarter of the joint venture; and
(11) Stating that a project-end profit and loss statement, including a statement of final profit
distribution, must be submitted to SBA no later than 90 days after completion of the contract.
(d) Performance of work. (1) 1 For any 8(a) contract, including those between mentors and protégés
authorized by Sec. 124.520, the joint venture must perform the applicable percentage of work
required by Sec. 124.510, and the 8(a) partner(s) to the joint venture must perform a significant portion of
the contract.
(2) Special Rules for Certain 8(a) Joint Ventures.
Notwithstanding subsection (d)(1) above, for any sole source 8(a) contract awarded pursuant to
Sec. 124.506 to an unpopulated joint venture (defined as a joint venture in which employees of the
partners are loaned to the joint venture, but remain employees of the partners) between an 8(a)
concern owned and controlled by an Indian Tribe or Alaska Native Corporation (ANC) and a
concern which is other than small and qualified as a mentor to the 8(a) under Sec. 124.520, the
tribally-owned or ANC-owned 8(a) party to the joint venture must perform the percentage of work
required by Sec. 124.510 by the conclusion of the 24th month of the contract period, and must, in
the aggregate, perform at least the percentage of work required by Sec. 124.510 over the entire
1
Note: to carry out this change, the current subsection (d) is re-designated as (d)(1) and subsection
(d)(2) is added.
12
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
contract period, including options. In addition, by the beginning of the final year of the contract,
including options, the 8(a) party must perform the percentage of work required by Sec 125.6(a)(5).
For a sole source 8(a) contract awarded pursuant to Sec. 124.506 to a populated joint venture
(defined as a joint venture in which the employees are employed by the joint venture rather than
the partners), each party receives “percentage of work” credit for labor dollars consistent with the
ownership percentage between the parties established in the joint venture agreement, and no
more than one half of the joint venture employees may have been previously employed by the
non-8(a) participant.
(e) Prior approval by SBA. SBA must approve a joint venture agreement prior to the award of
an 8(a) contract on behalf of the joint venture.
(f) Contract execution. Where SBA has approved a joint venture, the procuring activity will
execute an 8(a) contract in the name of the joint venture entity.
(g) Amendments to joint venture agreement. All amendments to the joint venture agreement
must be approved by SBA.
(h) Inspection of records. SBA may inspect the records of the joint venture without notice at any
time deemed necessary.
[63 FR 35739, June 30, 1998, as amended at 69 FR 29208, May 21, 2004]
13
FOR DISCUSSION PURPOSES ONLY
JOINT ADMINISTRATIVE PROPOSAL
ON SMALL BUSINESS CONTRACTING
Discussion Draft – November 10, 2007
TECHNICAL VERSION
6. Improvement to Prime Contractor Performance Requirements
[Revised text with proposed addition included Subsection (5):]
Sec. 125.6 Prime contractor performance requirements (limitations on subcontracting).
(a) In order to be awarded a full or partial small business set-aside contract, an 8(a) contract, or an
unrestricted procurement where a concern has claimed a 10 percent small disadvantaged business (SDB) price
evaluation preference, a small business concern must agree that:
(1) In the case of a contract for services (except construction), the concern will perform at least 50
percent of the cost of the contract incurred for personnel with its own employees.
(2) In the case of a contract for supplies or products (other than
procurement from a non-manufacturer in such supplies or products), the concern will perform at least 50
percent of the cost of manufacturing the supplies or products (not including the costs of materials).
(3) In the case of a contract for general construction, the concern will perform at least 15 percent of the
cost of the contract with its own employees (not including the costs of materials).
(4) In the case of a contract for construction by special trade contractors, the concern will perform at
least 25 percent of the cost of the contract with its own employees (not including the cost of materials).
5) In the case of a contract subject to subsections (a)(1) or (2) above awarded on a sole source basis
pursuant to Sec. 124.506 or other authority to a joint venture between an 8(a) concern owned and
controlled by an Indian Tribe, Alaska Native Corporation or Native Hawaiian Organization and a
business which is other-than-small and approved as a mentor to the 8(a) concern under Sec. 124.520,
the joint venture agreement required by Sec. 124.513 shall require that the 8(a) party to the joint venture
will perform at least the percentage of work set forth above in the aggregate over the entire anticipated
contract period, including options, and will perform at least 60 percent of the cost of the contract, as set
forth in subsections (a)(1) and (2), by the beginning of the final year of the 8(a) contract, including
options.
14
Related docs
