Service (sub)contracting in OCONUS for Small Business

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2 Service (sub)contracting in OCONUS for Small Business Breakout Session #: C12 Susan Thibodeaux and Eric Bennett Date: Monday, July 25 Time: 4:00pm-5:15pm

3 Why Pursue Contracts Overseas? SBA will begin counting OCONUS dollars in agencies goal achievements Currently about $100 billion a year in federal contracts including contracts that support overseas projects aren t considered when the agency calculates small businesses share of procurement dollars annually - 2

4 Overseas now included in goals Overseas set asides for small business Large primes required to have a small business plan on more OCONUS work Significant goals Small pool of small businesses to choose from 3

5 Finding Opportunities Prime opportunities USAID Department of State DOD Homeland Security COE Others Subcontract Opportunities 4

6 Laws and Regulations Local laws Country-to-country agreements Status of Forces Agreements FAR Agency/military regulations 5

7 Rules applicable to overseas contracts U.S. Foreign Corrupt Practices Act and other anti-corruption laws Human Trafficking Boycotts Commerce Boycott Treasury Boycott U.S. trade laws Environmental laws and agreements 6

8 Language Many services contracts require Managers who speak English Some require English to lowest level of organization Emergency communications Have a plan on or off installation 7

9 Translation Everyday communications Work direction, With employees, With customers Written media Scope requirements, processes, labor laws and hotlines Legal documents 8

10 Money Financial capital Currency Length of contract Conversion rates Transporting/moving money Payments Accounting Host country taxes and regulations 9

11 Banking Foreign or domestic Contract pricing and payment in foreign currencies Paying subs/vendors/employees in foreign currency Check, electronic Wire transfers, credit cards and cash 10

12 Taxes Each country has specific tax implications that should be taken into consideration when preparing proposals. 11

13 Defense Base Act insurance What it is Workers compensation type insurance coverage for contractor employee performing under government contracts outside the United States. Each contractor must provide and maintain DBA insurance before commencing work Significant penalties for lack of coverage If there is no local workers compensation law Local Nationals are covered under DBA 12

14 Who Requires DBA? Any employee working on a military base or reservation outside the U.S. Any employee engaged in U.S. government funded public works business outside the U.S. Any employee engaged in a public works or military contract with a foreign government which has been deemed necessary to U.S. National Security. Those employees that provide services funded by the U.S. government outside the realm of regular military issue or channels. Any employees of any sub-contractors of the prime. 13

15 Exemptions to DBA Waivers The request for waiver must be made by the government agency to the Department of Labor (DOL), OWCP. It is Department of Labor policy that the waiver does not apply to citizens or legal residents of the U.S. or to employees hired in the U.S. Once granted, the waiver is only valid if alternative workers' compensation benefits are provided to the waived employees pursuant to applicable local law. Current waiver list available on DOL.GOV 14

16 Compliance with Local Labor Laws (Overseas) (JUN 1997) (a) The Contractor shall comply with all (1) Local laws, regulations, and labor union agreements governing work hours; and (2) Labor regulations including collective bargaining agreements, workers' compensation, working conditions, fringe benefits, and labor standards or labor contract matters. 15

17 Compliance continued (b) The Contractor indemnifies and holds harmless the United States Government.any claims or litigation concerning allegations that the Contractor or the United States Government, or both, have not fully complied with local labor laws or regulations relating to the performance of work required by this contract 16

18 Workforce Hiring considerations Direct Labor broker Flow down regs and clauses ExPat (U.S. Citizen) Local National Foreign National Independent contractor 17

19 Foreign pay considerations Vacation and legal holidays Contract has U.S. ten holidays Country National holidays Thirteenth month pay, Mandatory bonus, profit sharing Severance and Notice pay 18

20 U.S. Citizen employees Expats Housing Travel Payment Benefits Insurance coverage Medical issues Working hours Applicable labor laws 19

21 Local National Local labor laws Payroll and benefits Non-productive time Applicability of U.S. laws/regs Installation regulations Security considerations Access to installation Access to data 20

22 Travel Fly America Act If a contract contains limits on allowable travel costs, allowable cost rules for contractor's travel and transportation allowances are usually IAW Part 31 of the FAR (which relies in large part on each contractor's own travel rules). Special Clauses Safety 21

23 Country Access Registration Dept of State Foreign Clearance Guide Consult with local law firm (as needed) Passport Sponsorship Visas 22

24 Safety Travel.state.gov Travel warnings and alerts Safety requirements Contract Country Health risks Being an American Medical 23

25 Subcontracts Mandatory flowdowns Local laws Illegal subcontracting Some countries ban subbing core tasks Payments Subcontract employees 24

26 Procurement Contract clauses Buy America, Trade Agreements, Restrictions on Certain Foreign Purchases Availability and substitution Time and cost trade-offs Cost of currency Cost/Time of shipping Vetting suppliers 25

27 Government support PGI (a) Support that may be authorized or required when contractor personnel are deployed with or otherwise provide support in the theater of operations to U.S. military forces deployed outside the United States may include, but are not limited to Deployment in-processing centers; Training; Transportation to operation area; Transportation within operation area; 26

28 Government support cont Physical security and force protection Organizational clothing and individual equipment; Emergency medical care and notification Meals and lodging Postal service and phone service Laundry Religious services. 27

29 Shipping OCONUS Every item that moves into or out of the U.S. must be reviewed Even if for your use Laws and regulations U.S. and Destination Mode Air, Sea, USPS, Land 28

30 Exporting from the U.S. Regulated by multiple entities The Department of State ITAR The Department of Commerce (BIS) EAR Office of Foreign Asset Controls Sanctions 29

31 Military Items The Department of State oversees all military items Firearms Ammunition Tanks / Vehicles Nuclear weapons International Traffic in Arms Regulations 30

32 ITAR The Munitions List contains many other items that would jeopardize the safety of our country if shipped to the wrong entity. These types of items are often referred to as ITAR Controlled items. 31

33 Duel Use Items The Department of Commerce (BIS) oversees all items under the Export Admin Regulation. These items are considered Dual Use items. Both civilian and military uses. The recent Export Control Reform moved many ITAR controlled items to Commerce control. 32

34 OFAC The Treasury Department Office of Foreign Asset Controls (OFAC) OFAC regulates Economic and Trade Sanctions Money and Movement Everyone in supply chain verified against OFAC list 33

35 Wrap up Potential Opportunities Get help Get educated Always follow the rules Grow your business Enjoy the experience 34

36 Contact Information Susan B. Thibodeaux Senior Director, Operations/SBLO 7315 N. Atlantic Ave. Cape Canaveral, FL