Size and Affiliation. First Wednesday Virtual Learning Series 2019

Transcription

1

2 Size and Affiliation First Wednesday Virtual Learning Series 2019

3 Hosts Christopher Eischen, Procurement Center Representative SBA Office of Government Contracting, Area IV, Kansas City, MO Gwen Davis, Procurement Center Representative SBA Office of Government Contracting, Area IV, Minneapolis, MN 3

4 Welcome to SBA Virtual Learning Questions answered during the final 10 minutes. 2. Technical problems: Contact the moderator with a note or call AT&T Support Desk at Page numbers stated for those working off hard copies of the program. 4. We cover the SBA Quick Reference as time allows. 5. For more SBA training visit the SBA Learning Center website 4

5 Association of Procurement Technical Assistance Centers (APTAC) Procurement Technical Assistance Centers are a vital resource partner. APTAC posts past First Wednesday programing at this link: Contracting officer resources: How PTACs partner with federal agencies : Find your nearest Procurement Technical Assistance Center at 5

6 FIRST WEDNESDAY VIRTUAL LEARNING SERIES 2019 SCHEDULE 1:00 to 2:00 Central Time FY 2019 Date Topic 1 October 3, 2018 Understanding the Non-Manufacturer Rule 2 November 7, 2018 Size and Affiliation 3 December 5, 2018 Joint Ventures 4 January 9, 2019 Certificate of Competency (COC) Program 5 February 6, 2019 Market Research 6 March 6, 2019 Woman Owned Small Business (WOSB) Program 7 April 3, 2019 Historically Underutilized Business Zone (HUBZone) Program 8 May 1, (a) Program 9 June 5, 2019 Service Disabled Veteran Owned (SDVOSB) Program 10 July 10, 2019 Regulation Updates 11 August 7, 2019 All Small Mentor Protégé Program The program schedule is for information only and is subject to change. 6

7 One Continuous Learning Point Self-service: Using the PowerPoint that was sent with your invitation for this training event, fill in your name on the certificate slide and save. Download the certificate and print for your records. You submit your request for training credit IAW your agency policy, i.e. FAITAS. Phoning in only: If you listen in groups and you want all attendees to be included on the future mailing list, send addresses of participants in an excel document to 7

8 Today s Speaker Stephanie Lewis Area Size Specialist Office of Government Contracting Area V (AR, CO, LA, MT, ND, NM, OK, SD, TX, UT, WY) U.S. Small Business Administration 8

9 Topics Covered Size Size standards NAICS Codes Nonmanufacturer Rule (NMR) Limitations on subcontracting (not size issue) Affiliation Types of affiliation Joint Ventures join December s webinar! Mentor-Protégé programs Size Protests and Appeals 9

10 Why is size status important? 1. Federal Contracting: Set aside for small businesses must be awarded to legitimate small businesses to ensure an even playing field 2. Other situations: Programs of other agencies patents and licensing Certifications VIP, 8(a), WOSB, HUBZone Obtaining federal property 10

11 1. Organized for profit What is a Small Business? 2. Place of business in the U.S. And operates primarily in the U.S., or makes a significant contribution to the U.S. economy i.e. payment of taxes, use of American products, labor, or materials 3. Each NAICS has a receipts-based OR employee-based size standard Each North American Industrial Classification System (NAICS) code has a small business size standard NAICS are created by the Dept. of Census, not SBA Wholesale and retail NAICS are not used in government procurements 13 CFR

12 SBA Size Standards Commercial and Institutional Building Construction $ Architectural Services $ Landscape Architectural Services Engineering Services $7.5 $ _a_Except Military and Aerospace Equipment and Military Weapons $ Sheet Metal Work Manufacturing 500 employees Light Truck and Utility Vehicle Manufacturing 1,500 employees It s important to recognize that a firm can be small for some NAICS while at the same time be other than small (large) for others. 12

13 How SBA sets Size Standards SBA has exclusive authority to set the small business size standard for each NAICS code 2017 NAICS/Size Standards Rolling reviews every five years Adjustments for inflation Changes apply to new solicitations posted after rule takes effect (or CO may modify them into an existing open solicitation at their discretion) 13

14 Average Annual Receipts (AAR) Use Federal Tax Returns Cost of Goods Sold plus Total Income Average of last three completed fiscal years Number of Employees Count all individuals employed on a full-time, part-time, or other basis. Numbers of employees for each of the pay periods for the preceding completed 12 calendar months (running average). 14

15 Exclusions-- 13 CFR (a) 1. Inter-affiliate transfers 2. net capital gains or losses 3. taxes collected for and remitted to a taxing authority if included in gross or total income 4. proceeds from transactions between a concern and its affiliates 5. amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker Inclusions Receipts or employees of an affiliate 15

16 Recognizing a small business General rule: Contracting Officer (CO) shall accept selfcertification unless there is a reason to question the firm s self-certification. SAM self-certification Must be updated every 12 months Effective at time of offer Can use date adjustment field to look up size for previous dates 16

17 Assigning NAICS codes Best describes the principal purpose of the product or service being acquired 13 CFR (b) Subcontracts: NAICS determined by prime contractor Reflects product or service obtained in the subcontract NOT just to make sub small Nonmanufacturer Rule & Limitation on Subcontracting rules do not apply 17

18 As of What Moment is Size Determined? as of the date the concern submits a written selfcertification that it is small to the procuring activity as part of its initial offer (or other formal response to a solicitation) which includes price. 13 CFR (a) Multiple Award Contracts a business is small at the time of offer for the Multiple Award Contract, it is small for each order issued against the contract, unless a contracting officer requests a new size certification in connection with a specific order. 13 CFR (a)(1) 18

19 As of What Moment is Size Determined? A small business which becomes large after written selfcertification is still considered small for the life of that contract (including options) unless recertification is requested/required. 13 CFR (g) In recertification, size is determined as of the date the concern self-certifies to the order/contract. 13 CFR (g) 19

20 SIZE RECERTIFICATION GENERAL RULE: if the concern is small at the beginning, it is small for the life of the contract (including options). EXCEPTION: recertification of size is required if there is a: novation or merger or acquisition without a novation or long-term contract (over 5 years including options; includes MAS, MAC, and GWACS). For long-term contracts, contractors must recertify before the end of the fifth year and every time an option is exercised thereafter. 13 CFR (g)(1)-(3); FAR

21 Limitations on Subcontracting Supplies: 50% of amount paid to it (excluding costs of materials) Services: 50% of the amount paid to it General Construction: 85% of the amount paid to it (excluding costs of materials) Specialty Construction: 75% of the amount paid to it (excluding costs of materials) Work performed by similarly situated entities (SSEs) does not count toward the percentage 13 CFR

22 Similarly Situated Entities (SSE) An SSE is a firm that meets the same size and status requirements as the prime for the subject procurement. I.e., a women owned small business (WOSB) subcontractor for a contract that is set aside for women-owned small businesses (WOSB) Firms that are similarly situated entities (SSEs) will not be found to have an ostensible subcontracting relationship. 22

23 Manufacturing Contracts On a small business set-aside contract, the offeror must be the Manufacturer or meet the requirements of the NonManufacturer Rule Not applicable to small business set-asides between the MPT and the Simplified Acquisition Threshold (SAT) IS APPLICABLE TO SBSAs over the SAT IS APPLICABLE TO SOCIO-ECONOMIC SBSAs of any dollar level Applies to orders off GSA Schedule if they are set-aside for small business Has to be self-performed by the offeror themselves (not an affiliate) 13 CFR

24 If a procurement is set-aside for small business and has been assigned a manufacturing or supply NAICS code, the small business offeror must: Non-Manufacturer Rule (NMR) (i) have less than 500 employees; (ii) be primarily engaged in the retail or wholesale trade and normally sells the type of item being supplied; (iii) take ownership or possession of the item(s) with its personnel, equipment or facilities in a manner consistent with industry practice; and (iv) supply the end item of a small business manufacturer made in the United States OR obtain a waiver of such requirement Waivers (waive subsection (iv) only) may be either class or individual and must be in place before receipt of offers. See procedures in 13 CFR Class waivers publicized on SBA s website. Individual waivers must be announced in solicitation. 13 CFR (b)(1) 24

25 AFFILIATION 25

26 General On-going basis Two Types of Affiliation For a Specific Procurement Joint venture Affiliated only for the contract at hand 26

27 AFFILIATION THE KEY TO SIZE IS AFFILIATION A concern s size always includes the size of all of its domestic and foreign affiliates. 13 CFR (a)(6) Separate divisions, subsidiaries, locations, CAGE codes, NAICS codes, product lines, state of incorporation, payment of taxes have no bearing on whether affiliation exists. THE KEY TO AFFILIATION IS CONTROL Concerns are affiliated if one concern controls or has the power to control the other, or a third party has the power to control both. 13 CFR (a)(1); FAR

28 Affiliation Factors GENERAL Common ownership Common management Identity of Interest (family members, pattern of common investments, dependence through contractual relationships) Newly Organized Concern CONTRACT SPECIFIC Joint Ventures/Teaming 28

29 For instance I own all of the following : 100% an ice cream parlor in Chicago 50% of a furniture manufacturing plant in Paraguay 75% of a machine shop in Algeria and None of them do any business with each other or have any connection with the others. But they are all affiliated because the same person controls all of them regardless of type of business and location (domestic/foreign) 29

30 For instance I own all of the following : 75% of Company A 33.3% of Company B My two children each also own 33.3% 14% of Company C Other owns own 40%, 40%, 6% 10% of Company D There are 9 other shareholders each with 10% I am one Director on a 2 person Board of Directors My common control causes Company A, B & D to be affiliates. 30

31 Is a Teaming Agreement a Joint Venture or a Prime/Subcontractor Relationship? Can be either 31

32 Prime / Subcontractor Relationship A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract 32

33 Joint Ventures (JV) JV must be in writing and registered in SAM Organized for a specific and limited purpose Each joint venture member must qualify as small for the NAICS code assigned to the procurement SB1 ($7 million ) + SB2 ($4 million) Size Standard $10 million 13 CFR (h) 33

34 8(a) Mentor Protégé JVs A joint venture formed by an SBA-approved mentor and 8(a) protégé (per ) may bid on a federal procurement as a small business concern if the protégé is small. 13 CFR (h)(3)(iii) SBA must: approve both mentor-protégé and JV Agreements (on 8a set-asides - 13 CFR (c)). written SBA approval of M/P Agreement must be given before offer written SBA approval of JV Agreement must be given before award 34

35 All Small Mentor Protégé JVs A joint venture submitted by an SBA-approved mentor and protégé may bid on a federal procurement as a SBC if the protégé is small. SBA must: Approve the M/P agreement before offer 13 CFR (h)(3)(ii) While SBA does not review the JV Agreement, it must still meet the requirements of a Joint Venture Agreement and will be evaluated if there is a size protest. 13 CFR 125.9(e) 35

36 Ostensible Subcontracting A subcontractor is an ostensible subcontractor if: The subcontractor performs the primary and vital requirements, or The prime contractor is unduly reliant upon the subcontractor. Treated as a Joint Venture 36

37 SIZE PROTESTS 37

38 Which Size Protests Must be Sent to SBA? ALL OF THEM Protests must be filed with CO, not SBA. COs must forward to SBA. COs/agencies do not have the legal authority to: decide a size protest; ignore a size protest; or advise the protester to modify, change, or resubmit the protest. 13 CFR (a); FAR (c)(1) Size protests ALWAYS go to SBA Area Offices. Not to SBA District Offices, not SBA Regional Offices, and not SBA HQ. 38

39 Referral Procedure Notify unsuccessful offerors and then wait five days before making award. Pre-award notification is required for RFPs/RFQs and a great idea for IFBs. FAR (a)(2) Which Area Office? The one that has jurisdiction over state in which HQ of protested concern is located. 13 CFR ; FAR (c)(1) 39

40 Area of Jurisdiction If the headquarters of a protested concern Forward the protest to the SBA is located in: Office of Government Contracting: CT, ME, MA, NH, NJ, NY, RI, VT DE, DC, MD, PA, VA, WV AL, FL, GA, KY, MS, NC, SC, TN 10 Causeway Street, Room 265 Boston, MA Janette Fasano (617) First Avenue, Parkview Towers King of Prussia, PA Helen Goza (610) helen.goza@sba.gov 100 S. Biscayne Boulevard, 7 th floor Miami, FL Ivette Bascumbe (305) , x182 Ivette.Bascumbe.mesa@sba.gov IL, IN, IA, KS, MI, MN, MO, NE, OH, WI AR, CO, LA, UT,WY, NM, OK, TX,MT, ND, SD AK, AZ, CA, HI, ID, NV, OR, WA, Guam 500 West Madison Street, Suite 1150 Chicago, IL David Gordon (312) David.Gordon@sba.gov 4300 Amon Carter Boulevard, Suite 116 Fort Worth, TX Stephanie Lewis (817) Stephanie.Lewis@sba.gov 455 Market Street, 6th floor San Francisco, CA Esmeralda Sanchez (415) Esmeralda.sanchez@sba.gov 40

41 Status of Award During Protest May not make award for at least 15 business days (until SBA issues its formal determination) unless CO determines in writing that an award must be made to protect the public interest. 13 CFR (a)(2); FAR (g)(1) CO can award after 15 days even if SBA s size determination is not finished by making a formal finding in writing that there is an immediate need to award the contract and that waiting will be disadvantageous to the Government. 13 CFR (a)(3); FAR (g)(2) 41

42 Advisory, Premature, Particular Contract Protests Size protests cannot be used to vet potential awardees Protests must be in connection with a particular (i.e., pending) procurement There is no secret SBA database listing all 28 million small businesses; we use SAM Premature protests (i.e., before notification of successful offeror) will be dismissed, even if made by CO Inform SBA if there is also a GAO protest 42

43 Timeliness and Specificity CO must receive a written protest five business days after (i) notification to unsuccessful offerors (RFPs/RFQs) (ii) bid opening (IFBs) 13 CFR ; FAR (d) Date of debrief is irrelevant for protest purposes A protest must contain specific, detailed evidence to support the allegation that the offeror is not small. FAR (c)(2); 13 CFR Protester must have standing to protest or will be dismissed 13 CFR

44 Processing a Size Protest If timely and specific, SBA (not CO) will notify the protested concern; firm has three business days to respond. SBA has 15 workings days to render its determination assuming there is no extension. Copy of final determination will be sent to the protester, the protested concern, and the CO. 44

45 Other than Small Determinations Companies found other than small : Are prohibited from self-certifying as small on any procurement with the same or a lower size standard Must be recertified as small by SBA before self-certifying as small again; Must notify contracting officers with pending procurements; and Must amend their size status in SAM and any other databases UNLESS determination was contract specific 45

46 Office of Hearings and Appeals (OHA) Any person adversely affected can appeal the size determination to OHA Contracting Officer can also appeal File within 15 calendar days after receipt of the size determination Judge shall issue a size appeal decision, insofar as practicable, within 60 calendar days after close of the record 46

47 TIPS PICK THE CORRECT NAICS It will affect your procurement (LOS, NMR, size standard) Do not use Wholesale or Retail NAICS ON A MAC, DETERMINE IF YOU WANT TO HAVE OFFERORS RE-CERTIFY THEIR SIZE STATUS HAVE METHOD IN PLACE REQUIRING LONG-TERM CONTRACT HOLDERS TO RECERTIFY THEIR SIZE CONSIDER ADDING JOINT VENTURE LANGUAGE TO PROPOSAL Request copy of Agreement FORWARD ALL SIZE PROTESTS TO SBA AS SOON AS YOU RECEIVE THEM INVOLVE YOUR PCR IF YOU HAVE ANY QUESTIONS DO NOT MAKE AWARD UNTIL AFTER 5 DAY PERIOD OR AFTER SIZE DETERMINATION IS ISSUED 47

48 QUESTIONS? 48