Breakout Session # 1706 Patricia Downing, Senior Manager, Aronson & Company Tuesday, April 11, 2006 2:45 pm – 3:45

1. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

2. Understanding Small Business Subcontracting Compliance Breakout Session # 1706 Patricia Downing, Senior Manager, Aronson & Company Tuesday, April 11, 2006 2:45 pm – 3:45 pm NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. Overview of Small Business Subcontracting • FAR Part 19 and the Small Business Act, as amended contain regulations that require large business compliance • Federal Government procurements that exceed $500,000 ($1,000,000 for construction) require a small business subcontracting plan from large businesses NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. Department of Commerce • Established and maintains the North American Industrial Classification System (NAICS) • SBA sets size standards for each NAICS (pronounced NAKES) industry • Each industry size standard is based on either annual revenues or number of employees NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. Small Business Categories • Small (SB) • Small Disadvantaged (SDB) • Woman Owned (WOSB) • Veteran Owned (VOSB) • Service Disabled Veteran Owned (SDVOSB) • HUBZone (HZB) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. Small Business Categories Defined Small Business (SB) A business concern, including its affiliates, that is independently owned and operated, and is not dominant in the field of operation in which it is bidding on government contracts. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Small Business Categories Defined Small Disadvantaged (SDB) A business of which at least 51% is owned by Small, Socially and Economically disadvantaged group members and whose management and daily business operations are controlled by one or more such individuals. Must be certified by SBA. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. Small Business Categories Defined Woman Owned (WOSB) A business that is at least 51% owned and controlled by one or more women, and the management and daily operations of the business are controlled by one or more women. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Small Business Categories Defined Veteran Owned (VOSB) A business that is at least 51% owned and controlled by one or more veterans, and the management and daily operations of the business are controlled by one or more veterans. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. Small Business Categories Defined Service Disabled Veteran Owned (SDVOSB) A small business concern where not less than 51% is owned and controlled by service-disabled veterans and the management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11. Small Business Categories Defined HUBZone (HZB) A business located in a Historically Under Utilized Business Zone that has been certified in writing by the SBA that it is a HUBZone small business concern, and that its principal office is located in a HUBZone and not fewer than 35 percent of its employees reside in a HUBZone. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

12. Considerations When Preparing Plans for Inclusion in Proposals NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

13. Determining If Plan Is Required • Check total contract value • Check NAICS code assigned to RFP • Check SBA size status thresholds for assigned NAICS code NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

14. Plan Timeline • Proposal Stage – Write the Plan • Award Stage: • Track • Report • Demonstrate Good Faith Efforts • Closeout Stage – Submit Final Reports NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

15. Minimum Plan Requirements • The Plan must demonstrate the contractor’s commitment to utilize small businesses of all types • Small • Small Disadvantaged • Small Woman-owned • Small Veteran-owned • Service Disabled Veteran-owned • HUBZone NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

16. Minimum Plan Requirements Must demonstrate: • The contractor’s willingness to provide opportunities for the specific small businesses targeted in the plan • Detail the contractor’s interpretation of good faith efforts NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

17. Writing the Plan • Use Plan Model – varies by agency • Generally includes the following: • Type of plan • Commercial, Individual or Master • Plan Period • Base, Option or Life of Contract • Goals • Dollars and Percentages of Total Subcontracted Value NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

18. Writing the Plan • Primary NAICS codes • Identified in the RFP for Prime Contractor • Prime Contractor identifies the NAICS codes for each subcontracting entity in the Plan Matrix NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

19. Writing the Plan • Matrix • Lists each subcontracting entity • Shows each small business category and/or categories under which the entity is qualified • May list services or products when specific subcontractor is unknown • Indirect costs • included or excluded from plan dollars NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

20. Writing the Plan • Identification of Program Administrator • Duties of Program Administrator • Reporting Requirements • Record Keeping NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

21. Writing the Plan • Good Faith Efforts • List activities to demonstrate efforts • References Liquidated Damages Clause invoked when goals are not met and a good faith effort is not evident NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

22. Developing Goals NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

23. FY 2005 Average Government-wide Goals Applicable to Federal Buyers • SB – 23% • SDB – 5% • WOSB – 5% • HZB – 3% • SDVOSB – 3% NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

24. FY 2005 Average Government-wide Goals Applicable to Large Prime Contractors • SB – 40% • SDB – 7% • WOSB – 6% • HZB – 3% • SDVOSB – 3% NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

25. FY 2005 Goals Applicable to DoD Large Prime Contractors • SB – 42% • SDB – 5% • WOSB – 5% • HZB – 3% • SDVOSB – 3% NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

26. Identifying Opportunities • Contract Administrators work with Project Managers to identify opportunities • May include: • Consultants & Independent Contractors • Other Direct Costs (ODCs) • Subcontractors NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

27. Identifying Sources • Bidders lists • Corporate database • Other internally developed mechanisms • External source lists NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

28. Using Historical Data • Information tracked in corporate database • Plans and semi-annual reports for similar projects • Past Performance reports NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

29. What to Do When No Opportunities Exist • Include indirect costs • Consider subcontracting a portion of the work your firm would normally perform • Look for opportunities in purchasing ODCs NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

30. Incorporating a Master Plan • Still Requires Individual Plan • Follow Policies established in Master Plan • Complete Attachment A and include Master Plan NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

31. Other Considerations • Plan submitted with proposal • Plan may be an evaluation factor • Plan must be approved prior to award • Plan is open to negotiation prior to award • Contract will not be awarded if plan is unacceptable NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

32. Award Stage: Tracking and Reporting • Understand what is to be reported • Know how it is to be reported • Determine how to track • Dependent upon tracking mechanisms available • Electronic • manual NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

33. Award Stage NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

34. Award Stage – What to Report • Semi-annually report on achievement of individual plan goals to include: • Dollars expended during the specified 6 month period • Cumulative dollars expended over the life of the contract including the current reporting period • Percentages of total dollars for each category NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

35. Award Stage – What to Report • Annually report on overall goal achievement: • A cumulative report of all subcontracted dollars • One report per agency • Agency is highest level of agency for example: • NIH, CDC, NCI should all roll up into one report for DHHS NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

36. Award Stage – How to Report - eSRS • As of November 1, 2005, eSRS is the new government-wide reporting mechanism for CIVILIAN agencies • DoD reports are scheduled to switch to eSRS mid 2006 • What is eSRS? • Electronic Subcontracting Reporting System NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

37. Award Stage – How to Report • Report electronically-online • Website: http://esrs.gov • All CIVILIAN reports must be completed online at this website • Paper reports will no longer be accepted NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

38. eSRS - What’s Different? • Requires registration of contractor • Some CCR info linked to eSRS • Requires individual input of each contract requiring a plan • SF294 now called ISR • SF295 now called SSR NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

39. eSRS - What’s Different? • ISR-Individual Subcontracting Report (old SF294) • New info needed for reporting • DUNS as it appears on individual contract award • Product and Service Codes • NAICS NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

40. eSRS - What’s Different? • Lower Tier Subcontractors use eSRS • Info needed: • Prime contract number • Subcontract number • DUNS of prime contractor • Product and service codes • NAICS NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

41. eSRS - What’s Different? • SSR – Summary Subcontracting Report (old SF295) • New info needed for reporting: • DUNS number as it appears on individual contract award • Product and Service Codes • Make sure copy signed by CEO is on file NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

42. Additional eSRS Info • Contractor Guide available • Due dates are still the same • Due 30 days after the end of the reporting period • ISR: April 30 and October 30 • SSR: October 30 for CIVILIAN agencies NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

43. Award Stage – Reporting • OF 312 - Optional Form 312 • If listed as a contract requirement….. • It is NOT optional! • Due upon Contract completion • Reports Goal Achievements by NAICS over life of contract • Closeout • Final reports should be submitted for the ISR, SSR and OF 312 (if required) as soon as the contract ends NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

44. Award Stage – Tracking • In order to report – you must track • Tracking begins at the Proposal Stage by capturing size status information • All proposed subcontractors shall self-certify their size status during the proposal stage • All business that state they are either a HUBZone or SDB must be certified by SBA • Self-certification is not acceptable for these two small business categories NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

45. Award Stage – Tracking • Re-certification of each business’s size classification should be done as often as the contract or regulations require • This can be as often as annually • Business size certification can be as complicated as officially signed Representations and Certifications or as simple as a signed statement on company letterhead NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

46. Award Stage – Tracking • The mechanism chosen for businesses to self certify should contain the following: • Small business types that must be reported • Penalty clause for providing false information • Point of contact • Signature of party providing information NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

47. Award Stage – Tracking • Certification documents should be updated at regular intervals • Certification documents should be retained in a central location in either hard copy form or electronically • Documents should be readily available for audit by SBA and/or other agencies NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

48. Award Stage – Tracking • Documents will be checked by SBA for: • Consistency of data collection • Data reporting across all vendors • The information collected by these documents should be entered either into a database or the accounting system for ease of reporting NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

49. Award Stage – Tracking/Reporting Tips • Any vendor used on a contract can be reported on the ISR and SSR whether or not they were included in the original plan • Each vendor/subcontractor’s dollars may be reported multiple times • If a business qualifies as a SDB & WOSB their dollars will be reported under each category NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

50. Good Faith Efforts NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management