April 6, 2015 Ms. Brenda Fernandez U.S. Small business Administration Office of Policy, Planning and Liaison 409 Third Street SW 8th Floor Washington, D.C. Re: RIN: 3245-AG58 Small Business Government Contracting and National Defense Authorization Act of 2013 Amendments Ms. Fernandez: Thank you for the opportunity to provide comments on the above referenced proposed rule. The Coalition for Government Procurement (“The Coalition”) is a non-profit association of firms selling commercial services and products to the Federal Government. Our members collectively account for approximately 70% of the sales generated through the GSA Multiple Award Schedules (MAS) program and about half of the commercial item solutions purchased annually by the Federal Government. Coalition members include small, medium and large business concerns. The Coalition is proud to have worked with Government officials over the past 30 years towards the mutual goal of common sense acquisition. Unfortunately our members report that small business rules are confusing for industry and government acquisition officials. The most consistent comment that we receive from member companies is that agencies are either not aware of or do not consistently apply small business regulations resulting in an uneven playing field for both small and large businesses. The confusion is exacerbated by fragmentary implementation of the Small Business Jobs Act and the lag in implementation of the small business requirements into the FAR. The current proposed rule continues the confusion in some respects; primarily in the lack of clarity as to how it would apply to multiple award Indefinite Quantity Indefinite Delivery (IDIQ) contracts. This is a critical deficiency since a significant volume of the government’s business is acquired through task and delivery orders against multiple award IDIQ contracts. A simple, clear set of regulations are also important in that the proposed rules impose significant penalties for businesses that fail to comply. Small businesses should have the benefit of an unambiguous set of rules. The FAR council is the regulatory body that government and industry rely on to understand and fulfill acquisition obligations. We urge SBA and the FAR council to issue an integrated set of rules that clearly state the small business rules applicable to agencies and contractors, in one place.
We offer the following specific comments on the proposed rule: I.
It is not clear how the following provisions will apply to multiple award IDIQ contacts: 1. Section 125.6(b)(1) requires that a small business prime enter into a written agreement with every “similarly situated entity” to detail the percentage of work forecasted to be performed by each entity. The signed agreement(s) must be attached to the prime’s offer to the government. Section 125.6(d) requires the prime to identify all subcontractors and the percentage of award amount subcontracted to each. These requirements do not reflect the way that government currently acquires products and services. Further the proposed regulations do not reflect commercial practices. Multiple award IDIQ contracts are typically for 5 years, with options for additional contract periods. The contract can be used by multiple agencies, cover wide geographical areas, have generic technical requirements and minimal volume commitments. A company awarded such a contract often does not know what, if any, specific work it will receive during the contract term. As a best practice contractors do not commit to subcontractors and team arrangements until ask orders are issued. 2. Section 125.6(c) requires the prime to certify with its offer that it will meet the applicable limitation on subcontracting. A clear determination of how the limitation applies in long-term contracts where requirements are essentially unknown at the time of award is needed. 3. Section 125.6(e) states that if a prime modifies a subcontractor’s award amount during the contract period so that it is no longer in compliance with the limitations on subcontracting then it must notify the contracting officer in writing. If the requirements of subsections (6)(b)(1) and (6)(d) become effective it is very likely that primes will be required to report multiple times. Such a process will add to the cost, time and administrative burden for both government and small businesses. This consequence is a disincentive to setting aside multiple award IDIQ contracts for small business concerns. 4. Section 125.6 is unclear; at a minimum we recommend that it be revised as shown. “…For an order set aside under a full and open contract, i.e. multiple award IDIQ contracts, or a full and open contract with reserve, the agency will use the period of performance for each order to determine compliance. This section does not apply in the case of reserves where the order is competed among both small and other-than-small businesses.
II. Section 125.6(a) (3) as written is incongruous with the way the government acquires many commercial items. Increasingly, agencies require complex solutions. Often those solutions are acquired through long-term IDIQ contracts. The SBA rules contemplate identification of one NAICS code representing the preponderance of the anticipated work under the contract. For reasons described above, it is difficult to identify one NAICS that is appropriate for complex requirements. The examples given in the proposed rule reflect requirements that are either primarily service or products. Often the acquisition is a solution where it is not easy to divide
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the items acquired so neatly. The example also reflects situations that are primarily for one service, when often an acquisition requires the acquisition of multiple services that should identify multiple NAICs rather than one as contemplated by current rules. SBA and the FAR council should collaborate on a set of rules that promote the use of small businesses without compromising the ability of agencies to structure acquisition platforms that provide innovative, mission critical solutions. III. We understand the importance of compliance in order that small businesses actually receive the benefits of the rule. However, in the attempt to protect small businesses, the proposed rule also seems to impose some difficult reporting requirements on those same entities. For example, section 125.6 prevents more than 50% of the subcontract price to be paid to firms not similarly situated at any tier. A small business prime will have to assure flow downs provision in contracts with its subs and their subs and corresponding reports back up the chain. The amount of subcontracting at all tiers must be managed to assure that the prime stays in compliance with the limitation and reports to the contracting officer when required. At a minimum, SBA should consider limiting the flow down requirements to first tier subcontractors. IV. The proposed rule states, “The SBA proposes to classify commercially readily available software as a product or item of supply for purposes of assigning a NAICS code and corresponding size standard. As such, a prime contract for this type of software would require compliance with the nonmanufacturer rule or be eligible for a waiver. Section 121.1203(d) authorizes SBA to grant individual waivers for COTS software.” This provision would have a negative impact on some small business IT resellers. If this rule is enacted, and solicitations are set-aside for SBs, IT resellers that focus on software would be unable to make offers because so much of the software sold is from very large businesses. Pursuing individual nonmanufacturer rule deviations would be time consuming for contracting officers. Because of the volume of software purchases made by agencies through small resellers, if SBA pursues this change, there should be a class deviation for commercially available software. The Coalition for Government Procurement appreciates the opportunity to comment on this important proposed rule. Sincerely,
Roger Waldron President
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