A Team By Any Other Name Is A …Subcontract?

On September 9, 2014, the GSA IG released its final report (A130009): Audit of Contractor Team Arrangement Use. Based on the review of multiple MACs and BPAs awarded between 2011-2013, the IG found “teaming arrangement data provided was incomplete, inaccurate and unverifiable.” Imagine that.  GSA is pursuing formal rulemaking with new regs expected by April 2016.  Interim guidance already posted clarifies the distinction between a team and a subcontract and provides direction to contracting officers utilizing an FPDS not yet able to handle multiple vendors per order.  Before getting into what it all means for contractors, let’s clarify when a team is not a team – it’s a subcontract.  GSA lays it all out at:

Contractor Team Arrangement (CTA) Prime Contractor / Subcontractor Arrangement
Each team member must have a GSA Schedule contract. Only the prime contractor must have a GSA Schedule contract.
Each team member is responsible for duties addressed in the CTA document. The prime contractor cannot delegate responsibility for performance to subcontractors.
Each team member has privity of contract with the government and can interact directly with the government. Only the prime contractor has privity of contract with the government and can interact with the government.  The prime contractor is responsible for its subcontracting activities. (Ordering activities are encouraged to specify in the Request for Quotation (RFQ) that the use of subcontractors requires prior approval by the ordering activities.)
The ordering activity is invoiced at each team member’s unit prices or hourly rates as agreed in the task or delivery order or GSA Schedule BPA. The ordering activity is invoiced in accordance with the prime contractor’s GSA Schedule contract, including any applicable price reductions.
Total solutions, otherwise impossible under individual GSA Schedule contracts, can be put together quickly and easily. The prime contractor is limited to the supplies and/or services awarded on its GSA Schedule contract.

I’ve been involved in forming hundreds of teams – we called them teams – and 99% of them didn’t strictly meet GSA’s “team” definition. I suspect there are very few true teams out there in the environmental services market outside of formal joint ventures. For the purposes of this blog, I’ll use the term CTA to mean a true team and subcontract to mean a prime/subcontract arrangement. Back to the real question: What does all this mean for environmental and engineering firms? In the case of a CTA, in the fullness of time I expect:

  • these rules will apply to ID/IQs as well as GSA contracts
  • a copy of the CTA will become a required submittal at the RFQ stage
  • teams will be asked to submit copies of CTA’s for existing contracts and task orders
  • all team members will undergo excluded parties checks
  • each teammate will be assigned a data identifier within AABS and will be treated as a prime contractor
  • performance ratings will accrue only to the firm doing the work
  • billing and payment will increasingly be made directly between the ordering agency and each team member
  • there will be more procurements like OASIS that exclude CTAs at the schedule level
  • resistance to markups on teammates and subcontractors is going to increase.  Count on it.
  • FPDS will be modified to allow tracking multiple contractors per order

What I wish small businesses all knew: When someone says you must have a GSA schedule contract to “team” with a GSA prime contractor…that’s true, BUT you can still subcontract to a GSA schedule holder without a schedule contract of your own and the hurdles are much lower. It’s true for prime contracts outside the GSA system as well.  Philosophically, a prime can subcontract to whomever it wants (in compliance with the terms of its subcontracting plan, the OK of the CO and excluding some set-aside scenarios); it’s the prime who is on the hook. Of course there are downsides to being a subcontractor.  It is good to know there are existing regulations that provide subcontractors with some recourse in two circumstances:  1) if they don’t get paid, and 2) if their qualifications were considered during the source selection process but they never received work under the contract.  If you find yourself in either circumstance and you are hitting a brick wall with your prime, you can and should contact the OCO or CO directly. What’s the procedure for a prime to start utilizing a subcontractor? If the prime is trying to meet subcontracting plan goals or to fill a technical gap, the CO/OCO will usually approve the request, even if the subcontractor in question wasn’t named in the proposal.

  • The SBA has a Subcontracting Assistance Program manual online if you want to dig into the details (or glean a few insights into developing the kind of subcontracting plan that will make source selection committees, and eventually auditors, really happy).
  • To talk all this through with someone, call your SBA Commercial Market Representative (CMR).  CMRs specifically counsel small businesses on how to obtain subcontracts, conduct matchmaking activities to facilitate subcontracting to small business, and provide orientation and training on the Subcontracting Assistance Program for both large and small businesses.  Most importantly, you can reach them by phone.  My CMR for Virginia, Anita Perkins, returns phone messages and has the patience of a saint. The Government Contracting Field Staff Directory lists names and numbers for CMRs nationwide.
  • You can also take advantage of online training.  On October 27, 2014, GSA is hosting a free webinar: GSA Contracting for Vendors Without a GSA Schedule.  This webinar gets repeated every few months.  To sign up, click the webinar link.  (Note: The date on the website still says October 20th, but the webinar has been rescheduled for the 27th).

Bottom Line – What does this mean for small businesses trying to get federal contract work?  It means subcontracting is the fastest and least costly way to break into or increase your base of federal work.  Find a prime contractor that either needs your technical skills or needs to meet its goaling obligations (or both) and show them how you can help.  If they agree, the paperwork is doable and it is certainly easier than the whole proposal process.  How do you find that prime that needs you?  Stay tuned.  Follow this blog and I’ll be covering some tools to identify a likely prime and some strategies for what to do then. If you wish, follow me on Twitter at @FedEnvBD  Thank you!

CFE is a small, woman-owned business providing federal business development support to companies in the environmental, engineering, energy and water industries.

SBA IG to HUBZones Firms: Double-Check Your DSBS Profile

The SBA IG has released a report highlighting weaknesses in the data systems used to track government progress towards small business contracting goals (Sept 24, Report 14 18 Agencies Are Overstating Small Disadvantaged Business and HUBZone ).

Hidden among those findings is some practical information that is important for small businesses to know right now. Bottom line: it is the responsibility of each individual small business to make sure its profile in the Dynamic Small Business Search (DSBS) system is visible and up-to-date. That process is a little more involved than it sounds, partly due to the aforementioned system problems.

The IG report summarized what happens if a small business, particularly a HUBZone business, doesn’t show up in the Dynamic Small Business Search system:

“When a firm enters its profile into SAM to become eligible to receive federal contracts, SAM refers small businesses to DSBS to provide a profile in order to market themselves as small businesses. The SBA also instructs small businesses to utilize DSBS in order to market themselves because agency contracting officers use DSBS to conduct market research prior to awarding small business contracts. In addition, procuring agencies’ contracting officers are required to confirm HUBZone certification through DSBS prior to awarding HUBZone contracts, and can use this system as a check prior to awarding 8(a) contracts. However, we found that DSBS is not working as intended. As a result, certain small businesses are not getting the visibility in DSBS that is needed for contracting officers to make decisions, particularly regarding HUBZone firms and may impact federal agencies in meeting their HUBZone procurement goals. Furthermore, individual HUBZone firms that successfully navigate the certification process will suffer the most because if the firm is not visible to agency contracting officers, it decreases its chance to obtain HUBZone contracts.”

So, while SBA is fixing its bigger problems, every small business out there – and particularly HUBZone firms – should take a few minutes to make sure their System for Award Management (SAM), the official U.S. Government system that consolidates the capabilities of CCR/FedReg, ORCA, and EPLS, has been updated within the past twelve months and that their updated DSBS profile is visible and accurate.

1) Make sure you have entered your data into SAM and that DSBS has created an accurate and visible profile for your firm.

2) Whenever you update your SAM make sure DSBS accurately recognizes the updates and your profile is still visible (and updated) on the DSBS system. DSBS has been having trouble recognizing SAM updates and as a result sometimes hides recently updated profiles. Double-check the DSBS after every SAM update.

SBA publishes a SAM Users Guide.  The Federal Service Desk is a great resource as well.  They have a telephone support line (real humans!) as well as an option to submit questions via a web form. I’ve never had a particularly long wait time in the telephone queue and I have yet to reach someone who didn’t know what they were doing.  You may contact the Federal Service Desk for help with:

•System for Award Management (SAM)
•Catalog of Federal Domestic Assistance (CFDA)
•Electronic Subcontracting Reporting System (eSRS)
•Federal Business Opportunities (FBO)
•Federal Procurement Data System (FPDS-NG)
•FFATA Subaward Reporting System (FSRS)

3) Make sure your information is updated annually. If you don’t update your SAM profile annually it expires. Once your SAM profile expires, DSBS no longer considers your business to be active and, guess what, your DSBS profile disappears.

4) Don’t rely on Pro-Net to do your updates. Pro-Net doesn’t create an audit trail and SBA doesn’t consider it a viable solution to the problem. Use SAM.

DSBS is searchable by the public and has been called the government yellow pages. See you in the system!

CFE is a WOSB providing federal business development support for environmental, engineering, energy and water firms.