Ensuring Small Businesses Representation: Enforce the Rules

The issue of subcontracts management is a badly needed topic that has gotten little attention recently, either through proposed legislation, or anywhere else. I attended the Acquisition Excellence 2012 Conference a few weeks ago, jointly sponsored by the American Council for Technology (ACT) – Industry Advisory Council (IAC) and the General Services Administration, discussing with several procurement officials the need for subcontracting accountability. Mainly, ensuring that percent and dollar amounts in subcontracting plans were being adhered to and measured, in regards to performance. All the officials discussed what should happen, but all also acknowledged that not enough was being done.

This is perhaps one of the most important ways that small businesses can be represented in federal contracts. Most contracts have performance reporting requirements, but very rarely do they include a holistic approach to the contract. How is the prime performing on adherence to the subcontracting plan? The importance is usually on lines of code and spend rates, even going so far to manage firm fixed priced contracts like time and materials. An effective tree-killing exercise, but not a very productive one.
Subcontractors have little options when needing to address grievances against large firms. Some small businesses have had contracts terminated, positions taken, or simply not having promises made to them kept.
Procurement officials do not want to get involved, and small businesses have recently taken to the media and the courts for relief.
Performance on a contract should also entail integrity and honesty in dealing with subcontractors in regards to past performance, as the government does itself no favors in dealing with bad actors that don’t adhere to promises and contractual requirements in subcontract execution.
The continued focus on small business is certainly a positive, but the holistic approach and institutional issues endemic to small business contract failures need to be addressed.
Government can achieve its small business goals, no question. It is the desire to change, along with a concerted effort by leadership, which is required to succeed.

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Angel Delgado

Penalize Prime for non compliance with their subcontracting plan (disincentives, non-extension of options, etc) and have the Prime penalize their subs for less than satisfactory performance. Pretty simple!

Jaime Gracia

It should be that simple, but it is not being done. CORs and COs are not being held accountable for ensuring compliance, and PMs are not being held accountable for gathering the data as part of performance reviews and reports.

Peter G. Tuttle

All kinds of games go on behind the scenes to deny small business opportunities and to skew requirements in favor of preferred vendors. One favored tactic is to push government purchasing responsibility off on a prime whose “commercial” rules of engagement are very different in regards to contracting than those of Federal buyers. Jaime is right – sometimes small business feels slighted to the point where they do go to Court – Read US Court of Appeals, Federal Circuit, Case No. 2007-5145 as just one example of a precedent setting case where the government got caught. Cheers.

Jaime Gracia

It is very frustrating when procurement officials state at these types of conferences and through responses to these issues that small businesses are paranoid, and this type of “gaming” does not occur. These are usually the same officials that have spent 30 years in government with little to no industry experience.

These officials get the scales uncovered when they go into industry to see how things really are. Both sides need better communication, but through education programs and initiatves to show how industry functions. DAU is developing some of these courses, so we can only hope they are productive and illuminative.

Case in point, here is a comment from the Federal IT Acquisition Summit, held April 2011:

One of the most satisfying panels for the SEWP IV staff was the industry panel discussing the contract proposal process from the contractors’ perspective. Before the event, people had warned that an industry panel would likely draw little interest from government employees. But the panelists provided valuable insight and generated lively interaction with the audience as contractors explained why they might be confused by solicitation language or hesitate to respond to certain requests for proposals. “The feedback regarding the panel was extremely positive,” Woytek said. “People said, ‘We really learned a lot from industry.’ ”

The resistance is step one, then the education can start. The ongoing “MythBusters” campaign is the tip of the spear, with OFPP having released their newest memo May 7th.

Angel Delgado

Peter’s example deals with the government “passing the buck” to select a software product to their already performing contractor, where they were supposed to do the procurement and, as stated in the report, allow the contractor to do their “inherently governmental function”. I believe it should be more important for Small Business to connect with other Small Business (or medium size) to enhance their capabilities and be able to provide a good “product”; however, some SB’s get “greedy” and do not want to share their “loot” and others are looking for “handouts”, when some Government officials (Sr. Mgrs) make promises and commitments they cannot fulfill. Just my two cents..

Jaime Gracia

No doubt small businesses can stand a dose of education themselves, which is part of my service delivery for my consulting business. Like an esteemed colleague of mine likes to say, “some companies are run by knuckleheads.”

Greed is pervasive in this business, and like you point out Angel, it astonishes me when small businesses act rapaciously, especially against other small businesses.

Nonetheless, many small businesses try to get their foot in the door, and are tuned away by the acts I point out. If a small business relies on the words of a government official then expects a handout, that is on them. That is part of the education process.