prime strategy - National 8(a) Association

Report
SUB-CONTRACTING:
A PRIME STRATEGY
NATIONAL 8(A) SUMMER CONFERENCE
ANCHORAGE, ALASKA, JUNE 18, 2014
RONETTA KEETER BRIGGS & LEIGH A. MCGEE
CO-FOUNDERS, OSIYO CONSULTING
Prime/Sub = Win/Win
Strategic Partners – Sitnasuak Native
Corporation’s GBS LLC, OSIYO Consulting, and
Native Nations Institute
Teaming Objective – Align a team with past
experience and multiple specialized skills to
capture an 8(a) set-aside contact
Contract Awarded – Department of Treasury’s
CDFI Fund awarded GBS LLC a contract for
eight Tribal consultations, research, and writing
an “Access to Capitol and Credit in Native
Communities” Study
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Participant Polling
Questions
How many prime contractors?
How many sub-contractors?
How many of you would consider subcontracting as a prime strategy?
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To Prime or Not to Prime –
That is the question?
WHAT'S YOUR BEST STRATEGY? WHAT SHOULD YOU CONSIDER?
It’s Your Strategic Choice!
Act As
Prime
The firm that
undertakes
complete contract
responsibility
May employ Subcontractors to carry
out specific work
Support
As Sub
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The firm engaged by
Prime to carry out a
specific piece of the
contract
Mandatory
requirement set by
federal government
to ensure small
business gets
government work
To Prime or Sub: 4 Big Questions?
What choice
aligns best with
our vision and
long-term
strategic plan?
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Is our company
familiar with all
aspects of
government
contracting?
Can our
company afford
the time and
cost of the
proposal
process?
Can our
company
manage
administrative
support and
compliance
concerns?
Do we want to?
Do we want to?
Do we want to?
SBA’s 2012 Scorecard on
Small Business Spending
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AGENCY
Total Eligible $
Small Business
Spend $
SB Goal Prime
%
SB Goal Sub
%
Gov-Wide
$404,180,126,266
$ 89,923,198,457
23.0 / 22.3
36.0 / 33.6
96.8
B
Defense
$274,991,402,519
$ 56,118,704,966
22.5 / 20.4
36.7 / 35.5
91.7
B
Energy
$ 24,566,940,887
$ 1,264,427,440
10.0 /
5.2
52.0 / 47.5
51.9
F
Education
$ 2,051,328,059
$
406,841,727
18.5 / 19.8
43.5 / 29.8
89.0
C
Commerce
$ 3,266,301,029
$ 1,204,849,919
39.0 / 36.9
30.0 / 46.7
104.8
A
Science
$
$
20.0 / 15.4
19.0 / 27.9
288,932,808
44,426,514
FY12
Score %
84.41
FY12
Grade
C
Government’s Subcontracting $ Goals
23% of federal contract dollars awarded to small businesses
5% of federal contract and subcontract dollars awarded to womenowned small businesses
5% of federal contract and subcontract dollars awarded to small
disadvantaged businesses
3% of federal contract and subcontract dollars awarded to service
disabled, veteran-owned small businesses
3% of federal contract and subcontract dollars awarded to HUBZone small
businesses
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Prime or Sub?
General Rules & Considerations
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The Prime Contract is a Federal Procurement Contract
The Subcontract is a Commercial Contract
There are very few mandatory flow down clauses
The government is very concerned about how primes manage subcontracts
The government can partially terminate a contract
No one reads the contract, but you better
Most prime/sub contracts and relationships fail because they do not properly plan,
and in particular, they fail to baseline the contract from the outset
Primes and subs must perform as totally integrated partners with exceptional execution
Risks in the Prime/Sub Affiliation
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
Division of Work - The larger the subcontractor’s share of work, the greater the risk
of affiliation concerns

Incumbency - SBA is more likely to question a subcontractor relationship if the
subcontractor was previously the incumbent for the contract work

Management - The larger the management role played by the subcontractor
and its employees, the greater the likelihood of affiliation issues

Proposal Terminology – If the terminology and content of the proposal suggest
that the subcontractor is an equal partner, or worse, the lead partner, repeated
references to the subcontractor can backfire

Relative Experience - When an inexperienced small prime teams with a large,
experienced subcontractor, SBA may decide that the prime could never have
been awarded the contract without the subcontractor’s experience
Source * Contract Management Article by Steven Kopeince
Required Federal Agency
Subcontracting Plans

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The Small Business Act requires the prime contractor to:
(1) make a “good faith effort” to acquire goods and services from the small businesses “used” in
the bid/proposal and “in the same amount and quantity”
(2) notify the contracting officer in writing if paying a reduced price to a subcontractor, or if
payment to a subcontractor is more than 90 days past due (for which the government has paid contractor)

Requires agencies to collect and report data on the extent to which
prime contractors meet the goals in their subcontracting plans

A prime’s failure to comply with a subcontracting plan may be
considered in the evaluation of past performance for future contracts
Why Sub-Contract as a Prime Strategy?
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Fewer administrative
obligations & less risk
Lower business
development costs
Ability to focus on
your core capability
and specialize
Gaining past
performance and
reputation of success
Finding a Prime Contractor
Top 10 Federal Contractors FY 2014 YTD
1. LOCKHEED MARTIN
$11,741,679,392
6. GENERAL DYNAMICS
$2,700,939,446
2. THE BOEING COMPANY
$6,067,839,786
7. MCKESSON CORPORATION
$2,521,942,237
3. RAYTHEON COMPANY
$3,669,029,992
8. BABCOCK & WILCOX CO
$2,194,804,627
4. UNITED TECHNOLOGIES
CORPORATION
$3,002,125,097
9. LOS ALAMOS NATIONAL
SECURITY LLC
$1,914,227,930
5. BECHTEL GROUP INC.
$2,789,433,157
10. UNITED LAUNCH ALLIANCE
L.L.C.
$1,835,927,952
Government
Agencies
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Business
Development
Organizations
Network
Marketing and
Relationships
Industry
Resources
The Internet
Major
Players
Marketing to the Prime Contractor
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Game Changers: Added Value
Entrance Tickets: Credentials

Quality Core Capabilities

We do it BETTER, CHEAPER, FASTER

Reputation & Past Performance

We have CAPACITY

Licenses & Professional
Certifications

We are ABLE: Reliable, Dependable,
Flexible, Can-doable, and valuable

Insurance & Worker's
Compensation Certificates


Reputable References &
Contacts
We are cost-saving, money-adding
PARTNERS. We bring future
opportunities, relationships, and
capabilities.
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Closing Comments and Questions
THANK YOU FOR SHARING YOURSELF AND TIME WITH US!
Innovative tools and methods
helping organizations
adapt, grow, and prosper.
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- Visioning & Strategic Planning
- Organizational Assessment
- Leadership Development
- Facilitation & Mediation
- Board Governance
Leigh A. McGee| 410-330-7484 | [email protected]
Roni K. Briggs| 972-720-9953 | [email protected]
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www.osiyo.biz
Sources
 15 U.S.C. §644(g)(1)
 Contract Management | September 2011 Article by Steven Koprince
 Congressional Research Service www.crs.gov
 http://www.sba.gov
 http://www.onvia.com/business-resources/find-prime-contractors-subcontracting
 The Federal Market Group Daniel M. Jacob www.fmg-ltd.com
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