Transcript Q2 environmental initiatives communication plan

Federal Contract
Compliance –
Commercial Items
February 10, 2011
Midwest SBLO Meeting
page
Introduction
Presented by
Ray Suennen
Governmental Contracts
Compliance Coordinator
Integrys Energy Services, Inc
[email protected]
page 1
Federal Regulations
This presentation is focused on compliance
with Federal contract requirements for
commercial items
and
subcontracting plan technical issues
FAR parts #s and clauses #s are identified for
reference purposes
page 2
Definitions
Commercial Item
FAR 2.101
1) Any item, other than real property, that is
of a type customarily used by the
general public or by non-governmental
entities for purposes other than
governmental purposes, and has been
sold, leased, or licensed to the general
public; or has been offered for sale, lease,
or license to the general public
page 3
Definitions
Commercial Item
2) Any item that has evolved from an item in # 1
through advances in technology or
performance ……
3) Any item in # 1 & 2 with commercially
available modifications or minor modifications
......
4) Any combinations of #s 1. 2 & 3 that are
available to the general public ……
page 4
Definitions
Commercial Item
5) Services such as installation, maintenance,
repair, training & others for support of an item
in #s 1-4 that the general public is provided…
6) Services competitively offered commercially
based on catalog or market prices …..
Examples include electricity, a welder, an
automobile,, drywall, a toothbrush, cabinets,
cabinet installation …….
page 5
Federal Regulations
Commercial Plan
A commercial plan is the preferred type
of subcontracting plan for contractors
furnishing commercial items.
FAR 52.219-9 (g)
page 6
Federal Regulations
Commercial Plan
- Covers the offeror’s fiscal year
- Applies to the entire production of
commercial items sold
- Includes the entire company or a portion
thereof (division, plant or product line)
19.701
page 7
Federal Regulations
Commercial Plan & Indirect Costs
- May include a proportionate share of
indirect costs
52.219-9(d)(1)
- Total value of projected subcontracts to
support the sales
52.219-9(d)(2)
Company wide plans include
all indirect costs
page 8
Federal Regulations
Commercial Plan
- Includes offeror’s planned subcontracting
for both commercial and Governmental
business
- One plan in effect at a time
- One Contracting Officer approves
52.219-9 (g)
page 9
Federal Regulations
Subcontracting Plan Requirements
Negotiated Acquisition
15.000
1) Is amount is expected to exceed
$ 650,000 for non-construction, or
$1.5 million for construction; and
2) Do subcontracting possibilities exist
The selected offeror must negotiate an
acceptable subcontracting plan with
Contracting Officer
19.702
page 10
Federal Regulations
Subcontracting Plan Requirements
Sealed Bid Acquisition
6.401 & 14.101
1) Is amount is expected to exceed
$ 650,000 for non-construction, or
$1.5 million for construction; and
2) Do subcontracting possibilities exist
The selected offeror must submit a
subcontracting plan to the Contracting Officer
19.702
page 11
Federal Regulations
Subcontracting Plan Exceptions
Not Required
1) From small business concerns
2) For personal service contracts
3) When performance entirely outside of
the US and its outlying areas
19.702
page 12
Federal Regulations
Commercial Plan Reports
- Subcontracting Plans are due 30 working days
before the end of fiscal year
19.704(d)
Once approved, submit to the non-primary
Contracting Officers
19.704(d)
- Summary Subcontracting Reports (SSR), due
30 days after the close of the reporting period
19.704(a)(10)
- Yr-End Supplementary Rprt - SDB due 90 days
after submitting Y/E SSR
52.219-9(L)(2)(iii)
page 13
Federal Regulations
Commercial Items
Certain laws are not applicable to or are
modified for subcontracts at any tier for
the acquisition of commercial items or
components
FAR 12.504
This is a significant factor in determining
the applicable regulations and reporting
requirements
page 14
Federal Regulations
Commercial Items
Two very important clauses
52.212-5
Contract Terms and Conditions
Required to Implement Statutes or
Executive Orders-Commercial
Items
Is required in contracts when the Government
purchases a commercial item from a Prime
Contractor
FAR 12.301(b)(4)
page 15
Federal Regulations
Commercial Items
Two very important clauses
52.244-6
Subcontracts for Commercial Items
Is required to be included in Federal contracts
with the Prime Contractor for non-commercial
items and applies to subcontracts at all tiers
(flow down clause)
FAR 44.403(a)
page 16
Federal Regulations
Commercial Items
“To the maximum extent practicable, the
Contractor shall incorporate, and require
its subcontractors at all tiers to incorporate
commercial items or nondevelopmental
items as components of items to be
supplied under this contract.”
FAR 52.244-6
page 17
Federal Regulations
Commercial Items
Why does the Government want to use
commercial items?
- should be less expensive
(avoid developmental costs)
- shorter time frame to obtain
(avoid the development time period)
- supply of product exists
(manufacturing facilities exist)
- market prices already exist (competitive)
page 18
Federal Regulations
Federal Compliance Requirements
There are two independent sources that
require compliance with the Federal
Government’s Contract Terms and
Conditions
1) Selling directly to the Federal Government
2) Selling to Federal Government
Contractors or Subcontractors
page 19
Federal Regulations
Federal Compliance Requirements
1) The Federal Government includes the
Federal Acquisition Regulations (FAR)
clauses in their contracts with the Prime
contractor
2) Your suppliers, who are Prime Contractors
(or subcontractors of Primes) include the
Federal Contract Requirements in their
Terms and Conditions in their subcontracts
with your company
page 20
Federal Regulations
Federal contracting involves
- Compliance with the FAR Terms & Conditions
FAR Clauses
Additional business requirements for
Socioeconomic Commitment
- Small Business Subcontracting
Program
Supplier Diversity Program
page 21
Federal Regulations
Federal contracting requires
- Adhering to specific requirements focused
on purchasing (Socioeconomic)
- Collecting additional data (certify size & type)
- Additional record keeping (status,dates,NAICS)
- Maintenance of records (current/accurate)
- Specific reporting (small bus & diverse supplier)
- Compliance reviews/audits
(Subcontracting Program)
page 22
Small Business Administration
Socioeconomic Program
The need to provide opportunities to
- Diverse Suppliers (Preferential Suppliers)
Disadvantaged
Women
Veterans & Service-Disabled Veterans
(those who have served and
sacrificed for our country)
Economically Deprived Areas
- All Small Businesses (“SB”)
page 23
Definition - Small Business
A Small Businesses (SB)
1) Is organized for a profit
Excludes
Non-profit organizations
Governmental agencies
2) Must have a place of business in the US
(an office or plant)
page 24
Definition - Small Business
A Small Business
3) Operates primarily within the US
or makes a significant contribution to
the US economy (pays US income
taxes / uses American products/labor)
FAR 19.001 “Concern”
Note - some foreign companies located in the
U.S. are a “Large Business” due to the overall
size of their parent company and subs
page 25
Definition - Small Business
A Small Business
4)
FAR 19.102(b)(1)
Does not exceed the size standard for its
industry. Size standards are determined by
NAICS code by each product or service
NAICS – North American Industry
Classification System code
It is possible to be a Small Business for
one NAICS code and a Large Business
for another NAICS code
page 26
Size Standards – NAICS Codes
Methods used to Determine Size of Business
1) Employees
Average number over last 12 months
2) Revenues
Average for last three years
3) Specific industries (many listed)
Electricity – 4 M mega watt hours
sold in prior year
19.102
page 27
Size Standards – NAICS Codes
To Determine the Size of a Business
Include employees/revenues/MWhs from
- All companies of common ownership
- Foreign affiliates
- Not-for-profit affiliates
- All companies of common interest
Joint ventures – 2 methods
Spouses business - FAR 19-101(2)
page 28
Size Standards – NAICS Codes
To Determine the Size of a Business
Common Ownership includes all affiliates
- Business in question
- All subsidiaries
- Parent company
- All sister companies
(must consider control – 19.101)
page 29
Size Standards – NAICS Codes
What is a Large Business?
Simply - everything that does not qualify as
a small business
- Government agencies
- Non-profit organizations
- Foreign companies (non-taxpayers)
- Businesses that exceed the Small
Business Size Standards
page 30
Definition - Small Business
Small Business Certifications
Contractors acting in good faith may rely on
written representations by their
subcontractors regarding their status as SB,
SDB, WOSB, VOSB, SDVOSB or HUBZone
Business concern
52.219-8(d)
The Year-End Supplemental Report for
Small Disadvantaged Business spend on
eSRS requires NAICS codes
page 31
Size Standards - NAICS Codes
To cross reference SIC to NAICS codes,
and to lookup NAICS codes use website http://www.naics.com/search.htm
A complete NAICS code listing is at –
http://www.sba.gov/contractingopportunities
/officials/size/table/index.html
Then select PDF format
page 32
Definitions
FAR Clauses
- The Terms and Conditions of the Federal
Government as written in the Federal
Acquisition Regulations (FAR) which
implement the purchasing laws and
executive orders of the U.S. Government
(Code of Federal Regulations “CFR”)
- FAR Clauses all start with “52.2”
- Includes both Flow Down Clauses and
clauses that do not flow down
page 33
Definitions
FAR Flow Down Clauses
Terms and Conditions that originate when a
business has a contract with the Federal
Government (called a Prime Contractor)
The Flow Down T&C are to be included in the
Prime Contractor’s subcontracts to its
suppliers (called First-Tier subcontractors)
Most Flow Down T&C are to be included in
First-Tier subcontracts to their suppliers
(Lower Tier subcontractors)
page 34
Definitions
Incorporate by Reference
52.103
When a FAR Clause is included in the Terms and
Conditions only by identifying its FAR number,
title and date, it has the same meaning and effect
as if it was listed in full text within the document
e.g. 52.222-26 Equal Opportunity (Mar 2007)
Used in Federal contracts and may be used
with Flow Down Clauses in subcontracts
page 35
Definitions
Contract
2.101
A mutually binding legal relationship
obligating a seller to furnish the supplies or
services … and the buyer to pay for them
Includes, but is not limited to, bilateral
instruments and purchase orders which
become effective by written acceptance or
performance
page 36
Definitions
Contracting
2.101
“Purchasing, renting, leasing, or otherwise
obtaining supplies and services from nonfederal sources”
Relate these definitions to taxes
page 37
Definitions
Subcontract
“Any contract entered into by a subcontractor
to furnish supplies or services for performance
of a prime contract or a subcontract”
52.203-13(a)
Any agreement … entered into … for supplies
or services required for the performance of the
contract or subcontract
52.219-9(b)
page 38
Definitions
Subcontract (Direct Costs)
“Also includes a transfer of commercial items
between divisions, subsidiaries, or affiliates
of a contractor or a subcontractor”
15.401
“Includes a transfer of commercial items
between divisions, subsidiaries, or affiliates
of the contractor or subcontractor at any tier”
52.244-6
page 39
Definitions
Subcontracting or Spend
All purchases/acquisitions/expenditures/
commitments for operations & capital
Acquisitions from all sources, unless
specifically excluded
Report Spend (not revenues or net income)
to the Agency that you sold to (not IRS)
page 40
Definitions
Subcontracting/Spend – excluded items
- Payroll - includes deferred comp-401K
employee/employer relationship 52.219-9(a)
- Taxes - all types – government collects, do not
enter into a subcontract to pay taxes and is
not for supplies or services
52.219-9(a)
- Inter-company charges, shared services and
allocations from affiliated companies
(indirect costs)
52.219-9(L)
page 41
Definitions
Spend/Subcontracting – excluded items
- Depreciations/amortization – not current
period subcontracts - prior expenditures,
not “entered into in period”
52.219-9(a)
- Offsets to revenues - rebates, refunds,
uncollectable accounts/bad debts
does not involve the purchasing of supplies
or services for the performance of the
subcontract
52.219-9(a)
- Non-U.S. operations
page 42
Federal Regulations
Commercial Items – Flow Down Clauses
FAR 52.212-5 (e)(1) and 52.244-6 (c)(1)
specifically identify the only FAR Clauses
that are required to be flowed down to
subcontractors
Even some of the identified flow down
clauses are exempted based upon other
FAR Clauses
page 43
Terms & Conditions – FAR Flow Down Clauses
FAR FLOW DOWN CLAUSES
To comply with the terms and conditions of the
Federal requirements, a firm can posted the
applicable FAR Flow Down Clauses on their
website.
The link must contains the FAR Clause #, the
FAR Clause Title, and the effective date.
The address of the Federal Government’s
website should also posted, which is where
the FAR Clauses in full text are located
page 44
Terms & Conditions – FAR Flow Down Clauses
FAR Flow Down Clauses Verbiage
All subcontracts and solicitations for goods
and services for the Contractor (or
subcontractor) and all of its subsidiaries
must contain reference verbiage to the FAR
Flow Down Clauses
Federal Acquisition Regulations (“FAR”);
The FAR Clauses listed at
http://www.companyname.com/supplier.aspx
are incorporated by reference, as applicable.
page 45
Terms & Conditions – FAR Flow Down Clauses
FAR Clauses in Full Text
The FAR Clauses in full text are located on the
Federal Government’s website at
https://www.acquisition.gov/Far/loadmainre.html
The FAR Flow Down Clauses per our
commercial contracts are as follows:
page 46
Terms & Conditions – FAR Flow Down Clauses
FAR Flow Down Clause Numbers & Titles
52.222-21
52.222-26
52.222-35
52.222-36
52.222-50
52.203-13
52.219-8
52.204-10
page 47
Prohibition of Segregation of Facilities (Feb 1999)
Equal Employment Opportunity (May 2007)
Equal Opportunity for Special Disabled Veterans,
Veterans of the Vietnam Era, and Other Eligible
Veterans (Sep 2006)
Affirmative Action for Workers with Disabilities
Combating Trafficking in Persons (Feb 2009)
Code of Business Ethics and Conduct (Apr 2010)
Utilization of Small Business Concerns (May 2004)
Reporting Executive Compensation and First-Tier
Subcontract Awards (Jul 2010)
Terms & Conditions – FAR Flow Down Clauses
FAR Clause Responsibilities
52.222-21
52.222-26
52.222-35
52.222-36
52.222-50
page 48
(A) Employment law, applies if have 15 or
more employees, applies to all subcontracts
(A)
Applies when subcontract is $100,000 or
more, promotes fair and equal treatment of
veterans for employment opportunities
(A)
(Jun 1998)
Ethical law relating to buying and selling of
people, commercial sex acts and using
forced labor, only violations reported
Terms & Conditions – FAR Flow Down Clauses
FAR Clause Responsibilities
page 49
52.203-13
Applies to subcontracts over $5 million,
promotes ethical conduct within business, a
written ethical policy, distribute the policy,
and ethical training, only violations reported
52.219-8
Applies to subcontracts over $150,000,
promotes practices for purchasing from
small businesses, and small diverse
businesses, no reporting
Terms & Conditions – FAR Flow Down Clauses
FAR Clause Responsibilities
52.204-10
Part 1
Part 2
page 50
Applies to subcontracts of $25,000 or more,
flows down only TEGE & subs to subcontractor,
TEGE reports, information will be made public
Provide general information on subcontracts and
subcontractors, includes amount of subcontract
Provide names & compensation of 5 highest paid
executives, need to document exemption reason
Most companies are exempt, since less than 80%
of revenue is from Federal sources, those not
exempt, will be providing to many companies
Terms & Conditions – FAR Flow Down Clauses
FAR Clause Responsibilities
Some suppliers may not like these, do we really
need to include these FAR Clauses?
FAR 52.222-26 states “The Contractor shall include the terms and
conditions of this clause in every subcontract”…
FAR 2.101 defines “shall”
Shall means the imperative.
(absolutely necessary)
page 51
Terms & Conditions – FAR Flow Down Clauses
FAR Clause Responsibilities
If a supplier needs assistance with locating the
FAR clauses in full text or would like to
generally discuss the clauses or why they are
required, assistance may be appropriate
Providing general information may be helpful,
but guidance or interpreting what the clauses
mean in relationship to their company is the
supplier’s responsible.
page 52
Federal Regulations
Commercial Items
Exempt required flow down clauses can include
52.222-54 E-verify
COTS exemption
22.1803(c)(1)
52.226-6 Promoting Excess Food
Donations
52.226-6(c)
Applies only to subcontractors “who will
perform, under this contract, the provision,
service, or sale of food in the United States”
page 53
Federal Regulations
Commercial Items
FAR 12.504
Laws not applicable or modified;
Walsh-Healey Act
Examination of Records of Contractor
Drug-Free Workplace Act
Transportation in American Vessels
Fly American
Cost Accounting Standards
page 54
Socioeconomic Program – Federal Definition
Socioeconomic Programs
Purchases from (Spend to)
- Diverse Suppliers (preferential suppliers
must be Small Businesses)
- Other Small Businesses
page 55
Socioeconomic Program – Federal Definitions
Other Small Business (non-diverse) Criteria
1) Must meet the NAICS size standard
(must be a small business)
2) Owned by at least 51% by US citizen(s)
3) Daily management and controlled is by
US citizen(s)
4) Owned by any ethnicity or sex
e.g. – could be a 30 year old Caucasian male
page 56
Socioeconomic Program – Federal Definitions
Diverse Supplier (Preferential Suppliers)
A)
Are small businesses owned by
Categories
Women
Disadvantaged Individuals
Veterans
Service-Disabled Veterans
page 57
Acronym
WOS
SDB
VOS
SDVOS
Socioeconomic Program – Federal Definitions
Diverse Suppliers
1- Ownership of the business must be at least
51 percent owned by the specific category.
2- Daily operations must be controlled and
managed by the specific category
3- Category owners must be a US citizen
e.g. - A women-owned business must be at
least 51% owned and controlled by one
or more women.
page 58
Socioeconomic Program – Federal Definitions
Diverse Suppliers
Disadvantaged individuals must be socially and
economically disadvantaged, included are
- Minorities (except the wealthy)
- Disabled individuals (if qualified)
- Any other individual if qualified, no matter
the ethnicity or sex
- Indian Tribes
- Alaskan Native Corporation
page 59
Socioeconomic Program – Federal Definitions
Diverse Suppliers - also includes
B)
HUBZone Business (HUBZ)
(Historically Under-utilized Business Zone)
1) Located in an economically
disadvantaged area
2) At least 35% of its employees live in
an economically disadvantaged area
3) Is controlled and at least 51% owned
by a US citizen
page 60
Socioeconomic Program – Federal Definitions
HUBZone Business
Is certified by the Small Business
Administration (SBA)
Is a Federal Government certification
HUB Business
Is certified by a specific state (TX & NC)
They are not the same. A HUB Business
does not meet the Federal standards
page 61
Socioeconomic Program Goals
Federal Goals to Contractors
Diverse Supplier Type
Women-owned
Disadvantaged
Service-Disabled Veteran
Hub Zone
Total Diverse Spend
% of Spend
5%
5%
3%
3%
16%
Total Spend to Small Businesses
(Diverse & Non-diverse)
page 62
23%
Socioeconomic Program Goals
Federal Goals to Contractors
Not specifically identified
% of Spend
7%
Categories for additional Spend
- Veteran-owned (VOSB)
3%++
- WOSB, SDB, SDVOSB & HUBZ
- Other Small Businesses (non-Diverse)
page 63
Subcontracting Program Reporting
Annual Reporting Requirements
- Small Business Subcontracting Plan
(projections/budget – calendar year)
- Small Business Subcontracting Report
- Year-End Supplemental Report for Small
Disadvantaged Businesses
(actual results based on Government’s
fiscal year – October 1 - September 30)
The reports summarize the Subcontracting Program
page 64
Subcontracting Program Reporting
1) Scope of Reports
- Either by the entire company or a portion
thereof (division, plant or product line)
FAR 19.701
- Applies to the entire production of
commercial items sold FAR 19.701
- Identifies Spend of the
Socioeconomic Program
page 65
Subcontracting Program Reporting
2) Company Goals
Subcontract award data reported by prime
Contractors and subcontractors shall be limited to
awards made to their immediate next-tier
subcontractors.
Credit cannot be taken for awards made to lower
tier subcontractors, unless the Contractor or
subcontractor has been designated to receive a
small business or small disadvantaged business
credit from an ANC or Indian tribe
FAR 52.219-9 (L)
page 66
Subcontracting Program Reporting
2) Company Goals
Purchases from a corporation, company, or
subdivision that is an affiliate of the prime
Contractor or subcontractor are not
included in these reports
52.219-9 (L)
(exception – pass through purchases)
Indirect costs, such as general &
administrative, are proportionately
included in a commercial plan
page 67
Subcontracting Program Reporting
2) Company Goals Example
$ mil
Total Small Business 150
Large Business
1,650
Total Company
1,800
. % . Fed%
8.3 23.0
91.7
100.0
Goals are stated in dollar amounts and
percents (percents are key)
Small Business includes Diverse Spend
page 68
Subcontracting Plan Reporting
3) Goals for Diverse Spend
Women
Disadvantaged
Service-Disabled Vet
Veterans
HUBZone
Totals
$M
27
30
4
10
9
.%.
1.5
1.7
0.2
0.5
0.5
Fed %
5.00
5.00
3.00
0.00
3.00
80
4.4
16.00
Note - Planned goals are less than Federal preferences
page 69
Subcontracting Plan Reporting
Goals for Diverse Spend
.$ Mil
Total Small Business
150
Total Diverse Suppliers 80++
Non-Diverse Small
Business Spend
$ 75 ??
actual
.%.
.%
8.3
4.4
53%
4.2
50%
++ Some Diverse Spend may be in more than one
category and may be counted multiple times
page 70
Subcontracting Plan Reporting
Diverse Spending Multiple Credit Reporting
Purchases from a Diverse Supplier that
qualifies in multiple diverse categories results
in being able to report the actual spend in
each of the qualifying diverse categories.
Spending $100 with ABC Company entitles the
contractor to take a $100 credit in each
category that ABC Company is certified in.
page 71
Subcontracting Plan Reporting
Diverse Spending Multiple Credit Reporting
ABC is a certified women, service disabled,
veteran owned company, the reportable spend is
Women
Service-disabled veteran
Veteran
Total Goal Credits
Actual Spend
page 72
$100
$100
$100
$300
$100
Subcontracting Plan Reporting
Diverse Spending Multiple Credit Reporting
FAR does not directly state the multiple credit
process, but requires the use of the eSRS
system. In the goals section (2c) on the
eSRS system is the following –
Socioeconomic Categories: Each of these items is
a subcategory of “Small Business Concerns” and
may not add to match the total in “Small Business
Concern” due to the following: In some cases the
same dollars may be reported in more than one block.
page 73
Subcontracting Plan Reporting
4) Subcontracting Procedures
Description of policies and procedures that
will be used to direct and support the
achievement of the Goals and how they
comply with the Federal Government’s
Acquisition Policy for small businesses
Includes outreach, notification, training,
purchasing, documentation & reporting
page 74
Subcontracting Plan Reporting
Federal Government’s Acquisition Policy
To provide 19.201
maximum practicable opportunities
in its acquisitions to
small businesses
veteran- owned small businesses
service-disabled veteran-owned SB
HUBZone small businesses
small disadvantaged businesses
women-owned small businesses
page 75
Federal Contracting
Contract Award Criteria
Weight
A) Company responsibility/technicals
4
B) Past performance
5
Includes Socioeconomic Program
1
(Must meet technical criteria of #A
& B in order to be considered for pricing,
evaluation criteria may be 50%)
C) Price
10
(Evaluation criteria may be 50%)
page 76
Summary
FAR Clauses and Socioeconomic Program are
- Terms & Conditions
- of the our sales contracts
- flowed down from our suppliers
- To be incorporated into our purchasing
processes
- Promoted through a Supplier Diversity
Program
page 77
Summary
Socioeconomic programs are focused on
1) supporting all small businesses
2) supporting small businesses with
social and/or economic barriers
(Supplier Diversity)
page 78
Summary
The Federal Contracting Process
- Contracts are on the government’s forms
- The government made most of the rules
- The government oversees the rules
- The government enforces the rules
- We have agreed to comply with their rules
page 79
Summary
What are your
questions
and
comments?
page 80