NIH POLICY MANUAL

1. Explanation of Material Transmitted: This chapter provides guidance to Contracting Officers/Contract Specialists (CO/CS) pertaining to small business and small disadvantaged business subcontracting plan review procedures and monitoring.

2. Filing Instructions:

3. Distribution: NIH Manual Mailing Keys F-401 and F-407

PLEASE NOTE: For information on:

• Content of this chapter, contact the issuing office listed above.
• On-line information, enter this URL: http://www1.od.nih.gov/oma/manualchapters/
• To sign up for e-mail notification of future changes, please go to the NIH Manual Chapters LISTSERV Web page.

This manual chapter provides general guidance to Contracting Officers/Contract Specialists (CO/CS) pertaining to small business and small disadvantaged business subcontracting plan review procedures and monitoring.  With the exception of the National Institute of Environmental Health Services (NIEHS) and the National Cancer Institute (NCI), which have their own SADBUS, all subcontracting plans for contract actions determined to be the responsibility of the decentralized and centralized NIH Station Support and R&D contracting organizations will be reviewed and monitored by the NIH Small and Disadvantaged Business Utilization Specialist (SADBUS), located in the Office of Contracts and Grants Management (OCGM), OA.

Section 211 of the 1978 Amendments to the Small Business Act (P.L. 95-507) requires that all prime contractors, except small businesses, and (1) contracts which are personal in nature and (2) contracts which will be performed entirely outside any State, territory or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico of $1,000,000 or more for construction, and $500,000 for other contracts, submit, before award, a plan for awarding subcontracts to small and disadvantaged businesses.  Any contract with a subcontracting plan must submit revised goals with modifications.

A subcontracting plan is required when it is anticipated that there will be subcontracting opportunities under the prime contract.  Public Law 95-507 places the responsibility for evaluating and monitoring the subcontracting plan with the CO. Section 304 of the Business Opportunity Development Reform Act of 1988 (P.L. 100-656) requires the payment of liquidated damages by a contractor when the CO's findings indicate that the prime contractor has failed to make a good faith effort to comply with its subcontracting plan.

The Government requires subcontracting plans during the acquisition process to advance socio-economic policies and objectives.  Procedures established are in accordance with the enactment of the Business Opportunity Development Act of 1988 (P.L. 100-656) amended Section 8(d)(4) of the Small Business Act (15 U.S.C. 637(d)(4).  The Federal Acquisition Regulations (FAR), Part 19, subpart 19.7 describes the policy and procedures for Subcontracting with Small Business and Small Disadvantaged Business (SB/SDB) concerns.   Also, the Department of Health and Human Services (HHS) provides additional guidance in the Department of Health and Human Services Acquisition Regulations (HHSAR) subpart 319.7, Subcontracting with Small Business and Small Disadvantaged Business Concerns.

D. References:

1. FAR Part 19, Subpart 19.7, Subcontracting with Small Business and Small Disadvantaged Business Concerns provides policies and procedures for subcontracting with SBs and SDBs.

2. Health and Human Services Acquisition Regulation (HHSAR) Subpart 319.7, Subcontracting with Small Business and Small Disadvantaged Business Concerns, provides the HHS'policies and procedures for subcontracting with SBs and SDBs.

3. Public Law 95-507, incorporated into the Small Business Act.  It is the policy of the United States that SBs and SDBs have the opportunity to participate in the performance of contracts awarded by Federal agencies.

4. Office of Federal Procurement Policy (OFPP), Policy Letter 80-1, Subcontracting:   Agency Coordination with the SBA Procurement Center Representative (PCR), facilitates the implementation of Agency coordination with the SBA/PCR with respect to subcontracting matters.  Provides for SBA/PCR to review solicitations that meet the subcontracting threshold prior to release of the solicitation to the public.

5. Office of Federal Procurement Policy (OFPP), Policy Letter 80-2, Regulatory Guidance on Section 211 of Public Law 95-507, directs the inclusion of the Utilization of SB and SDB concerns clause, when applicable.

6. Office of Federal Procurement Policy (OFPP), Policy Letter 80-2. Supplement No. 1, Regulatory Guidance on Section 211 of Public Law 95-507, states that a modification to a contract over $500,000 ($1,000,000 for construction) already containing a plan would   not  necessitate submission of a new subcontracting plan.

Subcontracting plan review procedures and monitoring are:

1. For all decentralized and centralized contracting offices, except NIEHS and NCI, the CO/CS, after negotiating a subcontracting plan he/she considers acceptable, shall forward a copy of the contractor's Small Business and Small Disadvantaged Business Model Subcontracting Plan (Appendix 3) and a completed Subcontracting Plan Review Form (Appendix 1), to the NIH SADBUS for review.

The NCI's SADBUS will perform these reviews for NCI actions and the NIEHS' SADBUS will perform these reviews for all NIEHS contract actions. Appendix 1, NIH Subcontracting Plan Review Form, is suggested for use in notification to the SADBUS and SBA/PCR.

On the other hand, if the CO determines that a subcontracting plan is not required then a waiver must be approved at a level above the CO and concurred with by the Agency SADBUS and the resident SBA/PCR. If a waiver of the subcontracting plan is appropriate, the file must be approved and documented in accordance with FAR 19.705-2.  See Appendix 2 for a copy of the sample memorandum.

The appropriate SADBUS and the SBA/PCR will review the subcontracting plan and provide the CO/CS with written advisory comments on the subcontract plan review form no later than five working days after receipt of the plan and in conjunction with the official SBA site visit of that week.  If the subcontracting plan is found to be deficient by the SADBUS and SBA/PCR, the CO/CS should discuss the advisory comments with the prime contractor, revise the subcontracting plan, and resubmit the plan and review form, indicating that the plan has been "revised" to the SADBUS. The CO will make the final determination concerning the acceptability of the subcontracting plan. A copy of the plan and review form should be included, when required, in Board of Award actions.  A copy of the final plan, and contract face page with a memorandum (Appendix 4) should be forwarded to the appropriate SADBUS who will forward copies of the plan to the HHS Office of Small and Disadvantaged Business Utilization, the Regional Small Business Administration Office in the area where the contractor is located and the SBA/PCR.   If final subcontracting plans have not been received by the SADBUS 30 days after award of the contract, it will be assumed by the SADBUS that the CO/CS has forwarded copies of the plan to the HHS and the SBA.

2. Reporting:

The CO/CS will inform prime contractors that they are required to report progress on the SF-294, "Subcontracting Report for Individual Contracts," (Appendix 5), April 30 and October 30 of each year.  The SF-294 is to be sent to the CO.  The contractors are also required to report results upon completion of the contract.

The SF-295, "Summary Subcontracting Report," (Appendix 6), should be submitted annually by the prime contractor 30 days after the close of the Government's fiscal year as indicated by the instructions on the reverse side of that form to:

Director, Office of Small and Disadvantaged Business Utilization
Department of Health and Human Services
200 Independence Avenue, S.W.
Room 517D - Hubert H. Humphrey Building
Washington, D.C.  2020l
Phone: (202) 690-7300

Information about the submission of the SF-295 should be addressed to the Director, Office of Small and Disadvantaged Business Utilization.

3. Subcontracting Plan Monitoring:

The CO/CS should compare each SF-294, Subcontracting Report, to the goals submitted in the prime contractor's subcontracting plan to establish whether or not the contractor appears to be meeting the goals (it is imperative that a determination regarding the status of a contractor's subcontracting progress be monitored regularly during the life of the contract).

If it is anticipated that the contractor will have difficulties attaining the established goals, the CO/CS should inform the contractor of deficiencies in writing, requesting the contractor to describe in detail problems encountered in meeting the subcontracting goals. The contractor should be apprised of the terms and conditions set forth in the clause at FAR 52.219-16, entitled "Liquidated Damages - Small Business Subcontracting Plan." Appendix 7 is a sample form letter suggested for use in   notification to contractors.  At the end of the fiscal year, the NIH SADBUS, the NCI SADBUS, and the NIEHS SADBUS will request reports from their respective COs for those contracts where progress has been unsatisfactory.

As stated in 15 U.S.C. 637(d)(8), the failure of any contractor to comply in good faith with goals of the subcontracting plan is a material breach of its contract. Further, 15 U.S.C. 637(d)(4)(f) directs that liquidated damages be imposed when a contractor does not make a good faith effort to comply with the goals of its subcontracting plan.

The CO should determine the causes or reasons for failure and take action(s) appropriate to the particular circumstance. When there is a clear absence of good faith effort, the CO should seek advice from the appropriate SADBUS and the Office of General Counsel and take whatever actions are deemed appropriate and necessary in accordance with FAR 19.705-7.

The Director, Office of Small and Disadvantaged Business Utilization (OSDBU), Office of the Secretary, Department of Health and Human Services, also will review the Summary Subcontract Reports SF-295 to monitor contractor progress in meeting established goals.   The CO shall require the contractor to provide in the Remarks Block of each Standard Form 294 submitted a narrative of the progress in fulfilling the small business and small disadvantaged business subcontracting goals.  In accordance with HHSAR 319.706(b), the CO is required to document the contract file at the time of physical completion to indicate whether the contractor met or failed to meet the small business and disadvantaged business subcontracting goals.  The CO must provide documentation indicating whether or not the contractor made a good-faith effort in attempting to achieve the goals.  A sample memorandum is provided at Appendix 8 for subcontracting compliance.  The memorandum can be changed to meet the CO/CS needs.  A copy of the memorandum should be forwarded to the appropriate SADBUS and OSDBU if the contractor fails to achieve the goals.

F. Records Retention and Disposal:

Records are retained and disposed of under the authority of the NIH Records Control Schedule contained in NIH Manual Chapter 1743, Appendix 1--"Keeping and Destroying Records" NIH Records Control Schedule, item 2600-A-4, Routine Procurement Files. Refer to the NIH Manual Chapter for specific disposition instructions.

Refer to paper copy.

DATE:
TO: Small Business Administration Procurement Center Representative (SBA/PCR)
Through:   NIH Small and Disadvantaged Business Utilization Specialist (SADBUS)*,
FROM: Contracting Officer, ICD
SUBJECT: Waiver of Subcontracting Plan

After review of (Title of Project and Contract Number), it is determined that the requirement for a Subcontracting Plan be waived in accordance with FAR l9.705-2. (Cite Reason:_____.)

Based on the above, a waiver of the Subcontracting Plan requirement is determined to be appropriate.

(Approval at a level above a Contracting Officer)

Agency SADBUS

SBA/PCR

* Revise to reflect the appropriate SADBUS for your particular action.

Note: A copy of the contractor's cost proposal should be included, for the SBA/PCR's review.

SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS MODEL SUBCONTRACTING PLAN OUTLINE*

DATE OF PLAN:

Identification
Data

CONTRACTOR: 
ADDRESS: 
SOLICITATION OR CONTRACT NUMBER:
ITEM/SERVICE:
TOTAL AMOUNT OF CONTRACT (Including Options):
PERIOD OF CONTRACT PERFORMANCE (Month, Day & Year):

* Federal Acquisition Regulation (FAR), paragraph 19.708(b) prescribes the use of the clause at FAR 52.219-9, entitled, "Small Business and Small Disadvantaged Business Subcontracting Plan."  The following is a suggested model for use when formulating such subcontracting plan.  While this model plan has been designed to be consistent with FAR 52.219-9, other formats of a subcontracting plan
may be acceptable.  However, failure to include the essential information as exemplified in this model may be cause for either a delay in acceptance or the rejection of a bid or offer where the clause is applicable. Further, the use of this model is not intended to waive other requirements that may be
applicable under FAR 52.219-9.

1. Type of Plan (Check One)

___Individual plan (All elements developed specifically for this contract and applicable for the full term of this contract).
___Master plan (Goals developed for this contract; all other elements standard; must be renewed annually).
___Commercial products plan (Contractor sells large quantities of off-the-shelf commodities to many Government agencies.  Plans/goals negotiated by a lead agency on a company-wide basis rather than
for individual contracts.  Plan effective only during year approved. Contractor must provide copy of lead agency approval).

2. Goals

State separate dollar and percentage goals for small business concerns and small disadvantaged business concerns as subcontractors, for the base and each option year, as specified in FAR 19.704.

A. Total estimated dollar value of all planned subcontracting, i.e., with all types of concerns under this contract, is $_____.

B. Total estimated dollar value and percent of planned subcontracting with small businesses (includes small disadvantaged businesses): (% of "A") $_____ and _____%.

C. Total estimated dollar values and percent of planned subcontracting with small disadvantaged businesses: (% of "A") $_____ and _____%.

D. Total estimated dollar value and percent of planned subcontracting with OTHER THAN SMALL BUSINESSES: (% of "A")  $_____ and _____%.

E. Provide a description of all the products and/or services to be subcontracted under this contract, and indicate the types of businesses supplying them:  OTHER (i.e. large businesses, colleges and
universities and non-profit organizations), SMALL BUSINESS (SB), SMALL DISADVANTAGED BUSINESS (SDB) (Check all that apply):
___Subcontracted Product/Service                               
___OTHER
___SB
___SDB

(Attach additional sheets if necessary.)

F. A description of the method used to develop the subcontracting goals for small and small disadvantaged business concerns (i.e., explain the method and state the quantitative basis (in dollars) used to establish the percentage goals, in addition, explain how the areas to be subcontracted to small and small disadvantaged business concerns were determined, and how the capabilities of small and small disadvantaged businesses were determined--include any source lists used in the determination
process).

G. Indirect costs have been ___ have not been ___ included in the dollar and percentage subcontracting goals stated above.  (Check one)

H. If indirect costs have been included, explain the method used to determine the proportionate share of such costs to be allocated as subcontracts to small business and small disadvantaged business concerns.

3. Program Administrator

Name, title, position within the corporate structure, and duties and   responsibilities of the employee who will administer the contractor's subcontracting program.

NAME:
TITLE:
ADDRESS:
TELEPHONE:

Duties: Has general overall responsibility for the contractor's subcontracting program, i.e., developing, preparing, and executing individual subcontracting plans and monitoring performance relative to the requirements of this particular plan.  These duties include, but are not limited to, the following activities:

A. Developing and promoting company-wide policy initiatives that demonstrate the company's support for awarding contracts and subcontracts to small and small disadvantaged business concerns; and assure that small and small disadvantaged businesses are included on the source lists for solicitations for products and services they are capable of providing;

B. Developing and maintaining bidders lists of small and small disadvantaged business concerns from all possible sources.

C. Ensuring periodic rotation of potential subcontractors on bidder's lists.

D. Ensuring that procurement "packages" are designed to permit the maximum possible participation of small and small disadvantaged businesses;

E. Make arrangements for the utilization of various sources for the identification of small and small disadvantaged businesses such as the SBA's Procurement Automated Source System (PASS), the National Minority Purchasing Council Vendor Information Service, the Office of Minority Business Data Center in the Department of Commerce, and the facilities of local small business and minority associations, and contact with Federal agency's Small and Disadvantaged Business Utilization
Specialist (SADBUS);

F. Overseeing the establishment and maintenance of contract and subcontract award records;

G. Attending or arranging for the attendance of company counselors at Business Opportunity Workshops, Minority Business Enterprise Seminars, Trade Fairs, Procurement Conferences, etc.

H. Ensure small and small disadvantaged business concerns are made aware of subcontracting opportunities and how to prepare responsive bids to the company;

I. Conducting or arranging for the conduct of training for purchasing personnel regarding the intent and impact of Public Law 95-507 on purchasing procedures;

J. Monitoring the company's performance and making any adjustments necessary to achieve the subcontract plan goals;

K. Preparing, and submitting timely, required subcontract reports;

L. Coordinating the company's activities during the conduct of compliance reviews by Federal agencies, and;

M.   Other duties.

4. Equitable Opportunity

Describe efforts the offeror will make to ensure that small and small disadvantaged business concerns will have an equitable opportunity to compete for subcontracts.  These efforts include, but are not limited to, the following activities:

A. Outreach efforts to obtain sources:

1. Contacting minority and small business trade associations;
2. Contacting business development organizations;
3. Attending small and minority business procurement conferences and trade fairs;
4. Requesting sources from the Small Business Administration's Procurement Automated Source System (PASS), and;
5. Newspaper, magazine ads which encourage new sources.

B. Internal efforts to guide and encourage purchasing personnel:

1. Presenting workshops, seminars, and training programs;
2. Establishing, maintaining, and using small and small disadvantaged business source lists, guides, and other data for soliciting subcontracts, and;
3. Monitoring activities to evaluate compliance with the subcontracting plan.

C. Additional efforts:

5. Flow Down Clause

The contractor agrees to include the provisions under FAR 52.219-8, "Utilization of Small Business Concerns and Small Disadvantaged Business Concerns", in all subcontracts that offer further subcontracting opportunities. All subcontractors, except small business concerns, that receive subcontracts in excess of $500,000 ($1,000,000 for construction) must adopt and comply with a plan similar to the plan required by FAR 52.219-9, "Small Business and Small Disadvantaged Business Subcontracting Plan." (FAR 19.704(a)(4)).

6. Reporting and Cooperation

The contractor gives assurance of (1) cooperation in any studies or surveys that may be required; (2) submission of periodic reports which show compliance with the subcontracting plan; (3)  Submission of Standard Form (SF) 294, "Subcontracting Report for Individual Contracts," and SF-295, "Summary Subcontract Report," in accordance with the instructions on the forms; and (4) ensuring that subcontractors agree to submit Standard Forms 294 and 295.

ADDRESSES

(a) SF-294 to be submitted to: cognizant Contracting Officer

(b) SF-295 to be submitted to:

Office of Small and Disadvantaged Business Utilization
Department of Health and Human Services
200 Independence Avenue, SW
Humphrey Building, Room 517-D
Washington, D.C. 20201

7. Recordkeeping

The following is a recitation of the types of records the contractor will maintain to demonstrate the procedures adopted to comply with the requirements and goals in the subcontracting plan.   These records will include, but not be limited to, the following:

A. Small and small disadvantaged business concerns source lists, guides and other data identifying such vendors;

B. Organizations contacted in an attempt to locate small and disadvantaged business sources;

C. On a contract-by-contract basis, records on all subcontract solicitations over $100,000, which indicate for each solicitation (1) whether small business concerns were solicited, and if not, why not: (2) whether small disadvantaged business concerns were solicited, if not, why not; and (3) reason for the failure of solicited small or small disadvantaged business concerns to receive the subcontract award.

D. Records to support other outreach efforts, e.g. contacts with minority and small business trade associations, attendance at small and minority business procurement conferences and trade fairs;

E. Records to support internal guidance and encouragement provided to buyers through (1) workshops, seminars, training programs, incentive awards; and (2) monitoring activities to evaluate compliance, and;

F. On a contract-by-contract basis, records to support subcontract award data including the name, address, and business size of each subcontractor.  (This item is not required for company or division-wide commercial products plans.)

G. Additional records:

This subcontracting plan was submitted by:
 
SIGNATURE: 
TYPED NAME:
TITLE:
DATE PREPARED:
 
PLAN ACCEPTED BY: (Contracting Officer)
TYPED NAME:
DATE:

Appendix 3 - Small Business and Small Disadvantaged Business Model Subcontracting Plan Outline:

Refer to paper copy.

DATE:
TO: SBA, Regional Office
FROM: Contracting Officer
SUBJECT:  Final Acceptable Subcontracting Plan(s)

Attached is a copy of the final negotiated Subcontracting Plan for the following contract __________. If you have any questions regarding the Subcontracting Plan, do not hesitate to contact this office on __________(Phone No.).

(Signature)

Attachments:
Final Subcontracting Plan
Completed Contract Face Page

cc: SBA Representative, SBA/PCR

Refer to paper copy.

Refer to paper copy.

Our Reference: Contract No.

Attention:

Dear __________

A review of our files and your most recent SF-294, Subcontracting Report for Individual Contracts for the referenced contract indicates that your organization (or firm) is experiencing difficulties in achieving planned subcontracting goals based on reported expenditures to date.

Please detail any problems you are encountering in meeting the anticipated goals, indicate how you intend to improve your performance in this important area and provide an estimated time schedule as to when subcontracting goals will be attained.

A written response to this request, should be received in this office no later than __________.

Please note that the provisions of the clause at FAR 52.219-16, entitled "Liquidated Damages - Small Business Subcontracting Plan" contained in the referenced contract remain in effect.

Sincerely,

Contracting Officer

DATE:
TO: File
FROM: Contracting Officer
SUBJECT: Subcontracting Compliance

Contractor __________ Contract No. __________ expired on __________. In accordance with HHSAR 319.706(c), the undersigned Contracting Officer has reviewed the file and determined that one of the following is the case:

1. Neither the original contract nor any subsequent (   ) modification exceeded $500,000 in value and as a result, no Small Business/ Small Disadvantaged Business Subcontracting Plan was ever required.

2. The contractor was successful in obtaining their (   ) goals for both Small Business and Small Disadvantaged Business in accordance with their SB/SDB Subcontracting Plan and in accordance with P.L. 95-507.

3. The contractor was unsuccessful in obtaining (   ) their goals for either Small Business or Small Disadvantaged Business (or both).  However, the contracting officer has determined that, for the reasons described below, the contractor did make a good faith effort to reach those goals in accordance with the requirements of P.L. 95-507.

4. The contractor was unsuccessful in obtaining (   ) their goals for either Small Business or Small Disadvantaged Business (or both).  Further the contracting officer has determined that, for the reasons described below, the contractor did not make a good faith effort to reach those goals in accordance with the requirements of P.L. 95-507.

5. The contractor was an 8(a) Firm or Small Business (   ) and no plan was required.

Contracting Officer

cc:
NIH Small and Disadvantaged Business Utilization Specialist
* Director, Office of Small and Disadvantaged Business Utilization, DHHS
* Revise to reflect the appropriate SADBUS for your particular action.

NIH