Issue Date (revision): - February 2000 (rev. 6)

Section	Topics in the Section
A	Small Business Utilization
1	Procurement Team Responsibilities in Support of the Small Business Utilization Program
2	The FAA’s Office of Small Business Utilization (OSBU) & Liaison Representative Involvement
3	Prime Contracting with Small Businesses
4	Subcontracting with Small Businesses
5	DOT Lending And Bonding Program
6	Business Declaration
7	Contract Bundling
B	Clauses
C	Forms

a. Effective implementation of the FAA’s small business utilization programs in their contracting actions, including achieving program goals;

b. Develop small businesses by taking all reasonable action to increase small business participation in the FAA’s procurements (including subcontracts);

c. Consider the feasibility of breaking out requirements to increase opportunities for small businesses to successfully compete for prime contracts;

d. Consider the extent of small business participation in contract performance during procurement planning;

e. Obtain guidance from the Office of Small Business Utilization (OSBU)/liaison as it relates to small business utilization issues; and

f. Participate and assist in the development of small business conferences and outreach efforts sponsored by the OSBU.

The OSBU maintains a direct working relationship with the procurement teams. When appropriate, the OSBU interacts with all procurement teams in the following areas to provide support and ensure effective and consistent program implementation:

a. Participates in procurement workshops to increase access to and award of FAA contracts by small businesses;

b. Participates in acquisition and procurement planning meetings and other scheduled meetings with the procurement team as advisors;

c. Identifies potential small businesses that qualify for a particular procurement;

d. Provides the procurement team with source lists of small businesses;

e. Ensures that the source selection criteria used to select firms for award is fair, consistent and does not limit opportunities for small businesses;

f. Provides advertising recommendations to the integrated products teams to ensure all requirements are being advertised in media accessible to small businesses;

g. Responds to written and telephone inquires from small businesses and small businesses owned and controlled by a socially and economically disadvantaged individuals regarding procurement opportunities with FAA;

h. Reviews final source lists to ensure an adequate representation of small businesses;

i. Reviews questions presented at conferences, preparing answers to questions submitted by small businesses, interacting with the integrated product teams for distribution of responses to all potential contractors;

j. Reviews business declarations and accompanying documentation;

k. Reviews subcontracting plans;

l. Ensures that small businesses and small businesses owned and controlled by a socially and economically disadvantaged individuals are entered into the OSBU database;

m. Assists in the proposal evaluation process as a non-voting member of the evaluation team;

n. Conducts on-site pre-award verifications to verify that a sufficient percentage of the ownership, as well as the business control and management of the firm is vested in a disadvantaged group member(s) or woman (woman) and verify compliance with small business program requirements;

o. Participates in debriefings of unsuccessful small businesses to ensure fair and equitable treatment to all firms;

p. Participates in postaward meetings with successful offerors to ensure a clear understanding of small business program guidelines and engagement of small businesses as subcontractors; and

q. Conducts on-site compliance reviews of contractors with subcontracting plans to ensure compliance with program requirements.

a. While the use of small business set-asides as a method of procurement is not mandatory, small businesses must be afforded reasonable opportunities to compete for all procurements. Thus, procurement teams should take the following actions when appropriate:

(1) Set-aside procurements competitively in accordance with the policies and guidance contained in Acquisition Management System (AMS) Section 3.2.2 Source Selection;

(2) Consider the capabilities of small businesses and small businesses owned and controlled by a socially and economically disadvantaged individuals during the screening phase of each procurement;

(3) Breakout large requirements (if severable) into smaller sized requirements to provide for greater small business participation;

(4) Plan procurements of supplies and services so that more than one small business firm may perform the work (if the work exceeds the amount that a single small business can handle);

(5) Ensure that delivery schedules are established on a realistic basis to encourage small business participation to the extent consistent with actual requirements of FAA;

(6) Encourage teaming relationships among small and large businesses to enhance competition; and

(7) Utilize small businesses on qualified vendor lists on a rotational basis to increase opportunities to the greatest number of small businesses.

b. Conducting set-asides with small businesses, very small businesses, and small businesses owned and controlled by socially and economically disadvantaged individuals:

(1) All set-asides are to be conducted directly with small businesses independent of the Small Business Administration (SBA);

(2) Procurements may be set-aside exclusively for small businesses and very small businesses;

(3) Procurements may also be set-aside exclusively for competitive award among socially and economically disadvantaged businesses (SEDB’s) that are expressly certified by the Small Business Administration (SBA) for participation in the SBA’s 8(a) program at the time of release of the initial screening information request (SIR) or public announcement (if issued). Each firm claiming 8(a) status is required to provide a copy of its SBA 8(a) certification letter to the Contracting Officer (CO) with its response to the initial SIR or public announcement (if issued) as evidence of eligibility. There is no requirement to obtain the SBA's approval to make award to the selected socially and economically disadvantaged business (SEDB).

(4) Procurements may not be exclusively set-aside for women-owned businesses; and

(5) Industry should be notified of the applicable standard industrial classification (SIC) code representing the predominant portion of the overall requirement in the public announcement to ensure small business size eligibility requirements are timely known.

The following is a listing of the subcontracting considerations as a guide that should be used in procurements that have subcontracting provisions as appropriate:

a. Establishment of goals requires much care to ensure that they are realistic and motivate the contractor. Percentage goals that are unrealistically low will only create a false sense of success and should be avoided. Likewise, goals that are too high can be counterproductive.

b. Subcontracting requirements should be a subject for review and discussion at postaward conferences. It is important to monitor contractor performance in meeting goals. This is particularly important early in the life of the contract when the majority of subcontracts will be awarded. Prompt corrective action should be taken if it appears that a contractor will not meet its goal. The CO is responsible for ensuring that the contractor attains all subcontracting goals. Subcontracting data (accomplishments) must be timely forwarded to the individual responsible for the preparation of the Major Procurement Program Goal Report.

c. The procurement team should notify the OSBU/liaison of the opportunity to review the subcontracting proposal in sufficient time to provide the representative a reasonable time to review the material and submit advisory recommendations prior to award.

d. The CO should provide a listing of potential small business subcontractors for information purposes. The FAA should not make any warranty as to their capabilities or abilities to perform any portion of the contract. The listing may be obtained from the OSBU.

e. Evaluate the percentage and dollar volume of planned subcontracting, total dollar volume of expected awards to small business subcontractors (including small businesses owned and controlled by a socially and economically disadvantaged individuals and women-owned concerns).

f. There should be separate subcontracting goals for small businesses and small businesses owned and controlled by a socially and economically disadvantaged individuals and women-owned concerns expressed as a percentage of total planned subcontracting dollars.

g. Principal product and service areas to be subcontracted and an identification of those areas where it is planned to use small business, small businesses owned and controlled by a socially and economically disadvantaged individuals, and women-owned subcontractors.

h. Review business declarations of principal proposed small business and small disadvantaged business subcontractors, including the type of product or service and the dollar value thereof to be awarded to each principal subcontractor. This information is to be used to assist the CO in making a determination as to the acceptability of the proposed subcontracting goals. The contractor is not contractually bound to make awards to the designated subcontractors nor is the Government approving the subcontracts.

i. Evaluate extent of complexity and variety of work to be performed by small businesses with greater weight on performance of substantive or high technology components or services. In this way, the FAA can ensure that small businesses will receive technologically challenging or a meaningful portion of the overall contract;

j. Include subcontracting monetary incentives such as including an award fee provision to provide incentives for providing meaningful, technically substantive subcontracting work to small businesses. Under this approach subcontracting proposals that provide appropriate percentage commitments would be accepted, but an award fee contract line item would be incorporated as part of the contract. Receipt of the award fee would be after either preliminary design review, critical design review, or other appropriate milestones. The percentage amount of the award fee pool would be based on the extent the contractor has provided meaningful, technically substantive work to eligible small businesses within the previously accepted percentage goals;

k. Evaluate past performance related to the offeror's compliance with prior subcontracting proposals and subcontracting plans with greater weight on subcontracting proposals received from concerns that have successfully attained, or exceeded subcontracting goals in the past.

l. Evaluate level of participation of small businesses evaluated based on the percentage of the total contract value (if appropriate). This is particularly recommended for requirements traditionally performed by small businesses that perhaps will be displaced due to the bundling of smaller set-aside requirements into one larger contract.

m. Contractors should be required to flow down similar subcontracting requirements under the prime contract to all subcontractors (except small businesses).

n. If an offeror submits an offer that does not address each of the subcontracting provisions, the CO should advise the offeror of the deficiency and request submission of a revised offer by a specific date; and

o. If the offeror does not submit an offer which incorporates the subcontracting requirements within the time allotted, the offeror should be ineligible for award.

a. To promote the financial assistance programs available from the OSDBU (S-40), procurement teams should add the following information in each public announcement of a procurement containing a bonding requirement:

"This Notice is for informational purposes for Minority, Women-Owned and Disadvantaged Business Enterprises: The Department of Transportation (DOT), Office of Small and Disadvantaged Business Utilization, has programs to assist small businesses, small businesses owned and controlled by a socially and economically disadvantaged individuals, and women-owned concerns to acquire capital and bonding assistance for transportation-related contracts. This is applicable to any eligible prime or subcontract at any tier. The DOT Bonding Assistance Program enables firms to apply for bid, payment, and performance bonds up to $1.0 million per contract. The DOT provides an 80 percent guaranty on the bond amount to a surety against losses. Loans are also available under the DOT short Term receivable financing. The maximum line of credit is $500,000. For further information regarding the bonding and lending programs. , please call the DOT Office of Small and Disadvantaged Business Utilization at (800) 532-1169."

b. The following should be included in all public announcements of all other procurements that do not require bonding:

"This Notice is for informational purposes for Minority, Women-Owned and Disadvantaged Business Enterprises: The Department of Transportation (DOT), Office of Small and Disadvantaged Business Utilization, has a program to assist small businesses, small businesses owned and controlled by a socially and economically disadvantaged individuals, and women-owned concerns to acquire short-term working capital assistance for transportation-related contracts. Loans are available under the DOT Short Term Lending Program (STLP) at prime interest rates to provide accounts receivable financing. The maximum line of credit is $500,000. For further information and applicable forms concerning the STLP, call the OSDBU at (800) 532-1169."

a. A successful small business program rest with FAA’s ability to limit participation to bona fide small businesses and small businesses owned and controlled by socially and economically disadvantaged individual for they are the intended recipients of the agency’s procurement dollars earmarked for small business set-asides.

b. To that end, the business declaration is:

(1) A tool used to ensure that the small business program benefits only those businesses that are bona fide small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals by establishing a basis for determining a firm’s eligibility to participate in a small business set-aside; and

(2) A tool used internally by the OSBU/Liaison to accurately report awards made to small businesses and small businesses owned and controlled by socially and economically disadvantaged individuals on the Major Procurement Program Goal (Accomplishments) Report.

c. In order for the owner of the firm to be found to have controlling interest in the company the following must exist:

(1) The eligible owner holds the position of chairperson of the board, president or Chief Executive Officer;

(2) The eligible owner has the right to vote his or her shares or other equity interest to elect the majority of voting members of the Board of Directors or other governing body;

(3) The eligible owner holds at least 51% unconditionally ownership and control of the operation;

(4) The eligible owner has direct full-time responsibility for the day-to-day management of the business, as evidenced by all of the following:

(a) Directly related managerial or technical experience and competency;

(b) Establishment of company policies;

(c) Determination and selection of business opportunities;

(d) Supervision and coordination of projects;

(e) Control of major expenditures;

(f) Hiring and dismissing key personnel;

(g) Marketing and sales decisions; and

(h) Signature on major business documents.

a. Definitions:

1. A bundled contract is a contract that is entered into to meet requirements that are consolidated.

2. Bundling is consolidation of two or more requirements for supplies or services, previously provided or performed under separate smaller contracts, into a SIR for a single contract that renders a contract likely to be unsuitable for award to a small business concern (including socially and economically disadvantaged (8(a)), small disadvantaged, and women-owned businesses) due to:

(i) The diversity, size, or specialized nature of the elements of the performance specified;

(ii) The aggregate dollar value of the anticipated award;

(iii) The geographical dispersion of the contract performance sites; or

(iv) Any combination of the factors described in paragraphs (2)(i), (ii), and (iii) of this definition.

3. Measurably Substantial Benefits are the dollar amount of benefits accruing from the bundling of requirements. These benefits can be in many forms to include cost savings, price reduction, quality efficiency, enhance performance, result in better terms and conditions, reduce acquisition cycle times and any other benefits

b. This section is not applicable to contracts whose total estimated bundled value (including all options) is less than $10 Million.

c. Bundling of contractual requirements is discouraged unless it is necessary and justified. Bundling is necessary and justified if there are substantial benefits which are measurable and quantifiable. The IPT shall document the measurably substantial benefits to the government . Benefits shall be equivalent to 10% if the total anticipated contract value is $75 million or less; or 5% if the contract value exceeds $75 million.

d. To ensure that prime contract opportunities are provided to small businesses, the following

alternatives shall be considered prior to bundling:

1. Breaking up the procurement into smaller discrete procurements to render them suitable for small business set asides;

2. Breaking out discrete components, where practicable, to be set aside for small business; or

3. When issuing multiple awards against a single solicitation, reserving one or more awards for small businesses.

e. If an IPT determines that contract bundling is to be used, the IPT shall include written justification in the file (a part of the acquisition strategy plan, separate memo, etc.) outlining the need for bundling and documenting the impact on attaining the FAA socioeconomic goals. Additionally, if bundling would result in any adverse impact to achievement of the agency's socio-economic goals, the SIR for the bundled procurement must be approved by the FAA Acquisition Executive (FAE).

In addition, the IPT shall notify the local FAA Small Business Office prior to issuance of the SIR.

f. In a bundled procurement, the acquisition strategy should provide for maximum practicable participation by small business concerns. Some of the ways this can be accomplished include the following:

1. Authorizing two or more small businesses to form a contract team and for that team to be considered a small business for purposes of a bundled requirement provided that each small business partner to the teaming arrangement individually qualifies as a small business under the assigned SIC or NAIC codes for the requirement.

2. For SIRs that offer a significant opportunity for subcontracting, the CO should include proposed small business, small disadvantaged business and women-owned business subcontracting participation in the subcontracting plan as an evaluation factor.

3. Including small business, small disadvantaged business and women-owned subcontracting goals in SIRs and contracts based on contract dollars versus planned subcontracting dollars.

4. Consulting the local FAA Small Business Office and Source Net

g. The requirements of this section do not apply to bundled contracts that are awarded in accordance with OMB Circular A-76 if a cost comparison has been performed under A-76 procedures.

h. The requirements of this section do not apply to contracts to be awarded and performed entirely outside of the United States.

See FAST Procurement Toolbox for applicable clauses.