SUB-CONTRACTING: A PRIME STRATEGYNATIONAL 8(A) SUMMER CONFERENCEANCHORAGE, ALASKA, JUNE 18, 2014

RONETTA KEETER BRIGGS & LEIGH A. MCGEE CO-FOUNDERS, OSIYO CONSULTING

2Prime/Sub = Win/WinGBS OSIYO NNI

Strategic Partners – Sitnasuak Native Corporation’s GBS LLC, OSIYO Consulting, and Native Nations InstituteTeaming Objective – Align a team with past experience and multiple specialized skills to capture an 8(a) set-aside contactContract 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 PollingQuestionsHow many prime contractors?

How many sub-contractors? How many of you would consider sub-contracting 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?

5It’s Your Strategic Choice!

The firm that undertakes complete contract responsibility

May employ Sub-contractors to carry out specific work

Act As Prime 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

Support As Sub

6To Prime or Sub: 4 Big Questions?

What choice aligns best

with our vision and long-term strategic plan?

Is our company familiar with all aspects of government contracting?

Do we want to?

Can our company manage

administrative support and compliance concerns?

Do we want to?

Can our company

afford the time and cost of the

proposal process?

Do we want to?

7SBA’s 2012 Scorecard on Small Business Spending

AGENCY Total Eligible $ Small Business Spend $

SB Goal Prime %

SB Goal Sub %

FY12 Score %

FY12 Grade

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 $ 288,932,808

$ 44,426,514

20.0 / 15.4 19.0 / 27.9 84.41 C

8Government’s Subcontracting $ Goals

23% of federal contract dollars awarded to small businesses

5% of federal contract and subcontract dollars awarded to women-owned 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

9Prime or Sub? General Rules & ConsiderationsThe Prime Contract is a Federal Procurement ContractThe Subcontract is a Commercial ContractThere are very few mandatory flow down clausesThe government is very concerned about how primes manage subcontractsThe government can partially terminate a contractNo one reads the contract, but you betterMost prime/sub contracts and relationships fail because they do not properly plan, and in particular, they fail to baseline the contract from the outsetPrimes and subs must perform as totally integrated partners with exceptional execution

10Risks in the Prime/Sub Affiliation 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

11Required Federal AgencySubcontracting Plans 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

12Why Sub-Contract as a Prime Strategy?

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

13Finding a Prime Contractor

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

Marketing and Relationships

Top 10 Federal Contractors FY 2014 YTD

Government Agencies

Business Development Organization

s

Industry Resources

Major Players

The Internet

Network

14Marketing to the Prime ContractorEntrance Tickets:

Credentials Quality Core Capabilities Reputation & Past Performance Licenses & Professional

Certifications Insurance & Worker's

Compensation Certificates Reputable References &

Contacts

Game Changers: Added Value We do it BETTER, CHEAPER, FASTER We have CAPACITY We are ABLE: Reliable, Dependable,

Flexible, Can-doable, and valuable We are cost-saving, money-adding

PARTNERS. We bring future opportunities, relationships, and capabilities.

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Closing Comments and QuestionsTHANK YOU FOR SHARING YOURSELF AND TIME WITH US!

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Leigh A. McGee| 410-330-7484 | lamcgee@osiyo.bizRoni K. Briggs| 972-720-9953 | rbriggs@osiyo.biz

Innovative tools and methods

helping organizations adapt, grow, and prosper.

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www.osiyo.biz

O S I Y OEst 2003

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17Sources15 U.S.C. §644(g)(1)Contract Management | September 2011 Article by Steven KoprinceCongressional Research Service www.crs.govhttp://www.sba.govhttp://www.onvia.com/business-resources/find-prime-contractors-subcontractingThe Federal Market Group Daniel M. Jacob www.fmg-ltd.com