As a recipient of research dollars from state and federal funding agencies, SDSU Research Foundation is responsible for compliance with the terms and conditions of the award. All state and federal agencies are required to comply with the requirements established by the Small Business Administration (SBA). These same requirements must flow down and become part of the proposal requirement and any subsequent award. The PI, project staff, SR Development, and purchasing department must all be committed to achieving the requirements as set forth in the proposal and award documents. The goals apply to subcontracted dollars only, i.e. product and/or services purchased from businesses. Consulting dollars spent with individuals are not included.
The Small Business Subcontracting Program section of Federal Acquisition Regulation (FAR) was created by the Small Business Act of 1999 and mandates:
- For contracts of more than $650,000 (or $1,500,000 for construction of a public facility), large prime contractors and subcontractors have to submit subcontracting plans containing specific percentage goals for different types of small businesses
- Subcontracting plans must contain a description of the methods and efforts used to assure that small business enterprises have an equitable opportunity to compete for subcontracts
Subcontracting plans must be submitted by contractors for review prior to the award of any contract. Failure to comply in good faith with its approved plan may subject the contractor to liquidated damages or termination for default. This requirement does not apply to small businesses, contracts under the prescribed dollar amounts, prime contracts not offering subcontracting possibilities, or contracts to be performed entirely outside the United States.
There are a number of codes, laws and regulations that provide lengthy explanations as to why the requirements are imposed on awardees of state and federal funds. Some of the more common ones include but are not limited to Public Contract Code Section 10111, 10115 et seq.; CCR Title 5 Section 43870 et seq., Military and Veterans Code, Sections 999.2, 999.5, 999.7, 999.11 and 999.12, Government Code Section 14838.5, Federal Law 95-07, Federal Acquisition Regulation and Office of Management and Budget.
In most cases, the award will define the minimum goal requirements. When it is not specified, SDSU Research Foundation is required to meet an overall standard. Targets as defined by the SBA are as follows:
- Statutory Goals Established by Federal Executive Agencies
The policy of the United States, as stated in the Small Business Act 15g (1), is that each agency shall have an annual goal that represents:
- 23% of prime contracts for small businesses
- 5% of prime and subcontracts for women-owned small businesses
- 1% of prime contracts for HUBZone
- 3% of prime and subcontracts for service-disabled veteran-owned (small businesses.)
- Individual Goal Categories
Each year, SDSU Research Foundation provides the SBA with estimates of the total dollar amount of all prime contracts to be awarded during the year and subcontracts to be awarded by all of the agency's "reporting prime contractors." Each agency must report its goals, expressed both in numbers, dollars, and as a percentage of the total amount to be awarded, for each of the following categories:
- Prime contract awards to be made to small businesses.
- Prime contract awards to be made under the authority of Section 8(a) of the Small Business Act.
- Prime contract awards to be made to small businesses owned and controlled by socially and economically disadvantaged individuals other than 8(a).
- Prime contract awards to be made to small businesses owned and controlled by women.
- Prime contract awards to be made to HUBZones.
- Prime contract awards to be made to small businesses owned and controlled by service-disabled veterans.
- Subcontracts to be awarded by prime contractors to small businesses.
- Subcontracts to be awarded by prime contractors to small businesses owned and controlled by socially and economically disadvantaged individuals.
- Subcontracts to be awarded by prime contractors to small businesses owned and controlled by women.
- Subcontract awards to be HUBZones.
- Subcontract awards to be made to small businesses owned and controlled by service-disabled veterans,
SBA works with the Federal Acquisition Regulation (FAR) Council to develop FAR guidance in order to implement the service-disabled veteran goal. The FAR must be changed so that these firms can represent their status. In order for a business to qualify and be certified in a particular category, it must meet specific criteria as defined in the web site locations listed below:
- Small Business Administration: www.sba.gov/
- Department of Veteran Affairs: http://www.va.gov/OSDBU/index.asp
- California State University: http://www.calstate.edu/icsuam/sections/5000
- SBA HUBZone Program: http://www.sba.gov/
- Department of Education: https://www2.ed.gov/about/offices/list/ocr/edlite-minorityinst-list-tab.html
A small business may self-certify provided they meet the criteria as defined in the SBA Table of Standards. The table may be viewed at the following site https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/table-small-business-size-standards
WBE, DBE, DVBE and VBE must be certified by the SBA and present a current certificate.
HBCU must be listed on the Department of Education web site.
HUBZone business must be located within a specific geographic grid area. This can be determined by entering the physical address of the business in the SBA HUBZone Program site.
SDSU Research Foundation’s Purchasing Manager is also the Small Business Liaison Officer (SBLO). The SBLO is the point of contact for small businesses and projects and will:
- Make information regarding pending solicitation available to, and consider offers from, small business suppliers capable of meeting SDSU Research Foundation business needs.
- Ensure prompt payment to small businesses.
- Identify and implement innovative acquisition processes to further small business participation.
- Give special consideration to small businesses and micro businesses by reducing experience requirements and level inventory normally required.
- Maintain a directory of potential suppliers.
- Provide one-on-one instruction as needed to support the program and goals.
- Monitor project goals to insure compliance and redirect goals as may be needed to deal with programmatic issues.
- Review reports prior to submission to the funding agencies.
- Assist the PI with subcontract plan submission on all awards exceeding $650,000.
- In accordance with the requirement of the award, request submission of sub contracting plans from subcontractors with an anticipated award in excess of $650,000.
- The Subcontracting Plan
Federal Acquisition Regulation (52.219-9) requires a Subcontracting Plan for Small and Small Disadvantaged Businesses for each contract $650,000 and over. Prime contractors, such as SDSU Research Foundation, must agree to purchase a percentage of the supplies and services required for the performance of the contract from small and disadvantaged businesses. Some federal agencies set specific goals. Most rely on the prime contractor to make a "good faith effort." The documentation of this effort is outlined in the DBE/WBE/VBE Good Faith Effort– Six Steps Documentation form available at: https://www.foundation.sdsu.edu/forms_index.html#purchasing.
The Subcontracting Plan specifies:
- Which items/commodities will be purchased from small and disadvantaged businesses
- The total dollars to be spent with small and disadvantaged businesses in each category
- The percentage of total dollars budgeted for supplies and services that these purchases represent.
The subcontracting plan is submitted to SRD by the SBLO for submission along with the research proposal and budget. Once the award has been made, the Subcontracting Plan becomes part of the contract and the PI is expected to meet the goals set in the Plan.
- Preparing a Subcontracting Plan
SRD notifies the PI and SBLO when a plan is required and whether or not the contracting agency has set specific goals. In either case, the plan must set separate goals for small and small disadvantaged businesses. The SBLO will assist the PI with the identification of vendors that meet specific disadvantaged, women-owned, small business or other requirements. The PI is expected to make every effort to meet these goals. It is imperative to keep these goals in mind as funds are expended as it is impossible to meet the goals at the end of a project when the money has already been spent. Once the SBLO identifies subcontracting opportunities and the dollars and percentage goals are calculated, the information is entered on a Subcontracting Plan form. Some contracting agencies provide these forms. The National Institutes of Health (NIH), for example, will not accept a subcontracting plan that is not on an NIH form. However, most agencies are flexible as long as the required information is included. The completed Subcontracting Plan is signed by the SBLO and sent to SRD to forward to the contracting agency for approval.
- Subcontracting Plan Reporting
SDSU Research Foundation is required to submit semi-annual and annual reports charting the progress in meeting subcontracting goals. Subcontract Reporting for Individual Contracts – SF 294 and/or Summary Subcontract Report - SF 295 are a contract requirement. Failure to file an SF-294 or SF- 295 or to meet the utilization goals as defined in the Plan could be considered evidence of a lack of a "good faith effort" to comply with contract requirements and could result in liquidated damages or other penalties, including material breach of contract and termination for default.
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