Tuesday, July 21, 2015

Best Practices for Meeting Small Business Subcontracting Goals

Most Government contractors have difficulty meeting their small business subcontracting goals. The Government has its own set of goals for awarding contracts to small and disadvantaged contractors. Similar goals are inserted into prime Government contracts and in some cases, flow down to subcontractors who in turn have their small and disadvantaged subcontracting goals. Sometimes, these goals are incorporated into "award fee" criteria as a means of incentivizing contractors (and subcontractors) to do a better job of finding these small and disadvantaged firms and then awarding them subcontracts. Perhaps the  push to meet these goals causes the Government and its contractors to perform less than thorough verification that small and disadvantaged firms are truly that. We've reported many times on cases involving companies that fraudulently claim small business (or veteran-owned or minority-owned, or woman-owned) status. True, these firms are robbing others of the program benefits but in reality, its sometimes nearly impossible to find qualified small businesses for particular tasks.

DCMA (Defense Contract Management Agency) is the agency with responsibility for monitoring and reviewing Defense contractor progress toward meeting small business goals. The Agency has seen first hand many of the successes and failures in the program. Based on those reviews, DCMA has compiled a listing of the "best practices" within the prime contractor community for achieving small business subcontracting goals, and in particular, small disadvantaged subcontractors. These best practices, although directed to prime contractors, would equally apply to subcontractors who also need to meet small business subcontracting goals. Lets look at this list of best practices.

  • Establish team or working group to assign advocates that act as extension of supplier diversity program office. This, according to DCMA will "spread the gospel" throughout the company.
  • Utilization of manufacturing engineer to visit SDBs (Small Disadvantaged Businesses) that had contracted SBLO (Small Business Liaison Officer) regarding business opportunities. Develop a form to allow clear rating of capabilities of each prospective source visited. A high rating resulted in business opportunities on both commercial and Government contracts. Also, increased buyer confidence that new companies being added to the bid list will perform.
  • Publication of supplier diversity news. Internal communication used to motivate staff to keep supplier diversity in mind. Articles are written and published regularly and targeted to reach those who often make sourcing decisions.
  • Appointment of business advocate. A woman employee is appointed to a temporary, one-year term as the women-owned small business advocate for the company. Person attends procurement conferences and meetings. This rotational assignment increases awareness among employees.
  • SBLOs formed a committee to better prepare subcontractors to do business with their companies. Group provides free training to small business on business etiquette, how to fill out interest applications, and any topic determined to help small businesses that attend. They have a graduation ceremony for small businesses that attended five of the six scheduled training sessions. The SBLOs have their Vice Presidents of Purchasing attend the graduation and the small businesses are given an opportunity to provide an oral presentation of the company to the audience.
  • Inclusion of small, disadvantaged and woman-owned business in every procurement. Company procedures require solicitation of at least one company from each SB category on every procurement. If buyer doesn't solicit at least one, authorization to proceed can only be obtained by going through the SBLO.
  • Identification of where expenditures occur so everyone, not only the buyer, knew to be on the lookout for small business sources in those areas. Analyzed procurement cycle and categorized purchases and suppliers involved. Identified opportunity areas and then focused outreach efforts to optimize spending impact.
  • Approval to award to SDBs that were not low bidder. Approval given by a Corporate VP committed to success of the SDB program which gave approval to award to SDBs that were not the low bidder. Not an open checkbook, but reasonable application.
  • Formation of re-sourcing team to establish policy and procedures to resource materials from one supplier to another. Team consisting of members from quality assurance, purchasing and SBLO evaluate parts to be re-sourced, analyze impact to subcontract goals and attempt to include at least one supplier capable of qualification in each of the small business categories.
  • Technology utilization. Outreach to small businesses using the internet and electronic application processes to do business.

We cannot attest to the effectiveness of these practices but DCMA is convinced that they will help contractors achieve their small and disadvantaged business subcontracting goals. Who knows, maybe some of them will resonate with you.

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