Matthew Blum (MB): Welcome to today's special webinar "Going Big for Small Business." Today’s webinar is being sponsored by the Office of Management and Budget’s Office of Federal Procurement Policy, the Small Business Administration’s Government Contracting and Small Business development program, and the Federal Acquisition Regulatory Council.
During the next two hours, you will hear from a series of officials who play critical roles in shaping the policies and tools agencies use to meet and exceed their small business contracting goals. I am Matthew Blum, associate administrator for the Office of Federal Procurement Policy and I’m pleased to serve as host for today’s webinar.
Before we begin our session, I want to take a minute to explain the objectives for this webinar. In a nutshell, our goal is to provide you with insight from officials who are most responsible for shaping small business contracting policies so that you can better understand the reasoning behind why certain policies and tools are being emphasized and how they are being shaped. Over the past year and a half deputy secretaries, chiefs of staff, and other senior officials in your agencies have been meeting with senior leadership at OMB, SBA, and White House officials to discuss strategies for maximizing opportunities for small business contractors and taking full advantage of the new authorities in the new Small Business Jobs Act as they come online. These discussions have covered topics such as set-asides under multiple award contracts, how to increase opportunities for small businesses under the simplified acquisition threshold, and how to accelerate payment for small businesses both as prime contractors and subcontractors.
Through the webinar today we are going to share some of the insights that have been gained through those important discussions. Now we won’t be giving tutorials during today's session. As I mentioned a moment ago, the focus is really on providing perspective. So it is important that you consider today's seminar as a supplement, not a substitute, for the small business training that you receive from FAI, DAU, and your agency.
Ultimately, success in achieving small business goals depends on the good work of every agency, and every one of you on the front lines that are listening to the webinar today. But there are a number of agencies that have specific responsibilities for crafting small business contracting policies; they are SBA, OFPP, and the FAR Council. Today, you will hear from officials from each of these organizations as well as from GSA’s Federal Acquisition Service which operates the Federal Supplies Schedule program, a key contracting program that provides access to many thousands of small businesses that offer a wide range of commercial products and services. We will also be joined by officials from DoD and Treasury who will discuss strategies they are using to successfully maximize opportunities for small businesses. Then we will conclude our webinar with a round table where we will be able to address some questions that we have been hearing from you in the field and also touch upon some hot topics in small business contracting. That is our road map for today's webinar. You can see it’s quite packed and we are excited to be here.
In a moment we will begin by hearing from OFPP Administrator Joe Jordan and SBA Deputy Administrator Marie Johns to provide a framework for today’s discussion. But first a quick programming note: when we set up this webinar, we had hoped that Joe would serve as the host, not me. Unfortunately, Joe was called away at the last minute to attend to a family matter. However, before leaving town, Joe sat down with OFPP’s Susan Truslow to talk about his priorities for the acquisition community and how small business contracting fits within those priorities. Here now is the interview with Joe, followed by words from SBA Deputy Administrator Johns.
Susan Truslow (ST): Hello, my name is Susan Truslow and I am here today to introduce Joe Jordan, Administrator for Federal Procurement Policy at OMB. Hi Joe.
Joe Jordan (JJ): Hi Susan, it’s great to be here, thank you.
ST: For those out there that are not aware of what OFPP does, could you give us a little summary?
JJ: Absolutely. The Office of Federal Procurement Policy was created in the seventies to oversee and coordinate government-wide Federal procurement policies. What does that mean? That means creating policies and regulations, the rules of the road that govern our acquisition system and how we award the 500 billion dollars in Federal prime contracts that go out every year. We also convene the Chief Acquisition Officers Council, a group of agency acquisition leaders that we pull together both to get ideas on what is working and what is not working and to disseminate new tools, guidance ,policies, etc. to make sure that they are all aware. We have a training component. We work with our partners at the GSA at the Federal Acquisition Institute to help our civilian contracting officers and other acquisition personnel get trained. And lastly, and why we’re here today, we work very closely in partnership with the Small Business Administration to make sure that as a government we are doing everything we can to maximize opportunities for small business contractors.
ST: As the new administrator, what are your priorities?
JJ: Well, you know, there is no shortage of great opportunities and challenges when we’re talking about about federal contracting. Again, when there is half a trillion dollars going out every year -- one out of every $6 that government spends -- we can do a lot of things to improve and move the needle in a positive direction. But there are three initiatives and areas of focus that I really want to highlight.
The first, buying smarter. For far too long, the government’s bout as if we were 130 mid-sized businesses as opposed to leveraging our buying power as the largest procurer of goods and services in the world, really driving value for the taxpayer.
Secondly, we have to build the right supplier relationships. This is a very positive component where we increase and improve our utilization of small business contractors, creating a win-win with the job creating, innovative small businesses, improving our supply chain and the health of that supply chain, as well as pumping more dollars into the economy through those small businesses. It also has an oversight component. We need to make sure we are only doing business with responsible parties that really understand what contractors’ performance was and we’re appropriately doubling down on the great contractors and not utilizing the folks that do not have that good past performance or ethics and integrity.
Lastly, one of my -- one of the areas the gets me excited -- developing our acquisition work force. That means not just our contracting officers, who I admit are the backbone of what we're trying to do in acquisition, but also the Contracting Officer Representatives, and the program managers, the folks who frequently develop the requirements that we need to utilize to go out and buy our goods and services. All of these folks need to be part of our training and development opportunities, and everyone needs to understand that government contracting is not an ancillary function. It is core to everything agencies do to accomplish their missions.
We do this both through formal ways, like the Defense Acquisition University, the Federal Acquisition Institute, and various other agency-led training and development centers, but also through informal ways. The front line forum where we get together contracting officers who are out there every day awarding contracts and they let me know what’s going on. Webinars and talks like this, where I can highlight some of the goals, priorities, and best practices. And then the great interactions I have every day with the folks in the acquisition community.
ST: How does this tie in with small business and reaching our goals?
JJ: Small businesses are inextricably linked and fully supportive of every one of those goals. If we are going to buy smarter, we need to increase competition. If you increase competition, you are pulling in more and more small businesses who are pushing the limits of innovation, driving the high quality of goods and services, the high level of customer service that the government wants, and we’re going to see maximized use of those folks. If we are building the right supplier relationships, again, that means creating a robust and healthy supply chain full of small business contractors and folks in all of the socio-economic groups. If we are developing our acquisition workforce in the way that I think we can, it means both giving them the tools they need to connect with these small business contractors and making sure they are aware of all the tools and their responsibilities to engage the small business contractors, so that we can achieve that win-win, where the government gets access to innovative high-quality small businesses, and the economy grows as a result of those small businesses getting increased participation in federal contracting.
ST: Isn’t strategic sourcing a key tool that you are proponent of as the administrator?
JJ: Absolutely. Strategic sourcing is one of my top priorities. It fits right in with that buying smarter, with that leveraging government’s buying power. But here’s the thing, it is absolutely in line with greater utilization of small businesses.
ST: I’m sorry, how does that not mean bundling?
JJ: Great question, and let me affirmatively say strategic sourcing does not mean bundling. Strategic sourcing mean being thoughtful about the way we acquire goods and services, especially things that are more commoditized, so that we can leverage the governments buying power across the board. But let me give you a concrete example because I know there is some skepticism and some worries in the small business community and in the contracting community about how this will really play out for small businesses. And that example is what we have done in our office supplies or OS2 initiative in the federal sourcing initiative as part of GSA. Through that, we got 15 vendors into one vehicle, one strategic sourced contract that folks could use. Of those 15 winners, 13 are small businesses. Now, when I was working at SBA, I used to here these multiple- award contracts, “Hey Joe, our agency awarded 13 of the 15 contracts so small businesses, isn’t that great?” My question would be, "Well, how many of the dollars are going to small businesses?" Because as we know, just by winning the contract does not mean that we got those task orders, it doesn’t mean you’ve got that revenue, those dollars in the hands of those small businesses. So I’ve been asking that question, and now, not only has this vehicle saved hundreds of millions of dollars for the government, but those small businesses have received more than three quarters, more than 75% of the dollars on that office supply contract. So again, we can save money for the government, we can leverage our buying power and buy smarter, free up time on these commodity type contracts so that acquisition professionals can focus on the more complex requirements, and we can increase our utilization of small business.
ST: What about insourcing? Isn’t that also a priority goal and doesn’t this take away opportunities for small business?
JJ: Insourcing is absolutely not a priority goal- it’s not an end within itself. What insourcing means is that we have got to make sure we have got the right balance in our workforce, in our contracting community, between what work is contracted out and what is done by government professionals. If something is inherently governmental, by definition, it should only be done by government professionals. In certain cases, the pendulum has swung a bit too far, and things that are inherently governmental have been contracted out. The other category where you need to look at insourcing is if something is a critical function, or closely associated with an inherently government function, and you risk losing control of critical processes or operations within an agency. It does not mean you have to insource everything that is a critical function or closely associated. It just means you have to pay special attention to it. I understand sometimes small businesses feel like they are the low hanging fruit that gets plucked to satisfy an insourcing objective. Again, let me reemphasize, there is no insourcing goal; there is no target we are asking agencies to hit. In our guidance from OFPP, it clearly states that small businesses should be the last place that agencies look when they are going for work that should be brought in-house. And if you're looking at a mix of work that’s done by both large and small businesses and you want to insource some of it, you should apply the rule of two. If there are two or more small businesses doing it, you should not insource the small business component.
ST: What other small business initiatives are being focused on this year, and in the future, what are we going to do to make those goals?
JJ: There are five things between now and the end of the fourth quarter. We have a real drive to hit our fiscal year small business contracting goals. It will require everyone's effort. We have five things that, tactically, we are asking folks to do that I am personally very focused on. First, setting aside contracts in greater proportion for small businesses under the simple acquisition threshold. Between $3,000 and $150,000, that’s a real “sweet spot” for small businesses.
ST: Aren’t we already required to do that?
JJ: Well, there is a presumption, but unfortunately, the data shows -- I am a big data and metrics and fact-based analysis guy. We looked at the data, and only about half of contracts in that sweet spot, in that band, were going to small businesses. We have got to improve that. That’s a place that agencies have to look. Secondly, we have got to use the new tool that Congress and the aministration provided through the Small Business Jobs Act, this ability to set aside task orders on multiple award contracts for small businesses, including on the GSA schedule, setting aside those orders for small business competitors exclusively. You have got to use that, we have got to use that authority, it’s going to really help move the needle. Third, we have to make sure we are syndicating best practices across the board to all the agencies as quickly as we learn them. That is one of the key things I have seen. I saw it what I was at SBA, and I bring it to OMB. Somewhere, an agency has cracked the code. They just need to make sure everyone else has learned it. Everyone else needs to see, “Oh, that’s how you do it?” and follow that blueprint. An example of that is my fourth priority -- accelerating payments to small businesses. We know that cash flow is critical to a small business. And, if their cash flow is healthy and their balance sheet looks good, it only helps us get more and more small businesses into the supply chain, which is a win-win. What did we do before? Accelerated payments to all small business prime contractors. Wildly successful. It was at a very low cost to the government, and a really high benefit to small businesses. We have now extended that so that we are paying all prime contractors within 15 days. In return, for them paying their small business subs faster, and we think that will be tremendously helpful. Fifth and finally, we have got to have a keen ear out there for any new guidance or tools that we can provide to help our contracting community. I want to be very responsive when I hear there is something that we could do to help push. And over the next two months, even though I know that is a short time frame for change in the government, we are standing by, ready, willing, and able, to make those changes and get those new guidance out there because we have got to hit the small business goals.
ST: So for today's purposes, what would you like the listener of this webinar to know? What would you want them to come away with?
JJ: For today's session, three things. First of all, you are not alone. We have your back. You do not always get to see how the sausage is made inside of the Executive Office of the President, along with the Deputy Secretaries we’ve pulled together. I want folks to know, that the conversation that are happening, you have got a seat at that table. Anything that I hear through our frontline forum, through our Chief Acquisition Officer’s Council, calls with the Senior Procurement Executives, conversations I have with our great acquisition professionals every day, I bring that to that table, and they are being heard. I want them to know that. Secondly, I want them to be aware of these new tools, of these areas of priority and focus for OFPP and the administration so that we are driving execution in the fourth quarter and beyond.
Third, I want to make sure that people have some confidence in how decisions are made. Not just that they know what the priorities are, but how did you arrive at that priority? That is why I talked about some of the impact. That is why one of my roles at OFPP is being chairman of the FAR Council, the Federal Acquisition Regulatory Council. Much to my dismay, the FAR Council is not a group of wise elders who stand around an old oak stump and wax poetically. But it’s a group of individuals who take all of the input agencies to try and improve the regulations in a way our contracting officers can use to set aside contracting dollars more effectively for small businesses and to do all the other great things that they do more effectively and efficiently. Finally – I know I said three, but I have to add this as a fourth. This is probably the most important thing. Thank you. I want you to know that I sincerely appreciate -- as do all of my colleagues, the president, all of the senior leadership -- respect and appreciate the work that our acquisitions professionals do. Yes, that is true for our contracting officers. And if you’re a Contracting Officer’s Representative and feel like this is a side-duty, I’m telling you, it is critical to the success of our government. If you are a program manager and you’re saying “Hey, I am just tossing requirements over the wall to our contracting staff”, you have to stop and think about the impact on the system. Contracting is critical to everything we do and I thank you for being part of this exciting team.
ST: Joe, I thank you for the words. Do you have any final words of encouragement for the work force, not just the Contracting Officers? But also them specifically, since they are the ones on the ground doing the work.
JJ: Again, I want to emphasize the thanks and appreciation. But I want to say- what you're doing makes a tremendous difference. It is not about getting all the way from here to some far away goal. Every incremental step means huge dollars. One of the reasons I love my job so much, if I make a 2% improvement, that is $10 billion dollars. If we just get 2% more in the hands of small business, that is a ton of revenue, even in this town, to help small businesses grow, create jobs, develop their businesses, and become even better suppliers to the government.
ST: Excellent. Thank you so much.
JJ: Thank you, this has been great. Thank all of you.
Marie Johns (MJ): Good afternoon, and welcome to the Going Big for Small Business Acquisition Seminar. My name is Marie Johns, and I have the honor of serving as the Deputy Administrator of the US Small Business Administration. On behalf of Administrator Karen Mills and the entire SBA team, I want to thank you for all you do to get federal prime contracting dollars into the hands of American small businesses. The work that each of you do is critical to our national security, the success of our communities, and the long-term strength of our economy. I know that you know the facts. Over the last two decades, small and new businesses have created two out of every three net new jobs in the US, and the country's 28 million small firms today employs 60 million Americans, that is half of the private-sector work force. The reality is, small business contracting is probably the single most important tool that we have at the Federal level to help American small businesses grow and create jobs. The president clearly understands this and he is made small business contracting a priority across the administration. The way we look at it is that small business contracting is a win-win. The government gets to work with the most innovative and forward-leading companies in America today, often with direct access to the CEO. And, small businesses get critical revenue to build and scale their operations. At the SBA, our goal is to make sure you have access to the best small businesses in America today. That is why we provide a wide range of counseling, mentoring, and loan programs to ensure that small business contractors can be effective and productive partners with your agencies. One of my favorite parts of this job is that I get to travel around the country meeting with small business owners and entrepreneurs, and they are some great small companies out there. Some of the best ones are already doing work with the federal government. These businesses are building the types of products, services, and tools that will make your agency stronger, more efficient, and more productive. To ensure you have greater access to these businesses, we have been working to increase coordination across government agencies and to improve the tools we have available to assist small business contractors. We have also increased outreach to important stakeholders so that they can help us identify more excellent small businesses. We want to make sure we are doing everything we can to support your efforts to reach more innovative small businesses that are building products and services that tackle some of our nation's most pressing security, military, and technology needs.
As you know, we released our Fiscal Year 11 scorecard in early July. In Fiscal Year 11, we awarded more than $91 billion to small businesses, which is 21.7% of federal government contracting dollars. We fell short of the 23% goal and dropped a point from Fiscal Year 10. However, during the first three years of this administration, the Federal government awarded more than $286 billion, or just over 22%, in federal contracting dollars to small businesses. This is a $32 billion increase over the three preceding years even as overall contracting spending declines. In Fiscal Year 11, 14 agencies hit their small business prime goal. I want to congratulate all the Contracting Officers and acquisitions staff at the Department of Treasury for meeting all of its small business goals, both prime and sub. That is excellent work. In addition, for the fifth consecutive year, federal prime contracting dollars awarded to our service-disabled veteran-owned small businesses increased to over $11 billion, or 2.65%. This is up from $10.8 billion, or 2.5%, in Fiscal Year 10. This is good news for our vets. We are working to make sure that our returning service members have opportunities to transition into successful business leaders. The Federal government also has consistently exceeded the small disadvantaged business goal of 5%.
The reality is we have made progress in a number of areas, but as we tell every agency official we meet with, our goal is to meet the goal. This is especially true as I look at our Fiscal Year 12 year-to-date numbers. We clearly still have our work cut out for us to achieve the 23% goal in Fiscal Year 12. The next two months will be absolutely critical as more than $100 billion in small business-eligible contracts will be awarded between now and the end of September. In fact, over 30% of these remaining contracting dollars will need to go to small businesses in the final two months of this year for us to be successful in meeting the goal. The good news is, if you continue to focus on small business opportunities, we can make this goal a reality. We take small business contracting very seriously at SBA. So seriously in fact, that Administrator Mills and I make a point to meet with senior leadership from buying activities and commands all over the country -- to stress the importance of small business procurement, highlight tools, like the one we're talking about today, to increase small business contracting, and to talk about ways the SBA can better support buying activities to meet small business contracting goals. These meetings have been incredibly helpful for us. They give us the opportunity to learn about best practices as well as to address challenges that may be impeding contracts. The commanders we spoke to tell us they need more small businesses to enter the federal supply chain because they bring the innovation and competition that is crucial to their agencies and to our country's success. I encourage you to take the knowledge that you gain from this webcast and use it to educate and empower your staff and colleagues because, together, we can get this done.
As I close, I want to share with you about a great small company that is an example of what we have been talking about located right in Wilmington, Delaware. In this olympic season, the owner Frank Masley, along with his wife, Donna Masley, was an olympiad in three winter olympics. In fact, he carried the American flag in the Sarajevo winter olympics. Frank and Donna have built a wonderful company. They have 40 employees, annual revenues of over $3 million. What they do is they make amazing gloves that keep our servicemen and women safe wherever they are serving around the globe. They are providing an excellent contract for our military. They are a true success story for small businesses that are helping our federal government achieve its mission. Together we can make sure your agencies have access to the best companies, best products, and the best services in the world today. Together, we can make sure America's small businesses are well-positioned to do what they do best: grow and create good jobs in communities across the country. Thank you very much.
MB: We are back live. You just heard Deputy Administrator Johns discuss why contacting is so critical to our nation's small businesses and their ability to grow and create jobs and build the economy. Within SBA, the primary responsibility for small business contracting rests with the Associate Administrator of government contracting and business development, and that is John Shoraka. John joins us for the webinar live now. John, welcome, great to have you.
John Shoraka (JS): Thank you Matthew, thank you for having me here today.
JS: Ok, sorry, we apologize for the technical difficulties. We are back. Unless you can read lips, you probably did not hear anything I had to say. We know that small business contracting is critical. Not only to the Small Business Administration, not only to the administration as a whole, but to the White House specifically. We have unprecedented collaboration with the SBA, OFPP, White House, and senior leadership from all agencies to work with every agency to make sure that meeting the goals is a critical element for each agency. We have had quarterly meetings over the last several years to work with these agencies at the most senior levels. We talk about where we are as a Federal government with respect to our goals. We talk about where we are with respect to each agency as far as meeting our goals. We talk about how we can collaborate and learn from best practices on achieving our goals.
So what are we focusing on as we go into the last two months of the fiscal buying season and launch into the next fiscal year? As Joe mentioned, there are three critical areas we are focusing on. One is opportunities under the simplified acquisition threshold. I will talk about each of these in more detail, but let me just mention what the three are. Opportunities under the simplified acquisition threshold. The other is providing opportunities for small business set-asides under multiple award contracts. Finally, inserting agency small business contracting goals into the performance evaluation criteria of SES staff.
On the first one, set-aside acquisition threshold. We know, all of us know, that the small business act and FAR require that unless the rule of two cannot be met, anything between the threshold of $3,000 to $150,000 be set aside for small businesses. Now, we know that when we analyze this government-wide, there is extensive opportunity for improvement in this area. We also know that if we move the needle closer and closer to the 100%, we would be that much closer to achieving our goal of 23% Federal government-wide. This threshold, or as Joe calls it, the “sweet spot”, provides opportunity for Contracting Officers to set aside contracts for our 8A program, for our HUBZone program, for our service-disabled and women-owned small business programs. But this also helps for agencies to reduce administrative costs. It promotes efficiency and economy in contracting and avoids unnecessary burdens for agencies and contractors. We want to take this opportunity to raise awareness with respect to the simplified acquisition threshold and make sure that all Contracting Officers are working to encourage, to the extent possible, anything within the threshold goes to small businesses. The second item I want to touch on is opportunities for set-asides under multiple award contracts in the federal supply schedules – Joe also mentioned this. We know that over the last 15 years more and more agencies have turned to multiple award contracts, the IDIQs, IDVs, et cetera in the federal supply schedule. We know that the Small Business Jobs Act gave us the authority to set aside now under these vehicles, so we want to make sure that we take the most advantage of this opportunity to get the dollars to the small businesses and make sure that we meet our 23% goal.
The Small Business Jobs Act of 2010 provided over 19 provisions to level the playing field for small businesses when it comes to Federal procurement. There were many provisions in there. I do not want to get distracted from the question that we have here with regards to 1331, but one of the most significant provisions was Section 1331. Section 1331 gave discretionary authority to contracting officers to set aside contracts under multiple award contracts, under the Federal supply schedules. In November 2 of 2011, the FAR Council issued an interim rule. This interim rule allowed and currently gives authority to set aside contracts for small businesses. We want to make sure that agencies take this opportunity, especially if you are not meeting your goals, to take advantage of this particular tool and set aside under multiple award schedules, under IDIQs and IDVs. We know, as an example, that if we utilize this tool on the GSA schedule by 5% to 10%, we would have an additional $2 billion to $4 billion in revenue -- we would hit our 23% goal. This is an excellent opportunity that is out there. We want to raise awareness around this and make sure that we are all taking advantage of this particular opportunity.
The last item, as I mentioned, is keeping senior officials accountable for the agency’s goals. We have seen a significant progress where agencies have implemented this. Have implemented accounting and performance metrics in evaluation of senior SES folks. We know that, as this happens, our small business specialists who are resident across the country, our acquisition folks who are champions of the small business community, have further support to make sure the agencies are meeting their goals. In closing, I just want to reiterate the importance of the statutory goal. We have talked – our Administrator John has talked about the economy, and how this affects the economy. But even broader, I think we have to understand it is not -- although it can have a significant impact on the economy -- it has a significant impact on the industrial base for the country. It has a significant impact on innovation and competition for the Federal procurement arena. So we want to make sure that we take advantage of every opportunity that resides out there and make sure that we bring all our tools to bear on this opportunity.
MB: John, thanks. You have given us a lot of good perspective, especially on the priorities of increasing opportunities under the SAT and this new authority under Section 1331. We look forward to having you back during our roundtable where we will explore those issues a bit further. Now we want to turn to another key player in shaping small business contracting policies, and that is the FAR Council. Actually, it is not just one player, it is four. The FAR Council is made up of the Administrator of OFPP, plus the Senior Procurement Executives at DoD, GSA, and NASA. The FAR Council works in close coordination with SBA In developing rules that affect small business contracting and the rules that you see in the FAR. We thought it might be helpful during this segment to take a minute or two to talk about how rules and laws and policies become the rules that you see in the FAR. We also thought it would be helpful to focus in particular on the authority that John just mentioned a minute ago in 1331. This authority took a somewhat different approach -- I should say, we took a different approach to of implementing this authority in the FAR. I think having an understanding of how we are implementing this in the regulations will provide an important perspective for you in the field as you consider and use this authority to increase opportunities for small businesses. For GSA, we have Laura Auletta. Representing NASA, we have Ron Poussard. It’s great to have both of you, welcome to the webinar.
Ron Poussard (RP): Thank you, Matthew. My name is Ron Poussard.
Laura Auletta (LA): And I am Laura Auletta. Today, we want to talk to you a bit about the FAR, how the FAR gets revised, and why that is important in this environment, particularly with respect to this rule that Matthew talked to and John talked to on section 1331.
RP: We all know congress passes bills and the president must sign those bills in order for it to become law. Each year, this process results in laws that impact the Federal contracting process and sometimes very significantly. In most cases, laws are issued that provide some period of time to implement them in the regulations, like the FAR. Sometimes we have 180 days to implement a law in the FAR, and that gives us time for the process to take its course. This recognizes that there is a need for a deliberative process, before Contracting Officers are asked to implement a particular law. Changing the FAR is the work of the Defense Acquisition Regulatory Council, or the DAR Council, and the Civilian Agency Acquisition council, or the CAC. Together, these councils review the laws that come out, assign the work of analyzing and drafting FAR language, including clauses and other things that may affect your contracts. They assign those to specific teams. And manage the publication process in the Federal register to include a process that asks for, solicits comments, in response to those comments to the rules that we published. These councils do this by issuing proposed rules, interim rules, or a final rule. A proposed rule solicits comments before making the FAR change effective, whereas an interim rule goes into effect while the comments are being solicited. And a final rule is the product of those processes that ultimately publishes a change to the FAR. These rules are typically approved by the FAR Council, which is made up of DoD, GSA, and NASA. They are published in what we call the Federal Acquisition Circulars, or FACs. This process is important to ensure consistency in the application of laws across the Federal contracting process. It is not the desire of the process for each and every Contracting Officer to develop their own clauses to implement specific provisions of law. Other agencies can also issue rules within their areas of responsibility, and they can impact the contracting process and require changes to the FAR. SBA is one example of an agency whose policies and processes can be directly related to the contracting process and require change. It is important to understand that Contracting Officers must follow the FAR until it has changed, or a deviation is approved. Laura is now going to talk about this process. In particular, focus on SBA rules that were mentioned earlier.
LA: Thanks Ron. You know, it is interesting because normally, what we would expect to see in something like this, where we have a law that is enacted, we would normally expect to see SBA move out and begin implementing that regulation and their regulations. In this case, we took a slightly different tact. Why did we do that? With section 1331, of the Small Business Jobs Act, it did a few things. But among them, key was the ability for Contracting Officers to set aside task and delivery orders under multiple award contracts. Including GSA Federal supply schedule contracts. What we know about ordering under these multiple award contracts is that it has become increasingly popular over the last decade or so. It gives great advantages to agencies in terms of streamlining to meet their mission critical needs. What we know about the set asides that we are all familiar with is that they are a very important tool to getting us to those nimble, innovative contractors who help us small businesses -- help a small business meet our mission critical needs. Unfortunately, there was silence in the FAR about set asides, how we apply them to these great, streamlined acquisition vehicles known as multiple award contracts.
Recognizing this and recognizing what section 1331 did to bring these two things together presented us and the agencies with a tremendous opportunity. Here we have this great streamlining tool that they have been using and that they are very familiar with, over here we have set asides. Together, combining them, it was a powerful combination. So powerful, in fact, that SBA, OFPP, and the FAR Council agreed it was crucial to get that tool in hands of Contracting Officers, through the FAR, as quickly as possible even before SBA had an opportunity to work out the details. That is how we ended up with an interim rule in the FAR before SBA worked out the details. What I would like to stress here is that, in this fourth quarter, it is a very important tool for us to reach our goals. I cannot stress that enough. We are seeing agencies using this tool right now through e-buy. We are seeing the statistics roll in that folks are setting aside their task and delivery orders under GSA schedule contracts. In a few moments, we are going to hear from Houston Taylor, one of my colleagues at GSA. He will be giving you three very simple steps on how you can use this tool now in the fourth quarter to meet your goals. If you are not meeting your goals at your agency for small business, regardless of the category of small business, you should be setting aside task and delivery orders right now under multiple award contracts, and we would encourage you to use the GSA schedule program to do that. That is what I would like to point out to folks, is that there is no risk in doing this right now. You can do it right now, your colleagues are doing it right now. I would urge you to join your colleagues and start setting aside these orders.
MB: Thank you both, that was perfect. And as Laura mentioned, coming up next, we are going to hear from Houston Taylor and some of the very important steps that FAS is taking with respect to the schedules to enable agencies to take full advantage of the discretionary set-asides. Before we do that, we are going to take a 10-minute break. Believe it or not, this technical glitch we had a moment ago worked well because it kept us exactly on schedule. We will take a break and see you all in 10 minutes.
MB: Welcome back. As promised, we will now turn to the Federal supply schedules. Before I introduce Houston Taylor, there are three important points to keep in mind which explain why this schedules program is so important to our conversation today. First, Federal agencies acquire approximately $50 billion worth of goods and services every year through the schedules that GSA and VA operates. That accounts for roughly one out of 10 contracting dollars. Second, there are many thousands of small businesses that participate in the Federal supply schedules program, so it is easy to understand why small businesses view the schedules as their gateway to the Federal marketplace. Third, schedules are essentially multiple-award contracts. The authorities that you heard every speaker today talk about, John, Laura, and Ron, about using discretionary set-asides as a tool to access small businesses, is very vital and important with respect to the schedules program. To tell you more about what GSA is doing to implement the discretionary set-aside authority, we are pleased to have Houston Taylor here, he is the Assistant Commissioner of FAS, with us. Welcome, Houston.
Houston Taylor (HT): We are back, I think with our technical difficulties resolved. I always like to story-tell a bit, and there is actually a little story behind this. Flexibility is the key to air power, as we continue to move forward. Let's jump in to my part here today and talk a little bit about what GSA has done to support OFPP and SBA to implement Section 1331 of the Small Business Jobs Act. Quite frankly, it has been a journey, working with our stakeholders, Chief Acquisition Officers, Senior Procurement Executives, agency small business directors -- on the hill, industry, and small business. No small task, meeting, talking, discussing, getting the different views around the impact of 1331. Our role has been to work very closely with the interim rule that was published in November, 2011. As we move through that, though, let's talk about some of what we have done, from a GSA perspective. Let me give you some numbers “inside the game”, if you will. First, here's what we know when you use the multi-award schedule, commonly referred to as schedules. When Federal agencies use the multi-award schedule, we see that they achieve their social-economic goals. We know for a fact that 26 out of 28 CFO Act agencies using schedules have achieved or met their socio-economic goals. The takeaway there is simple: when you use schedules, there is a high probability that you will hit your social-economic goal.
What are some of the numbers behind the schedules program as it relates to small business? First, 35%, or $13 billion has gone to prime dollars in small businesses in Fiscal Year 2011. This year, Fiscal Year 2012, we are tracking slightly below that, 34%, or approximately $10 billion. I am confident though, with your help, that we can meet or exceed the goals that have been set. Now, let's talk about the acquisition strategy that is available to you as a user. How do I actually use the schedules to go out and achieve the social and economic goals that have been set aside and mandated by your agencies? A couple of points. First off, small business groups, FAR Part 19, small business, 8A, HUBZone, service-disabled vet, economically-disadvantaged, woman-owned -- they all apply. You can achieve set-aside in any of those areas. There are three simple steps that you really need to follow. One, perform your market research. I cannot overemphasize this. Do your homework. Spend time looking at the schedules, making sure that you have the small businesses that is capable of meeting your needs. If you're not sure, reach out to the companies, reach out to us, GSA, but do your homework. And finally, in that area, document your findings. Documentation is critical.
Secondly, incorporate the appropriate FAR set-aside clauses in your Request For Quotation. This is a critical step to make sure that people responding to your RFQ understand the rules of engagement, the terms and conditions, and that it is, in fact, set aside. When we think about schedules in that area, recognize that we are looking at 19,000 to 20,000-plus schedule contractors. They are not all small business, so it is important for you to make sure you recognize that. What we're doing to help you in that area is we are modifying our schedule contracts to ensure that those terms and conditions are in place for you. We are about 60% down the road in completing that task. Until such time, it is critical that you, as a procurement official, make sure that you have incorporated the FAR set-aside clauses. Third point- use the same competition rules provided in FAR 8.405; except, limit your consideration only to small businesses. For specific instruction on how to perform set-asides under the MAS, check out FAR 8.405-5.
Now, let’s go a little bit further- what are some of the initiatives that we are doing to ensure that, in fact, you can use set-aside procedures under the schedules in a fast and efficient way? First, from a system perspective, when we refer to e-buying schedules, we are talking about our platform for posting requirements. If, in fact, you use the e-buy system, it will automatically insert language into the Request For Quotation, notifying the contractors that this is a set-aside. So that is a key point -- if you think about it, e-buy can help you do your job better. Secondly, the language provides automatic compliance with the clause. That is embedded in what we have done. It restricts access to the set-aside, to RFQ holders only with small business. In other words, if a large business attempts to get in, they would get the notice that the requirement has been set aside, again making your job a little bit easier. Functionality -- let's talk about some of what we are seeing. I think it was alluded to earlier. What is really happening? Are Federal agencies using e-buy and schedules? We are starting to see preliminary numbers in that area, and I want to share some of those numbers with you. In the past three months, nearly 3200 RFQs have been set aside. In the month of June alone, we saw that roughly 20% of the 7200 RFQs posted were set-aside. That tells me, as a procurement official, that you are getting the information and understanding it and using the tools in front of you. Clearly, we can do better. We will continue at GSA to monitor the data and provide feedback to the Federal agencies.
Now, I want to move into an area of training our acquisition workforce and industry. Putting tools in place, putting regulations in place is a great thing, but if the workforce is not trained, if they are not armed with information, then we fall short. Mr. Jordan touched on it when he talked about the acquisition workforce. It is a passion with me as well. At GSA, I encourage you to take a look at our YouTube videos. We have two of them out there on how to do small business. We have had over 1100 views at this point. We have a blog on GSA Interact. Take a look, over 8,000 hits up to this point. A lot of good information. Frequently asked questions and answers, “How do I do this?” We have an FAQ on the website with nearly 7300 hits. Take a look at the policy, take a look inside our portal. Finally, in the area of training, we have training for industry as well as our contracting acquisition workforce. That training is available through our webinars and our YouTubes. So, please keep it in mind, take advantage of the training. When we think about going big for small business – this is our call. I again want to thank you, your effort, and your support, in meeting our social economic goals.
MB: Houston, thanks very much, that was great. I guess I didn’t tell the truth at the beginning of the webinar – I said there would be no tutorial. The quick tutorial that you just gave about how to use the schedules was wonderful. A great three-step process. I hope that those of you who have not had the opportunity to have training will take Houston up on his offer and the work that he and his team are doing to make 1331 an easy tool for you to access small businesses on the small business schedules. We have heard from officials who play key roles in shaping policy. We have heard a little bit of a tutorial. Now, we want to hear from a few agency officials to talk a bit about some of the strategies that they are using in order to maximize opportunities for small business contracting. We are very pleased to introduce and welcome Andre Gudger, who is the Director of Small Business Programs at DoD. Andre, welcome to the webinar.
Andre Gudger (AG): Thank you, Matthew. It is great to be here. In fact, when I thought about this opportunity to participate in a webinar, I thought this would be a great chance and opportunity to tell everyone out there who will see this in real time and watch the recording to say -- the Department of Defense has taken the rule of two, or to set-aside multiple award competition for multiple award contracts for small business, very seriously. In fact, last year, in June, myself and Dick Ginman, the Chairman for Acquisition Policy, signed a joint memo that was one of the first steps, a quantum leap in the right direction, that allowed us to encourage our entire acquisition workforce to, when planning acquisitions, to set aside task orders under the Federal supply schedule and multiple-award contracts for small business. We know that the fourth quarter is a big part of our spending in the Department of Defense. We thought it would be appropriate to look at how we can encourage competition in a few small businesses in what we do, and work on building out our industrial base. That was the stuff that allowed us to implement further the 1331 guide into November. It was possible then for us to set aside multiple-award contracts for small business. We thought that getting our workforce trained would be a key element of that. In November of last year, we got guidance out to our entire acquisition work force of over 27,000. And I must thank all of them for the hard work that they have done so far in improving the numbers and improving our competition. I have to thank all our small business directors. We have a host of small business stories. It is very difficult to choose one are two to present to you, but I think that we have looked at this and said, our great colleague at GSA talked more about the implementation of 1331 and how it has been very successful for GSA. DoD is a very large user of the GSA schedules. So one of my success stories for DoD was through the GSA Federal supply schedule, a set-aside for the Department of Navy.
It was a change in the culture, for lack of a better term. It was a large business set-aside of $11 million for the past decade. And in fact, the incumbent was performing well. But when we used market research, going back to the memo we sent out in June of the prior year, and we encourage the use of market research for all acquisitions, we uncovered that there were small businesses who could perform this kind of knowledge-based work, and after a great meeting with SBA and the Senior Procurement Executives and specialists and Contracting Officers, it was determined that this opportunity could be set aside for small business competition. Again, it was a quantum leap in the right direction for us at the Department of Defense. The Navy was a leader in this procurement. Since then, other great stories have followed.
A second best practice of implementation of 1331 was the Air Force. The Air Force actually had a very unique requirement for the joint terminal TAC controllers, which is what we use to train our young men and women in the services as they were preparing for combat. It was a very difficult procurement, traditionally done by large business. Through market research, again we found that small businesses could compete if we looked at the requirements very closely and broke out pieces for small businesses to perform what they do best and look for the innovations that they have been giving us. So, we did that. The procurement was a very large overhaul of 55 systems and training modules worldwide. Again, we have a good success story with the Navy and a great success story with the Air Force. I would like to say one of our biggest and best success stories came here recently in a sources sought. I would encourage all you businesses to look at sources sought and take it seriously. We use sources sought as one of our means of market research. We put out a sources-sought notice on a $7 billion procurement, full and open, unrestricted competition, and we did not get the response we thought we should get. So, in my office, we said that we understand there are small businesses that could play. And so we encouraged a second round of Requests For Information from industry, and the industry responded, and responded very well. It will serve as paramount to our process, in looking at it as the benchmark for progress moving forward. We took a $7 billion procurement and set it aside with multiple-award connotations, whether it be large and small business awards made on this contract. We have built on- and off-ramps to allow for healthy competition over the life of the contract. Small business – right now, we have reserved, although it is not awarded, we have estimated reserving about $3.5 billion of that $7 billion for small business competition. Whereas over the past 10 years, small business only served as a subcontractor.
We again think that this is the right direction, and have received an enormous amount of positive feedback from industry. I think this new regulation will ensure that healthy competition is maintained. It will be a shining example in the Department of Defense. It promotes additional opportunities for small business success. I would like to wrap up, thinking about some of the best practices. The Department has taken even one step further. We are looking at some of our existing contracts, long-term contracts, and seeing whether the rule of two can apply to even our existing contracts. It is not just new contracts. We're doing a very fine scrub. In fact, our head of defense procurement and acquisition policy and myself just crafted our second memo about multiple award contracts. And we are encouraging all our services and agencies to relook at previously awarded contracts, and, where appropriate, open it up for small business competition for the fourth quarter of this year and beyond. With that, I would like to thank you for your time and attention and turn it back over to Matthew.
MB: Andre, thank you very much. Everybody knows what a critical role DoD plays in acquisition. We greatly appreciate the leadership that you and your team are showing to increase and maximize opportunities for small businesses. We especially appreciate your sharing some of your secrets for success. At the beginning of the webinar, you heard Deputy Administrator Johns mention that the Department of Treasury met all of its small business goals in the last Fiscal Year. That includes not only for small businesses, but also for small, disadvantaged businesses, service-disabled, veteran-owned small businesses, HUBZone small businesses, and women-owned small businesses. It is really quite a feat. We are very pleased to welcome Pam Wilson, who is a business analyst at the Department of Treasury, as well as Jake Hansen, who is the Director of Procurement Policy at IRS. Please listen carefully, as we're all waiting to hear their secrets to success so we can duplicate or, to use Joe Jordan’s words, ‘syndicate’ it throughout the government. Welcome.
Pamela Wilson (PW): Good afternoon, everyone. First, I would like to start off by saying, “Go team Treasury!” Yay! Good job, guys. Good afternoon. We will start off by sharing some of the treasury's great news with you guys. And then my colleague, Jake Hansen, from the IRS will share some successful practices for how the Internal Revenue Service has met its goals. So we are going to get into some of our great news – in Fiscal Year 2011, our Treasury-wide small business campaign, which was called “Crush the Goals”, resulted in a landmark achievement. For the first time ever, Treasury not only met but exceeded all five of its small business contracting goals. Treasury exceeded both of our two most challenging goals, which were the HUBZone and the Service-Disabled Veteran-Owned small business goal by one percent. We more than doubled our goal for contracting with women-owned small businesses, as well as small and disadvantaged businesses. Treasury also earned a rating of “A+” on the SBA scorecard for small business contracting achievements. Also, our Senior Procurement Executive, back in July, personally issued a letter to all of our prime contractors requesting that, number one, they accelerate payments to small businesses. Two, that they consider modifying the existing contracts to include clauses to pay the small businesses in an accelerated manner. And then asking them to insert similar clauses in future contracts with small business contractors. In Fiscal Year 2012, Treasury is on track to repeat these same successes.
Next, I would like to address how Treasury is implementing the three White House “asks”. The first “ask” of the White House was for leadership accountability. Treasury has three levels of leadership accountability. One, comprehensive reports are disseminated weekly to the Treasury small business acquisition community. Two, the small business goal attainments are discussed monthly during our Treasury Acquisition Council meetings, we call them our TAC meetings. And three, record reviews are conducted quarterly by our Deputy Secretary, Mr. Wolling, and the Senior Procurement Executive, Mr. Thomas Sharpe, during our senior-level management meetings. During Fiscal Year 2011-2012, the small business goals were included in all of our performance plans for our Treasury’s procurements staff, Senior Executive Service, and the acquisition staff. The Deputy Secretary has gone above and beyond by aggressively setting Treasury-wide overall small business goals at 35% versus the 32% statutory goal. It is noteworthy to mention that the Treasury holds its non-appropriated bills to the same standards as our appropriated bills. When Treasury combined the appropriated bills with the non-appropriated bills, our goal increased from 34% to a whopping 63%.
The second “ask” of the White House deals with simplified acquisition thresholds. Treasury has been very aggressive in ensuring compliance with the SAT requirement. We are reporting above the government-wide goal of 65%. Treasury is currently at 71%, and we’re getting there by having policy controls in place. One of our policy controls is that all procurement files must include acquisition plans that are reviewed by team -- by the office of small business development and, two, are reviewed by a small business specialist, and large business recommendations are challenged if any are necessary. The SAT status for each bureau is then reviewed quarterly by our bureau Chief Procurement Officers and bureau heads. The third “ask” of the White House deals with multiple-award contracts. We have been asked to consider using the multiple-award contracts with small business set-asides if we have not hit our goals. Although Treasury has met the goals for Fiscal Year 2011, and we're on track for meeting those goals in Fiscal Year 2012, we're now going to utilize our TIPS contract, which is the Total Information Processing Support service contract, our largest IT MAC, to the tune of about $450 million, and the cyber security component piece of that is exclusively held for small business. Treasury is currently meeting all of its small business socio-economic goals, with the exception of HUBZone, and we are looking to these MACs to specifically focus on HUBZone IT contracting. Other Treasury MACs are being considered for targeting products for HUBZone set-asides. As we move forward to Fiscal Year 2013, we will continue to improve upon these things that proved vital to our successes – i.e., leadership accountability, communication, incentives, and targeted outreach. To enhance, we are expanding our tools and resources, including training and education, with creative uses of technology. The US Department of Treasury thanks you for giving us this opportunity to share our good news. Now I will turn it over to my colleague, Jake Hansen, to share some successes.
Jacob Hansen (JH): Thanks, Pam. It truly was an exciting year to be in the Department of Treasury and the IRS. It really comes down to my first day on the job. We all remember what that is like to have jitters on your first day on the job. I was going in to meet Commissioner Doug Shulman, and the Deputy Commissioner Beth Tucker, and my new boss, Dave Grant, in charge of agency-wide shared services. It was May 9th. I remember we were coming off of a lengthy continuing resolution. My main concern was on executing the IRS budget. I was certain that would be the focus. My first meeting with the Commissioner changed my acquisition outlook for the remained of that year, and probably for the remainder of my time with the IRS. He asked me the question- “Can we make our socio-economic goals?” I was caught aback a little bit. We had maybe five months left to the Fiscal Year, and I am being asked about our social and economic goals? I had never seen anything like that. It was an organizational culture shift that I had never seen. That’s tip number one- you have to have that support from the top. Because the entire time, for the remainder of the Fiscal Year, not once did I get pushback from a customer on trying to go to a socioeconomic contracting category for a contract award. That’s a big deal – when the whole team is behind you, you can accomplish amazing things. You also have to inspire the team. What I mean by that is you cannot tell people to go for a goal for the sake of going for a goal. That is not how this happens. You're talking about parts of our country that are disadvantaged, that need assistance. It is part of the American dream. I myself am a service-disabled veteran. I served in Iraq, alongside these men and women that are coming back from a war zone. We owe it to them, after being great ambassadors and warriors, to give them a piece of the pie. That is how you motivate your contracting workforce – make them understand why we are trying to do these socioeconomic categories. The right reason – taking care of Americans for a greater America.
My personal formula is simple. Surround yourself with really good people. Listen carefully to what they have to say. And then empower them to do their job. And I’ll tell you what – from my career, both in the military and the IRS, I’ve found that there are two different types of leaders -- those that say they care about people and those that care about people. And you know who knows the difference? It’s the people. When you truly care for your workforce, when you are truly looking out for their well-being, when you realize that diversity is a strength of a workforce, you can bring the whole group together. All you have to do is ask them for the right reasons to try to accomplish a goal, and they will turn a mountain to do it. In this case, the IRS and Treasury did so. Now, you cannot visit this just from time to time. When you are going for socio-economic goals, it has to have a daily focus. I took one of my talented GS-15’s, and put her on this project to help me have that daily focus. We actually developed some CFC-style charts, you know, the thermometer charts, the red ones, for each of our socioeconomic categories, so that we could show the whole workforce how we were doing as a team. It allows them to see where we have done really well in certain socioeconomic categories and where we had to work harder in other. And still, HUBZone, Service-Disabled Veteran-Owned businesses are a challenge.
And then, you have to employ those analytics, those charts we talked about right there. The more important part is taking a good look at your forecasting. You need to really understand what is coming down the pipeline and make sure that they are going in the right socio-economic categories. If they are not targeted for a socioeconomic category, why not? Again, we have to do the rule of two, and we may have to do a Request For Information. If we find we have two qualified small businesses in that category, that is great. That is the direction we have to go in. That is the direction that the IRS did go. Sometimes, you really have to focus on locating the HUBZone contractors. What I mean by that is that, a lot of times in contracting, sometimes we assume that, because we put something in FedBizOps, that everyone is scouring it for opportunities. With some of these smaller businesses, that’s not necessarily true. So what you need to do is do your homework, know what these HUBZone contractors can do, service-disabled, women-owned contractors can do. And then make sure, when you’re putting solicitations out there, that you do that little bit extra and reach out to them to make sure they know the opportunity is there for them to compete on.
Also, reach out to large contractors and ask them about their sources for suppliers of HUBZone and other service-disabled and women-owned businesses. Leverage the flexibility inherent in the regulations. If you are an 8A contractor, and if you are an 8A HUBZone or service-disabled or women-owned small business, that is a triple win for us. And you know what, I am going to be searching you out, because we do have flexibilities to help you get some of those contracts. And celebrate every success. For every award made to a HUBZone, Service-Disabled, Women-owned contractor, I personally send out an e-mail to the entire contracting chain of command, including, for many larger awards, Beth Tucker, our deputy commissioner, and even sometimes Commissioner Shulman, to celebrate. Folks, we are one of the most exciting career fields that exists in the Federal government. You have to have a passion, and be excited about meeting these goals. You have to get your organization fired up about reaching them, and you know what? You can. Thank you very much.
MB: That is great advice. I’m sure you are all feeling the same thing that I am, which is, when you listen to Pam and Jake speak, which was just for a few minutes, nobody questions or wonders why Treasury is meeting all of its goals. Congratulations once again. In a minute, we're going to move to our roundtable discussion. First, a quick announcement. Although Joe Jordan was not able to join us live in today’s webinar, OFPP is planning a webinar called “Meet the Administrator”, or “Meet the OFPP Administrator”, and that will be coming this fall. Keep your eyes open for that. We hope you will have the opportunity to hear more from him coming up shortly. I will now move my chair down. This is our short gymnastics segment, in honor of the olympics. There we go. I should perhaps reintroduce everybody. We have Laura Auletta, we have John Shoraka, and we have Ron Poussard. I am still Mathew Blum. I thought it would be good to start our roundtable with a couple of the issues that we have been talking a lot about, that are the key priorities and – John, as you noted, we have been talking a lot about with the Deputy Secretaries, with the Chiefs of Staff, with the small business Directors, with the Senior Procurement Executives, any official we can find, the key priorities. We want to make sure these messages are getting out.
MB: Our first question, that we hear from a lot of folks, deals with the SAT. Essentially, what is new here? We know that, for many years, the Small Business Act had a statutory requirement to set aside work for small businesses if the rule of two was met. What is it we want to see agencies doing differently, beyond what they are currently doing?
JS: That is a great question, Matthew. One of the things is that we are not changing the rules here, as you mentioned. The emphasis is taking advantage of what is out there. We identified that there are significant opportunities in the Simplified Acquisition Threshold. We know that, as we move closer to that 100%, we are never going to get quite to 100% -- there’s reasons why we won’t. As we move closer to that 100%, we will get closer to the 23%, what we would encourage -- and we have seen some of the best practices today -- how do we keep not only our acquisition folks, but our program managers aware of our performance? Sharing how the agency is doing with regard to the Simplified Acquisition Threshold, within the agency, would be helpful in keeping the focus on this issue. That is one of the best practices out there.
MB: And as you mentioned earlier, John, when we have done analysis of the data, we see that there are true opportunities, real significant dollars, that are not going to small businesses that we think would be eligible for small businesses with some of these best practices. Let's talk about 1331. I know we have talked a lot about that. There are a couple of points I want to go back to, to make sure they are clear in people’s minds. The first relates to the unusual way in which the reg was developed. As we talked about, the FAR came out with its interim rule with the basic framework. Then SBA came out with the proposed rule that provides greater detail – what are set-asides, what are partial set-asides, and how do reserves work? I guess -- there are some folks who have this question, which is, “If I am out there and using the FAR rule, and I am using processes that are different than the SBA proposed rule, am I going to get into some sort of trouble? Do i need to stop what I am doing and, when these rules are finalized, even if they are a bit different than what they are now, do I need to somehow change my current practices, or am I ok to move forward?”
RP: I’ll take that, Matthew. As you’ll remember, what I was talking earlier, we talked about the process of the Federal register. I find that if you try to understand a rule and why it is in place, as opposed to just what it is asking us to do, it is great to go back to the Federal register notice and read the preamble, which describes the situation. In this case, the preamble is pretty clear. Moving forward with the interim rule was a joint decision. SBA and OFPP both recognizing the importance of the rule, to get that ability and authority out to our contracting officers so that they can actually use it and move forward with it. I know some, from my own experience, who were using it long before the rule even was in place. The ability to set-aside, when specifically stated in solicitations. This particular interim rule makes it clear that set-asides may be used in connection with the placement of orders on a multiple-award contract. Notwithstanding, although, are the requirements of fair opportunity, and many of looked at that as one of the challenges we face in doing set-asides under multiple award contracts. Providing the solicitation provisions, which are also part of that interim rule, is an important aspect of it. That preamble also -- and another statement you often see in the preamble is the expectations -- the expectations of the FAR Council. In this case, they made it clear that the FAR Council expects us and the agencies to use that authority as the SBA is working on developing the rules that are more specific to how we implement it.
MB: John, do you agree with that?
JS: Absolutely, I concur. Ron mentioned we're working on a rule that is going out for public comment. We will work through that process. We wholeheartedly support taking advantage of the interim rule to help us get where we need to go with respect to our goals.
MB: So let me pose this question. I know it was touched upon, but I want to bring it all together. What would be the specific things that agencies can do right now? In other words, we have a very broad FAR rule, but I think there will still be some folks, and again, I would be in that category too if I was smart enough to be a Contracting Officer. What are the tools that are accessible to me so that I do not have to do a lot of reinventing the wheel? If we were going to do a very simple checklist, what are some of the immediate things that come to mind?
LA: I think that the first thing we can do is make sure our workforce understands where training is available and how to use it. Houston talked to us earlier about training available on the schedules program. We also have training available through the Federal Acquisition Institute. I would encourage you to use the tool that we have stepped out with first. You’ve heard a lot about it, but the GSA Schedules program. We have really stepped out there, we have made the training available. We have given you three easy steps to making this a reality and starting to use it. We are seeing numbers and they are starting to increase in the use of this as a way of reaching these small businesses and achieving the goals. I think that is key. I think it is noteworthy that when you use schedules and you use e-buy, we are keeping statistics on this so that we can monitor the usage and see how we are doing.
RP: I think another good point is within your own agencies or locations, you can take advantage of your small business Directors or small business specialists, the SBA procurement representatives in your area who are looking for the types of vehicles that might be suitable for promoting your small business participation and meeting this mission. And I understand the Department of Homeland Security, DHS, has some coming up this last quarter. DHS's Eagle 2 and First Source 2 are out there. And there are many others, and I think it is important to use the tools at your disposal, for those who are doing market research, to understand what vehicles are out there for you to use.
JS: One thing that I would add is that we often get a concern about our rule, when it does come out, being retroactive. We want to make it clear that our rule will be forward-looking. “I use the interim rule and I may have done something awry”. We want to make it clear that our rule will only be forward-looking.
MB: So, get yourself trained on the schedules, talk to your OSDBUs, look for contracts that will be online or are already online that will already incorporate the discretionary set-asides, and also be assured from SBA that the good work they are doing will be prospective, not retroactive. I should also just put a point in, not to forget, that SBA did a comprehensive listening tour last year. I think that one of the reasons it has been taking some time to get these rules in order, is in order to digest all of the good things you have heard from people throughout the country, both agencies and in the private sector. This is complicated. We need to do it right and make it understandable and practical for our work force. We will get there. Those are good steps.
RP: I think I have one, Matthew, from OMB. We have been hearing about something called a ‘quick-pay initiative’. We know recently that OMB sent out a letter about accelerating payments to small business subcontractors. Can you talk about what quick-pay is so folks understand what is going on?
MB: That is a great question, Ron, and I’m glad you brought that up. It is very important to understand, especially for the Office of Management and Budget for very simple reasons. Simply put, faster payments increase liquidity and unlock capital that small businesses need and can use to reinvest and grow their companies, to hire people, and to strengthen our economy. And also to increase their participation in Federal contracting. Last fall, OMB established the quick-pay policy to essentially waive cash management policies that are in the Payment Act. Typically agencies are required to pay their businesses within a 30-day window. By waiving cash management, we created a goal that agencies should aim to pay their prime small business contractors within 15 days whenever possible, to the maximum extent practicable. This past July, we have built on that quick-pay policy and extended this to accelerate payments to small business subcontractors. And the way we did that with our policy is a two-step process. Step one is that we have asked all the agencies to accelerate payments to all of their prime subcontractors, small and large, with the goal that this will incentivize them to then turn and pay their subcontractors at a faster pace. So agencies are all being asked to encourage their prime contractors to accelerate their payments to their small business subcontractors, and the FAR Council has a role in this process. They developed a temporary clause that will soon be shared with agencies, hopefully this week, to help with the acceleration of payments between the prime contractors and the small business subcontractors. But getting the money into the hands of small businesses at the prime level and at the subcontract level is very important to our nation’s economy. And John, I understand we have been getting some positive feedback from the small businesses.
JS: Absolutely. As Marie mentioned, both our Administrator and our Deputy Administrator do a significant level of traveling across the country, and meet with small businesses from Main Street to government contractors, and the effect that this has on the cash flow of a government contractor, especially a small business, can’t be explained enough. A lot of people think, “It’s money, what difference does it make if you get it 15 days earlier?” But the cash flow impact can be significant, when payroll has to be met, when expenses have to be paid. They do not have to borrow. They can get their payments quicker. That has a significant impact on the business's ability to grow and be successful.
MB: Great. Well there is a lot more to come, and, as I mentioned, the FAR Council has put together a deviation, and we will be working on rulemaking and also thinking about the long-term strategy for what are the best policies to get this into the FAR on a long-term basis, so thank you. Another question we hear frequently from the agencies, from you in our listening audience is where can an agency go if they need help with their women-owned small business rules? The authority for women and small businesses has been around for some time, but the rules are relatively new, and there are some challenges to make sure you get it right, and I know SBA has been doing work on that. John, can you give us a few points of view?
JS: Absolutely. You mentioned that the authorization from Congress has been around for some time. I think it was in 2000 when that authorization was given. The rules themselves were not really addressed and brought to bear until the administration took that on in 2011. As you know, women-owned small businesses and economically disadvantaged women-owned small businesses have an opportunity to have a level playing field to participate in government contracting. We do know that the program is unique. There are particular codes that apply, and there is a lot of uniqueness around the program. We have developed a training course specified towards Contracting Officers, but available for everybody that might want to learn more about the program. The course itself is on our training portal, SBA.gov/gcclassroom, and we have also shared it with FAI. It’s on their site under Continuous Learning Opportunities. The link will be posted at the end of this webinar. Again, I would encourage, there are multiple opportunities for Contracting Officers to look at the SBA website and make themselves aware of what is out there.
MB: And John, thanks for reminding me, at the end of the webcast as you mentioned, we will be having a series of resources that will post for you. You can do some follow-up after the session and know where to find this information. I want to switch gears a little bit. We have been talking about policy and regulatory issues. Let's take a minute to touch on legislation related to small business contracting. As I’m sure you know if you have been following Congress, there has been a lot of discussion of small business issues. In fact, in the house bill for the National Defense Authorization Act for 2013, I think I counted approximately or close to 40 provisions. They cover the landscape from acquisition planning, training, contract bundling, the protégé program, the role of the OSDBUs, the role of the procurement center representatives, goaling, everything you can think of. As a caveat, the administration is in the process of working through and reviewing those provisions. We will not be able to share views in terms of the specifics of those provisions. But I do want to step back and look at this; the purpose of today's webcast is perspective. What might folks take away from the fact we have so much going on in the Defense Authorization bill, these 40 provisions – is there any message we can get from that?
JS: I can take a stab at that. I think that certainly, it shows the amount of focus that is on this arena in Federal procurement and especially small businesses. It shows that this is very visible, not only to the White House and the administration, but also on the hill. As you mentioned, it would be premature to comment on specific provisions. But we have seen how this has culminated in the White House procurement group that meets quarterly to address goals and best practices like we’ve seen today. We have seen this with regards to the Small Business Jobs Act that we mentioned earlier today and the 19 provisions for leveling the playing field when it comes to small business procurement. And let's not forget about the White House interagency working group, the small business task force that was established early on in the administration. A lot of those recommendations were either implemented initially or made their way into the Small Business Jobs Act. So those are things that I think one can take away -- what we see is there is a significant focus on small business procurement, there is a significant understanding of the impact this can have. As I mentioned earlier, it is not just a focus on employment and economic growth, it is with regards to implementation, and the capabilities that it brings to the Federal procurement arena and overall industrial base.
MB: As we approach the end of our webinar, I want everyone to take out your crystal ball. We want to look forward and think about what we need to do to maintain and build on this momentum so that we can continue to do better and better at meeting and exceeding our goals. At the beginning of the webinar, we heard Joe, when he was talking to Susan, he mentioned a number of steps that we need to focus on. He mentioned several that we have dwelled on. Maximizing opportunities under the SAT, taking advantage of 1331, accelerating payments to small businesses, syndicating best practices. Maybe we should just repeat that one in particular. There are so many good things that go on on a day-to-day basis. I have often told my colleagues that, if every Contracting Officer took just 15 minutes a year to write down one good thing they were doing, and we took 1%, we would still have hundreds of examples of great things that are going on. Sharing best practices -- we can never do enough of that. I hope those of you listening to today’s webcast – I understand there are well over 1000 tuned in. I hope you will reach out to your management and tell us the good things you are doing. There is nothing more powerful. It doesn’t matter what we say, necessarily, it’s what our colleagues are doing – using these practices and making them work. Also, Joe mentioned keeping a close eye on whether there are additional tools that agencies may need. And this one, I think he was mentioning in light of the fact that we’re in a fiscally challenging environment, and it may be a little different for when you’re talking about a program that has a steady state versus one where you might be seeing a reduction in contracting, need to make sure that, for example, the OSDBU is at the table with the CAO, with the CFO, with the contracting people. So, that was his list- how do you all feel about that? Did he get it right? Are there other things that you might add?
JS: I can say two things. One thing -- Joe mentioned the acquisition work force and the hard work they do every day. They are champions of small business. We have our small business specialists and our PCRs and our OSDBUs et cetera, I want to make sure that they understand the gratitude that comes from the administration and SBA. As one of the best practices mentioned, knowing that we have their back, knowing that senior leadership is being held accountable, knowing that, at the most senior levels, we are having meetings to make sure that the small business procurement goals are met – I think that is very important. Last thing I’ll mention – I bet, for the folks joining us today, they probably did not realize that lipreading might come in handy today. [laughter] But having said that, thank you.
LA: Thanks for mentioning that, we appreciate it. I thought I would add one other thing. When we’re looking at achieving these goals and we have to focus so much attention on the fourth quarter, I think it goes back to what Jake said earlier -- we need to have this sort of focus throughout the year. By using the monitoring techniques that Treasury talked about throughout the year, that would be a great service. One of those best practices that perhaps we should syndicate.
RP: I will just add market research. If there is anything more necessary or more critical to bringing in capable firms to our missions, it is to be able to do solid market research, where we can be able to match our requirements against capabilities that are out there. I think the more we can share common market research across and within agencies, and help those that are drafting requirements and have needs to be able to structure requirements in ways that we can maximize the opportunity for small business -- that is critical, important to achieving those requirements, in addition to the other goals and priorities we have.
MB: All great advice. That is wonderful, and we will let that be the last word. Ron, Laura, John, thank you so much for being here. To all our guests at the webinar, we understand we had 2,300 viewers tune in. That is fantastic and great for our small business community. We hope that today we have given you a little insight into the reasoning behind the shape and prioritization of today’s current small business contracting strategies. As I mentioned earlier, as we leave you, we will put up on the screen some of the resources that you can avail yourself of to find out additional information as you need it. We also hope this webinar is not the end, but the beginning of a conversation. We hope you will reach out to your Senior Procurement Executives, your small business Directors, and your representatives on the DAR and the CAC to provide any ideas or thoughts and concerns that you have as we work toward our goal of meeting and exceeding our small business goals. Before we leave, we want to thank our friends from the Federal Acquisition Institute for helping us today in putting on this webinar. A special thanks to Susan Truslow who has corralled the cast and done a fantastic job in being our executive producer. From all of us at OFPP, SBA, and the FAR Council, thanks so much for joining us. So long for now.
