# DLAD PART 19

- 19.001 Definitions.

- SUBPART 19.1 – SIZE STANDARDS

- 19.102 Size standards.

- SUBPART 19.2 - POLICIES

- 19.201 General policy.

- 19.202-1 Encouraging small business participation in acquisitions.

- SUBPART 19.3 - DETERMINATION OF STATUS AS A SMALL BUSINESS, HUBZONE SMALL BUSINESS, OR SMALL DISADVANTAGED BUSINESS CONCERN

- 19.307 Solicitation provisions.

- SUBPART 19.5 – SET-ASIDES FOR SMALL BUSINESS

- 19.502-1 Requirements for Setting Aside Acquisitions.
- 19.502-3(90)

- 19.503 Setting aside a class of acquisitions for small business.
- 19.505 Rejecting Small Business Administration recommendations.
- 19.508 Solicitation Provisions and Contract Clauses.
- 19.590 Cascading/Combined Set-Aside Logic Clauses for Business Systems Modernization (BSM) Applications and Legacy Systems Having the Capability to Apply “Cascading Logic.”.

- SUBPART 19.6 - CERTIFICATES OF COMPETENCY

- 19.602 Procedures.

- 19.602-1 Referral.
- 19.602-3 Resolving differences between the Agency and the Small Business Administration (SBA).
- 19.602-4 Awarding the contract.

- SUBPART 19.7 – THE SMALL BUSINESS SUBCONTRACTING PROGRAM

- 19.705 Responsibilities of the contracting officer under the subcontracting assistance program.

- 19.705-4 Reviewing the subcontracting plan.

- 19.790 Responsibility for reviewing the subcontracting program.

- SUBPART 19.8 - CONTRACTING WITH THE SMALL BUSINESS ADMINISTRATION

- 19.803 Selecting acquisitions for the 8(a) Program.

- 19.804-2 Agency offering.
- 19.804-90 Withdrawal of requirements.

- 19.806 Pricing the 8(a) contract.
- 19.807 Estimating fair market price.
- 19.809 Preaward considerations.
- 19.812 Contract administration.

- SUBPART 19.14 – SERVICE-DISABLED VETERAN-OWNED SMALL BUSINESS PROCUREMENT PROGRAM

- 19.1405 Service-disabled veteran-owned small business (SDVOSB) set-aside procedures.
- 19.1406 Sole source awards to service-disabled veteran-owned small business (SDVOSB) concerns.
- 19.7100 Scope.

- SUBPART 19.90 - DLA MENTORING BUSINESS AGREEMENTS (MBA) PROGRAM

- 19.9001 General.
- 19.9002 Policy.
- 19.9003 Scope.
- 19.9004 Purpose and approach.
- 19.9005 Contracting officer responsibilities and program considerations.
- 19.9006 Reporting.
- 19.9007 Solicitation provision and contract clause.

PART 19

SMALL BUSINESS PROGRAMS

TABLE OF CONTENTS

19.001 Definitions.

SUBPART 19.1 – SIZE STANDARDS

19.102 Size Standards

SUBPART 19.2 - POLICIES

19.201 General policy.

19.202-1 Encouraging small business participation in acquisitions.

SUBPART 19.3 - DETERMINATION OF STATUS AS A SMALL BUSINESS, HUBZONE SMALL BUSINESS, OR SMALL DISADVANTAGED BUSINESS CONCERN

19.307 Solicitation provisions.

SUBPART 19.5 - SET-ASIDES FOR SMALL BUSINESS

19.502-1 Requirements for setting aside acquisitions.

19.502-3 Partial Set-Asides

19.503 Setting aside a class of acquisitions for small business.

19.505 Rejecting Small Business Administration recommendations.

19.508 Solicitation Provisions and Contract Clauses.

19.590 Cascading Set-Aside Logic Clauses for Business Systems Modernization (BSM) Applications.

SUBPART 19.6 - CERTIFICATES OF COMPETENCY AND DETERMINATIONS OF RESPONSIBILITY.

19.602 Procedures.

19.602-1 Referral.

19.602-3 Resolving differences between the agency and the Small

Business Administration.

19.602-4 Awarding the contract.

SUBPART 19.7 – THE SMALL BUSINESS SUBCONTRACTING PROGRAMS

19.705 Responsibilities of the contracting officer under the

subcontracting assistance program.

19.705-4 Reviewing the subcontracting plan.

19.790 Responsibility for reviewing the subcontracting program.

SUBPART 19.8 - CONTRACTING WITH THE SMALL BUSINESS ADMINISTRATION (THE 8(a) PROGRAM)

19.803 Selecting acquisitions for the 8(a) program.

19.804-2 Agency offering.

19.804-90 Withdrawal of requirements.

19.806 Pricing the 8(a) contract.

19.807 Estimating the fair market price.

19.809 Preaward considerations.

19.812 Contract administration.

19.14 SERVICE-DISABLED VETERAN-OWNED SMALL BUSINESS PROCUREMENT PROGRAM
19.1405 Service-disabled veteran-owned small business (SDVOSB) set-aside procedures

19.1406 Sole source awards to service-disabled veteran-owned small business (SDVOSB) concerns.

[SUBPART 19.70 – HAS BEEN ELIMINATED]

SUBPART 19.71 - PILOT MENTOR-PROTEGE PROGRAM

19.7100 Scope.

[SUBPART 19.72 HAS BEEN ELIMINATED]

SUBPART 19.90 - DLA MENTORING BUSINESS AGREEMENTS (MBA) PROGRAM

19.9001 General.

19.9002 Policy.

19.9003 Scope.

19.9004 Purpose and approach.

19.9005 Contracting officer responsibilities and program considerations.

19.9006 Reporting.

19.9007 Solicitation provision and contract clause.

19.001 Definitions.

"Fair market price" as defined in the FAR is a price DLA would expect to pay under "normal competitive conditions," which means under full and open competitive conditions (without a reservation, set-aside, preference, or the like).

SUBPART 19.1 – SIZE STANDARDS

19.102 Size standards.

(f) The nonmanufacturer rule may be restated as follows. When an acquisition has been set aside for award to small business, and a small contractor proposes to furnish to the Government items made by an entity other than itself, both the offeror and the manufacturer/producer of the items must be small businesses, and the items must be produced in the United States. This rule is subject to waiver and exception, as provided below.

(4) When the particular product or class of products being acquired is not currently produced by small domestic businesses (as determined authoritatively by the SBA), the SBA may grant a class waiver. In this case, the small nonmanufacturer/offeror will not have to furnish the product of a small business; it may provide any firm’s product. The contracting officer may initiate action with the SBA to have the nonmanufacturer rule waived for a class of products.

(5) The contracting officer may also request a waiver of the nonmanufacturer rule for a specific solicitation if no small domestic manufacturer/processor can reasonably be expected to fulfill the requirement at that time.

(7) An “exception” (rather than a waiver) to the nonmanufacturer rule applies when: the procurement is accomplished using the simplified procedures of Part 13; the buy is set aside for small business; and the anticipated dollar value will not exceed $25,000. Even though the small business offering on this procurement is not obligated to provide the product of another small concern, the items themselves must have been manufactured or produced in the United States.

(90) In simplified acquisitions for supplies having a total value of less than $25,000, an exception to the nonmanufacturer rule takes precedence over a waiver of the rule. Under these circumstances, a nonmanufacturer is expected to provide the end-product of a domestic producer.

SUBPART 19.2 - POLICIES

19.201 General policy.

(b)(90) DLA small business specialists are guided by “the DLA ‘One Book’ (DLAD 5025.30) process chapter, ‘DLA Small Business Programs.’” Contracting personnel should recognize the assigned responsibilities of these individuals and work cooperatively with them to achieve the objectives of the DLA Small Business and Small Disadvantaged Business Utilization Program and to avoid duplication of effort.

(d)(10)(A)(i) DLA contracting and small business personnel have been granted a deviation (FARS DEV 2004-01) to forego this review for transactions with a value less than or equal to the simplified acquisition threshold (SAT) when such transactions are accomplished or initiated electronically via the “SPEDE” (SAMMS (Standard Automated Material Management System) Procurement by Electronic Data Exchange); “SASPS II” (SAMMS Automated Simplified Procurement System, Phase Two); or “PACE” (Procurement Automated Contract Evaluation) systems.

(d)(10)(A)(ii) DLA contracting and small business personnel are also permitted via FARS DEV 04-01 to forego this manual review for transactions with a value less than or equal to the SAT when such transactions are accomplished or initiated via automated processing within the Business Systems Modernization (BSM) environment.

(d)(10)(B) Whenever the deviations in (d)(10)(A), above, are used, an individual or blanket DD Form 2579, Small Business Coordination Record, shall be included in the (hard-copy or electronic) contract file.

(d)(10)(90)(a) Periodic reviews of automated awards to which either the legacy or the BSM deviation pertains shall be conducted to determine whether certain buys may be set aside in the future for HUBZone or service-disabled veteran-owned small business concerns (in the case of legacy system buys only) or 8(a) program participants. The contracting officer and small business specialist shall jointly consider backing out individual or groups of transactions, based on a national stock number or federal supply class, with Central Contractor Registration (CCR)-listed HUBZone or service-disabled veteran-owned small business concerns or 8(a) suppliers (for legacy and BSM applications), from these automated systems.

(b) For review of an action that could result in a recommendation for a service-disabled veteran-owned small business (SDVOSB) set-aside, use the following procedures for individual or blanket DD 2579s until the form is revised: identify the contractor as an SDVOSB in the “Acquisition History” block (line 10(b)(9)); indicate a set-aside recommendation in the “Remarks” block (line 14).

(d)(10)(91)(i) There are times when a contract action’s estimated value will be less than $10,000, thus precluding the need for a DD 2579 review, but the resulting contract’s actual value exceeds the review threshold. So long as the estimate was originally made in good faith, there is no need to conduct an after-the-fact review in accordance with DFARS 219.201(d)(10).

(ii) However, if changes (e.g., quantity increases) are made to the scope of the acquisition subsequent to establishment of the original good-faith estimate, and if these changes cause the potential value of the contract to exceed the DFARS 219.201(d)(10) review threshold, do not proceed with the acquisition until a DD Form 2579 review is conducted.

(d)(11) See subsections 7.170-2 and -3 and paragraph 10.001(a) for a complete discussion of consolidation of contract requirements.

19.202-1 Encouraging small business participation in acquisitions.

(e)(90) Contract Bundling. See section 7.107, paragraphs 10.001(a) and (c), and subparagraphs 15.304(c)(3) and 15.305(a)(5) for a complete discussion of this topic.

SUBPART 19.3 - DETERMINATION OF STATUS AS A SMALL BUSINESS, HUBZONE SMALL BUSINESS, OR SMALL DISADVANTAGED BUSINESS CONCERN

19.307 Solicitation provisions.

(90) When the provision at FAR 52.219-1, Small Business Program Representations, is used in solicitations issued via electronic means, one of the following provisions shall be used to record information required by FAR 52.219-1, paragraph (b). For purchases below the simplified acquisition threshold (SAT), use the provision at 52.213-9004, Offeror Representations, Certifications, and Fill-in Information--Electronic Commerce; for purchases above the SAT, use 52.219-9004, Small Business Program Representations. See 13.101(b)(2)(91).

SUBPART 19.5 – SET-ASIDES FOR SMALL BUSINESS

19.502-1 Requirements for Setting Aside Acquisitions.

(b)(90) Notwithstanding FAR 19.501(a) and 19.502-1(b), Federal Prison Industries (FPI) may also compete for, and could receive award of, set-aside acquisitions of items listed on the FPI Schedule. Accordingly, insert the provision at 52.219-9001, Set-Asides of Acquisitions of Items Listed in the Schedule of Products Made in Federal Penal and Correctional Institutions, in acquisitions of such items whenever a comparability determination leads to a competitive acquisition (see FAR and DLAD 8.602) and an individual FAR set-aside clause is used. Whenever any of the combined/cascading set-aside clauses (i.e., DLAD 52.219-9008 through 52.219-9016) is used in accordance with 19.590, allow FPI to participate; see 19.508(90), below.

19.502-3(90)

Use 52.219-9017, Small Business Set-Aside Portion – Equal, in solicitations involving partial small business set-asides. See FAR 19.502-3. Use the base provision for solicitations involving partial small business set-asides when the set-aside portion is equal to the unrestricted portion. Use 52.219-9017 Alternate I, Small Business Set-Aside Portion – Unequal, when the partial small business set-aside portion differs from the partial non-set-aside portion.

19.503 Setting aside a class of acquisitions for small business.

(d) The DD Form 2579, Small Business Coordination Record, shall be used to give written notice of a withdrawal from a class set-aside to the procurement center representative (PCR). The form shall be sent through the office of the Small Business Specialist (SBS). The basis for the withdrawal shall be documented in the remarks section.

19.505 Rejecting Small Business Administration recommendations.

(b) If the chief of the contracting office approves the action of the contracting officer, the next level of appeal shall be the activity commander. If the Commander approves the action of the contracting officer, the PCR shall be so advised and may proceed with the appeal actions prescribed in FAR 19.505(c).

19.508 Solicitation Provisions and Contract Clauses.

(90) Set-aside clauses designed for use in Business Systems Modernization (BSM) applications. Note that, for the acquisition of items included on the Federal Prison Industries (FPI) Schedule, FPI is permitted to submit an offer, and to have its offer be fairly considered, for any solicitation containing any of the following clauses. For these FPI Schedule items, such solicitations will only be established following a comparability determination that results in the use of competitive procedures (including set-asides). See 8.602(a)(ii)(90) and 19.502-1(b)(90), as well as FAR 19.504, 19.508(c), and 52.219-6, Alternate II.

(a) Insert the clause at 52.219-9008, Combined HUBZone/Small Business Set-Aside Instructions – Type 1, in automated solicitations and contracts in BSM applications (and legacy systems having the capability to apply cascading logic) when: values will exceed the micro-purchase threshold, but will be less than or equal to the simplified acquisition threshold; either the non-manufacturer rule applies or an exception to the rule is to be employed; and a set-aside to a HUBZone small business concern or a small business concern is anticipated.

(b) Insert the clause at 52.219-9009, Combined HUBZone/Small Business Set-Aside Instructions – Type 2, in automated solicitations and contracts in BSM applications (and legacy systems having the capability to apply cascading logic) when: values will exceed the micro-purchase threshold, but will be less than or equal to the simplified acquisition threshold; the non-manufacturer rule is waived and no exception to the rule applies; and a set-aside to a HUBZone small business concern or a small business concern is anticipated.

(c) Insert the clause at 52.219-9013, Combined Set-Aside Instructions – Type 1, in automated solicitations and contracts in BSM applications (and legacy systems having the capability to apply cascading logic) when: values will exceed the micro-purchase threshold, but will be less than or equal to the simplified acquisition threshold; either the non-manufacturer rule applies or an exception to the rule is to be employed; and a set-aside to a service-disabled veteran-owned small business concern, HUBZone small business concern, or a small business concern is anticipated.

(d) Insert the clause at 52.219-9014, Combined Set-Aside Instructions – Type 2, in automated solicitations and contracts in BSM applications (and legacy systems having the capability to apply cascading logic) when: values will exceed the micro-purchase threshold, but will be less than or equal to the simplified acquisition threshold; the non-manufacturer rule is waived and no exception to the rule applies; and a set-aside to a service-disabled veteran-owned small business concern, HUBZone small business concern, or small business concern is anticipated.

(e) Insert the clause at 52.219-9015, Combined Service-Disabled Veteran-Owned Small Business/Small Business Set-Aside Instructions – Type 1, in automated solicitations and contracts in BSM applications (and legacy systems having the capability to apply cascading logic) when: values will exceed the micro-purchase threshold, but will be less than or equal to the simplified acquisition threshold; either the non-manufacturer rule applies or an exception to the rule is to be employed; and a set-aside to a service-disabled veteran-owned small business concern or a small business concern is anticipated.

(f) Insert the clause at 52.219-9016, Combined Service-Disabled Veteran-Owned Small Business/Small Business Set-Aside Instructions – Type 2, in automated solicitations and contracts in BSM applications (and legacy systems having the capability to apply cascading logic) when: values will exceed the micro-purchase threshold, but will be less than or equal to the simplified acquisition threshold; the non-manufacturer rule is waived and no exception to the rule applies; and a set-aside to a service-disabled veteran-owned small business concern or a small business concern is anticipated.

(91) Each of the clauses at (a) through (f), above, refers to and applies multiple FAR set-aside clauses. However, only the FAR clause matching the awardee’s small business program and type representation applies to the award. See 19.590, below.

19.590 Cascading/Combined Set-Aside Logic Clauses for Business Systems Modernization (BSM) Applications and Legacy Systems Having the Capability to Apply “Cascading Logic.”.

(a) The systems logic used in BSM automated procurements and certain legacy systems is able to consider the applicability of more than one kind of set-aside in a combined or “cascading” fashion, according to an order of precedence. It simultaneously accommodates service-disabled veteran-owned small business (SDVOSB) set-asides, HUBZone small business set-asides, and total small business set-asides, including exceptions and waivers to the non-manufacturers rule, where applicable. If, at the time of solicitation, there is a reasonable expectation of receiving offers from two or more SDVOSBs or HUBZone small business concerns, the BSM software and the programming for applicable legacy systems will use a combined set-aside for the automated solicitation. All small businesses should be encouraged to submit quotes; however, offerors will be informed (by means of the provision language itself, and possibly by a message on the face of the solicitation) about the order of precedence in which the set-asides will be applied.

(b) If the acquisition is valued between $2,500 and $100,000 and there is a reasonable expectation of receiving competitive offers from two or more service-disabled veteran-owned small business (SDVOSB) concerns or HUBZone small business concerns, the RFQ produced automatically in BSM and applicable legacy systems will contain a combined set-aside that follows this order of precedence:

(1) SDVOSB concerns; then, if no qualified quote is received from a SDVOSB concern -

(2) HUBZone small business concerns; then, if no qualified quote is received from a HUBZone concern –

(3) Small business concerns.

(c) If the acquisition is valued between $2,500 and $100,000 and there is a reasonable expectation of receiving competitive offers from two or more service-disabled veteran-owned small business (SDVOSB) concerns, but not from two or more HUBZone concerns, the RFQ produced automatically in BSM and applicable legacy systems will contain a combined set-aside that follows this order of precedence:

(1) SDVOSB concerns; then, if no qualified quote is received from a SDVOSB concern –

(2) Small business concerns.

(d) If the acquisition is valued between $2,500 and $100,000 and there is a reasonable expectation of receiving competitive offers from two or more HUBZone small business concerns, but not from two or more service-disabled veteran-owned small business (SDVOSB) concerns, the RFQ produced automatically in BSM and applicable legacy systems will contain a combined set-aside that follows this order of precedence:

(1) HUBZone small business concerns; then, if no qualified quote is received from a HUBZone concern –

(2) Small business concerns.

(e) If the acquisition is valued between $2,500 and $100,000 and there is a reasonable expectation of receiving competitive offers from two or more small businesses, but not from service-disabled veteran-owned small business (SDVOSB) concerns or HUBZone small business concerns, the RFQ produced automatically in BSM and applicable legacy systems will become a total small business set-aside.

(f) If, after combining and “cascading” these set-asides, no qualified quote is received from a small business at a fair market price, the set-aside will be withdrawn and the buy re-solicited on an unrestricted basis.

SUBPART 19.6 - CERTIFICATES OF COMPETENCY

19.602 Procedures.

19.602-1 Referral.

(a)(2) Prior to referring a potential contractor to one of the SBA's area offices in accordance with FAR 19.602-1 and DFARS 219.602-1, the contracting officer shall thoroughly review all the pertinent facts available, including the preaward survey (PAS), and make a determination of responsibility in accordance with FAR 9.105-2. This determination should so thoroughly consider all pertinent data and the circumstances of the acquisition that, barring substantial evidence refuting the specific elements for which the contractor was determined nonresponsible, it represents the contracting officer's intention to pursue an appeal if the SBA Headquarters notifies the contracting officer of its intent to issue a certificate of competency (CoC). Evidence to refute the identified elements of nonresponsibility may come from the SBA, the contractor, contract administration office (CAO) personnel, or any credible source, as long as the information uncovered specifically addresses the deficient elements cited in the nonresponsibility determination. Recognizing that valuable lead time may be lost if the CoC procedure is delayed, the contracting officer may initiate the CoC process pending resolution of the type of correctable deficiencies that may have been identified in the PAS.

(90) All contracting activities are encouraged to utilize a standardized and simplified form letter for CoC referrals. DLA Form 1756, Referral of Small Business for Certificate of Competency (CoC) Consideration, is available for this purpose.

19.602-3 Resolving differences between the Agency and the Small Business Administration (SBA).

(a) The contracting officer shall request the SBA to specifically address those elements considered to be unsatisfactory and document the file accordingly. The reconciliation of differences should include, as appropriate, requests for updates and additional data from the CAO personnel responsible for the PAS.

(a)(90) If the SBA notifies the contracting officer of its intent to issue a CoC, the contracting officer shall either:

(1) Appeal the issuance of the CoC in accordance with DFARS 219.602-3(c)(i), as detailed below; or,

(2) Using the information currently available, determine the contractor to be responsible, document the file, and proceed with contract award; or,

(3) Determine to accept the CoC, without determining the contractor to be responsible. This alternative allows consideration of the circumstances of an individual acquisition which may make accepting the CoC the most reasonable alternative. Notice of the award shall be provided to the division chief (or another appropriate level above the contracting officer), to the activity postaward monitor, and to the contractor general file (see FAR 4.801(c)(3)).

(c)(90) If the contracting officer intends to appeal the issuance of the CoC, the contracting officer shall request the Small Business Specialist (SBS) to notify the SBA Headquarters of the intent to appeal the CoC in accordance with DFARS 219.602-3(c)(i). Within 3 workdays of receiving the SBA Headquarters notification of its intention to uphold the SBA Region's decision to issue a CoC, the contracting officer shall fax a report to J-71 summarizing the pertinent facts of the case. (Voluminous reports should be express mailed.) The pertinent facts shall include: name of the prospective contractor; item; quantity; dollar value; the specific elements for which the prospective contractor was determined to be nonresponsible; a copy of the pertinent portions of the preaward survey; SBA's rationale for issuing the CoC; and, the proposed alternative means of satisfying the requirements. A copy of this report shall also be forwarded to the SBS at the activity. The Director, Acquisition Management, (J-7) , sh all review the information provided and advise the contracting officer within 5 workdays of the decision to support the appeal, or to recommend acceptance of the CoC. The Executive Director, Acquisition Management shall provide a copy of that decision to the Director, Small and Disadvantaged Business Utilization (DDAS). If the Executive Director, Acquisition Management elects to support the formal appeal, the contracting officer will be advised to expeditiously prepare the formal appeal and forward it through the activity SBS to DDAS in accordance with DFARS 219.602-3(c). The formal appeal shall include at a minimum: the particulars of the contract, (i.e., item, quantity, etc.); the PAS; the contracting officer's determination of nonresponsibility; any appropriate update on the contractor's progress toward becoming responsible; and a discussion of the attempts made to reconcile differences with the SBA. The Director, Acquisition Management, (J-7) , shall be provided a simultaneous copy of the appeal. Formal appeals shall be forwarded for receipt at DLA within 5 workdays of notice that the Executive Director, Acquisition Management supports the contracting officer's intent to appeal. Formal appeals should be indexed and tabbed.

(91) Once the contracting office requests the SBA Headquarters to review the intention of the Area office to issue a CoC, DLA contracting personnel are not authorized to waive the right to appeal, or to forfeit an appeal, without the concurrence of the Executive Director, Acquisition Management . Requests for such concurrence shall include substantially the same type of information submitted in the report notifying the Executive Director, Acquisition Management of the contracting officer's intention to appeal.

(92) All reports submitted by the contracting officer to the Executive Director, Acquisition Management concerning CoC appeals shall be forwarded through the chief of the contracting office (see 2.101) for all other activities.

(93) The requirements of subparagraphs 19.602-3(c)(90) and (91) do not apply to simplified acquisitions. Contracting offices are authorized to develop local procedures to process appeals on simplified acquisitions.

19.602-4 Awarding the contract.

(c)(90) If the activity has not heard from the cognizant SBA field office within 5 working days after referral, the activity will contact the SBA office to which the matter was referred to determine whether a CoC is being processed. The contract file shall be documented to reflect that this action was taken.

(91) In awarding a simplified acquisition:

(i) The contracting officer shall not agree to a longer period of time than 15 business days for the SBA reply before proceeding to award to another offeror unless the extension is approved by the chief of the contracting office.

(ii) The contracting officer may proceed in accordance with FAR 19.602-4(c) when 15 calendar days have elapsed since the date of referral of the matter to SBA.

SUBPART 19.7 – THE SMALL BUSINESS SUBCONTRACTING PROGRAM

19.705 Responsibilities of the contracting officer under the subcontracting assistance program.

19.705-4 Reviewing the subcontracting plan.

(d)(7) The services of the activity and CAO Small Business Specialist (SBS) are available to assist in review of subcontracting plans. Requests for review of a subcontracting plan by the cognizant CAO shall be forwarded through the SBS at the contracting office to the SBS at the CAO. The buyer should provide a reasonable length of time (generally, at least 7 working days) for the CAO review. The results of a CAO review, and any recommendations which arise therefrom, shall be evaluated by the contracting officer prior to approval of the subcontracting plan. The contract file shall be documented to reflect the review and the contracting officer's final decision on the goal accepted.

19.790 Responsibility for reviewing the subcontracting program.

When administration of contracts containing the Small Business, Small Disadvantaged Business, Women-Owned Small Business Subcontracting Plan clause is retained by the contracting office, the procedures in 42.202(e)(90) apply.

SUBPART 19.8 - CONTRACTING WITH THE SMALL BUSINESS ADMINISTRATION

(THE 8(a) PROGRAM)

19.803 Selecting acquisitions for the 8(a) Program.

(a)(4)(90) The contracting office shall assure that follow-on Section 8(a) contract support will be provided for that period of time reflected in the SBA approved business plan. In furtherance of this, close coordination between the contracting officer and SBS is essential.

(c)(90) In addition to responding to SBA requests for potential requirements to support an approved business plan of a small disadvantaged firm, it is the policy of DLA to identify other requirements which are considered suitable for placement with SBA under the Section 8(a) program. Contracting officers will consider the Section 8(a) program as a possible method of satisfying all new requirements being processed for contract action. Special attention will be given to those commodities and services which are anticipated to be recurring requirements and for which there are a limited number of prospective small business sources.

19.804-2 Agency offering.

(a)(1) The SBA notification, if required (see DFARS 219.804-2(2)), shall be provided in writing through the SBS and a copy provided to the local SBA PCR. If no response is received from SBA by the applicable due date, (i.e., within 10 working days of receipt of the offering in accordance with FAR 19.804-3(a) or within 5 working days of receipt in accordance with DFARS 219.804-3), the requirement may be withdrawn or the time extended at the option of the contracting office.

19.804-90 Withdrawal of requirements.

(a) When circumstances arise indicating a need to withdraw requirements previously committed for Section 8(a) contracting, the contracting officer shall seek SBA agreement for such withdrawal through the SBS. If the SBA does not agree with such withdrawal, complete data supporting such proposed withdrawal shall be provided through the SBS to the Small and Disadvantaged Business Utilization Office for review and concurrence or nonconcurrence.

(b) When a requirement previously committed for Section 8(a) contracting is withdrawn and subsequently acquired by normal acquisition methods, the contracting officer shall, within 15 days after award, provide a summary of the facts to the SBS on each item stating: (i) the DLA estimated fair market price (FMP), (ii) the SBA final offered price, and (iii) the final contract price.

19.806 Pricing the 8(a) contract.

(b) Although an 8(a) supplier may be able to justify a price exceeding the FMP, award at a price that exceeds FMP is prohibited (see section 921 of P.L. 99-661). Occasionally, cost and price analysis discloses that award should be made at a price below FMP. But in most cases, the analysis supports the FMP as fair and equitable to both parties and the award is consummated at that price.

19.807 Estimating fair market price.

(a) A fair market price is one which the government can be expected to pay in a competitive environment, in the current open market place. It is not necessarily the lowest price resulting from a competition under ideal conditions.

(b) In determining the FMP for an acquisition other than those covered in paragraph (c) (90) of this section, the contracting officer, whether using previous buys, a market survey, pricing data, and/or cost or pricing data, would exclude any identifiable abnormally priced offers. This includes prices which, although reasonable, were found to have been abnormally low or high due to special or non-recurring circumstances, such as a one-time price reduction, premium charge, distress sale, etc. The EMP should normally be derived based on adjusting the lowest (except for repeat purchases (see 19.807(c) (90)) remaining reasonable price consistent with the Government’s requirements in the manner specified in FAR and DLAD 19.807(c). No other price differential or adjustment factor shall be used (e.g., for independent government estimate inaccuracies, for differences between fully competitive awards and reservations, for differences between awards to manufacturers and to dealers, etc.). The practice of soliciting quotes from non—8(a) sources for the sole purpose of determining the FMP should be used only after the contracting officer/buyer has exhausted the use of cost or price analysis and considered commercial prices for similar products and services, available in— house cost estimates, data (including cost or pricing data) submitted by the SBA or the 8(a) contractor, and data obtained from any other Government agency. Soliciting market quotes is an acceptable means of conducting a market survey. However, market quotes provided by contractors for this purpose could be misleading, since there is no corresponding performance risk for the contractor.

(c) (90) Establishing an FMP does not mean that the section 8(a) subcontractor will always be able to meet the most recent, lowest, and /or comparable price obtained through full and open competition or sealed bidding.

(91) When there have been recent awards for comparable quantities of the item being purchased, which resulted from “normal competitive conditions,” the most recent award shall be the basis upon which FMP is determined. A comparable quantity is not necessarily a similar quantity but must be one to which a logical price comparison can be made with the current quantity. Recent award prices of incomplete contracts or orders may be considered if they were determined reasonable under normal competitive conditions and

there is no evidence of poor performance. All recent award prices are to be considered in determining if the most recent comparable price is representative of “normal competitive conditions.” If the most recent award price is not representative of “normal competitive conditions,” the file shall be so documented and the next most recent comparable award price shall be considered as the basis for the FMP determination. The contracting officer must ensure that the differences in acquisition strategies are fully considered when developing the FMP. Factors to consider when developing the flip include but are not limited to: direct vendor delivery, required delivery schedule, minimum order quantities, maximum order quantities, surge requirements, potential ship to locations, estimated annual quantities, contract period including options, FOB point, quality/inspection requirements , and packaging.

(92) Award of a section 8(a) contract shall not be delayed pending award of a recently issued solicitation which resulted in competitively priced offers, unless there is no reasonable basis for determining FMP other than the pending competitive award price.

(93) When a solicitation for a particular item would generally result in different unit prices for different line items, it may be desirable to develop separate FMP5 for each line item. However, it is not permissible to establish a range of FMPs for any single item or group of items.

(94) Averaging of previous bid or award prices is prohibited.

(95) Previous section 8(a) award prices may be used to determine the current FMP only when: (a) a suitable previous competitive price is not available; and (b) when the previous FMP was established in accordance with FAR and DLAD guidelines.

(96) A format similar to that in paragraph 19.807(91), below, shall be used to document consideration of all relevant factors affecting price used to adjust the previous award price (base FMP), or the reason the factors were not adjusted.

(97) Once the FMP is established, considering previous award prices and all relevant factors affecting price, it will be the highest price that DLA will pay, except when a revised FMP, established within the FAR/DLAD guidelines, is fully supported and documented by the contracting officer.

(98) Although use of previous competitive award prices is the required method of determining FMP, whenever applicable, nothing in this directive shall preclude consideration of the unique factors of an individual acquisition or the application of another method of determining FMP, as listed in the FAR/DLAD, provided that the file clearly documents the reasonableness of the chosen approach.

(90) Documentation of FMP.

(i) For repeat purchases, the contract file shall be documented as to how the FMP was established in the format prescribed in paragraph (91). Section 2 of the prescribed format provides for identification of the current requirement and identification of previous award prices. As indicated in subparagraph (c)(91), unless unusual circumstances exist, the most recent award price under normal competitive conditions will be the base unit price. Other previous award prices are listed for purposes of comparison. A statement documenting that the base unit price being used is reflective of normal competitive conditions shall be included in section 4 "Discussions." If other than the most recent competitive award price is used the file shall be documented as to why the most recent award price was not used and as to the reasonableness of the selected base unit price.

(ii) The base unit price established in accordance with subparagraph (c)(90) above shall be adjusted for the factors listed in section 3 of the prescribed format and any other relevant factors. Adjustments can be increases or decreases to the base unit price. Calculation and rationale for the use of adjustment factors shall be documented. Factors not considered shall be annotated "not applicable." The adjustment factors shall be added to or subtracted from the base unit price to arrive at the FMP for the current requirement.

(iii) Section 4 of the format shall be used to supplement sections 2 and 3 and to provide additional justification, as necessary, to determine that the established FMP is a price that DLA would expect to pay under normal competitive conditions.

(iv) The buyer/contracting officer may request the assistance of the activity cost and price analyst. The price analyst shall either prepare or review and coordinate on the FMP determination. If the price analyst does not concur with the buyer's FMP determination the file shall be documented with the reasons for nonconcurrence. The FMP shall be approved by the contracting officer. If there is a disagreement between the SBA/8(a) contractor and the contracting officer concerning the FMP determination, the SBS shall be given an opportunity to review the FMP determination and to provide comments. The disposition of any pricing or SBS comments shall be documented in the contract file.

(91) Prescribed FMP format.

DETERMINATION FOR REPETITIVE PROCUREMENTS

1. IFB/RFP_________________________NSN___________________ITEM________________________________________________________________________________________

2. Base of FMP Qty FOB U/P Award date

_________________________________________________________________________

Current Requirement:

Previous Procurement(s): 1)

2)

3)

Base Unit Price $________________________

3. Adjustments (Show all calculations) + or - $

a. Quantity ____________

b. EPA Index (List index source, #, dates,

title and values) ____________

c. Transportation (List rate and source) ____________

d. Delivery Schedule ____________

e. Packing and Packaging (List rate and source) ____________

f. Other (Specify differing specs, terms,

conditions, etc.) ____________

Net Adjustment (a through f above) ____________

FMP for Current Requirement

(Base Unit Price + or - Net Adjustment) ____________

4. Discussions (Use reverse if necessary)

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

5. Coordination/Approval:

Buyer's Signature/Date

________________________________________________

Price Analyst Signature/Date

__________________________________________

Prepared _______ Reviewed _______

Concur ______________________________ Nonconcur _______________________

Approved: Contracting Officer____________________________Date___________

19.809 Preaward considerations.

A contracting officer intending to award a contract to an 8(a) program participant shall independently determine the responsibility of the firm in accordance with the guidance contained in FAR, DFARS, and DLAD Subpart 9.1 whenever there is any question of the concern’s ability to perform the contract. This may include conduct of a preaward survey, as appropriate. Negative or inconclusive responsibility determination results for an 8(a) program participant shall be referred to the SBA for Certificate of Competency consideration; see FAR, DFARS and DLAD Subpart 19.6. Notwithstanding this determination, the SBA remains the prime contractor on all 8(a) contracts, and continues to determine eligibility of such concerns for contract award. See DFARS 219.800.

19.812 Contract administration.

(d) The contracting officer or authorized representative shall notify the SBS prior to initiation of any adverse action against an SBA subcontractor. In cases involving initiation of default procedures, at the request of the SBS, the contracting officer shall provide the facts required for notification to DDAS.

(90) Requests for technical and/or management assistance which are in excess of DSC or DCMA capability and resources shall be referred through the SBS to DDAS. Through agreement between HQ DLA and SBA, technical and management assistance teams can, under certain circumstances, be made available to augment assistance provided by the contracting officer.

(91) As described in FAR 42.5, postaward orientation conferences with contractors are conducted to assure a clear understanding of the scope of the contract, the technical requirements, and the rights and obligations of the parties. The contracting officer or technical representative should initiate a request for such a conference on all first time 8(a) contractors and when the 8(a) firm has experienced problems. Assure that all matters requiring clarification or resolution are considered and contractual requirements are explained. Specific attention shall be given to the requirements of statutes, executive orders, and labor provisions.

(92) Early notification to the SBA of deficiencies in contract performance by a Section 8(a) firm is particularly important in the administration of 8(a) contracts.

(93) Whenever it becomes known that the 8(a) subcontractor has encountered problems which could jeopardize contract performance, the SBS shall be notified. The contracting officer or authorized representative shall provide all reasonable assistance to the subcontractor to correct deficiencies.

SUBPART 19.14 – SERVICE-DISABLED VETERAN-OWNED SMALL BUSINESS PROCUREMENT PROGRAM

19.1405 Service-disabled veteran-owned small business (SDVOSB) set-aside procedures.

(90) Proper reporting of the use of SDVOSB set-asides in either a manual or an automated environment shall be accomplished through the DLA Contract Action Reporting System (DCARS). See pertinent line-by-line reporting instructions at 53.204-70(c) and (d).

(91) See 19.508 and 19.590, above, for further guidance on use of the SDVOSB set-aside in the BSM environment and in legacy systems having the capability to apply “cascading logic.”

(92) When market research indicates that only one SDVOSB exists for a given acquisition, the primary criterion for an SDVOSB set-aside (i.e., reasonable expectation of receipt of offers from two or more eligible firms) cannot be fulfilled. In this situation, application of cascading logic could actually prevent award to the SDVOSB, because award will likely be made under the successive set-asides. If diligently performed market research fails to identify two or more SDVOSBs for an item or class of items, it may be appropriate for the contracting officer to remove those buys from automated processing (at the solicitation, as well as the evaluation, phase), thus permitting application of SDVOSB sole-source authority.

19.1406 Sole source awards to service-disabled veteran-owned small business (SDVOSB) concerns.

(90) Proper reporting of the use of the SDVOSB sole-source authority in either a manual or an automated environment shall be accomplished through the DLA Contract Action Reporting System (DCARS). See pertinent line-by-line reporting instructions at 53.204-70(c) and (d).

SUBPART 19.71 - PILOT MENTOR-PROTEGE PROGRAM

19.7100 Scope.

The Mentoring Business Agreements (MBA) Program (see Subpart 19.90, below) is a DLA variation on the DoD Pilot Mentor-Protege Program, which was established under Section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101-510), as amended. The DLA program is not intended to supersede the DoD program.

SUBPART 19.90 - DLA MENTORING BUSINESS AGREEMENTS (MBA) PROGRAM

19.9001 General.

The Mentoring Business Agreements (MBA) Program is a DLA variation on the DoD Pilot Mentor-Protege Program (although it does not supersede the latter). Under the DLA Program, experienced (generally large business) entities serve as mentors to selected proteges in reciprocally rewarding relationships. The protege is ordinarily a small, small disadvantaged, or women-owned small business; however, it may also be a Javits-Wagner-O'Day Act (JWOD)-qualified nonprofit agency for the blind or other severely disabled, approved by the Committee for Purchase from People Who Are Blind or Severely Disabled. This Agency program differs from the DoD Mentor-Protege Program in that it:

(a) is not statutorily mandated;

(b) will remain in effect so long as it achieves the purposes for which it is intended;

(c) permits the selection of any small business or JWOD-qualified nonprofit agency as a protege;

(d) does not require potential mentors to undergo a substantial approval process in order to qualify for that role, or to identify intended proteges "up front";

(e) is determined successful more by the establishment of long-term business relationships between mentors and proteges (and perhaps the latter's improved business processes and penetration into new markets) than by numbers and dollar values of subcontracts with SDBs or any other category of small entity; and

(f) offers no direct monetary incentives to contractors. (Instead, it relies on a market-based incentive consisting of the extension of favorable consideration to the mentor under the instant and future source selections, and within the context of option exercise or order placement under multiple-award contracts.)

19.9002 Policy.

Through the DLA MBA Program, experienced prime contractors (large or small, including JWOD entities) extend developmental assistance, with Government encouragement, to small, small disadvantaged, and women-owned small businesses or JWOD entities in return for the recipient's providing value-added services and/or products. The mentor provides the benefit of its managerial expertise, technical capabilities, market knowledge and penetration, and economies of scale. The protege provides a distinctive proficiency or capability (such as a specialized product, service, or, potentially, admission into its own market) which supports the mentor's business objectives.

19.9003 Scope.

Contractor participation in the DLA MBA Program shall be the focus of an evaluation factor to be included in all solicitations or other announcements for long-term contracting arrangements expected to exceed $500,000. This requirement shall not be mandatory for contracts for commercial items, unless logistics services in support of those items are also being acquired under the same contract. Any other exception to this requirement must be approved by the chief of the contracting office, without power of delegation. An explanation for the exception must be included in the solicitation file, and a copy must accompany the report required in 19.9006(e). Inclusion of the program coverage in solicitations below $500,000, though optional, is encouraged in all appropriate circumstances.

19.9004 Purpose and approach.

(a) There are three purposes served by the DLA MBA Program. It is intended to:

(1) Provide maximum opportunity to the small business/JWOD community to participate in DLA's reengineered business processes at either the prime or subcontract level.

(2) Remove the tendency on the part of some small businesses to depend on doing business with the Government exclusively, and to lead them to new opportunities that are chiefly available today in the commercial marketplace.

(3) Foster private-sector, mutually beneficial mentor-protege relationships that transcend performance under specific contracts. These long-term relationships can lead to equally long-term stability and opportunities for growth.

(b) The Government benefit realized is the establishment of stronger, better sources - the large or experienced and the small or disadvantaged entity - in whose abilities there can be greater confidence than ever before. The mentoring process strengthens the likelihood of a small firm's being able to compete for DLA contracts at either the prime or the subcontract level, and provides another outlet, vision, and opportunity to those whose prior range of operations was unnecessarily limited.

(c) A typical approach to MBA could be an arrangement between two entities who are both in similar business lines, with the prime contractor providing the advantage of its experience, technical capabilities, and business networks to the protege. Another could involve a prime from the warehousing/distribution business sector teaming with one or more proteges - not only in product lines, but also in software development, management of hazardous materials, transportation, electronic communications, and other such areas. The DLA MBA Program can be applied across the entire spectrum of DLA commodities and required services (but see 19.9003 for the commercial-item supply contract exception to mandatory inclusion).

19.9005 Contracting officer responsibilities and program considerations.

(a) DLA contracting offices will work together with their respective small business offices as catalysts and facilitators, identifying entities willing to participate as mentors. Prospective prime contractors are responsible for selecting small, small disadvantaged, and women-owned small businesses (or JWOD entities) for participation with them in the Program. However, when requested, the DLA contracting office and/or small business office will assist prospective prime contractors in the process of locating small entities as potential proteges. The prime must establish for itself the parameters of its involvement under the Program; its proposal for participation, identifying the assistance already undertaken or to be rendered, shall be incorporated into its contract with the Government. The prospective contractor is obligated, as part of its contractual undertaking, to enter into a written, binding mentoring business agreement with a protege based on this plan. (Thus, the MBA, by its being expressly contemplated by the mentor's proposal and by the latter document's incorporation into the prime contract with DLA, binds the mentor firm to both the protege and the Government.)

(b) Even though the Government does not enjoy privity of contract with the protege (and therefore cannot be a party to, or require a copy of, the MBA), the contracting officer shall inform the prospective offeror/mentor that the future agreement must reflect the plan included with the latter's offer.

(1) Notwithstanding that the agreement is not made a deliverable under the contract, or that a copy cannot otherwise be demanded by the contracting officer, he or she shall nevertheless request that the agreement be made available to the Government. The contractor shall be advised that any agreement so provided will be compared with the proposal contained in the contract with DLA, to ensure that it adequately reflects the mentor's obligations expressed within that contract.

(c) DLA contracting offices shall lead by example in this mentoring concept by placing greater emphasis on assisting small, small disadvantaged, and women-owned small businesses through their Business Counseling Center services and other functions/specialists throughout the activity. These contracting offices will actively promote and participate in industry-sponsored conferences and organizational seminars/meetings, using the events as a forum to discuss and forward Program goals.

(d) To promote Program participation, the DLA MBA Program shall (as stated in 19.9003) be included as an evaluation factor in best-value acquisitions that meet applicability standards. Prospective offerors shall be asked to include, as part of their overall proposal, a plan to participate in the Program as a mentor; each plan must delineate the assistance already undertaken or to be rendered to a protege. The factor is an element in the overall award decision, and the proposal provided by a successful offeror shall be incorporated into the resulting contract and monitored during performance by the contracting officer and other pertinent parties.

(1) Participation in the MBA Program is entirely elective; however, proposals that demonstrate a strong commitment to affording small, small disadvantaged, and women-owned small businesses a real opportunity to compete in the reengineered business environment will ordinarily receive a more favorable rating for this evaluation factor than those that demonstrate a lesser or no such commitment. (Examples of this type of "real opportunity" include the mentor's developing the protege into a stronger competitor by designating the latter a "valued supplier," or by permitting it to perform part of the contract work in conjunction with the prime through a type of teaming arrangement.) There is no limit to the type of assistance the prime contractor may provide to achieve its Program objectives. Of course, the "helping hand" that any firm can extend necessarily depends upon unique variables, including its business sector, range of market penetration, capitalization, competition, location, etc. The Government shall determine the adequacy of the contractor's proposal, but shall not dictate the kind of assistance to be provided.

(e) For applicable contract actions, the contracting officer shall provide incentives for prime contractors to establish and administer MBA arrangements. These include:

(1) evaluation of current or proposed participation in the MBA Program as an independent factor (separate from any overall past performance evaluation factor) in source selection;

(2) use of MBA performance under previous contracts as part of the overall past performance evaluation factor in source selection;

(3) evaluation of present MBA performance in determining placement of orders under multiple-award contracts; and/or

(4) consideration of contractor present and past MBA performance in the exercise of options for the follow-on years of long-term contracts.

(f) The DLA MBA Program shall be monitored, and performance under it analyzed, by the contracting officer and the cognizant small business specialist(s) to ensure the intended purposes of the Program are being achieved. Because activity must be evaluated specifically in terms of the contractor's commitment to the advancement and viability of a protege, and because oversight reviews must be conducted in accordance with the plan contained in the prime's contract with the Government, rather than in accordance with the agreement (see 19.9006(a) through (c)), care must be taken not to assess intentions, without regard to outcomes. The value of both effort expended and results achieved must be considered in each individual mentoring situation.

19.9006 Reporting.

(a) Participating mentors shall be required to submit periodic progress reports on the fulfillment of their proposals. Furthermore, when a mentor voluntarily furnishes a copy of the MBA to the Government, the contracting officer shall compare the later agreement to the mentor's earlier proposal.

(b) All accomplishments against MBA proposals shall be reviewed semi-annually with the mentor and the protege by the contracting officer and the cognizant small business specialists from the buying activity and the DCMA component(s). (Administration of contracts containing the MBA provision/clause should ordinarily be delegated to DCMA; however, when overall administration is retained, supporting administration by DCMA must nevertheless be requested for purposes of Program oversight. See, generally, 42.202(e)(90). Activity/component Commanders or their Deputies are strongly encouraged to participate in such reviews. HQ DLA (DIRECTOR, ACQUISITION MANAGEMENT (J-7) and DDAS) shall also be afforded an opportunity to participate.

(c) Not only shall small business specialists monitor contractor activity under the plan, but they shall also, at least implicitly, oversee and report on performance under the agreement, when that document has been provided to the Government. Note, though, that even if activity in accordance with the agreement is able to be monitored, such information cannot be used as the basis for any contractual determination (including source selection, option exercise, or order placement), because the mentor's contractual duties to DLA extend only to the contents of the plan. Similarly, a formal assessment of the protege's fulfillment of its undertakings (as set forth in the MBA) cannot be made, because that party's contractual obligations extend only to the prime. Despite this, the general monitoring of all aspects of performance is one of the Government's primary duties under the MBA Program. A proper balance must therefore be maintained between the demands occasioned by legitimate Government interests, and respect for a contractual relationship to which the Government is not a party.

(d) Wherever possible, this Program will utilize existing reporting mechanisms to evaluate prime contractor compliance.

(e) A Reports Control System (RCS) number has been established for reporting the number of MBAs in place each fiscal quarter. Additionally, you are required to indicate whether, for the applicable buys, offers were received from both small/JWOD and large entities, whether the successful offeror chose to participate in the MBA program, and, if so, whether the successful offeror was a small/JWOD or a large business. The RCS number remains DLA(Q)2609(MM). These reports are mandatory, and are due from the corporate contract policy office at each Center to HQ DLA, ATTN: J-71, by the 10th working day of the month following the end of the quarter.

(f) Notification of a mentor's and protege's arrangements regarding signing ceremonies for these MBA agreements shall, whenever practicable, be provided to Headquarters, DLA (DDAS and J-71) at least two weeks prior to the planned event so that DLA executives may attend, at their election. Formal ceremonies with appropriate publicity are encouraged.

19.9007 Solicitation provision and contract clause.

A provision substantially the same as the one at 52.219-9002 shall be inserted in all solicitations meeting the criteria in 19.9003, above. Additionally, a clause substantially the same as the one at 52.219-9003 shall be included in all solicitations and contracts containing provision 52.219-9002.