Kenneth Fletcher
NS&D Monitor
3/14/2014

A National Nuclear Security Administration official last week outlined a host of concerns with the way NNSA and Department of Energy small business contracting is impacting industry, including in the list reverse auctions, restrictive size standards, acquisition strategies and underutilization of contract vehicles. One big concern is the consequence of using reverse auctions for small business procurements. “Who in the world thought that was a good idea? Everybody knows why,” NNSA Albuquerque Complex Small Business Program Manager Greg Gonzales said to applause at the 2014 Waste Management Symposium, held in Phoenix, Ariz. “It’s a good deal for the government, because we drive costs down to the bone. But whoever wins on a reverse auction has no money to invest in their own company for growth. I’m not sure why the contracting officers don’t understand that, but it’s because most of them have never been in industry. The same thing on lowest price technically acceptable versus the best value. You get the same kind of result. I think it’s bad for the government and bad for industry.” 

Another issue is making multiple awards on indefinite delivery/indefinite quantity contracts that, subsequently, are significantly underutilized, Gonzales said. “I see it a lot at the M&O level for the subcontracts, where they’re issuing stuff out and they never run anything through it. It causes industry to spend a lot of money writing proposals and nothing ever flows through it. I’d like to see that practice stop,” he said, adding another concern is “issuing ID/IQ small business contracts and then using other contracts with large business instead of the one you set up for small business. I’ve seen that happen a lot, especially in today’s very tight economy.”

Encouraging Small Business Subcontracting

More meaningful opportunities for small business subcontracting should be encouraged among prime contractors by including it in the past performance selection criteria for award, Gonzales said, adding that could also include “what is being proposed in terms of a small business utilization plan in the proposal for an active contract that we are seeking to award. I think if we focus a bit better at the NNSA and the M&Os looking at awarding subcontracts in that regard, I think we can drive a little bit different behavior.” 

In the Department’s Office of the Environmental Management, prime contracts in general require 50 percent of subcontracts to go to small business, EM Deputy Assistant Secretary for Acquisition and Project Management Jack Surash said at last week’s meeting, using as an example the cleanup contracts at Oak Ridge and Hanford’s River Corridor. “What we did in both of those was we restricted the contractor to performing the work, they could only perform 40 percent of the work themselves so to say it in another way we required them to subcontract out 60 percent of the work,” he said. “We further required that one half of that 60 percent be subcontracted to small businesses. That resulted in 30 percent of the work going to small businesses in both of those examples. There is an emphasis on getting to small businesses whether it’s at the subcontract or the prime level across programs.” 

‘Useless’ Responses from Contracting Officers

Another issue for some small businesses has been “useless” responses from contracting officers to questions on requests for proposals, Gonzales said. He used as an example one response stating that the answer was in the reading room. “How many people can afford to send a whole team to a reading room to figure out the answer to that question? If you know where the answer is and it’s in the reading room, tell industry which document to look at in the reading room. Because when you make statements like that it creates an unfair playing field because only the incumbent knows the answer to the question,” 

DOE should also offer more procurements to contractors that do not hold General Services Administration schedules, Gonzales said. “A lot of really good contractors out there do business with us who don’t hold GSA schedules,” he said, stating that not putting a procurement on the open market as a set-aside “limits the pool of available contractors that can bid as a prime.” Instead, market research should be used in developing an acquisition strategy—a sources sought notice could be issued through both GSA and the open market, resulting in “a comparative analysis of what kinds of responses we’re getting from both sides of the fence and where does the pool of best-qualified contractors lie.” 

Gonzales listed several other concerns, including issuing size standards for contracts that are too small, cutting out many small businesses that may otherwise bid. Another mistake is not always holding industry day meetings or preproposal conferences to receive feedback from industry, he said. And he also decried encouraging particular approaches such as Contractor Team Arrangements. “I think it’s a real problem. I think the government ought to stay out of your business and let you tell us how you can meet our requirements,” he said.