Kenneth Fletcher
WC Monitor
12/5/2014
Industry officials called on the Department of Energy late last month to take a number of steps to improve small business contracting, including promoting more meaningful prime and subcontract opportunities that encourage business growth. A contracting task force formed by the Energy, Technology and Environmental Business Association discussed its recommendations with DOE officials at the group’s annual conference, held in Knoxville, Tenn. The group emphasized that DOE should incentivize small businesses to perform more project-based work and equitably share contract risks and rewards. According to DOE Director of the Office of Small and Disadvantaged Business Utilization John Hale, the Department is focusing on value-added contracting. “One thing that really kind of keeps me up at night is that high-performing small businesses would either choose not to work with the Department of Energy or stop doing work for the Department and pursue other agencies that they felt are more beneficial to the company in terms of building and maintaining their company,” he said.
In recent years, a number of DOE prime cleanup contractors have moved to a staff augmentation-based approach for subcontracting, which small businesses say leaves them little opportunity for growth. DOE’s Office of Environmental Management is growing prime small business opportunities, which are all task based, DOE EM Deputy Assistant Secretary for Acquisition and Project Management Jack Surash said. “I know small businesses have to do some staff augment work, but I would say to be very careful of that, because that’s not sustainable. Your folks can change ship on you relatively easy and it’s not a good way to grow your business,” Surash said.
Make Small Business Participation Enforceable Part of Contract
DOE could create more incentives for small business participation in prime contracts, and make small businesses working specific scope an enforceable, fee-bearing part of prime contracts, said Tetra Tech’s Tiki Dixon, a member of the ETEBA Task force. “Small business plans required in major bids do not translate into enforceable fee-bearing contract requirements to provide small businesses with significant roles on the team," Dixon said.
Though small business participation is not an enforceable part of the contract, “we do pay attention to this even without any fee-bearing consequences,” Surash said, noting that subcontracting is taken into account in the Contractor Performance Assessment Reporting system. “We are holding our prime contractors accountable there,” he said. “CPARS is source selection information that is not made public. However, I am aware of all EM CPARS and I can assure you that any prime contractor that is not meeting its small business plan is not receiving an excellent, very good or satisfactory.”
Hale said that his office is also paying attention to subcontracting. “If we see that there is a specific area for overall small business or socioeconomic goals that aren’t being met we will really focus those back to the program office to work on why is this happening, what is the plan, what are their outreach requirements and how can we in our world help them find capable small businesses if we can’t find them,” he said.
The Department should also try to reduce costs for contract bids by keeping the timeframe for awards shorter, some industry officials said. “Sometimes that can be a very long, drawn-out process, costing you time and money,” Dixon said. “A potential solution is to reduce the timeline of contract awards, reducing costs and effort to both DOE and the bidders.” Surash responded: “We want to continue to work on that. We brought the time it takes way down, but we can still do better.”
DOE Should Request Industry Input on Contract Type
Due to the risk of fixed-price contracting if a scope is not well defined, DOE should accept feedback during presolicitation, Susana Navarro of Navarro Research and Engineering and the task force said. “But it is very risky when there are significant unknowns. So one of the recommendations we had was that during the presolicitation stage DOE should request input from the bidders or the community regarding the type of contract to be utilized,” she said. She noted that DOE’s Oak Ridge Office had already taken that step for upcoming procurements.
While DOE is moving towards allocating more risk to contractors through more fixed-price contracts, “we are very interested in doing a better job of defining the requirement up front, having potentially shorter terms in our contracts,” Surash said. Instead of a five-year base period, EM is beginning to use two- or three-year base periods with subsequent options. “We are finding that these longer contracts, we were out in front of our headlights. We’re not able to put our arms around lots of things,” he said.
Additionally, in new contracts DOE is looking to fix price a base amount of work, while items with more uncertainty could fall under a different structure. “There is a lower level of work that is going to happen no matter what happens with the budget. The budget is not going to go to zero. We’re really just unsure about the top amount,” Surash said. “So what we’ve done there is go after a fixed price, firm fixed price deal for that lower level of work and then built in a pricing structure, almost an ID/IQ [Indefinte Delivery/Indefinite Quantity] structure, for this variable work to treat the stuff that goes up and down. It may vary. But at the end of the day we’d like to keep these deals fixed price and allocate the risk to you. Hopefully we’re doing it.”
Expand Mentor Protégé Program
Because of the success of the mentor-protégé program, in which a large business partners with a small business and works on meeting goals, DOE should consider expanding it, Bechtel’s Andy Kelsey said. “Look at expanding the eligibility of these programs. Veteran owned businesses are not eligible, and even the non-disadvantaged small businesses, perhaps you could do a parallel program. Perhaps it doesn’t have the sole-source capability, but we challenge it and maybe it could be broader and get more small businesses involved,” Kelsey said. Another possibility would be for large small businesses to act as mentors to smaller small businesses.
DOE’s Office of Inspector General has raised some issues in with the mentor-protégé program in a recent report, Hale noted. “Some of the concerns from the IG office [are] who is eligible to be a member of the program. They felt there were some instances that some companies were too large and had several subcontracts or prime awards and weren’t the best proteges, so maybe those who were truly needy couldn’t get into the program,” he said. “We are really concerned that the small businesses are really getting value-added mentoring and are learning out of their relationship with the mentor. While there’s not a time limit, we want to make sure that a meaningful exchange is really going on throughout the length of the agreement.”
