Office of Small and Disadvantaged Business Utilization

Small Business Program Policy Manual

Introduction

“The essence of the American economic system of private enterprise is free competition. Only through full and free competition can free markets, free entry into business and opportunities for the expression and growth of personal initiative and individual judgment is assured. The preservation and expansion of such competition is basic not only to the economic well being but to the security of this Nation. Such security and well being cannot be realized unless the actual and potential capacity of small business is encouraged and developed. It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts for property and services for the Government (including but not limited to contracts for maintenance, repair and construction) be placed with small- business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation.” 1

Small businesses are important to the United States. We have Government programs to support and assist small businesses because they make valuable contributions to our economy. There are approximately 24 million businesses in America and 99 percent are non-farm small businesses. More than 16 million Americans own a small business and employ 53 percent of the private work force in the United States. The following are additional notable reasons why small businesses are important to the U.S. economy:

• 90 percent of small businesses in the United States employees fewer that 20 employees.

• Small businesses are responsible for approximately 50 percent of the gross domestic product (GDP).

• The Small Business Administration reported in the “Small Business Economy for Data Year 2006” (published December 2007) businesses with fewer than 500 employees gained 1.86 million new jobs in 2004

• Small businesses create most new American products and technologies, including such things as the computer chip, the rocket engine, xerography, and the ballpoint pen.

• More than 99 percent of all American Businesses are small.

• Small businesses are a vital part of the Nation's industrial/defense mobilization base.

• Small businesses generate competition and ensure a competitive economic climate.

Despite its large numbers and important role in the economy, small businesses received less than 22.8 percent of Federal Government prime contract awarded in Fiscal Year 2006 (Small Business Economy for Data Year 2006, published December 2007).

A. AUTHORITY

The Small Business Act, Public Law 83-163 (hereafter referred to as the Act), began with the statement of Congressional policy quoted at the beginning of this chapter. The Act, as amended, established the authority for loans, procurement set-asides, management counseling, certificates of competency and advocacy to assist small businesses. The 1978 amendments to the Act, Public Law (PL) 95-507, established small business-small purchase set-asides, subcontracting plan requirements for certain prime contracts and provided the statutory basis for the 8(a) Business Development Program. PL 95-507 further required the establishment of an Office of Small and Disadvantaged Business Utilization (OSDBU) in each Federal agency.

PL 100-656, the 1988 amendment to the Act, introduced competition to the 8(a) Business Development Program and established a process for setting goals for procurement prime contract and subcontract awards to small and small disadvantaged business concerns.

PL 100-656 required that liquidated damages be assessed against prime contractors who fail to make a good faith effort to achieve their subcontracting plan goals.

PL 100-533, the Woman's Business Ownership Act of 1988, also amended the Act to make statutory the Federal program for Woman Owned small businesses (WOSB). The WOSB program was created in 1979 under Executive Order 12138 and the National Women’s Business Council. Policy Letter 80-4 of the Office of Federal Procurement Policy established uniform Government-wide procurement policies for woman owned small businesses. Federal agencies are required to encourage woman owned small business participation in their prime and subcontract awards.

PL 103-355, the Federal Acquisition Streamlining Act (FASA) of 1994, also amended the Act to accommodate a Government-wide goal of 5 percent of total prime contract awards to woman owned small businesses. The Act deleted existing separate coverage relating to woman owned businesses and revised existing coverage to place woman owned small businesses on an equal footing with small disadvantaged businesses. Additionally, the Individual Subcontracting Report (ISR, formally the Standard Form 294) and Summary Subcontracting Report (SSR, formally the Standard Form 295) were also revised and streamlined.

The Historically Underutilized Business Zone (HUBZone) Act of 1997 (15 United States Code. 631 and PL 105-135) created the HUBZone Program. The purpose of the HUBZone Program is to provide Federal contracting assistance for qualified small business concerns located in historically underutilized business zones in an effort to increase employment opportunities, investment and economic development in those areas.

In 1999, PL 106-50, The Veterans Entrepreneurship and Small Business Development Act, established a goal for subcontracts awarded by prime contractors to veterans, service disabled veteran owned and veteran controlled small business concerns.

The small business program is implemented in Part 48 of the Code of Federal Regulations (CFR), in Part 19 of the Federal Acquisition Regulation (FAR), and in Part 319 of the U.S. Department of Health and Human Services Acquisition Regulation (HHSAR).

B. HHS POLICY AND RESPONSIBILITY

It is the policy of the U.S. Department of Health and Human Services (HHS) to ensure that opportunities to compete for and receive a fair share of HHS’ procurement expenditures are provided to small, 8(a), small disadvantaged, woman owned, Hubzone, service disabled veteran owned and minority owned small businesses (hereafter referred to as small business).

The department’s Secretary once stated that the President believes that small business enterprises are vital to the economic health of our nation. Small businesses have proven to be competitive, responsive, flexible and innovative. For these reasons, HHS has various activities to support and assist small businesses.

In Section 15 of the Act, it requires that the OSDBU Director to "have supervisory authority over personnel of such agency to the extent that the functions and duties of such personnel relate to functions and duties” under the Act. The OSDBU Director collaborates with the Small Business Administration (SBA) to ensure HHS is actively working to meet and/or exceed its small business goals.

C. SMALL BUSINESS PROGRAM GOALS

The Act (15 U.S.C. 644(g)) requires that the President establish annual Government-wide goals for procurement awards to small businesses. The individual agency goals must represent the estimated maximum practicable opportunity for small businesses to participate in the performance of contracts let by the agency. Because of the nature of HHS’ purchases, it continues to strive to meet and exceed the statutory minimum goals for small businesses.

Section 9 of the Act, as amended by the Small Business Innovation Development Act, PL 97-219, requires Federal agencies with budgets for research and development (R&D) that exceed $20 million for any fiscal year to establish goals for R&D awards to small businesses. The annual goals must be at least the percentage of the R&D budget expended by the agency with small business concerns in the immediately preceding fiscal year.

Each small business program goal is established by statute. The OSDBU Director, after consultation with the SBA, establishes annual HHS goals for prime contracts and subcontract awards for each small business program. HHS Operating Division (OPDIV) senior executives are responsible for meeting their OPDIV’s small business program goals. At the HHS, the goals are communicated by the OSDBU Director to the OPDIV Chief Procurement Officer and Head Contracting Authority (HCA). The OPDIV performance is similarly tracked internally by the Office of Administration and Management (ASAM) through various acquisition data systems. Each program or project is expected to meet or exceed its component’s goals and each Senior Manager and Executive is held accountable in their Performance Management Plans.

An annual report of HHS performance is submitted to the SBA and to the Office of Management and Budget (OMB) Administration for review. The reports must cite and explain failure to achieve goals and what actions are planned to achieve goals in the succeeding fiscal year. The data SBA collects is used to create annual presidential and congressional reports.

D. OSDBU’s ROLE

The Act, section 15 established the Office of Small and Disadvantaged Business Utilization (OSDBU) in each Federal agency that has procurement powers. The HHS OSDBU Director reports to the Office of the Deputy Secretary and serves as the point of contact for small business matters while overseeing the implementation and execution of the functions identified in sections 8 and 15 of the Small Business Act as it relates to the HHS.

The OSDBU has oversight authority for the performance of HHS OPDIVs in meeting small business goals and relies on Small Business Specialists (SBS) co-located at the OPDIVs to provide necessary support to the acquisition and program staff.

E. DUTIES OF OPDIV SMALL BUSINESS SPECIALIST (SBS)

The OSDBU Director assigns at least one Small Business Specialist (SBS) to each OPDIV. The SBS is co-located at the OPDIV to be accessible to Contracting Officials, Program Officials, OPDIV contractors, vendors and others who may require technical assistance. The primary duties of the OPDIV SBS include, but are not limited to the following:

• Serve as small business technical advisor and work with Contracting and Program Officials, Purchasing Agents and other OPDIV staff to address procurement strategies.

• Identify and address proposed solicitations that involve bundling of contract requirements or the removal of requirements from a small business program.

• Facilitate small business participation as suppliers and subcontractors through outreach activities locally and throughout the United States.

• Analyze HHS Small Business Review Form 653 (Form 653), subcontracting plans, Sources Sought announcements and other supporting documentation for proposed acquisitions.

• Serve as a liaison for the OPDIV and the SBA Procurement Center Representative (PCR) to address solicitations, contracts, small business plans, purchase orders and other related acquisition issues.

• Assist SBA PCR in their duties and functions relating to sections 8 and 15 of the Small Business Act and other related acquisition and small business regulations.

• Assist OPDIV HCA in developing strategies which encourage small business participation and to meet HHS small business subcontracting goals.

A current list of HHS SBS may be reviewed on the OSDBU website under the heading “Staff Services.”

HHS Contracting Officials shall refer to FAR 7.104(d) and 19.202-1 to strategize with the SBS to ensure that small business concerns have an equitable opportunity to compete for all procurement opportunities.

In addition, HHS OPDIV Head Contracting Authority (HCA) shall take the following actions to encourage small business participation:

• Conduct and document market research within 12 months of issuing a solicitation. The documentation must illustrate the actions taken to obtain adequate competition.

• Instruct contracting officials to issue a Sources Sought to provide advance notice of the intent to post a solicitation. In accordance with FAR 5.205, the Contracting Officer must consider ppotential sources that may respond to advance notices for a subsequent solicitation. A Sources Sought should indicate the number of pages allowed in the response to avoid submission of mini proposals and encourage small business participation.

• Support the participation of the OSDBU and the OPDIV SBS in the advance procurement planning process.

• Prepare and submit a forecast of contract opportunities which identifies each anticipated purchase in excess of Simplified Acquisition Threshold (SAT, FAR 2.101) each year by October 1. Ensure that each forecast requirement includes a title, description of the purchase, the North American Industry Classification System (NAICS) code, the estimated value (including Options), the estimated quarter for release of the solicitation, the name and telephone number of a contact person(s) for each entry and other information as suggested by the SBS.

• Utilize 8(a) set-asides whenever qualified 8(a) firms are identified for a particular acquisition (See FAR 19.804-1).

• Ensure that small businesses receive payment in a timely manner in accordance with the Prompt Payment Act Amendments of 1988, as amended, consistent with FAR 32.9 and 19.702.

• Utilize total or partial small business set-asides whenever there are at least two responsible small businesses qualified to respond (See FAR 19.502-2 and 19.502-3).

G. OUTREACH ACTIVITIES

1. Introduction

It is the policy of the HHS to engage in meaningful, aggressive outreach activities and programs to assist, counsel and advise small businesses on how to pursue contracting opportunities with HHS.

The OSDBU mission is to:

• assist small businesses to develop, grow and ensure its long-term success;

• continue to foster an environment where highly skilled suppliers may compete successfully for a fair share of HHS' procurement on their own merits; and

• assist large businesses to increase subcontracting opportunities for small businesses.

The HHS has developed specific marketing materials and outreach activities to accomplish its mission. The following are examples of such activities:

2. Marketing Publications

HHS publishes and posts literature to assist small businesses in its marketing efforts. For example, it posts (1) the Forecast of Contract Opportunities lists potential procurement opportunities for each OPDIV and (2) the web-based “Doing Business with HHS” will assist small businesses in marketing its service and products to the OPDIVs.

3. Vendor Outreach Sessions

The OSDBU, in conjunction with the OPDIV SBS, sponsors a series of small business Vendor Outreach Sessions (VOS). The purposes of the sessions are to provide the small business community with the opportunity to meet with the HHS SBS and HHS Staff to discuss their capabilities and to learn of potential procurement opportunities. HHS Prime Contractors and other Government agencies are often invited to participate in the sessions to provide information concerning subcontracting opportunities or other agency’s procurement opportunities.

4. OPDIV Outreach Activities

HHS OPDIVs engages in various forms of outreach activities. An OPDIV may develop outreach activities that compliment its mission or an upcoming procurement. An OPDIV shall involve its assigned SBS or the OSDBU in the development of an outreach activity. The SBS shall provide guidance to ensure that the small business community has reasonable representation.

5. Other Outreach Activities

Throughout the year HHS presence is requested at various outreach activities throughout the United States. For example, the Minority Enterprise Development Week, National Small Business Federal Contracting Week, Veterans Conference and Small Business Week are a few national small business annual outreach activities. In addition, the HHS is invited to attend congressionally sponsored procurement fairs, Trade Association Conferences and various networking and speaking engagements.

All waivers or deviations from the Small Business Program policies prescribed in this manual require the approval of the OSDBU Director or a designee. Each OPDIV shall seek the advice of its assigned SBS prior to the execution of such actions.

I. STRATEGIC SOURCING

The HHS has leveraged its purchasing power to obtain Department-wide discounts under the auspices of the HHS Procurement Support Center (PSC) Strategic Sourcing Division (SSD). Currently, the PSC SSD competed and established HHS-wide Blanket Purchase Agreements (BPA) for the following commodities:

• Custodial Products
• Events Management Services
• Office Equipment
• Office Furniture
• Office Supplies
• Temporary Administrative and Professional Staffing Services
• Temporary Professional and Medical Staffing Services
• Document Management Pilot
• Domestic Mail
• Information Technology Peripherals
• Laboratory Supplies

The strategic sourcing BPAs remain the preferred sources for the above categories. However, contracting officials may procure services and products from a non-strategic sourcing vendor.

1 Small Business Investment Act of 1958, 15 U.S.C. 631, Section 2.(a)

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