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Carla:Good morning and welcome to today's live SBA Web Conference. With that, I'll turn the call over to Dwight Johnson. Dwight, please go ahead.Dwight:Thank you, Carla. Hi, everybody. Welcome and we are delighted in having you join us again, excuse me, on SBA 1st Wednesday Virtual Learning. Our presenters this morning are Mariana Pardo, who is the Director of HUBZone Program, and Alison Mueller, who is an Attorney Advisor. Both are at our headquarters in Washington, DC. Next slide, please.That would be, Dwight, and my colleague, Jan Kaiser, in Chicago. If you need to reach us any time, our emails and phone numbers are listed. Next slide, please.Just for background, as we always say here, our area directors, the links of area directors is listed here, and this is what you use that link for, for size, for finding SBA staff, COCs, and subcontracting plans. Be sure to send your subcontracting plans to the area office. Then we have the comment about 8(a) and also always remember that you've got to have the right NAICS code if you're going to use the Women's Program. Next slide, please.Again, welcome. We will be announcing page numbers since many of you are not able to follow along or log in to our system, so you're on the phone only. Be sure to sue the Procurement Technical Assistance Center, and we have the link there as to the appropriate ... as a resource for you. Next slide, please.We have something new and some of you checked this out and have given us good feedback about the Association of Procurement Technical Assistance Centers now houses our program. These can be accessed at anytime for credit. They also have a link for resources to contracting staff. Next slide, please.Carla:Slide 7Dwight:Slide 7, and be careful in your solicitations about not promoting someone who is a private company. Be sure that if you make reference to any resource, it would have to be a PTAP in your solicitation. Slide 8, please.Next month we are discussing SBA size standards, and we are going to have a few changes in the HUBZone Program that will be in effect between now and then. We'll have a little bit more information for you about that on June 1st. I guess this would be Slide 9 then.This is worth one continuous learning points. Again, if you are phoning in only, please email sbalearning@ so we're sure that you're on our mailing list, we have a record of your participation which we otherwise do not have. Please, if you're listening in groups, send an Excel document containing all the emails, not just the names, of those participating, and then everybody receives the post-program email. Next Slide 10.This is a certificate which you can just complete on your own if you wish. Next slide is 11.Now we are contracting with HUBZone Certified Small Businesses. That's where the regs are, down in the lower right-hand corner. With that, I will turn it over to Mariana. Thank you very much.Mariana:Thank you, Dwight. Next slide, please.Carla:Slide 12Mariana:Slide 12. This delineates what we're going to be talking about today, which is we're going to be discussing HUBZone set-asides, sole source awards. We're going to be also discussing set-asides of orders, the price evaluation preference when you are using full and open competition, as well as limitations on subcontracting and non-manufacturer rule. As Dwight mentioned, there are going to be some changes coming up, probably within this month, so we're going to point out the areas where the changes will be occurring. As Dwight was saying, we will send you an update as soon as the changes become in effect. Next slide, please.The Small Business Administration administers the HUBZone Program, so be cautious when you get a customer that says they are HUBZone because they are located in a HUBZone area. That is not a HUBZone-certified firm. A firm could be located in a HUBZone, could be employing folks that reside in a HUBZone, but yet they're not certified by the Small Business Administration as a HUBZone concern. The businesses have to apply for this certification, and they need to meet certain requirements in order to obtain the certification as well as maintain it. We will issue a certification once they are approved, and the way you verify a firm's certification is in the list of qualified HUBZone firms that SBA maintains in the Dynamic Small Business System. All the firms that are in that list are eligible for HUBZone contracting preferences and awards. Next slide, please.Carla:Slide 14.Mariana:Thank you. The HUBZone contracts, including multiple awards, are those awarded through a sole source awards mechanism to qualify as HUBZone small firms, set-aside awards which includes partial set-asides based on competition that are restricted certified firms. The awards are also, as we mentioned, full and open after a price evaluation preference is applied, awards based on a reserve for HUBZone firm in a solicitation for a multiple award contract, and orders set-aside for HUBZone firms against a multiple award contract that was awarded in full and open competition. Next slide.At the time the requirements to bid on a HUBZone contract are very important since the companies are required to be in compliance at the time of initial offer and at the time of award. At the time a company submits the offer on a specific HUBZone contract, it certifies to the contracting officer that it is a qualified HUBZone firm that appears in that list in the Dynamic Small Business Search, that there has been no material change that could affect their eligibility since the date that they were certified, and is small under the NAICS code assigned to the procurement, and that it will attempt to maintain the required percentage of employees who are HUBZone residents during the performance of that HUBZone contract. Next slide, please.To be eligible for a HUBZone contract, the company, as I mentioned earlier, has to be compliant both at the time of offer and at the time of award. In general, a joint venture may be considered a HUBZone firm, a HUBZone small business, if both joint ventures or the members of the joint venture are certified and each is small under the NAICS code assigned to the contract. This requirement of the joint venture that is currently in the regulations is one of the ones that will be changing within this month or so. It is going to be part of an [inaudible 00:09:28] rule, and basically what it would mean is once that rule becomes final, a HUBZone firm could joint venture with any other firm, so long as they're small under the NAICS assigned to the contract. Once this rule is finalized, the HUBZone firm does not need to joint venture with other HUBZone firms in order to meet this requirement. It will be removed. Next slide, please.Here is a screenshot of the list, the Dynamic Small Business Search. Next slide, please. Thank you.As you will see in the slide that will follow this one, is you will need to look at a particular section in the slide that will show ... that will be marked "Yes" and will have a date down below when the firm alleges that they're HUBZone certified. That's what you're looking for when you're looking at that profile for a particular contractor. Let's look at the next slide for an example of how the certification is displayed. By the way, this slide was amended for those following with the hard copy because there was a typo in the word "example." As you will see midway there through this slide where it says "HUBZone Certification" you see that the "Yes" is marked, and you have to have to have the HUBZone certification date. When you see those fields filled in like this, you are confirming, you're validating, that the contractor that presented that offer is indeed a HUBZone-certified firm.It is extremely important that, when you're about to award the contract to a HUBZone firm, you go back to the list and verify again that they're still certified because the firm could have been decertified subsequently after they submitted the offer. As we were learning earlier, the company has to be in compliance, has to be in the list, at the time of bid and at the time of award, so you will be doing at least two checks as you're validating certification. Let's look at the next slide.Carla:Can you tell us how joint ventures will appear that are HUBZone in the Dynamic Small Business Search?Mariana:Joint ventures are not displayed in the Dynamic Small Business Search as certified because joint ventures do not qualify. They will fail the ownership and control requirements, so a joint venture will not be able to obtain the certification for HUBZone, okay?Carla:Thank you.Mariana:Sure. Good question. Next slide, please. I'm sorry, let's stay with one. This is an example of decertified firm. Let's say that you checked on the profile when the firm submitted the offer, and there was a "Yes" and there was a date. Now you're getting ready to award the contract to this firm, and you go back and you check, and it shows "No" but the date is still there. This is basically informing you that the firm is no longer certified, but at some point in this example, September 26, 2007, the firm was certified on that date, but it was subsequently decertified. The profiles do not display when ... They do not display the date when the firm was decertified, only [inaudible 00:13:27]. Obviously, if you're about to award the contract, to this company, you would not be able to award the HUBZone contract to this company. You would have to go the next best offer that you had gotten. Let's go to the next one. Next slide, please. Thank you.This is an example of a firm that it was never HUBZone certified. When you see the "No" and there's no certification date, that's basically a firm that was never certified. This is the example that I was saying at the beginning if a firm comes in and they say, "We are a HUBZone," and you go here and it says no, probably there is a misunderstanding from the firm. They believe that the fact that they are located in a HUBZone means that they're a HUBZone firm, and that is not the case. Next slide, please.Carla:Just real quick. If it says "Yes" where it says "HUBZone certified," then they're still to be considered active?Mariana:Correct.Carla:Okay, thank you.Mariana:Okay, I am going to now turn this over to my partner here, Ali, so Alison if you can take it from here.Alison:Sure, we're starting this on the relationship among the various socioeconomic programs that SBA oversees, and as a side fact, there's no order of precedence among our programs which are the 8(a) Program, the HUBZone Program, the Service-Disabled Veteran-Owned Small Business Program, and the Women-Owned Small Business Program. The reason for this slide is until a couple of years ago, the HUBZone statute was written in such a way that it appeared that the HUBZone Program took precedence over these other small business programs. Now there's a statutory amendment to fix that a few years ago, so since then we've been trying to clarify that there's parity among our programs. If it's a situation where you want to do some kind of small business set-aside, HUBZone is an option, but you're not required to go HUBZone.In making that determination, in terms of what program to use for your set-aside, you should look at the results of your market research as always, and then, of course, your agency's progress in meeting the SBA small business goals. Next side.Again, this is addressing the issue of parity that came up a lot in the past. For a contract that's between the micro-purchase threshold, which is now 3,500, and the simplified acquisition threshold of 150,000, those contracts are required to go to small businesses. However, there's no order of precedence between a small business certified versus a HUBZone certified versus an 8(a) contract, et cetera. When you're looking at a contract that's over the simplified acquisition threshold, in that case the contracting officer should first look at 8(a), HUBZone, SDVO and WO programs before considering a small business set-aside. The one exception to that general rule the the socioeconomic programs take precedence over straight small business set-aside is that the contract was in the 8(a) Program already or has been accepted in the 8(a) Program, then the once-8(a)-always-8(a) rule applies. In order to remove that contract from that program, you would have to come to that 8(a) Program office and request removal in order to award under one of the other programs. Next slide, please.Carla:Slide 24.Alison:Here we'll be talking about set-asides of orders. Next slide.Carla:25.Alison:Actually this goes over the general general set-aside procedures which explain that for acquisitions that are above the micro-purchase threshold, a contracting officer can set aside under the HUBZone Program and once again should consider HUBZone set-asides before considering a small business set-aside or, as we're adding here, before considering a HUBZone sole source award. We'll get into that in a slide or two explaining why, but generally the reason is you can only award a HUBZone sole source contract if there's one prospective offeror. You can't do a sole source if there's more than one.In order to set aside a contract under the HUBZone Program, the contracting officer has to have determined that or has to have a reasonable expectation that offers will be received from at least two certified HUBZone companies and that award will be made at fair market price. Next slide.Carla:26.Alison:This suggests a situation where a contracting officer has decided to do a HUBZone set-aside and has done the requisite market research and made the determination to do so and then either receives only one offer or no offers. Under our regulations in the FAR, if you only receive one acceptable offer from a HUBZone firm, then you should make award to that concern. If you don't receive any acceptable offers from HUBZone firms when you've done a HUBZone set-aside, you should withdraw ... cancel the solicitation and re-solicit it as a small business set-aside. The appropriate part there is that you should look at what your market research shows, if you can do a small business enterprise instead. All right, next slide.Carla:27.Alison:Here we're talking about, again, HUBZone sole source awards. Our contracting officer can award a sole source award under the HUBZone Program, and this is again before considering a small business set-aside if you don't have a reasonable expectation that offers will be received from two or more HUBZone firms. In other words, you only expect that there's one HUBZone firm that can do the work. That's a major criteria, and then there's certain thresholds that the contract has to fall under in order to be able to do a HUBZone sole source. Here the slide ... I think all the slides show, even ones that haven't updated, we have an additional update where the FAR-required inflation change has updated the number, the threshold, here, so for our HUBZone sole source award, the contract has to be valued under 7 million if it's a manufacturing contract or 4 million for all other contracts. Again, the slide says 6.5, but as of, I think, July 2nd of last year, due to the FAR inflation change, it's now 7 million.The additional requirements to do a HUBZone sole source are that, as we mentioned before, the contract can't be in the 8(a) Program, so that means it can't be being performed by an 8(a) firm and it cannot have been accepted into the 8(a) Program. Otherwise, you have to get a release from the 8(a) Program Director, as we said. To do a sole source, they have to be above the simplified acquisition threshold. The one firm that you determine can do the work has to have been ... You have to determine that they're a responsible contractor. Then finally the award has to be made at a fair and reasonable price.At the end here we note that SBA can always appeal a contracting officer's decision not to make a HUBZone sole source award, although that's somewhat rare. Next slide.Here we're going to discuss ... Next we're going to talk about set-asides of orders and then we'll get to price evaluation preference, so we can go to the next slide.Carla:Slide 29.Alison:Thank you. Under the current FAR rules, agencies can set aside orders that are ... If you have a GSA federal contract that was awarded for an open competition, contract officers now have the authority to set aside orders against that multiple-award contract to HUBZone firms. This is a discretionary authority, so you can see they're not required to do set-asides of these types of orders, but they are authorized to. You can also reserve one or more contract awards for HUBZone firms if you're doing a full and open multiple-award procurement. All right, next slide.Carla:Slide 30.Alison:Still talking about set-aside of orders, the FAR specifies that the Part 19 requirements still apply if you're doing an order against a multiple-award contract. This, for HUBZone purposes, means that the HUBZone joint venture requirements would apply, and the HUBZone performance of work requirements would apply, as well as the HUBZone eligibility requirements. Once again, as we mentioned, the HUBZone joint venture requirements will be changing shortly, as will the performance of work requirements, but if you're doing a HUBZone set-aside order, you have to follow the Part 19 HUBZone rules. Next slide.Carla:Slide 31.Alison:Here we'll be talking about the price evaluation preference, so our next slide.The HUBZone price evaluation preference is used in acquisitions that are conducted using full and open competition. They're not used if price isn't a selection factor. for example, an architect and engineer acquisition. The price evaluation preference also does not apply where all fair and reasonable offers are accepted. The best example of that is if it's a multiple award schedule contract. Next slide.In order to apply to have the HUBZone price evaluation preference, if you read our FAR, our rules have some regulations for SBA, or if you read the FAR regulations, it can be a little confusing, but the way you should think about it is that the price evaluation comes into play if your prospective awardee is a large business and you have another offeror who is a certified HUBZone small business. Where you have the large business that is a prospective awardee as well as another offeror who is a HUBZone firm, you should apply this 10% price evaluation preference to the large business and determine whether after that 10% has been applied whether their offer is still lower than that of the HUBZone firm. This second bullet here, offers from HUBZone firms that have not waived the evaluation preference, it specifies that a HUBZone firm does have the option to waive the price evaluation preference, in which case you wouldn't apply it, but I think that's pretty rare. You also would not apply it if the prospective awardee is a small business concern. Let's go to the next slide for an example.Carla:Slide 34.Alison:Here on the slides that were distributed so the people who are looking at hard copies and not on the webinar screen, there were, I think, one or two typos in this. I'll just read through the numbers so everyone can follow along. We have in our example the offer amounts that were provided. The HUBZone offered $113. The small business offered $103, and the large business offered $100, so this is a situation where we would apply the price evaluation preference because the large business is the prospective awardee with the lowest dollar amount, the lowest offer. Then in the column to the right of that, under PEP Applied, you should see HUBZone at $113, the same as its offer; the small business 103, the same as its offer because we don't apply it to the small business; and then the large business, when the PEP is applied, that number should read 110. That's basically 10% higher than their original offer.When the PEP has been applied, you see that, in this example, the large business, their offer of 110, post-PEP so to speak, is still lower than the HUBZone firm, so in this case the price evaluation preference does not help the HUBZone firm, and the large business would still be the awardee. It's a little confusing to look at the small business still listed there as 103, which is less than 110, but we ignore the small business because they were not the original prospective awardee, and the PEP can't be applied to benefit the small business. The PEP only can be applied to benefit the HUBZone small business.In the next slide we have another example. Here everyone should be looking at the same numbers. I won't walk through it as slowly, but here, once again, the large business had the lowest offer, so we applied the 10% price evaluation preference to the large business's offer amount increasing it from 95 to 104.50, which is higher than the HUBZone business's offer of $100. Again, we ignore the small business because they weren't in line for award to begin with. Here the price evaluation preference does help the HUBZone small business concern, and they would be considered the lowest offeror in this example. All right, next slide.Carla:Slide 36.Alison:Then go to the next slide again. The next four slides all address the limitations on subcontracting and the non-manufacturer rules. I'm not going to walk us through these four slides because these are the rules that are changing basically imminently like Mariana said, this month, could be as soon as this week or next week. It's hard to say, but it's soon anyway. The good news is that the rules are becoming a little clearer in my opinion and at the very least more consistent with the other programs. If you've worked on programs other than the HUBZone Program, you'll see these changes coming through, and you won't have to remember a separate set of rules for HUBZone versus SDVO or 8(a), for example.Generally the new limitations on subcontracting rules for all these programs, instead of looking at the way the statute was written that changed this, instead of looking at how much work the prime contractor is performing, it's worded to limit the dollar amount that the prime contractor can subcontract to other companies. In general the rule is that they can subcontract no more than 50% of the value of the prime contract. In other words, they can spend no more than 50% of the prime contract value on subcontracts.The other big caveat to that under the statute that made this change is that when you do that analysis, or when the firm is doing that analysis in order to determine whether they're able to make an offer, subcontracting, that calculation excludes work done by what's referred to as similarly situated entities. For a HUBZone contractor, that means other HUBZone contractors, and that means they can spend up to 50% of the amount of their prime contract award on subcontracts. When we say subcontracts in this context, if they're subcontracting to other HUBZone firms, that doesn't count towards that 50%. It helps HUBZone firms and small businesses in general because more small businesses can get involved in the work that's being done.Again, we're not following these slides, but since they're on here, we can go to Slide 39, the non-manufacturer rule, and I'll discuss those changes, so that's two forward. Did we go one past it?Carla:Yeah.Alison:Perfect. Here we're talking about the non-manufacturer rule. Again, this is changing imminently. What will change specifically on this slide is it's supposed to be that a HUBZone concern can submit an offer for supplies as a non-manufacturer if it meets the requirements of a non-manufacturer rule, which are still housed in 121.406. However, where we say "and" in the underlined portion of that slide, that's going away. Under the new rule, a HUBZone firm can operate as a non-manufacturer and can supply the products of a small business manufacturer. It used to have to be a HUBZone manufacturer that was actually supplying the products. Then that first bullet, that second line, there are no waivers for HUBZone contracts, that also is changing. There will be non-manufacturer rule waivers for the HUBZone Program, again, once these rules go final, which should be relatively soon.Carla:Then the new non-manufacturer rule will be that ... Right now it says that it has to be a small business manufacturer providing the end item is also a HUBZone, so in the future it's just going to be a small business manufacturer?Alison:Yes, if anyone is familiar with the normal situation for a small business set-aside, for example, that's how it works. The non-manufacturer rule allows a small manufacturer to provide the supplies, even if they're not the prime contractor. The prime can sub that work to another small business. It has to be a domestic small business, and the same rule will be true in the HUBZone contract context, which again should be good for HUBZone firms.Carla:Okay, thank you.Alison:We can skip the next slides because I don't want to go over too much that's changing. Then I think that concludes it for my set of slides.Carla:That was Slide 40.Alison:Yes, 40 was the last on my list.Carla:We have received some questions, and we're running ahead of time, so we'll have time to address the questions we received so far. One of the questions is, how can you check on the status of a HUBZone application for certification?Mariana:Yes, this is Mariana, and you would send an email to HUBZone, that's H-u-b as in boy-Z as in zebra-o-n as in Nancy-e, HUBZone, @, g-o-v. It would be very helpful if you could give us either an application number if you have it, besides the name of the firm. If you don't have an application number, give us a DUNS number that you have. The reason why we would need either an application number and/or a DUNS number besides the firm's name is that sometimes the way that firm's are spelling LLC, sometimes they put a period or not, and we cannot find it in our system, the nuances of the spellings. If you send an email at HubZone@, we can certainly find the status.By the way, I wanted to expand a little bit. If you have a firm that you've done your market analysis and you've determined that there's only one firm that could do the work that you will need to be done, and you would like to issue a sole source award, you can send an email and basically say, "I'm looking into a sole source award of a HUBZone contract to a firm that has applied for certification," we will pull that application out of the queue and expedite the process to give the answer to the firm to the determination whether they were approved or not. Otherwise, we cannot expedite any other processing. Right now the processing timeline is approximately a little under 80 days from the time that we have all the documentation that we need, but in case it's a sole source, we have been able to pull that application, take a look for you quickly and complete the analysis and issue a determination so that the firm and the agency can proceed as they deem necessary.Alison:Can I add something?Mariana:Yes, please.Alison:The only thing I would add is that it's sometimes confusing or there is mixed messages out there. In order to be found eligible for a HUBZone contract, a firm has to have been certified before submitting its offer. If it has an application pending, it's won't be found eligible.Mariana:Correct. That's a very good point. Thank you, Alison.Alison:Sure.Carla:We've received several more questions. The next one is, is this information displayed like you would find on DSBS because the examples or the screenshots were from DSBS. The question is, is that information displayed in the contractor's profile or do we need to check the DSBS in addition to SAM when awarding?Mariana:The official list is contained in the DSBS. When a company is certified or decertified, our internal system updates the profile in DSBS in the Dynamic Small Business Search, which in turn refreshes the profile in SAM. They usually are in sync. Currently they're working very well, but if you want to consult ... You are required in the FAR to look at the list that is being maintained, and the list for the statute is actually DSBS.Carla:Okay. We received another question about what is the relationship between a labor surplus area and a HUBZone? This is a requirement for receiving equal low bids to first look at labor surplus areas. Does that mean we would award to a HUBZone company?Alison:I would have to get back to you on ... The short answer is labor surplus area ... I don't know the definition off the top of my head, but it's a distinct concept from the HUBZone definition, so there could be some overlap. I would want to look into it and give you a clear answer without just speculating if that's okay.Carla:[inaudible 00:38:54] programs. In DSBS, this question says that they've seen that a business is showing as HUBZone certified, but the date of certification is more than three years ago. Is the date updated when the business goes through recertification?Mariana:No, that's a very good question. The date is ... I'm sorry about that. The date is not updated on each recertification. The recertification is internal for us, so the date that appears in the Dynamic Small Business Search is the date that the firm received their certification.Carla:Their initial certification?Mariana:Correct.Carla:Another question is, what is the rule regarding the percentage of time if it is a service business that the company's employees must spend in their HUBZone office?Mariana:That doesn't have any impact on an award or on a consideration. I'm looking at Ali. It is an eligibility item, but I'll cover that because it's for interest, but again, this will not count ordinarily as far as a contract. Perhaps you can explain. I can think of some issues that maybe we can expand it, but for eligibility issues, the company must have the majority of the employees working from their HUBZone location. If a company has two locations, let's say, and this is eligibility, not contracting, okay? Eligibility for the certification. If a company has two locations that they maintain. Let's say they owned both locations. One is in a HUBZone. One is not in a HUBZone. The location in the HUBZone ... In order to meet the principal office requirement, the location in the HUBZone has to have more employees than the location that is not in a HUBZone.Now for companies that the majority of the employees are working in job sites, obviously the company would not be counting those employees that are working in job sites when they're doing their analysis to see if they meet principal office. Let's say that it is an IT firm that provides help and support around the federal government, and so they have 100 employees and 90 of those employees are working in different sites around the country, some Air Force bases, some commercial facilities, and federal agencies, and they have 10 employees that are basically doing administrative bid, contract administration, et cetera, so they have 10 employees and they still have the two offices. Those 10 employees that are not working in job sites ... The company, in order to meet that principal office, would have to have 6 out of the 10 working out of the HUBZone office that they own in order to meet that principal office requirement. They would have 4 employees working out of the non-HUBZone location.When the company is doing the analysis of the residency requirement, which involves also employees, the regulations require for firms to have at least 35% of the employees residing in a HUBZone, any HUBZone around the country, so they would look at the total 100 employees. They would look at the total 100 employees, and they would determine if at least they have 35 residing in a HUBZone, okay?Now in terms of that percentage, might have an issue of contract performance. Do you think it could be viewed from a contract specialist, a contract officer monitoring compliance ... How would you see that coming into play? I'm looking at Ali right now as a question ... percentage working.Alison:Yeah, there aren't requirements for the contracting officer to monitor compliance with those two eligibility criteria.Mariana:How about performance of the contract? Would they be ...Alison:Then you're talking about the limitations on subcontracting ...Mariana:Oh, okay.Alison:That doesn't address where anyone works. I should say in the near future the question will be where people were working. It never was limitations on subcontracting, but the new question will be how much money is the prime contractor spending on subcontracts.Mariana:Right, thank you.Alison:There is a limit. I can give you an [info 00:43:56] over it initially, but for those who are interested, the new limitations on subcontracting will be 50% of the prime contract amount for services, except construction, and 50% for supplies unless it's a non-manufacturer. However, for general construction, they can't pay their subcontractors more than 85% of the prime contract award amount, and for special trades contractors the limit is 75% of the amount of the prime contract award.Mariana:They cannot pay over 85%?Alison:Correct.Mariana:Okay, got it.Carla:Another question is, when looking at different categories above 150,000, when we consider different categories, what type of documentation does the SBA want to see if we want to instead go straight to small business?Alison:SBA doesn't necessarily review the contract files. It would be a more unique situation. In general, if there's a protest by a small business at some point, that's when the file would come into play, and SBA may or may not be involved, but the contract file should include market research that shows there aren't either 8(a) firms, HUBZone firms, SDVO firms, or WOSB firms that can do the work. There has to be documented reason that the contracting officer determined it had to go small.Carla:Your DD2579 or GSA2689 or the VA2268 and different agencies have different forms that's their small business coordination record, and when they send this form to their SBA PCR for review, that PCR is typically going to ask, if you're going straight to small business, why didn't you consider any of the socioeconomic categories first? That should be addressed in that, and then that becomes, you're right, Ali, a part of a contract file.Alison:Yeah, thank you for adding that. I'm not ever involved in the PCR side of things, so it's helpful to me to hear this, too.Carla:Now, this goes back ... I've got another question. It kind of goes back to the 10% price evaluation preference. If you apply the 10% price evaluation preference to a large business and its price exceeds a small business concern price but not the HUBZone, can you use the price evaluation preference to award to the small business concern?Alison:No, the price evaluation preference can only be used to benefit a HUBZone small business concern. It can't be used to benefit another small business offeror.Carla:Okay. Is there any type of formal letter used for sole sources to HUBZone similar to the 8(a) Program?Mariana:No, a sole source, it does not have to come to the HUBZone office or to SBA. The agency would have to follow their internal procedure. Again, market analysis, would have to document their own file, go through whatever review processes they have to go through when considering a sole source, and maintain that documentation internally.Alison:I'll add one thing to the price evaluation preference issue that I didn't mention. The question has come up in the past, what happens in a best value evaluation scenario? The rules say that you should apply the price evaluation preference first, and then do your best value analysis.Carla:Okay, so we had a question, and I don't know ... We do have a few minutes here where we could go back because there is a question that says Slide 33, which is the ... This is always an issue when it comes to the price evaluation preference. I'm glad we had this extra time. Slide 33 is called "Applying the Price Evaluation Preference," and they're asking that we go through this one more time and review this with a more simplistic explanation they're saying. If we just review this one more time, maybe that will be helpful.Alison:Sure, so that's ... We're on 34 right now. If we can go to ... We're on 35.Carla:If we go to 33, which is titled "Applying the Price Evaluation Preference."Alison:Okay, so this is again explaining how you apply the price evaluation preference, and I didn't walk us through the way it's written here, but I will now. The reason I didn't is because the FAR and our rules are a little inconsistent in how it is explained, so I tried to explain it conceptually, but I'll go through this.It says that the contracting officer ... It should say it should apply the 10% price evaluation preference to all offerors, so when we say apply the 10% price evaluation preference, that means we're adding 10% to the value of the offer. That means the offer times 1.1, so 110% of the offer is the post-price-evaluation-preference value. We apply that 10% to every offeror except the HUBZone small business concern that hasn't waived the price evaluation preference. Of course, you don't apply the 10% to a HUBZone firm. Here it says you don't apply it to otherwise successful small business concerns either, so if the prospective awardee is a regular small business concern or an 8(a) firm, a woman-owned small business firm, or an SDVO firm, anyone but a HUBZone firm that's small for the procurement, you would not apply the 10% price evaluation preference to them.Really the price evaluation preference only comes into play where there's a large ... the prospective awardee is a large business, and you have another offeror in line who's a HUBZone firm. You have to have both of things at play. Full and open, anyone could bid. You had HUBZone firms bid and you had a large business bid, and the lowest offeror is a large business, so you apply the 10% price evaluation preference to the large business's offer.Mariana:As you were saying, then the best value is afterwards?Alison:Yeah, if it's a best value scenario, then yeah, you apply the 10% first to figure out who has the lowest cost, whoever has the lowest cost, and then you do the full best value analysis.Carla:We had another question about that, and they're asking, is the 10% applied to both the price and fee or just price when fee is applicable?Alison:I think you would apply it to the entire value, but let me make a note to review what our regs say and clarify that.Carla:Okay, thank you. Going back to some other questions, are only full-time employees counted toward HUBZone eligibility requirement, or are all part-time employees also considered in that percentage?Mariana:Again, this is eligibility. Doesn't have any consideration as you are contracting, but it's eligibility, what we do internally, what the firm also does to evaluate compliance. An employee is actually defined in the regulations. An employee is an individual that works either full-time, part-time, or any basis for that matter, so long as that individual works a minimum of 40 hours a month. The firm sometimes needs to count someone that they're an independent contractor. If that independent contractor is ... Sometimes an independent contractor needs to be considered an employee once they do an analysis of that. Someone that they're paying in-kind compensation, so long as that person works 40 hours a month, also that individual needs to be counted as an employee. An owner, by the way, so long as the owner ... Even if the owner doesn't get paid, which sometimes they don't, but the owner works a minimum 40 hours a month, then that owner needs to also be counted as an employee.Carla:Another question is, if we do a 100% HUBZone set-aside and receive no offers, what's our next option? Can we go straight to a total small business set-aside?Alison:You should withdraw the solicitation in that case. This is on Slide 26. If there's no acceptable offers received for the HUBZone set-aside, then in general, yes, you would withdraw and go to a small business set-aside, but the result of your market research would be relevant. If the HUBZone firms that you initially thought could do the work were the only firms in the market and there aren't other small business concerns, then maybe it wouldn't make sense to do a small business set-aside, but the general rule is yes, you would withdraw and go to a small business set-aside.Mariana:If I could share a best practice from some agencies that are not only meeting but exceeding ... They have some contracting goals. What they're doing is part of their market research ... If they're using a sources sought or a request for information, RFI, what they're doing is they are doing a sources sought or RFI limited to HUBZone firms instead of doing it for all small businesses. When they're doing that, that aids into their market search and actually they're able to find more firms that would respond to sources sought when they really are targeting just HUBZone-certified firms. That's a best practice that I've heard from some of the agencies I wanted to share.Carla:We only really have a couple more minutes, but I wanted to ask you quickly about a question that we received that was saying ... If I could find it here, it was something about SAM and DSBS not working for the next six weeks which is limiting GLS being able to connect. Is there any workaround for the next six weeks for applications? Have you heard anything about that?Alison:No.Mariana:I have not either, no, none of us.Alison:Six weeks?Mariana:Six weeks. We'll find out and we'll get back to you, together with the other questions that you had.Alison:I have no idea if this is what it's related to, but some exciting news [and if it's this 00:56:31] then the six weeks isn't a terrible thing. Some people may be aware SBA has embarked on a pretty big and exciting project to modernize all of the certification program processes online. The firms currently use a bunch of different systems to apply to different programs, and we're in the process of creating one system that all contracting officers and all small businesses will use for all the different programs. Part of that project is phasing out GLS. A down-the-road stage of that project is recreating DSBS. It probably won't be called DSBS anyway, creating a new small business search that's easier for the procurement community to use and is actually dynamic, unlike the current system. Again, I have no idea if the six-week issue is related to that, but the fact that SAM is down also, makes me think that maybe it's not because SBA doesn't control SAM, but the good news is that sometime in the next year or two you should see modernized systems for these programs. It's pretty exciting.Carla:Thanks for clarifying that. Someone else put in a note that said, "SAM is not down," so ...Alison:I'm generally pretty up to date on that project, so I'm surprised to hear about it, but I will certainly find out, and we can update everyone on what we find out.Carla:All right, thank you. With that, I just wanted to thank you both for being such informative speakers and providing us with some great slides to reference. If anyone who's listening wants a copy of the slides or needs to be on the invitation list, they need to send an email to sbalearning@. Thanks very much for your time. We'll look forward to hearing from our next speaker next month, and we'll see you back here then. ................
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