Small Business Set-Aside Programs - Term Paper Example

Small Business Program and Source Selection Plans Introduction The government is responsible for promoting the growth of the economy by encouraging business growth (Cibinic et al., 2006). One of the approaches the government uses to support economic growth by awarding contracts to small businesses either through competitive process or by a direct awarding of the contract to disadvantaged businesses in order to help the achieve necessary competence (Keyes & Feldman, 2011). This case scenario examines the criteria used by the procurement officer awarding the contract to small businesses. 1. Small business programs A small business can be described as a privately owned business that is not dominant in its field of operation, and that falls within the definition recognized by the Administrator of Small Business (Compton, 2009). The standards of evaluating the size of the business are determined by the number of workers, mean annual gross income, and relative size of other businesses in the same industry (Keyes & Feldman, 2011). Small business program is used for reviewing the capacity of the small businesses to compete effectively in particular industries. The amendment of Small Business Act in 1978 by the congress provided for the heads of agencies in collaboration with Small Business Administration (SBA) to set-aside the value of the "total contract and subcontracts to be awarded to small businesses every year" (Manuel & Lunder, 2012). In 1988, the congress made further amendment to establish a provision for the establishment of government-wide objectives of awarding proportion of the federal contracts and subcontracts dollars to small businesses in various categories (Cibinic et al., 2006). The provisions require a proportion of equal to or greater than 23% of the government contracts awarded to small business, 5% to business owned by people with disability, 5% to small businesses owned by women, 3% to small businesses owned by service-disabled and 3% to Historically Underutilized Business Zones (HUBZone) small businesses (Keyes & Feldman, 2011). However, if the total value of the contract is above $2,500 and not exceeding $100,000 the whole contract can be awarded to small businesses that have the capacity to deliver the requirement (Cibinic et al., 2006). Awarding of the contracts to small business by the agencies is of the essence to the government because it depicts the efficiency with which the congressional policy of empowering small business is being implemented (Compton, 2009). However, following the criticism that the government was not achieving its goals of empowering the small businesses and that the goals were very low, the 111th- and 112th congress members enacted a legislation to raise the goals and motivate the agencies to meet their objectives (Manuel & Lunder, 2012). The goal of the legislation was to ensure the SBA and Federal Procurement Policy Administrators satisfy the agency requirements of awarding “annual government-wide goals” to the small businesses in the specified criteria that recognize disadvantaged businesses and women-owned businesses (Keyes & Feldman, 2011). According to the legislation, the sub-contracting objectives should be based on realistic achievement of the business and non-discriminatory of business category. Purpose of Small Business Programs The congressional policy requiring federal government annual contracts and subcontracts to be awarded to small business and those with special requirements serves various purposes including establishing agency-specific goals and government-wide goals for awarding proportion of the contract and subcontract dollar given to small businesses (Compton, 2009). The requirements ensure SBA and the contracting agencies evaluate and reorganize the planned procurement in order to increase opportunities for small business participation (Cibinic et al., 2006). It enables agencies to set-aside contracts and sub-contracts to allow only small businesses to compete with one another or even make express contract award to particular small business in case no other business could handle such contracts (Keyes & Feldman, 2011). Finally, the legislation authorizes agencies to provide small businesses the opportunity to compete with each other (Tiefer & Shook, 2004). The SBA section 8(a) establishes a program that allows small businesses to join any form of contract and subcontract with other agencies that have competence in the tasks they are contracted to perform (Nash et al., 2007). The firm undertaking the contracting activity is approved by the SBA under specified provisions and circumstances (Cibinic et al., 2006). SBA promotes economic growth by supporting the establishment feasibility and by supporting quick recovery of the economy after calamities (Manuel & Lunder, 2012). 2. Set-aside for small business program evaluation Small business set-aside is reservation of acquisitions to be undertaken by the small businesses and can be awarded to a specific business, class or to any small business (Cibinic et al., 2006). The awarding of set-aside business can be carried out unilaterally by the contracting officer or may be determined by SBA procurement centre. The procurement officer is required to set aside individual or class acquisition for competition among small businesses in case it is in the best interest of maintaining or mobilizing the full productive capacity of the nation, war or national defense program (Keyes & Feldman, 2011). The program provides non-financial support to particular small businesses and those businesses that are owned by economically and socially underprivileged individuals in order to involve them in government contracts (Manuel & Lunder, 2012). In order for business to qualify for set-aside programs, it should be able to satisfy certain requirements stipulated in the legislation [8(a)] (Compton, 2009). For example, a business must be owned by private individual(s) who are economically or socially disadvantaged, US citizens and of good character. The business must have potential for growth and must have been in operation for at least two years prior to applying for the 8(a) program (Tiefer & Shook, 2004). Some racial or ethnic communities such as Alaska Native Corporations and Community development Corporations are considered disadvantaged economically while others can make an application to demonstrate their economic disadvantage in order to qualify for the program (Compton, 2009). The economically disadvantaged small businesses should not have more than $250,000 capital during the time of application for the program (Nash et al., 2007). Small businesses cannot be considered for a duration exceeding nine years. The businesses are considered as women-owned if at least 51% of their shares are held by women, and at least one or more women are involved in daily operations of the business (Manuel & Lunder, 2012). Service-disabled veteran-owned are businesses whose at least 51% of the shares are in the ownership and control of service-disabled veterans (Compton, 2009). The veterans are x-soldiers from, navy, air force and active military discharged from their duties after sustaining disabilities in the line of their duties. HUBZone small businesses are whose at least 51% of ownership and control is under the US citizens residing and have their office in the HUBZone or base closure lands within Indian reservations with higher than median unemployment rate and less than median household income (Nash et al., 2007). The procuring officer is required to set-aside all acquisitions with the dollar value within the range of $2,500 and $100,000 for small businesses in the circumstances where there is a possibility for obtaining two or more offers from the small businesses at a fair market value and with assurance of required quality delivery time (Manuel & Lunder, 2012). Therefore, in this scenario the procurement officer should set-aside all the acquisitions of $100,000 unless there is no small business capable of meeting the requirements at a fair market price. 3. Contract format The purchasing officer relies on laid down procedure to when arranging Request for Proposal (RFP) in order to solicit bids from the interested parties (Manuel & Lunder, 2012). The procurement officer leaves blank spaces in the sections intended for negotiation with the other party. Universal format uses identical structure and is useful to government for making repeat contraction from time to time (Tiefer & Shook, 2004). The universal format shows name, physical address of the issuing activity and the building as well as room number. In addition, it includes the date, RFP number, and the number of pages, acquisition author and a brief narrative of the product or services, personal information of the offeror such as name, physical address, city zip code, etc. Other details include agency-unique information such as security classification, priority rating, etc. Finally, there is a signature block for contract party and the government (Keyes & Feldman, 2011). The commercial contract takes consideration personal details of the offeror and the offeree such as names, date, physical address, description of the items or services forming the matter of the contract and other specific terms and conditions each party must satisfy in order to establish a contract (Compton, 2009). In addition, the proposal includes technical information such as support required from the government, clear title of the proposal, and supporting information such as contract value and duration among other details (Nash et al., 2007). Commercial format is essential in case of innovative ventures happening outside government domain and is meant to invite the government to be part of the innovation process (Compton, 2009). However, universal contract format is suitable in this case scenario because the requirements are specific and determined by the purchasing officer. The procurement officer has specific requirements that must be satisfied by the other party in order to qualify for the contract (Tiefer & Shook, 2004). 4. Purpose and criteria for source selection evaluation plan The procurement officers undertake source selection plan in order to achieve the best value of the contract based on a competitive process and to ensure the risk associated with the contract is kept as low as possible (Keyes & Feldman, 2011). Through an evaluation plan of the source selection the procurement officer is able to determine the proposals that fall within the required threshold and the applicants who qualify for consideration (Nash et al., 2007). The government should not be interested with only achieving dollar value from the contract, but they desire to support economic growth by promoting small businesses (Compton, 2009). Therefore, the techniques for source selection should take into consideration the needs of the small businesses and other government objectives hence the need for source selection. The procurement of the case in consideration requires various considerations before it is implemented in order to ensure the government objectives are achieved (Keyes & Feldman, 2011). The first consideration is the dollar value whereby the procurement officer should award the contract to most-competent party in terms of quality, delivery time and cost since the contract is of a fixed value (Tiefer & Shook, 2004). Secondly, the procurement officer should decide whether the contract is to be awarded from a single source or whether to use multiple sources based on their competence (Nash et al., 2007). The past performance records can be very useful when determining the efficiency of the party to achieve the contract objectives. The single sourcing is appropriate when there is only one party capable of delivering the contract requirements under the stated (Cibinic et al., 2006). Thirdly, the procurement officer can select the best source based on technically suitable proposal with fair evaluated price in case there are many potential (Keyes & Feldman, 2011). Finally, the procurement officer may consider applying a tradeoff technique where the government may prefer particular entities without consideration of contract value and technical competence (Compton, 2009). Conclusion Awarding of government contracts to small businesses assist the government to achieve various objects other than achieving the best dollar value of the contract. The government set-side a proportion of their acquisition for small business to compete in case there are more than one offeror capable of providing the requirements at a fair price and where contract can be split into more than one sections, otherwise the contract may be offered to a single source. Selection of the source enables the procurement officer to obtain the best value for the contract and the most-suitable party to provide the requirements.   References Cibinic, J., Nash, R. C. & Nagle, J. F. (2006). Administration of Government Contracts. USA: CCH Incorporated. Compton, P. B. (2009). Federal Acquisition: Key Issues and Guidance. USA: Management Concepts Inc. Keyes, W. N. & Feldman, S. W. (2011). Government Contracts in a Nutshell, (5th Ed.). West Group. Manuel, K. M. & Lunder, K. E. (2012). Small Business Set-Aside Programs. Retrieved on 10th August 2014 from Nash, R. C., Schooner, S. L., O’Brien-DeBakey, K. & Edwards, V. J. (2007). Government Contracts Reference Book, (3rd Ed.). USA: CCH Incorporated Tiefer, C & Shook, W. A. (2004). Government Contract Law. USA: Carolina Academic Press. Http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/R41945_06152012.pdf Read More