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Do All Team Members of a CTA Have To Be Small Businesses When Using a Small Business Set Aside?


Why do all members of the CTA have to be small businesses if an agency uses a small business set aside for their requirement?

It seems that Brad and I are receiving quite a few calls on this subject lately. I guess that is to be expected with the inception of discretionary set asides for the GSA schedules program as of November 2011.  Currently, the Small Business Administration (SBA) is working on developing policies in reference to set asides.

GSA has a web page with Small Business Frequently Asked Questions (FAQs). On that page, one of the questions (Question #13) is in reference to small business set asides when using Contractor Teaming Arrangements (CTA).

Disclaimer: Please keep in mind that this is NOT a FAR Part 9.6 Contractor Teaming Arrangement. FAR Part 9.6 deals with partnerships and joint ventures.

*(Note 1: This is often confused. GSA will be renaming Contractor Teaming Arrangements to Contractor Partnering Arrangements to alleviate the confusion)

**(Note 2: Keep in mind that the Contractor Teaming Arrangement used in GSA schedules cannot be found anywhere in the FAR. It is the COs discretion to accept a quote with a CTA, therefore, make sure to determine the CTA is in the best interest of the Government and that the contract folder is well documented)

Let’s take a look at one of the important traits of a CTA.  Remember that a CTA simply defined is, “two or more schedule contract holders working together to meet the Government’s needs.”   

The first thing I want to touch base on is how we treat CTA Team Members. In essence, the Government treats each team member as a prime contractor. What does that mean to us? It means that the Government has “privity” with each contractor. When awarding the contract, the Government is not just awarding to the team leader of the CTA, but to all team members.  They team members are all individually responsible for providing their portion of the contract. Yes, the Contracting Officer (CO) can only put one contractor on page 1 of the contract. GSA also recommends that the rest of the team members and their schedule contract numbers are somewhere on the contract (normally in the free text edit area of page 2).

IAW FAR Par 19.501(a), “the purpose of small business set asides is to award certain acquisitions exclusively to small business concerns.”  Since the Government has invoked FAR Part 19, the regular set aside rules are applicable and only Small Businesses are eligible to be Prime contractors.

By allowing large businesses to be team members of a CTA that is set aside for small businesses, there is no way of the Government controlling how much of the requirement would be going to the large business. Not only that, but an agency would be artificially inflating small business goals. Keep in mind that subcontracting and CTAs are very different under the schedule program. Think about this for a minute. CTAs are made up of schedule contract holders.  At this point, we have not brought subcontracting into the mix. Meaning, the Limitations on Subcontracting clause, 52.219-14 (the 50% rule), has not been triggered since all team members have schedule contracts. So again, no control on how much of the requirement is being completed by a small business.

Also, IAW clause 52.219-6(b), “Offers are only solicited from small business concerns. Offers received from concerns that are not small business concerns shall be considered non-responsive and will be rejected.”

One of first things I learned when gaining experience as a new contract specialist many moons ago, was a certain level of risk aversion. There are words we try to avoid.  What would one of those words be you might ask?  PROTEST! What could happen if we set aside a requirement for small business and then make an award to a team with a CTA where one or more team members are a large business?  I would have to say……..wait for it……..protest! I have not found a GAO case that has set the precedent in this case, as the small business set aside is so new to the GSA schedule program (I welcome any input and would be glad to add a case if you can find one).  GAO normally reviews the FAR and the precedent set by previous cases. After that, GAO oftentimes consults with GSA.  What would GSA say at this point? Well, I believe that one of the things GSA would do is point to the earlier mentioned post from the GSA website. 

As often is the case, there is not a specific citation in the FAR in regards to this particular paradigm (See **Note 2 above). Acquisition professionals like to have something we can hang our hat on. In this case, we have to make a decision based on what is available to us. I don’t know about you, but I am convinced that once the Government makes a decision to set aside a particular requirement for small business, we have to consider all of FAR Part 19. I would hang my proverbial hat IAW FAR Part 19.501(a) and clause 52.219-6(b). I don’t believe that there is anything supporting any other decision.

Thanks to both Shelley and Stacy for your comments and suggestions! You know who you are!

As always, I look forward to hearing your comments, criticisms, and yes, even your smart remarks.


Views: 1793


<p>The Limitations on Subcontracting requirements come into play and they can vary depending upon the stripe of small business. &nbsp; Furthermore, SBA&#39;s precedents on the Ostensible Subcontractor rule come into play. &nbsp;That is all too involved to detail here but I suggest one research those terms and get to know them in the context of schedule set-asides.&nbsp;</p><p>An additional wrinkle is that SBA supports multiple types of set-asides on existing contracts. &nbsp;One way is to just see if a company remains small ON THE CONTRACT per what is coded on the IDV CAR in FPDS-NG. However, SBA also supports checking on size status in real time from CCR/ORCA (we might refer to that as open market size re-representation). &nbsp; However, customers won&#39;t be able to achieve their objectives if they use an open-market size-rerepresentation since any order awarded against schedules will inherit the socio-economic properties from the master contract&#39;s/IDV&#39;s CAR in FPDS-NG and not from the current CCR status of a company. Schedule guidance ought to tackle that head-on.</p><p>A vulnerability of schedules and small business set-asides will be that because of FAR 52.219-28 that provides for size re-representation at the master contract level at certain triggering events (e.g., schedule options), a customer could award a longer term task order (say 5 years, having a base year and four option years) during the 4th year of a schedule contract to a schedule contractor, expecting to be able to earn small business credit over the life of the task order. &nbsp;However, because of the master contract size re-representation, if the schedule contractor is now no longer small after its 5th year, any options on the existing task order that are exercised will no longer carry small business credit. &nbsp;I&#39;m not sure schedule guidance is clear about that matter with its customers who may end up being suprised and/or upset. &nbsp; That scenario is complicated enough when there is just one schedule contractor involved. &nbsp;If the CTA approach is used and, based upon the logic in the dialogue above where all schedule CTA holders have to be small, if even one of them becomes other than small that can jam up the whole socioeconomic credit thing for orders leading to frustrated customers and/or data integrity issues.</p><p>In other words, set-asides under schedules probably work well for delivery orders. &nbsp;They probably are really hairy for task orders in terms of creating predictability for customers.</p><p>&nbsp;</p><p>&nbsp;</p><p>&nbsp;</p><p>&nbsp;</p>
<p>Under some efforts, Multiple Award IDIQ BPAs are awarded to both Large and Small businesses that then compete for task orders.&nbsp; At the BPA level, the BPA holder has a team of large and small business Team Members and Subcontractors.&nbsp; Tasks may be either F&amp;O or SBSA.&nbsp; Teams are formed&nbsp;by selecting a few companies (both Team Members and Subcontractors)&nbsp;from the BPA to bid the task order.&nbsp;Does GSA consider the CTA to be at the BPA level or at the task order level?&nbsp;&nbsp;</p>
Brad Powers
<p>&nbsp;</p><p style="margin-top:0in;margin-right:0in;margin-bottom:.2in;margin-left:0in; line-height:18.0pt"><span style="font-size: 10pt; font-family: Arial, sans-serif; ">Wow, Tonya, that is a very interesting question no one has ever asked me before. &nbsp;My initial response is that the CTA would be at the BPA level but that is mostly because I have never seen it done any other way. &nbsp;So..... &nbsp;I&#39;m going to fall back on the ever popular &quot;it depends.&quot; &nbsp;The RFQ requesting BPA quotes should describe how CTAs will be handled and how task order competitions will be conducted for a set of multiple award BPAs. &nbsp;In that case, all CTAs would definitely be linked to the BPA. &nbsp;I know that in my BPAs, I also include requirements for how teams may (or may not) be restructured during the life of a BPA. &nbsp;If the RFQ was silent, I think it would be safest to assume that the CTAs are linked to the BPA. &nbsp;Only if the RFQ and resultant BPAs specifically allowed teaming at the task order level and everyone was evaluated that way during the RFQ source selection would I say task order teams were acceptable. &nbsp;How you could reasonably perform such an evaluation in the first place is a question I will leave for another day.<o:p></o:p></span></p><p style="margin: 0in 0in 0.2in; line-height: 18pt; "><span style="font-size: 10pt; font-family: Arial, sans-serif; ">In your specific scenario, I would imagine that the decision to set aside or not set aside a particular task order would change the evaluation requirements. &nbsp;In a set aside, only the team members on the designated socioeconomic category would be allowed to participate. &nbsp;In a Full and Open Scenario, it would be up to the team how they wanted to structure themselves to compete for that piece of business unless there was a specific structure set forth in the RFQ and resulting BPAs. &nbsp;You would need to use the team members you have on your BPA today. &nbsp;Any additional resources would need to be handled through subcontracting.<o:p></o:p></span></p>
<p>Superb update, Dan. &nbsp; &nbsp;As a CSD, I have received this question a few times and your summary is succcinct and sensible.</p><p>&nbsp;</p><p>Related question -- if a KO has a requirement that is not a small-biz setaside, and receives a quote from a CTA &nbsp;that has a small and a large...and the KO determines that CTA quote to be best value, would that KO be able to claim small biz &quot;credit&quot; on that award ? &nbsp; &nbsp;</p><p>&nbsp;</p><p>Thanx, &nbsp;Danno</p><p>R3 CSD</p><p>&nbsp;</p>
Dan Briest
<p>Hey Danno,</p><p>Well, the answer is.......wait for it............okay, how many of you are going to guess what I type?</p><p>The answer is IT DEPENDS! How many times have you heard <a href="http://interact.gsa.gov/users/brad-powers" target="_blank">Brad</a> and <a href="http://interact.gsa.gov/users/dan-briest" target="_blank">I </a>say that?</p><p>It has nothing to do with what the CO claims.&nbsp;It has everything to do with which contractor is listed on page one of the delivery or task order.&nbsp;The&nbsp;size status&nbsp;data is automatically populated in the contract action report (CAR) and then to FPDS-NG, from the schedule contract size status. If the large business contractor is listed on page one, the&nbsp;FPDS-NG will show 100% large business. If the small business is listed on page one, the agency will receive 100% towards their&nbsp;socioeconomic goals.&nbsp;</p><p>Great question Danno!</p>
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