Kenneth Fletcher
WC Monitor
6/20/2014
As the Department of Energy plans procurements in the coming years for another round of major prime cleanup contracts, a significant question for small businesses is how the Department will consider promoting meaningful small business subcontracting. Small businesses have expressed concern in recent years as a number of prime contractors have made significant changes to subcontracting strategies that largely reduce opportunities for growth. “We’re looking to see if there are policies and things that we can do that would also incentivize contractors as it relates to meaningful and sustainable small business work while also getting the mission done. Those are things that as these contracts come up, they have a big lead time, so we’ll be in some of those conversations,” John Hale, Director of the DOE Office of Small and Disadvantaged Business Utilization, told WC Monitor on the sidelines of the DOE Small Business Conference in Tampa, Fla., last week.
Notably, Hanford cleanup contractor CH2M Hill Plateau Remediation Company decided in early 2013 to largely self-perform work that had previously been going to preselected subcontractors, and in 2012 Oak Ridge cleanup contractor URS-CH2M Oak Ridge moved to a staff augmentation based-approach rather than task-oriented subcontracting. In the coming three years major prime cleanup contracts are expected to come up for rebid at Idaho, Savannah River, Hanford and Oak Ridge.
Moeller: ‘Health and Safety Have Become a Commodity’
Many small business officials have, in particular, taken issue with the move toward staff augmentation, stating that it does not promote building skills and expertise in companies. “Surprisingly, health and safety has become a commodity in which generalists are often filling specialist positions,” Dade Moeller CEO Matt Moeller told WC Monitor last week. “The challenge for small businesses is to balance keeping a staff of highly specialized individuals with commodity prices. It’s hard for small businesses to maintain their niche, particularly when it is a technical one, when you have so many generalists in technical positions,” Staff augmentation is “cheaper and it works up until the day you have problem. Then when you have a problem you may not have the people with the expertise to get you out of it,” Moeller emphasized.
Hale said he recognizes the value of task-based work for small businesses. “Once they know they are at the table, they can invest in a project, which is what they want. If they can invest in the project, they can invest in talented people,” he said. “If a small company knows up front that they are going to be engaged and have a meaningful part of the scope of the work they can invest in the talent and the other resources to bring that to bear. So when that has worked it has worked well.”
Small Business Support ‘Needs to Be Explicitly Part of the Solicitation’
Hale said he is listening to those concerns from small business officials and is working with the management in the Office of Environmental Management and other program offices with large prime contracts. “We could always put out a policy, but you could also highlight the people and see what’s worked well and let’s see how can we replicate this. So I think it’s a different side of the same coin. I’m not going to say that policy comes off the table, but I know that there are cases where this has worked in the past and it is currently. So to bring those things in would be my preferred approach,” Hale said. “But it might take a little bit of both. Given the work we do, some of these things can get so site-specific and contract specific, what can you take that can be replicated?”
But some small business officials are hoping for clearly defined incentives for small business subcontracting. Before contract award, bidding entities should commit to subcontracting task-based work, industry officials said. “The only way to get opportunities is if naming small business is part of the scoring,” Moeller said. “It needs to be explicitly part of the solicitation.” Another industry official said that more meaningful subcontracting could be accomplished through policy objectives. “DOE doesn’t have to tell prime contractors how to do business. Instead DOE can flow down the DOE small business policy objectives,” the official said. “You tell large businesses to develop a real small business subcontracting plan that meets the DOE policy objectives.”
Surash: Subcontracting is Up To the Prime Contractor
However, Jack Surash, Deputy Assistant Secretary for Acquisition and Project Management in DOE’s Office of Environmental Management, said that prime contracts shouldn’t necessarily prohibit a staff aug subcontracting approach. “Our contract is with DOE and the contractor. We are looking for our best value, we are looking for efficiencies, we are looking for safe work, we are looking for quality work and we care about small businesses,” Surash told WC Monitor on the sidelines of the conference. “But all that being said, if a prime contractor feels that a staff augmentation versus a staff-based subcontract is in their best interest and in the bottom line introduces the results they are after, I really need to leave that to the prime contractor to make that call.”
Surash emphasized that EM does require prime contractors to subcontract a certain percentage of work to small businesses. “We are relatively aggressive on our requirements for utilization of small businesses at the subcontract level. So we’ll stay like that,” he said. “I think the issue that a number of firms were bringing up is that actually some of the procedures that the prime contractors were using, the commercial procedures they were using were not as transparent as the federal procedures. There’s nothing I can do about that.”
