NMTC Comments - FAR Set-Asides for Research & Development

PUBLIC COMMENT National Minority Technology Council 1616 Anderson Road McLean, VA, 22102 Web: www.nmtcouncil.org

Building Trusted Networks™

October 8, 2012

(FAR)

MARKET RESEARCH

October 8, 2012

NATIONAL MINORITY TECHNOLOGY COUNCIL

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“It is our position that Small Business Set Asides for Research and Development will not only stimulate our economy but it will bolster our ability to compete in our current global economy”

Karl Cureton Chairman, National Minority Technology Council

NATIONAL MINORITY TECHNOLOGY COUNCIL

October 8, 2012

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NMTC Public Comment U.S.C 610 (FAR Case 2015–015)

SUMMARY:

DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to clarify that contracting officers shall set aside acquisitions for research and development, when there is also a reasonable expectation, as a result of market research, that there are small businesses capable of providing the best scientific and technological approaches.

Background Descriptions

Market Research Federal acquisition personnel have historically engaged in market research. In today’s environment, to ensure that high-quality solutions are provided to the end-user at a reasonable price, it is necessary to conduct that research in greater depth. Further, it is essential that today’s market research be conducted by drawing on the knowledge of all stakeholders (including industry) up front, to ensure ongoing access to evolving technologies. Additionally, acquisition personnel must create acquisition strategies that facilitate the introduction or incorporation of evolving commercial items.

When market research indicates that a government need can be met by an item of supply or a service that meets the broad definition of a commercial item, and that is of a type customarily available in the marketplace, then the contracting officer must solicit and award a contract using the commercial item acquisition policies found in Federal Acquisition Regulation (FAR) Part 12. If market research indicates that commercial items might not be available to satisfy the agency’s needs, the agency must reevaluate those needs and determine whether they can be restated so as to permit the use of commercial items.

Federal acquisitions begin with a description of the government’s needs stated in terms that allow the procurement team sufficient information to conduct market research. Market research is a critical component in describing agency needs, developing an overall acquisition strategy, and identifying the terms, conditions, and practices appropriate for the items being acquired. As a result, new skills, approaches, and perhaps attitudes must be acquired by all personnel to adequately analyze commercial capabilities.

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Some specific benefits that may accrue from performing acquisitions thorough market research include: • • • • •

minimizing the risk of doing business, for both the Government and the contractor; uncovering and identifying potential problems, thereby reducing risks associated with contingencies; obtaining information to support price reasonableness determinations; creating a benchmark to track progress during contract performance; evaluating the contract’s success;

• •

identifying additional sources; and understanding better the options available to satisfy the Government’s requirement.

Federal Research and Development President Obama’s budget request for FY2013 which includes $140.820 billion for research and development (R&D), a $1.951 billion (1.4%) increase from the FY2012 estimated funding level of $138.869 billion.

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Federal R&D funding can also be examined by the character of work it supports—basic research, applied research, and development—and funding provided for facilities and acquisition of major R&D equipment. (See Table 2.) President Obama’s FY2013 request includes $30.627 billion for basic research, up $449 million (1.5%) from FY2012; $33.369 billion for applied research, up $1.586 billion (5.0%); $74.138 billion for development, down $345 million (-0.5%); and $2.690 billion for facilities and equipment, up $265 million (10.9%).

Federally supported research laid the groundwork for the integrated circuit and the subsequent computer industry; the Internet; and advances in chemicals, agriculture, and medical science. Federally funded R&D has resulted in innovations and discoveries, leading to new companies and entire industries that have made Americans more prosperous, healthier, and safer.

“ The key to our success— as it has always been— will be to compete by developing new products, by generating new industries, by maintaining our role as the world’ s engine of scientific discovery and technological innovation. It’ s absolutely essential to our future.”

— President Barack Obama, November 17, 2010

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Federal Procurement Small Business Set-Asides The purpose of small business set-asides is to award certain acquisitions exclusively to small business concerns. A “set-aside for small business” is the reserving of an acquisition exclusively for participation by small business concerns. A small business set-aside may be open to all small businesses. A small business setaside of a single acquisition or a class of acquisitions may be total or partial. The determination to make a small business set-aside may be unilateral or joint. A unilateral determination is one that is made by the contracting officer. A joint determination is one that is recommended by the Small Business Administration (SBA).

Agencies are required to automatically set aside work for small businesses that is equal to or less than the value of the simplified acquisition threshold (SAT) (generally $150,000) unless the contracting officer determines the “rule of two” cannot be met – i.e., there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery.

In working together to enact section 1331 of the Small Business Jobs Act of 2010, Public Law 111-240, both the Administration and Congress recognized that significant opportunities exist to increase small business participation on multiple award contracts. To capitalize on these opportunities, section 1331 directed the Administrator for Federal Procurement Policy and the Administrator of the Small Business Administration, in consultation with the Administrator of General Services, to establish regulations under which Federal agencies may, at their discretion, use partial contract set-asides, contract reserves, and order set- asides under multiple award contracts.

Minority Technology Industry The National Minority Technology Council’s (NMTC, Council) Strategy provides for a comprehensive approach to addressing the economic paradox of growth and disparity. The Minority Technology Industry is one of the fastest growing industries in the US. The US Census data shows there are over 65,000 minority technology companies employing over 500,000 people in the US and abroad. This $100 Billion industry is a powerhouse of innovation with capabilities spanning every sector of the technology industry.

The Council is currently implementing our national District Strategy highlighting minority technology companies across the US. With a database of over 9,000 Registered Minority Technology Companies representing over $20 Billion in annual sales, and expressed support from both Federal and State agency executives, we are now positioned to expand our local presence. Please review our web resources and consider participating in our national dialog about the growth and expansion of the Minority Technology Industry.

NMTC Web Resources

Website: www.nmtcouncil.org Document Library: www.issuu.com/nmtcdoc

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We have proven methodologies and employ some of the brightest minds in the world. The Council strategy at its core is designed to expose the thousands of businesses involved in solving today’s technology problems. As a body of entrepreneurs we know there is strength in numbers, and plan to leverage our growth and challenges to better serve our customers and employees. Our members are ready to do business bringing a tremendous force of talent, able to solve the technology challenges of today and tomorrow.

NMTC Recommendations

“Reasonable Expectations” and the Minority Technology Industry The Minority Technology Industry has participated in over $2.5 Billion in SBIR-STTR awards over the life of the program. Many of these awards have resulted in industry commercialization. This framework of capability illuminates the need to generate a bias away from any notion that minority technology companies are anything but highly capable research and development vendors. In fact as the government works to leverage specific NGO’s that cater to specific markets there will be more set-asides created. Contracting officers need to be encouraged to forge new partnerships with industry leaders who represent small business. In order to change expectations we need to expand our knowledge base for market research.

Identifying Additional Sources The National Minority Technology Council works to serve the common business interest of the Minority Technology Industry. Organized as a 501c6 Trade Association the Council has established a membership of over 9,000 minority technology companies located across the US doing business globally. There are many components to the US $142 Billion in Federal R&D Research. As an association the Council works to organize our great many members in order to facilitate larger transactions by enabling teaming arrangements, joint ventures and potential subcontract relationships with large federal primes and federal laboratories. The Council recognizes the limitations facing our federal contracting officers in developing detailed market research projects or processes. We respectfully recommend federal contracting officers consider conducting more interchange meetings and pre-solicitation conferences that target the minority technology industry.

Expected Impact of this Rule

Impact on Minority Technology Industry This rule will have a significant positive economic impact on any small business including small minority technology companies that wishes to participate in the Federal procurement arena. Over 9,000 of our members have completed a CCR registration and would potentially benefit from the implementation of this rule. With over 65,000 US minority technology companies located across the US totaling over $100 Billion in

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combined revenue, we estimate this rule alone could increase the size of our industry by $5 Billion over the next 5 years.

Encouraging contracting officers to set-aside federal procurements will mobilize our nation’s full productive capacity. Large federal contractors are no longer able to generate the innovation and creativity found in our representative companies. Our minority technology companies were born from capability, inspiration, and courage. We hire the brightest most diverse talent and have a longstanding tradition of excellence and commitment. Many of our members have GSA Schedules and are familiar with FAR and other nuances found in doing business with the Federal Government. This rule will foster a deeper relationship with our member companies and will further promote the need to integrate the vast capabilities of our members with the acquisition process.

Impact on Urban Communities and US Job Market Research and Development jobs are generally higher paying and require post high school education. There is a growing push in Urban Communities to integrate industry and education. The Council has played a large role in formulating how the technology industry and education comes together for economic gain in urban communities. The National Minority Technology Council is committed to increasing student and parent participation in S.T.E.M. (Science, Technology, Engineering, Math) Education Reform. Our unique proxemics to thousands of Minority Technology Companies located close to our hardest hit US Urban Centers allows us to provide a relevant path for our youth and their parents for job readiness. Our communities have never before had an opportunity to see the American Dream in action. This rule will further fuel our STEM efforts by being able to point to Federal Policies that are programed to bring jobs to our hardest hit communities. This policy pivot could create over 200,000 jobs in urban communities across the US. This would require a unique focus both from our federal contracting officers, the education community, our city elected officials, our member minority technology companies, and those citizens who stand to gain employment in an industry now seemingly hidden from sight. This long run view to employment through innovation was the spark that ignited the transformational growth in the US economy in the 20th Century. Our country now has the opportunity to not only generate the kind of parity inspired by those famous civil rights leaders dreamed but also the future that will inform other nations of the value of our Republic.

We congratulate the forward thinking of the DoD, NASA, and GSA Administrators and staff who have worked to propose this important rule. The National Minority Technology Council is encouraged with the direction and guidance that is peculating throughout the Federal Government to “Buy Small Business�. We trust this public comment will further exemplify the many sources of companies and it is our hope to highlight the vital importance to create policies, practices, and procedures that include the great many minority technology companies located across the US.

NATIONAL MINORITY TECHNOLOGY COUNCIL

October 8, 2012

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Contact Information

National Minority Technology Council

1616 Anderson Road McLean VA 22102

www.nmtcouncil.org

Author

Karl Cureton Chairman, National Minority Technology Council karl.cureton@nmtcouncil.org 202-870-8127