For many organizations that have earned contracts with the government in excess of $550,000, identifying the small businesses (by commodity provided), collecting signed self-certification affidavits from each supplier, and reporting on this spend is mandatory. Gone are the days of simply checking whether the supplier was listed on CCR (formerly SBA Pro-NET). For many, being out of compliance can cause significant disruption and loss of revenue.
Identifying Small Business
Small businesses account for 20- 45% of the supply base and are in a constant state of flux due to a slight increase or decrease in revenue, a change of ownership, or even the acquisition of another business, It is a daunting task to keep up with their status. Collecting current revenue and employee counts across the supply base, identifying what commodities (by NAICS code) they supply to your organization, and matching it all against the current government small business guidelines, can be inefficient, costly, and exasperating.
You should be concerned with:
- The significant internal costs associated with manually identifying current, active small businesses within your supply base
- Missed, or inaccurate, small business affidavits
- Loss of revenue due to being out of compliance
According to the US Small Business Administration, a supplier of Pipeline Transportation of Crude Oil (NAICS: 486110) is considered small if their employee count is under 1,500. A supplier of Pipeline Transportation of Natural Gas (NAICS: 486210), however, is considered small only if their revenues are under $7 Million. Suppliers often don’t know their own NAICS code, let alone whether they are considered small by government standards. The responsibility, therefore, lies on the buying organization.
Large suppliers often subcontract. If subcontracting over $550,000 ($1m for construction), they may also be required to report their small business compliance. Identifying which large suppliers may have flow-down responsibilities is difficult at best. Not having insight into this is very risky.
A common situation: mailing a form out to every supplier in hopes that it reaches the right hands, that they understand what is being asked of them, and that they comply. The success rate? Less than 20% – and that assumes that returned forms were accurately completed.
You should be concerned with:
- Cost inefficiencies of reaching out manually to each small business to request its certification
- Risk exposure from not having timely insight into ongoing spend and certification coverage
When is it considered too late to fix a problem? Whether a company reports spend once or twice a year, insight and corrective actions are needed all the time. Without foresight and proper management, as opposed to reacting to a problem, companies run the risk of poor audit results from the DCMA or other auditing agency.
The HICX. Small Business Self-Certification solution helps government contractors solve these problems:
- Collect all necessary information on all suppliers to determine potential small business fit
- Query suppliers on potential subcontracting amounts to determine whether they need to be enrolled into a subcontracting plan
- Match supplier spend, by commodity, against the US Small Business Administration’s criteria
- Determine whether a supplier is qualified as a Small Business (SB), Woman-Owned Small Business (WOSB), Historically Underutilized Business Zone (HUBZone) business, Veteran-Owned Small Business (VOSB), Service-Disabled Veteran-Owned Small Business (SD-VOSB), Small Disadvantaged Business (SDB), or a Historically Black Colleges & University/Minority Institution (HBCI/MI)
- Automate self-certification collection, by commodity, to each qualifying supplier
- Provide escalation workflows and visibility when compliance is not met
- Export capabilities of all self-certification affidavits for DCMA, or other, review and audit