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SmallGovCon Week in Review: June 18 – 22, 2018

Summer has officially started! Let’s get it started off with the SmallGovCon Week in Review. This week’s edition includes a new FAR provision relating to the Kaspersky ban, NIH’s CIO-SP3 HUBZone awards, and much more. DoD, GSA, and NASA issue an interim rule amending the FAR to ban Kaspersky products. [federalregister.gov] NIH makes more CIO-SP3 on-ramp awards. [washingtontechnology.com] House appropriators putting the Defense Department on notice that they’ll be keeping a close eye on future OTA awards. [fcw.com] Former employee of U.S. government contractor in Afghanistan sentenced to 5 months in prison after pleading guilty to accepting illegal kickbacks. [justice.gov] EPA issues direct final rule to amend EPAAR by removing Mentor-Protégé clause requirement. [federalregister.gov] After pleading guilty to government procurement fraud, a former official at Scott Air Force Base sentenced to two years of probation. [stltoday] GSA needs to recognize that contracts with good selection and reasonable access fees are preferred over high fee, limited section vehicles. [federalnewsradio.com]
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Koprince Law LLC

Koprince Law LLC

 

SBA Inspector General: 89% of WOSB Sole Source Contracts Were Improper

Nearly 90% of women-owned small business sole source contracts reviewed by the SBA Office of Inspector General were improper, according to a startling report issued yesterday. In the study, the SBA OIG concluded that because of pervasive flaws in the award of WOSB and EDWOSB sole source contracts, “there was no assurance that these contracts were awarded to firms that were eligible to receive sole-source awards under the Program.”  And if that wasn’t enough, the SBA OIG reiterated its position that, as a legal matter, it is improper to award any WOSB or EDWOSB sole source contract to a self-certified company. The SBA OIG studied 56 WOSB and EDWOSB sole source contracts awarded between January 1, 2016 and April 30, 2017.  This pool “represented 81 percent of the Program’s contracts awarded on a sole-source basis for this time period.” The results were startling: SBA OIG determined that “Federal agencies’ contracting officers and firms did not comply with Federal regulations for 50 of the 56 Program sole-source contracts, valued at $52.2 million.”  As a result, there was no assurance that these contracts were awarded to eligible WOSBs and EDWOSBs. Before awarding a WOSB or EDWOSB contract (whether set-aside or sole source), the Contracting Officer is required to confirm that the WOSB or EDWOSB has provided certain supporting documentation to the certify.sba.gov portal.  But SBA OIG found that “contracting officers awarded 18 contracts, valued at $11.7 million, on a sole-source basis” to companies with no documentation in the system.  Thirty-two sole source contracts were awarded to companies with incomplete documentation in the system. “Awarding contracts to potentially ineligible firms eliminates contracting opportunities for eligible businesses,” the SBA OIG wrote.  “Further, the results associated with the Federal Government’s goals for contracting with WOSBs may be overstated, and the public and Congress may not know to which the Program has addressed underrepresentation.” The SBA OIG pointed out that the 2015 National Defense Authorization Act, which allowed WOSBs to receive sole source contracts, also required the SBA to implement a formal certification program for WOSBs and EDWOSBs.  However, although the SBA implemented the sole source authority in October 2015, “SBA has not issued regulations pertaining to a certification progress for the Program.”  An SBA official interviewed by the SBA OIG “estimated that it will take at least another year to actually implement a certification process.” Citing the plain language of the 2015 NDAA, SBA OIG repeated an opinion it has previously expressed–that it is against the law to award WOSB or EDWOSB sole source contracts to self-certified companies.  “OIG firmly contends that the enabling legislation limited eligibility for sole-source contracts to certified entities,” the SBA OIG wrote.  The SBA OIG report notes that the SBA’s government contracting leadership disagrees with this conclusion, but doesn’t explain the leadership’s legal rationale for doing so. This isn’t the first time that an oversight body has questioned whether WOSB and EDWOSB self-certification may be causing ineligible companies to win set-aside and sole source contracts.  Just last summer, the GAO concluded that WOSB and EDWOSB self-certification may allow “potentially ineligible businesses” to receive contracts.  In a 2015 report, the SBA OIG found that 15 of 34 WOSB set-aside awards were improper.   The same year, the SBA OIG pushed the SBA to quickly implement a formal certification program, stating that self-certification “exposes the program to abuse.”  Two years earlier, the NASA Inspector General issued a report suggesting that incorrect WOSB self-certifications may be pervasive. The 2015 NDAA became law on December 19, 2014.  We’re approaching four years since Congress eliminated WOSB self-certification.  But despite repeated pushes from watchdogs like GAO and SBA OIG, the SBA has yet to even propose regulations to implement a government-wide WOSB and EDWOSB certification program. I cut the SBA some slack early on, because there’s no doubt that implementing a brand new certification program is a complex process, requiring careful thought and a thorough understanding of potential options and resources.  But enough is enough.  At this point, I can only conclude that despite repeated reports about pervasive problems with self-certification, implementing the WOSB certification program simply isn’t a priority for the SBA.  That’s a shame because reports like the one the SBA OIG issued yesterday make clear that WOSB self-certification just isn’t working well. A cynic might wonder if the SBA is dragging its feet because requiring WOSB certification could torpedo the Government’s already-low WOSB goaling achievements.  I doubt that’s the case–I bet the SBA’s hesitance is probably more about the significant time and resources and time needed to implement the certification program. I’m also not sure that the Small Business Act, as amended by the 2015 NDAA, requires the government to discontinue counting self-certified WOSBs for goaling purposes.  As I read it, the statute very clearly prohibits set-aside and sole source contracts from being awarded to self-certified companies, but doesn’t necessarily preclude the government from counting self-certified companies toward its annual goals.  It will be interesting to see what the SBA’s lawyers make of it. I’ve long predicted that a formal certification program ultimately will increase WOSB awards.  If I were a Contracting Officer, I’d be tempted to skimp on WOSB contracts because of the added administrative burden involved in checking for supporting documents, as well as a lack of confidence that self-certified bidders truly qualify.  A formal certification program will eliminate the additional administrative requirement while giving Contracting Officers much-needed assurances their WOSB awardees really are eligible.
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Koprince Law LLC

Koprince Law LLC

 

GAO: Where RFP Requirements Clearly Not Met, Protest Costs Reimbursable

As Koprince Law attorneys have discussed in depth, GAO will in some instances award costs for a clearly meritorious protest where an agency does not take corrective action before the due date for the agency report. But what are the standards for a “clearly meritorious” protest? It’s instructive to look at a recent GAO decision that reviewed protest grounds dealing with past performance evaluation and a requirement that the Army be able to set up the proposed product within 60 seconds. In HESCO Bastion Ltd., B-415526.3, (April 3, 2018), GAO reviewed a request by HESCO Bastion Ltd. for reasonable costs after it protested an award to JSF Systems, LLC. Under the RFP, the Army sought HESCO brand name or equal earth-filled barriers conducted under FAR part 12 and part 13. The RFP sought the Lowest Price Technically Acceptable proposal. Proposals would be rated acceptable or unacceptable based on factors including prior experience and past performance. The prior experience factor required a demonstration of 2 years of experience, within the last 5 years, manufacturing earth-filled barriers for the government. For past performance, offerors had to show details about “recent and relevant contracts for the same or similar items.” The requested items had to be HESCO brand name or equal earth-filled barriers–CART and RAID configurations, as marketed by HESCO. To be an equal product, both products must be deployed in a maximum of 60 seconds, and the RAID product had to contain “uilt rails inside for easy deployment.” The Army made award to JSF, finding its proposed products met all requirements. HESCO protested award to JSF.  After initially defending the protest by filing an agency report, the Army took corrective action. HESCO then requested reimbursement of its protest costs. The basic rule is that GAO can recommend that an agency reimburse protest costs where GAO decides “that the agency unduly delayed taking corrective action in the face of a clearly meritorious protest, thereby causing a protester to expend unnecessary time and resources to make further use of the protest process in order to obtain relief.” A clearly meritorious protest is one where, reasonably, the agency had no “defensible legal position.” Normally, corrective action is prompt if taken before the agency report’s due date. In this case, with respect to whether the protest was clearly meritorious, GAO looked at each of the three protest grounds in turn to see if the agency really had a leg to stand on. First, HESCO argued JSF did not have the necessary experience where the RFP required at least 2 years of experience within the last 5 years manufacturing earth-filled barriers for the government. The agency report argued that, because JSF had experience with “delivery of earth-filled barriers” and its subcontractor had manufacturing experience, JSF met the requirement. GAO was not persuaded, holding that delivery is not the same as manufacture and the subcontractor certification was expired on its face. Second, JSF’s past performance did not meet the requirement to provide “detailed information on the contracts” of subcontractors because the proposal didn’t include all required information and the subcontractor’s required certification was expired. Plus, the Army did not evaluate whether past performance for the offeror showed recent and relevant contracts. Third, with respect to JSF’s proposed products, the Army determined that both the CART and RAID or equal products, which similarly required a maximum 60 second deployment, were evaluated as “[r]apid deployment.” The Army also determined the RAID or equal product had built rails for easy deployment, because the proposal specification sheet described the offered product as “easy to deploy by pulling open, positioning and filling.” GAO held, in a less than shocking result, that “rapid” is not the same as 60 seconds, and “pulling open, positioning, and filling” is not the same as “built rails.” In sum, then, GAO held that the documents in the Army’s position “did not provide a legally defensible basis for the agency’s position.” GAO recommended the Army reimburse costs to HESCO. As the HESCO Bastion case demonstrates, “clearly meritorious” is a high (but not impossible) standard to meet. For the protester to recover costs, the agency’s position must be legally indefensible, that is, blatantly wrong.
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Koprince Law LLC

Koprince Law LLC

 

SmallGovCon Welcomes Stephen Skepnek

I am very pleased to announce that Stephen Skepnek has joined our team of attorney-authors here at SmallGovCon.  Stephen is an associate attorney with Koprince Law LLC, where his practice focuses on federal government contracts law. Before joining our team, Stephen practiced civil litigation and administrative law with the Kansas Corporation Commission.  Check out Stephen’s full biography to learn more about our newest author, and don’t miss his first SmallGovCon post on the GAO’s tricky timeliness rules.
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SmallGovCon Week in Review: June 11 – 15, 2018

In honor of Father’s Day, how about a dad joke? What kind of train eats too much? A chew-chew train! . . . Now that you’ve stopped laughing, let’s dig into the SmallGovCon Week in Review. This week’s edition includes articles about the draft 2019 NDAA, an update on the SAM.gov hack, a proposed FAR amendment, and more. Happy Father’s Day, and have a great weekend! House version of the NDAA contains biggest overhaul to DoD’s commercial buying practices being debated in the Senate this week. [Federal News Radio] The GSA updated procedures for its contractor registration site due to a backlog in the SAM.gov verification process. [fedscoop] DoD, GSA, and NASA proposing to amend FAR to provide guidance to be consistent with the National Defense Authorization Act. [Federal Register] GSA STARS II vendors receiving malicious e-mail spoofs. [APTAC] Next month, regulators will ask contractors for their thoughts on ways to increase use of a federal online portal. [Bloomberg Government] New Jersey couple ordered to pay the United States for overcharging the military. [U.S. Department of Justice] Texas man sentenced to 41 months in prison for unlawfully retaining national defense information. [U.S. Department of Justice]
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Claim of Bad Faith Termination by Government Requires Strong Evidence, says CBCA

An agency has broad discretion to terminate a contract for convenience. But sometimes, a contractor will challenge the termination for convenience by arguing that the agency acted in bad faith in terminating the contract. A recent CBCA decision looks at what type of evidence is needed to establish bad faith. Not surprisingly, the CBCA confirms that the standard of proof is quite high. In J.R. Mannes Gov’t Servs. Corp., CBCA 5911 (Mar. 29, 2018), the CBCA reviewed an appeal of J.R. Mannes Government Services Corporation, which claimed the FBI terminated a task order for convenience based on bad faith. J.R. Mannes argued the FBI wanted to “get itself a better deal by performing the work in-house” or to retaliate against J.R. Mannes for a previous appeal. In 2015, the FBI awarded a task order to J.R. Mannes to work on a project to administer user access to applications hosted on the FBI’s mainframe computer. By March 2017, the FBI planned to retire the mainframe system, so it concluded that the J.R. Mannes task order supporting the mainframe should be discontinued. Therefore, the contracting officer modified the task order so the option year was not exercised. On June 23, 2017, J.R. Mannes responded “that the modification ‘constitute[d] an improper termination for convenience’ because a bad faith termination would entitle it to its ‘anticipated profit.'” On July 21, 2017, J.R. Mannes filed a claim for $53,139 in lost profits.  The contracting officer did not issue a decision, and J.R. Mannes filed an appeal of the deemed denial. The CBCA wrote that “[t]he Government can terminate a contract for convenience when it is in its best interests.” There is a “presumption that government officials act in good faith” and the appellant must submit evidence to rebut that presumption. The FBI said that it chose to terminate because “it no longer needed a contractor to support a mainframe computer system that the FBI planned to retire in 2018. Also, the FBI chose to eliminate this contract, as well as others, due to funding constraints.” J.R. Mannes argued that the termination was in bad faith because of a claim it submitted on another contract. It submitted a letter of a former J.R. Mannes employee that stated the employee had talked to an FBI contracting officer representative and “[m]y initial and enduring reaction to her question and comment is that the contract which I was performing was being targeted for termination because of legal actions J.R. Mannes initiated on an unrelated FBI contract.” In response, the FBI submitted sworn declarations that the FBI did not know about J.R. Mannes’ claim on the unrelated contract until months after the alleged conversation with the FBI COR that was discussed in the employee letter. The CBCA said that the FBI’s declarations were “more persuasive and believable” than J.R. Mannes’ evidence, and denied the appeal. As the J.R. Mannes case demonstrates, in order to have a viable claim bad faith termination by the government, a contractor must present strong evidence that the government acted in bad faith. An unsworn letter of the type J.R. Mannes submitted probably won’t cut it.
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Bid Protest Filed After “Non-Required” Debriefing Was Untimely, Says GAO

GAO’s bid protest regulations provide strict timelines for filing a protest. Typically, a protest challenging an award must be filed within 10 days after the basis of the protest is known or should have been known. There is an exception to this rule for protests filed after a debriefing, but only when a debriefing was required by the FAR. As one contractor recently discovered, where a debriefing is not required, GAO’s bid protest regulations are not nearly as forgiving. ITility, LLC, B-415274.3, 2018 CPD ¶ 134 (Comp. Gen. Apr. 2, 2018) involved the establishment of blanket purchase agreements with Federal Supply Schedule contract holders for the Department of Defense, Defense Information Systems Agency for agency program support. The solicitation was a total small business set-aside under FAR subpart 8.4. The solicitation anticipated awarding contracts to the five lowest priced, technically acceptable offers with a substantial confidence past performance rating. ITility timely submitted a proposal in response to the Solicitation. On December 20, 2017, ITility learned that its proposal had lost to five lower-priced offerors with acceptable plans and past performance ratings. ITility requested a debriefing. Nearly 2 weeks later, on January 2, 2018, the agency sent ITility slides with much of the same information provided in ITility’s unsuccessful offeror notice. Two days later, on January 4, 2018, a debriefing was held in person. ITility subsequently filed a GAO protest on January 12, 2018, challenging the agency’s evaluation methods. The central question in ITility’s protest quickly became whether the protest was timely filed after a debriefing. GAO timeliness rules generally require bid protests to be filed “not later than 10 days after the basis of protest is known or should have been known[.]” There is a limited exception, however, for procurements where an agency is required to provide a debriefing when requested. When a debriefing is both required and requested, a protest may be timely filed within 10 days of the debriefing’s conclusion. Procurements conducted under FAR Part 15, for example, require debriefings. ITility’s procurement, however, was conducted under FAR subpart 8.4; a subpart specifically designated for FSS contracts with different procedural rules and, importantly, no required debriefing. The agency argued that ITility’s protest was too late because it was not filed within 10 days after ITility knew or should have known the basis of the protest. Specifically, the agency claimed ITility knew or should have known the basis of the protest when it learned the name of each selected awardee, their proposed price, and the ratings of their plans and past performance. ITility responded that the time-period to protest did not start until it was given a debriefing and it had timely filed its protest within 10 days of receiving the agency’s debriefing slides. GAO disagreed with ITility and dismissed the protest. GAO noted that “[t]he timeliness rules reflect the dual requirements of giving parties a fair opportunity to present their cases and resolving protests expeditiously without disrupting or delaying the procurement process.” In this case, GAO concluded ITility’s protest was untimely. According to GAO, the protest needed be filed not later than 10 days after ITility knew or should have known the basis for its protest and that the “debriefing exception” for procurements conducted on the basis of “competitive proposals” under FAR part 15 did not apply to this procurement conducted pursuant to FAR subpart 8.4. ITility is a stark reminder of the GAO’s strict timeliness rules. As ITility painfully discovered, these timeliness regulations can trap unsuspecting bid protesters. Here, ITility missed their deadline and with it, their chance at winning a bid.
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GovCon Voices: Five Quick Tips for Winning Proposal Graphics

Even skilled graphic designers often struggle with creating effective proposal graphics. While the usual rules of good graphic design still apply, proposal graphics come with their own unique set of challenges and requirements. In this post, we’ll look at some quick tips that can mean the difference between missed opportunities and winning graphics. But first, let’s dispel two common myths. Proposal Graphic Myths: Myth 1: Creating proposal graphics requires expensive or difficult software. This is a common misconception. The truth is that many effective proposal graphics are made in widely available programs like Microsoft’s PowerPoint or Visio. For graphics requiring more precision, Adobe Illustrator may be quicker and easier, but it’s not an absolute necessity—use the tools with which you’re comfortable. Myth 2: Proposal graphics need to be flashy. The truth is that clarity is much more important than pizzazz. For instance, a simple organizational chart using only straight lines, rectangles, and a couple of well-chosen colors suggests the orderliness and elegance of your solution. Meanwhile, a chart with a rainbow of colors and lines zigzagging everywhere suggests that your solution is convoluted, confusing, high-risk, and so on. While that second graphic may be more visually striking, it’s not nearly as compelling as the first. Quick Tips for Improving Proposal Graphics: Quick Tip 1: Only use graphics for important points. Nearly anything in a proposal could be represented with a graphic, and since very text-heavy pages look dull, it can be tempting to fill a proposal with graphics (especially if you have a library of old graphics you can reuse). But page space is nearly always a scarce resource in proposals. When using a graphic, make sure that it’s illustrating a key point. Graphics call a lot of attention to themselves, so make sure you’re using them to highlight major win themes, discriminators, etc.—those essential points you most want the reader to remember. On the other hand, if you simply need to provide some visual interest to a block of text, consider using a callout box rather than a true graphic—callout boxes are visually appealing and let you highlight key proof points without sacrificing much page space. Quick Tip 2: Make sure the graphic stands on its own. A common mistake is to include proposal graphics that require lengthy explanations in the body text surrounding them. Whenever you include a graphic, ask yourself, “If I saw this graphic alone, with no other text, would I understand it?” Evaluators are busy, and they’re not going to spend several minutes trying to decipher a difficult graphic. Moreover, if you need a block of text to explain what the graphic is supposed to show, then the graphic is just wasting space—the text could do that work alone. Aim for self-contained graphics that can be interpreted in 10 seconds or less. Any longer and an evaluator is likely to give up and move on. The body text around the graphic should elaborate, not explain. Quick Tip 3: Carefully craft your action captions. The captions below a graphic stand out from the rest of the text—a hurried evaluator skimming the page will naturally pay more attention to them than any one sentence in the body text. For that reason, you want to make sure your action captions effectively present your key points. For example, consider these three possible captions: Company X’s Proposed Organizational Structure. Company X’s Proposed Organizational Structure. Our proposed structure allows the Government direct access to senior decision-makers and subject matter experts. Company X’s Proposed Organizational Structure. Our proposed structure allows the Government direct access to senior decision-makers and subject matter experts, allowing for rapid response to urgent or unforeseen Government requirements. The first option is a missed opportunity. Anybody looking at an organizational chart should be able to tell immediately that it is in fact an organizational chart—if not, there’s something seriously wrong with the graphic! This caption is just wasted space. The second option is better, as it calls attention to a key feature of the organizational structure. But it doesn’t explain why that feature is a benefit to the customer—it stops short and hopes that the evaluator will make the desired inference. That may or may not happen. The third option is the best of the bunch. It calls attention to a feature of the graphic, and explains why that feature is beneficial to the customer. An evaluator who skims through the body and reads only the caption will still understand the key benefit that makes your solution the right choice. Quick Tip 4: Pay close attention to fonts. Most proposals have font restrictions in place (e.g., all text must be Times New Roman 12-point). Unless the RFP specifically states otherwise, these restrictions apply to graphics as well as body text. In other words, if you reuse an old graphic and forget to convert it from Arial 10 to Times New Roman 12, your proposal is non-compliant and at risk of rejection. Quick Tip 5: Always build graphics at actual size. The most common compliance problem isn’t using the wrong font when building the graphic, but rather, accidentally making the text too small after the fact. Inexperienced proposal graphic designers will often create a graphic using the correct font size in the PowerPoint or Illustrator source file—but when they go to move the graphic into the proposal document, they find that it’s too big. So they shrink it down to fit the page—and now the font is too small, rendering the graphic non-compliant. To avoid this problem, always design your graphics at actual size. For instance, if your proposal has 8.5”x11” pages with 1-inch margins, you have a maximum of 6.5”x9” of usable space. Make sure you set your slide (PowerPoint) or artboard (Illustrator) to those dimensions before you start building the graphic. When you insert it into the proposal, it will be exactly the size you need, eliminating the compliance risk. Never shrink graphics to fit into the proposal document. If they don’t fit, go back to the source file and make the appropriate changes there. Conversely, never expand small graphics to fit the page either—this leads to blurry, distorted graphics. Instead, go back to the source file, where graphics can be resized without loss of quality. Finally, designing your graphics at actual size has the additional benefit of making it clear from the beginning how much page space the graphic will take up. In severely page-limited proposals, shaving that extra half inch off the side of the graphic can make all the difference. Just by incorporating these five quick tips, you can immediately improve your proposal graphics and, by extension, your proposals and boilerplates as a whole. For further assistance with graphics, page layout, or any other part of the proposal process, contact Global Services today! Courtney Fairchild, President Courtney Fairchild is the President and CEO of Global Services. Global Services is a niche consulting firm focused on proposal management, proposal compliance, and GSA Schedule maintenance for federal contractors. Over the past twenty years she and her team have successfully prepared, negotiated, and managed 2,500+ federal contracts for Global Services’ clients, totaling over $20 billion dollars. Ms. Fairchild has been with the company since it was founded in 1996 and headed up the Global Services GSA Schedule Programs division from its inception. Global Services – 1401 14th St. NW, 3rd Floor, Washington, DC 20005 Phone: 202-234-8933 Email: global@globalservicesinc.com LinkedIn: www.linkedin.com/in/globalservices Twitter: @globalservicedc GovCon Voices is an occasional feature dedicated to providing SmallGovCon readers with candid news, insight, and commentary from government contracting thought leaders. The opinions expressed in GovCon Voices are those of the individual authors and do not necessarily reflect the opinions of Koprince Law LLC or its attorneys.
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SBA OHA Rejects “Chain Affiliation” Theory

Ordinarily, a company isn’t affiliated with the affiliates of its affiliates. That sentence may sound a little silly, but it encapsulates an important principle about the breadth of the SBA’s affiliation rules.  As demonstrated in a recent SBA Office of Hearings and Appeals decision, the SBA doesn’t apply its rules to create “chain affiliation.” Before we get to the case itself, a simple example might be helpful.  Let’s say two companies–Company A and Company B–are affiliated under the common management rule because the same individual is the highest officer of both companies.  Let’s also assume that Company B receives almost all of its revenues from Company C, creating affiliation between Companies B and C under the economic dependence rule.  Companies A and C have no direct connections. Is Company A affiliated with Company C–the affiliate of its affiliate?  It’s an important question.  For many small businesses, adding “chain affiliates” like Company C could push them over relevant size standards. OHA’s recent decision in Size Appeal of WisEngineering, LLC, SBA No. SIZ-5908 (2018) provides some answers.  The WisEngineering case involved an Army solicitation for logistics support services.  The solicitation was issued as a small business set-aside. After evaluating competitive proposals, the Contracting Officer announced that Barbaricum, LLC was the apparent successful offeror.  WisEngineering, LLC, an unsuccessful competitor, filed a size protest.  WisEngineering alleged that Barbaricum was affiliated with various entities. The SBA Area Office determined that Barbaricum was affiliated with Woodside O’Brien, LLC, a venture capital firm, under the SBA’s common ownership and identity of interest rules.  However, affiliation with Woodside did not push Barbaricum over the solicitation’s $20.5 million size standard. Woodside held an interest in several entities collectively referred to as the “Portfolio Companies.”  However, Barbaricum did not have any significant relationship with the Portfolio Companies.  The SBA Area Office held that Barbaricum was not affiliated with the Portfolio Companies and issued a size determination finding Barbaricum to be an eligible small business. WisEngineering filed a size appeal with OHA.  WisEngineering argued, in part, that the Area Office erred by failing to find Barbaricum affiliated with the Portfolio Companies. OHA wrote that “the record does not support the conclusion that Woodside is affiliated with the Portfolio Companies.”  However, “even if Woodside were affiliated with the Portfolio Companies, this would not establish that Barbaricum and the Portfolio Companies are also affiliated.” Citing previous size appeal decisions, OHA wrote that it “has repeatedly rejected such ‘chain affiliation’ allegations, and has made clear that a challenged firm is not affiliated with the affiliates of its affiliate in the absence of any common ownership or control between the challenged firm and affiliate.”  Here, WisEngineering “points to no evidence that Barbaricum, or its owners, hold any interest in, or have any power to control, the Portfolio Companies, or that any of the Portfolio Companies have any such ownership or control over Barbaricum.”  Thus, “the Area Office correctly found that Barbaricum is not affiliated with the Portfolio Companies.” OHA denied the size appeal. As the WisEngineering case demonstrates, a company isn’t affiliated with the affiliates of the company’s affiliates, absent common ownership or control between the firms themselves.  And in my view, that’s the right policy.  In many cases, chain affiliation would result in companies being affiliated with entities with whom they have no connections, and potentially no reason to believe that they are affiliated.
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SBA May Eliminate 8(a) Joint Venture Approvals

The SBA is considering eliminating the requirement that contractors obtain the SBA’s prior approval to joint venture for 8(a) contracts. There’s no doubt that eliminating the approval requirement would reduce burdens and expenses for 8(a) companies and their joint venture partners–but it could also lead to an uptick in sustained protests against 8(a) joint ventures. Under current regulations, “SBA must approve a joint venture agreement prior to the award of an 8(a) contract on behalf of the joint venture.”  Additionally, after the joint venture is approved in connection with the first 8(a) contract, “SBA must approve addendums prior to the award of any successive 8(a) contract to the joint venture.” The approval requirements are widely misunderstood.  Some contractors believe that an 8(a) company must always receive the SBA’s prior approval to pursue a contract as a joint venture, even when the joint venture will pursue non-8(a) work.  That’s not the case–only 8(a) contracts require the SBA’s prior approval.  Other contractors believe that once the SBA approves a joint venture to bid on one 8(a) contract, the joint venture is “8(a) certified” and doesn’t need any future SBA approvals.  Again, that’s wrong, and failing to get SBA’s approval of an addendum can cost the joint venture a contract. Misunderstandings aren’t the only problem with the approval process.  It also can take a heck of a lot of work to get an 8(a) joint venture approved.  Not only does the SBA require a joint venture agreement fully complying with 13 C.F.R. 124.513, but SBA District Offices also tend to require a great deal of supporting documentation, such as resumes, work share breakdowns, staffing plans, and so on.  Some District Offices insist on “mandatory” joint venture agreement provisions that are nowhere to be found in the regulations; others demand that limited liability company joint  ventures produce LLC operating agreements–again, not a regulatory requirement. Needless to say, for small, disadvantaged businesses, meeting these requirements can be onerous, time consuming and costly. Well, these problems may one day be a thing of the past.  In a Federal Register publication issued last week, the SBA said that it is considering “possibly eliminating SBA’s role in approving joint venture agreements for 8(a) competitive contracts.”  The SBA says that this change may make it “easier for small business concerns to understand and comply with” the 8(a) Program requirements. There’s little doubt that eliminating the prior approval requirement would be a good thing from the standpoint of cost and burden.  But there may be a downside.  If SBA adopts this change, I think you’ll see more protests sustained against 8(a) joint ventures. As annoying as the prior approval requirement might be, it also serves an important purpose–the SBA validates, before award, that the joint venture agreement meets all the mandatory requirements under 13 C.F.R. 124.513.  If not, the SBA District Office typically sends the joint venture agreement back to the 8(a) company for edits.  In other words, if the joint venture agreement isn’t perfect, it’s usually okay; the joint venturers will likely get a second bite at the apple. If the prior approval requirement is eliminated, the first and only time the SBA will review an 8(a) joint venture agreement is after an award is announced and a protest filed.  This is how it already works for joint ventures competing for small business, HUBZone, WOSB, and non-VA SDVOSB contracts. At that point, if the joint venture agreement isn’t perfect, there are no do-overs.  The protest is sustained, and the contract goes to the next in line.  That’s the downside of the absence of prior approval–the stakes are much higher if and when the joint venture agreement is reviewed by the SBA. There are some mighty tremendous resources out there to help 8(a) companies and others form compliant joint ventures.  But not everyone will avail themselves of those resources or get the joint venture agreement exactly right.  And once competitors realize that the SBA isn’t reviewing joint venture agreements up front, they may be more inclined to file protests of awards to 8(a) joint ventures, guessing that the joint venture is more likely to have missed something than would be the case had the SBA given its prior seal of approval. Would eliminating prior approval be a good thing?  On balance, I think so.  The amount of time and effort needed to obtain prior approval just isn’t necessary in a program supporting disadvantaged small businesses.  However, if the SBA does eliminate the prior approval requirement, 8(a) companies will need to understand that the obligation now rests with them to get the joint venture agreement exactly right the first time. It’s important to note that the SBA hasn’t made or even officially proposed this change.  It’s just under consideration and may never occur.  We’ll see what happens, but for now, the prior approval process continues.
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SmallGovCon Week in Review: June 4 – 8, 2018

TGIF! Let’s get the weekend started off with a look at the latest and greatest in government contracting. In this week’s edition of the SmallGovCon Week in Review, we’ll take a look at DoD’s final rule amending DFARS to increase certain micro-purchase thresholds, more questions about the SBA’s small business participation report cards, a former background investigator’s guilty plea, and much more. Have a great weekend! DoD issues final rule amending DFARS to increase micro-purchase thresholds. [Federal Register] Did the Small Business Administration really meet their FY17 goals. [Linkedin] A former background investigator pleads guilty to making a false statement and may serve 5 years. [U.S. Department of Justice] Google not renewing its contract with Pentagon due to employee backlash. [Quartz at Work] Richmond company agrees to pay $625,000 to settle federal civil fraud lawsuit. [U.S. Department of Justice]
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SBA Plans to Consolidate All Small and 8(a) Mentor-Protégé Programs

The SBA plans to issue a proposed rule consolidating the All Small Mentor-Protégé Program and the 8(a) Mentor-Protégé Program. According to a recent SBA publication in the Federal Register, the SBA has had a change of heart about whether it is necessary to run two similar mentor-protégé programs–one for everybody, and another only for 8(a) firms. When the SBA created the All Small Mentor-Protégé Program in 2016, the SBA purposely left in place the existing 8(a) Mentor-Protégé Program.  At the time, SBA explained that it had considered consolidating the two mentor-protégé programs, but rejected the idea because the 8(a) Mentor-Protégé Program “has independently operating successfully for a number of years and SBA believes that it serves important business development purposes that should continue to be coordinated through SBA’s Office of Business Development, rather than through a separate mentor-protégé office managed elsewhere within the Agency.” Additionally, in 2016, the SBA couldn’t be sure how well the All Small Mentor-Protégé Program would work in practice.  The SBA was concerned that the All Small Mentor-Protégé program might be overwhelmed with applications to the point where SBA might have to institute “open and closed enrollment periods” for that program.  The SBA may not have wanted its 8(a) companies to be subjected to the potential of open and closed enrollment periods–and kept the separate 8(a) Mentor-Protégé Program active to make sure that didn’t happen. Fortunately, the SBA’s concerns about the implementation of the All Small Mentor-Protégé Program proved largely unfounded.  In practice, the All Small Mentor-Protégé Program Office has been, in my opinion, about as close to perfect as a new government office can get.  The ASMPP Office, as it is called (everything in government needs an acronym) is efficient, speedy, and responsive.  Instead of needing to establish open and closed periods, the SBA at one point was able to tell the public that the average processing time of an All Small Mentor-Protégé Program application was a mere eight days.  And because the All Small Mentor-Protégé Program offers the same benefits as the 8(a) Mentor-Protégé Program, even many 8(a) companies have elected to apply to the ASMPP instead of the 8(a) Mentor-Protégé Program. Instead of providing a special benefit to 8(a) companies, the existence of two similar SBA mentor-protégé programs has caused some confusion.  For example, many contractors think that an 8(a) company must go through the 8(a) Mentor-Protégé Program instead of the All Small Mentor-Protégé Program.  Nope.  Others believe that a mentor-protégé joint venture cannot pursue an 8(a) set-aside contract unless the joint venture was formed under the 8(a) Mentor-Protégé Program instead of the ASMPP.  Again, nope. Now it seems that the SBA has changed its mind about the need for two SBA mentor-protégé programs.  In the Federal Register publication, the SBA says that it “contemplates consolidating the All Small Mentor-Protégé Program and the 8(a) Mentor-Protégé Program into one program.” The SBA plans to issue a formal rule to implement this change, but hasn’t done so yet.  We’ll keep you posted.
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GAO: Subcontracting Plan Required by Solicitation Must be in Proposal

It’s a basic tenet of government contracting that a contractor must comply with the requirements of an agency solicitation. Those are the rules of the game. But in practice, there can be some tricky calls. For instance, what if a solicitation includes a requirement that appears to conflict with the FAR? Does an offeror still have to comply? A recent GAO decision explored this situation in the context of a solicitation’s requirement for subcontracting plans. The decision in Land Shark Shredding, LLC, B-415908 (March 29, 2018) concerned a solicitation from the VA for document shredding services. The RFQ was set aside for veteran-owned small businesses. The RFQ included three evaluation factors: technical, price, and past performance. As part of the technical factor, the RFQ required vendors submit a subcontracting plan.  Under the subcontracting plan, vendors were to: The RFQ advised vendors that “[f]ailure to provide the information requested in the evaluation criteria may result in being found non-responsive.” The CO, in response to an inquiry about why it did not receive the award, told Land Shark Shredding, LLC (Land Shark) that its quotation was nonresponsive, in large part because it did not provide a subcontracting plan. Land Shark argued that, because it is a small business, and small businesses are not required to submit small business subcontracting plans, it should not have been found at fault for not submitting a subcontracting plan. The Solicitation included FAR clause 52.219-9, Small Business Subcontracting Plan, which the GAO agreed by its terms states that “[t]his clause does not apply to small business concerns.” GAO held that the RFQ’s evaluation subfactor required the submission of a subcontracting plan, and the RFQ stated this would help the VA “assess the contractor’s compliance with the limitations on subcontracting or percentage of work performance requirement. Therefore, “it is clear that the RFQ required vendors to submit a subcontracting plan, not a small business subcontracting plan pursuant to the inapplicable FAR and VAAR clauses.” In addition, Land Shark argued that it had informed the agency as part of its proposal that “use of subcontractors on the contract remained undecided, which served as its subcontracting plan” or, alternatively, that it might perform the work without subcontractors. GAO was not buying that argument, holding that “Land Shark’s indecision about whether it will perform the work itself or employ a subcontractor to fulfill the requirements does not provide the information requested by the RFQ, and did not provide sufficient information to allow the VA to assess compliance with the limitations on subcontracting requirement.” GAO also noted that, to the extent Land Shark was protesting that the subcontracting plan requirement itself was unnecessary for the procurement, this was an untimely challenge to the terms of the solicitation. Viewed through the GAO’s eyes, it seems like a simple decision that when a solicitation calls for a subcontracting plan, a contractor must submit one. However, from the contractor’s perspective, (a) the solicitation was asking for something that was not required under the FAR and (b) the contractor attempted to honestly state in its proposal that it did not know if it would use subcontractors. After all, this was a paper shredding contract, probably on the less complicated end of the universe of government contracts. GAO, as usual, stuck to the rules of the game: if it’s required in the solicitation, it better be in the proposal. As GAO noted, if you don’t think the solicitation requirements are reasonable, that is a pre-award challenge.
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Populated or Unpopulated? Ambiguous JV Agreement Sinks 8(a) Award

An 8(a) joint venture agreement was ambiguous about whether the joint venturers intended to create a populated joint venture (which is no longer allowed) or an unpopulated joint venture–and the ambiguity cost the joint venture an 8(a) set-aside contract. In a recent decision, the U.S. Court of Federal Claims upheld the SBA’s decision to reject a joint venture agreement that was ambiguous about whether the joint venture was populated or unpopulated. The Court’s decision in Senter, LLC v. United States, No. 17-1752C (2018) involved a solicitation for support services at Coast Guard headquarters.  The Coast Guard issued the solicitation as an 8(a) set-aside on July 21, 2017. Senter, LLC submitted a proposal.  Senter was a joint venture between Sylvain Analytics, Inc., an 8(a) company, and Enetereza, Inc., a non-8(a) company.  The joint venture was originally established in April 2016, presumably to compete for a different contract. The joint venture agreement described Senter as a “populated Joint Venture limited liability company” that would be “populated with its own employees.”  The joint venture agreement referred to Senter as “populated” in various other places. At the time, there was nothing wrong with establishing a populated joint venture–that is, a joint venture that would perform the contract with employees of its own.  For convenience, most joint ventures were unpopulated, meaning that the joint venture members performed work on the joint venture’s behalf using the members’ employees.  But the SBA regulations allowed both populated and unpopulated joint ventures. That changed in August 2016.  In a final rule effective August 24, 2016, the SBA eliminated populated joint ventures for set-aside contracts.  Following the 2016 revision, the SBA’s regulations have required that joint ventures be unpopulated. That takes us back to the 2017 Coast Guard solicitation.  By then, of course, the SBA’s regulations required Senter to be unpopulated.  After the Coast Guard identified Senter as the apparent successful offeror, the Coast Guard contacted the SBA to determine whether Senter was eligible to receive the contract. The SBA determined that Senter had not (as SBA regulations require) submitted an addendum for SBA approval to pursue the Coast Guard contract.  This alone could have caused the SBA to deny Senter the contract.  But the SBA apparently was in a lenient mood, because it gave Senter the opportunity to amend the joint venture agreement anyway.  The SBA sent Senter a joint venture checklist, which required Senter to (among other things) indicate that the joint venture was unpopulated. Senter didn’t follow the SBA’s instructions, or at least didn’t follow them well.  The addendum it submitted still identified the joint venture as “populated” and said that it would be “populated with its own employees.”  Confusingly, though, the addendum said that Sylvain would perform 51% of the work and Enetereza would perform 49%–as might be the case in an unpopulated joint venture. After some additional back-and-forth, the SBA issued a denial letter informing Senter that it was ineligible to receive the contract.  The SBA cited “discrepancies and lack of supporting documents,” particularly regarding whether the joint venture was populated or unpopulated. Senter ultimately filed a complaint in the Court, seeking to overturn the SBA’s determination.  Senter alleged that it “established with documentation that it was an un-populated joint venture,” and therefore the SBA erred by finding Senter ineligible for the Coast Guard contract. The Court wrote that “the documents Senter submitted to the SBA contained a dizzying array of inconsistencies and ambiguities pertaining to its status as populated or unpopulated.”  After walking through many of these inconsistencies, the Court wrote: Any 8(a) contractor should be aware of the general rule that it must establish its eligibility as of the date of the submission of its initial offer.  Senter was therefore in a position to know that when the SBA assessed the addendum, it would necessarily have to ensure that the agreement, as amended and revised by the addendum, met the SBA’s standards for program eligibility, including the requirement that the JV be unpopulated. The Court denied Senter’s protest and granted the government’s motion for judgment. The Senter case is a good reminder of something I often see in our firm’s practice–contractors tripped up when documents become outdated because of rule changes.  The SBA overhauled its joint venture regulations in 2016, and not just to eliminate populated joint ventures.  The SBA also changed the profit-splitting rules, made major changes to the SDVOSB joint venture rules, and adopted new rules for HUBZone joint ventures, among many others. Using a “template” joint venture agreement that dates from before August 2016 is almost a surefire recipe for noncompliance.  As Senter makes clear, anyone planning to submit a proposal as a joint venture must be certain that the joint venture agreement meets current regulations.
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SmallGovCon Week in Review: May 28 – June 1, 2018

This week, I had the great opportunity to join Guy Timberlake in Minneapolis to discuss the impacts of the 2018 NDAA on small businesses. It was a wonderful event (made all the better by the fabulous participants and presenters). Minneapolis was fun, but it’s nice to be home. Hopefully you’re gearing up for a lovely weekend (perhaps with a little bit of pool time reserved). Before you punch out completely, let’s check out the latest in the world of government contracting. In this week’s edition of the SmallGovCon Week in Review, we take a look at Washington Technology’s new podcast focused on the future of government contracting, a lawsuit in which a contractor allegedly falsely overcharged the U.S. Navy for ship husbanding services, and more. Enjoy, and we’ll see you back here next week! Washington Technology launches “Project 38,” a podcast that discusses the future of government contracting [Washington Technology] The General Services Administration wants to make it easier for federal and state agencies to quickly acquire a broader array of cybersecurity services [Nextgov] United States settles lawsuit alleging that a contractor falsely overcharged the U.S. Navy for ship husbanding services [U.S. Department of Justice] An audit of two Army Contracting Command centers in Redstone, Alabama, and Warren, Michigan, revealed The Department of Defense must increase its efforts in order to meet small business subcontracting goals [Small Business Trends] A civilian employee at Picatinny Arsenal admitted his role in a scheme that traded bribes and other gratuities for favorable treatment on government contracts [TAPinto.net]
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Let’s Replace SBA Small Business Goaling Grades with Participation Trophies

For Fiscal Year 2017, SBA’s small business goaling scorecard awarded 21 agencies grades of “A+” or “A” for their small business contracting and subcontracting.  Two agencies received a “B” and a single, lonely agency brought up the rear with a “C.”  Not one agency received a grade below “C,” even agencies that missed most of their small business goals. It was a “record breaking” performance, to hear SBA tell it.  But these inflated grades do a disservice to the public and government alike.  So long as almost everyone is going to get a top grade anyway, I say we just replace next year’s SBA goaling grades with agency participation trophies. Why do I think SBA’s goaling scores are a problem?  Let’s take a look at a few examples from the 2017 report card. First up, the Department of Agriculture.  When it came to prime contracting goals, Ag was five-for-five: it exceeded its small business, WOSB, SDB, SDVOSB and HUBZone goals.  And the small business achievement was especially impressive: 58.05%, versus a 49% goal.  For its lofty achievements, Ag (appropriately, I think) earned an “A.” Now let’s take a look at the Department of Energy.  DOE went just one-for-five on its prime contracting goals.  DOE exceeded its small business goal, but the raw numbers weren’t that exciting: DOE managed 13.79% for small businesses, versus a 10.2% goal.  DOE missed all four of its socioeconomic goals, whiffing particularly badly on HUBZone (3.00% goal, 0.62% achievement) and SDVOSB (3.00% goal, 0.98% achievement).  So SBA really let those bums at DOE have it!  SBA gave DOE… ummm, an “A.” Now, I know DOE has some unique pressures in the small business world because of DOE’s extensive use of large M&O primes.  And it’s not like DOE isn’t trying–the annual DOE Small Business Conference is truly excellent.  But this isn’t a commentary on DOE, it’s a commentary on SBA: Ag and DOE got the very same letter grade even though Ag exceeded all five of its goals, and DOE missed four-of-five.  What kind of scoring system assigns the same grade for 100% success as 20% success? Let’s look at an an agency that doesn’t share DOE’s unique contracting model (I know, I know, every agency is “unique” but DOE probably more than most).  The National Science Foundation went just two-for-five on its goals.  It exceeded its small business and SDB goals, the latter by a significant margin.  But NSF fell short on its WOSB, SDVOSB and HUBZone goals.  Its WOSB achievement was particularly disappointing–just 3.57% versus a 5.00% goal.  So what grade did NSF get?  An “A.” Finally, let’s check in on the fine folks at the Department of Justice.  For FY 2017, DOJ missed its small business goal, although it came pretty close.  DOJ fared particularly badly with HUBZones, managing just 1.09% against a 3.00% goal.  But DOJ exceeded its WOSB, SDB and SDVOSB goals.  What grade did the SBA assign DOJ?  By now, you see where I am going with this–of course, the DOJ also got an “A.” So here we have four agencies.  One of the four knocked it out of the park, exceeding all five of its prime contracting goals.  Another did relatively poorly, meeting only one of its goals.  The others fell in between, hitting two and three goals, respectively.  Some major differences, yet all four agencies get to tout identical “A” small business grades. The SBA publishes the scoring methodology it uses to develop its scorecard grades.  The statistical formulas may be too complex for my little lawyer brain to fully process, with terms like “component weight” and “weighted performance.”  But you know what?  I don’t need to truly understand how the math works.  Because any methodology that produces the same grade for the four agencies I just discussed is bad methodology.  And bad methodology leads to bad public policy. By handing out “A” grades like tootsie rolls on Halloween, the SBA provides a disincentive for under-performing agencies to get better. Why, for example, should a DOE Contracting Officer care about issuing HUBZone set-asides to improve on the agency’s abysmal HUBZone score when DOE is already A-rated?  If an agency can get top scores without meeting any of its socioeconomic goals, why worry about those goals at all? And what about agencies like Ag, which exceeded all of its goals?  Sure, Ag gets to tout an “A”–but apparently it could have gotten that same grade with a lot less small business contracting.  So, what’s to stop Ag from looking at other agencies’ scorecards and saying, “why the heck are we trying so hard?”  An “A” grade ought to be something that sets an agency apart, a reward for truly outstanding work, something to really brag about.  Instead, it’s become run-of-the-mill. Worst of all, the glut of “A” grades makes it seem as though the government is doing fantastically across the board when it comes to small business contracting.  Sure, some agencies are doing very well, and deserve kudos.  But does any small contractor really think that 21 out of 24 agencies truly are doing “A” level work when it comes to promoting small business?  Let’s keep in mind that one of the so-called “A” agencies achieved approximately zero percent of its socioeconomic goals. When the SBA issues a press release touting 21 “A” grades and one lingering lonely “C,” the message that policymakers and the public get is that small business contracting couldn’t be better.  This has very real policy consequences.  After all, why should policymakers bother to question efforts like streamlining, consolidation, bundling, category management and the like, if almost the entire government is getting “A” grades from the very agency whose purpose is to protect and serve small businesses? The SBA’s recent press release smacks of spin instead of unvarnished small business advocacy.  For instance, the SBA’s press release brags that the government exceeded its WOSB “subcontract goals.”  That’s nice, but subcontracts are awarded by prime contractors, not the feds.  The actual dollars the federal government spent on WOSB prime contracts in FY 2017?  A mere 4.7%, well short of the not-so-lofty 5% goal. This inconvenient fact isn’t mentioned in the press release–nor is the fact that the government missed its HUBZone goal by a wide margin (3.00% goal, 1.65% achievement).  And while the SBA press release trumpets the government’s achievement of the 23% small business goal, it fails to note that small business achievement declined compared with the prior fiscal year: from 24.34% to 23.88%.  Indeed, the government’s prime contracting achievements declined in four of five categories; a slight increase in the SDVOSB category was the only exception. Small businesses don’t need spin; they need advocacy.  Small businesses face very important policy challenges on the horizon, like the streamlining recommendations from the Section 809 Panel.  The last thing small businesses need is for policymakers to evaluate the future of federal contracting with a distorted view about how well the government is already doing when it comes to promoting small business contracting. If the SBA is going to give everyone, or almost everyone, the same goaling grade, then I say we eliminate grading entirely.  Moving forward, the SBA’s policy on small business scorecards should be no different than the policy of a second-grade soccer coach at the season-end pizza party: everyone gets a participation trophy. You heard me.  Starting next year, each agency will get a bright, shiny SBA-approved trophy.  But instead of trying to grade the agency’s performance, and risk sending policymakers rose-colored signals, the trophy will simply confirm that, yep, the agency procured some stuff in the last fiscal year.  Congratulations, agency!  You participated!  You just keep that nice trophy right there on the shelf and show it to your grandmother when she visits for Thanksgiving, okay? Let’s face it, we’re pretty much heading in the participation trophy direction anyway, with “A” grades being devalued by how commonplace they’ve become–and how disconnected they are to agencies’ actual small business achievements. So what do you say, SBA?  Let’s toss out the complicated weighted formulas and get started on those soon-to-be-coveted FY 2018 participation trophies.  At least now, when Ag and DOE get the same thing, it will make a little bit of sense.
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SmallGovCon Week in Review: May 21 – 25, 2018

Memorial Day is almost here, which means the unofficial start of summer. I hope everyone enjoys the long weekend while remembering all the men and women who gave their lives in service to our country. In this week’s edition of the SmallGovCon Week in Review, two Topeka men were named in a scheme to fraudulently obtain government contracts set aside for minority and disabled military veteran contractors, contractors argue that a Pentagon proposal to curb bid protests would deny fair access of companies seeking relief from potentially unjustified awards, and much more (including some special pre-holiday snarky commentary by yours truly). Procurement fraud allegations from right here in Kansas: two Topeka businessmen are named in $352 million dollar fraud scheme. [KSNT] A contractors’ group is urging the Senate to reject a DoD proposal to curb bid protests. [Government Executive] (And see my article about how DoD bid protests are already exceedingly uncommon). The SBA has announced that the government met its 23% small business goal in FY 2017. [PR Newswire] (That’s good news, of course, but the SBA’s spin omits the fact that the government missed its WOSB and HUBZone goals once again). The Army is recompeting $600 million follow-on contract to provide information technology services worldwide. [Bloomberg Government] Simplified buying has increased over the years and this year agencies are on track for a record-breaking fiscal year.  [GovConChannel] The DOE has issued a revised Small Business First policy to foster dynamic business environment for the small business community. [U.S. Department of Energy] (And given that DOE missed all four of its socioeconomic goals in FY 2017, a renewed focus on small business seems wise). As agencies approach the year-end surge, they’ll look for ways to spend their remaining IT funds quickly, and SEWP is set up to do just that. [Bloomberg Government] Two men who took part in a bid-rigging and bribery scheme involving $54 millions in contracts at Fort Gordon received the maximum prison terms of five years Wednesday despite the recommendation from the U.S. Attorney’s office for a reduction in their sentences. [The Augusta Chronicle]
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Thank You, DOE Small Businesses!

I am back in Lawrence after a great trip to Houston, where I spoke at the DOE 17th Annual Small  Business Forum & Expo.  My breakout session on the Top 10 Legal Issues for Small Contractors covered a range of topics from enhanced debriefings to joint ventures. A big thank you to Earl Morgan, Anita Anderson, and all the other organizers of this outstanding event.  And thank you, also, to everyone who attended my session and stuck around afterward to ask questions. I’ll be in Wichita on June 5 to present a much longer version (a half-day!) of the Top 10 Legal Issues seminar.  To register, visit the Kansas PTAC website.  I hope to see you there!
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Small Business Participation Declines, But SBA Still Gives Government High Marks

It’s that time of year again. School’s ending for the summer and kids are coming home (some sheepishly) with their report cards. And with the close of Fiscal Year 2017, the federal government has also been given its report card. Like last year, the FY 2017 report card reveals a mixed bag. Though the SBA gave the federal government another “A,” the bottom-line numbers reveal a troubling trend for small business government contractors. As a quick background, the SBA is obligated under federal law to set small business participation goals for the federal government. In addition to the overall 23% goal for small business prime contract awards, the government should also award at least 5% of its prime contract awards to WOSBs and small disadvantaged businesses and 3% to SDVOSBs and HUBZone companies. Last year, the SBA gave the federal government an “A” grade for achieving its small business prime contracting effort in Fiscal Year 2016. This grade came even despite missing its HUBZone and WOSB participation goals “by a country mile.” On the face of it, the federal government enjoyed more success in 2017: the federal government awarded more contracts, by dollar value, to small businesses last year than it did the prior year ($105.7 billion in 2017 versus slightly less than $100 billion in 2016). 23.88% of these contracts were issued as prime contracts to small businesses, 9.10% to SDBs, and another 4.05% to SDVOSBs—all in excess of the stated goals. And on an agency-level basis, the 2017 grades are fairly similar to those last year: 20 agencies earned an “A+” or an “A,” 3 agencies received a “B,” and 1 was given a “C.” Just like last year, however, the federal government missed its HUBZone and WOSB prime contracting goals: it awarded only 1.65% of its prime contracts to HUBZones and only another 4.71% of contracts to WOSBs. Digging into the report deeper gives pause for concern. In almost every category, the federal government’s prime contracting achievement numbers declined from just last year. For example: In 2016, the government awarded 24.34% of prime contracts to small businesses, but that number fell to 23.88% in 2017; and 9.10% of prime contracts went to SDBs in 2017, compared to 9.53% in 2016. These declines might seem trivial. But when the government procures hundreds of billions of dollars of goods and services annually, even the smallest decrease represents a significant hit. Perhaps more troubling, however, is the government’s continuing (and worsening) failure to prioritize HUBZone and WOSB awards. Though the 2016 report highlighted deficiencies in the government’s efforts, it backslid even more in 2017: it awarded 4.71% of prime contracts to WOSBs in 2017 (down from 4.79% in 2016) and only 1.65% to HUBZones (versus 1.67% in 2016). The SBA’s small business participation goals should represent the minimum aspirations for the federal government. But so long as the SBA is willing to provide positive affirmation in the face of some significant failures, what incentive do agencies (or the federal government as a whole) have to actually increase their small business participation levels? Just as any parent would be concerned if their child came home with a report card showing worsening performance across almost every metric, the SBA should be concerned with the government’s small business participation performance. If you ask us, ignoring the troubling trend in small business participation won’t lead to any substantive improvement; instead, the SBA should demand better from the federal government.
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Incumbent Not Entitled to “Extra Credit” in Transition Evaluation, GAO Says

An incumbent contract wasn’t entitled to receive “extra credit” in the agency’e evaluation of offerors’ transition plans. In a recent bid protest decision, the GAO held that the agency reasonably awarded a non-incumbent more strengths than the incumbent in the evaluation of transition plans, writing that incumbency alone doesn’t automatically entitle the incumbent to the highest-possible transition plan score. The GAO’s decision in Integral Consulting Services, Inc., B-415292.2, B-415292.3 (May 7, 2018) involved an Army task order competition seeking a contractor to provide various support services primarily in support of the National Ground Intelligence Center.  The solicitation called for a best value tradeoff considering technical merit and cost. The solicitation specified that the Army’s evaluation of the technical factor would include an analysis of each offeror’s transition plan.  The Army was to evaluate “[t]he Offeror’s understanding of the processes and procedures required to transition from an incumbent contract,” as well as “the Offeror’s understanding of the risks associated with its approach, and the strategies it will employ to mitigate those risks.” The Army received six proposals.  Integral Consulting Services, Inc. was one of the six offerors.  The Army then established a competitive range, which included Integral. Integral’s transition plan relied on its status as the incumbent.  Integral proposed a complete transition on “day one,” well in advance of the solicitation’s 90-day transition period. In its discussions with Integral, the Army identified two weaknesses in Integral’s transition plan.  The Army said that Integral’s transition plan “lacked details regarding the processes and procedures it would use, and did not clearly identify risk areas or mitigation strategies, to successfully accomplish transition on day one, as proposed.” After reviewing Integral’s response, the Army found that Integral had successfully resolved the weaknesses by performing a “more comprehensive look” into its experience and knowledge.  The Army ultimately assigned Integral a single strength for Integral’s transition plan because “unlike a new entity coming in to assume control of the program, the incumbent has only to implement processes already in place.” The Army gave two strengths to the transition plan of another offeror, The Buffalo Group.  In its evaluation of TBG, the Army assigned a strength for exceeding the 90-day transition timeline and another strength for TBG’s risk mitigation plan. TBG and Integral were both assessed overall “Outstanding” ratings for the technical factor.  However, TBG’s total proposed cost/price was approximately $89.7 million whereas Integral’s was approximately $131.6 million.  The Army awarded the task order to TBG. Integral filed a GAO bid protest challenging the award to TBG.  Among its grounds of protest, Integral argued that it was unreasonable for the Army to have assigned more strengths to TBG’s transition plan than to Integral’s.  Integral contended that, as the incumbent, no other offeror could pose less transition risk, which should have led to Integral receiving the higher score. The GAO wrote that “[t]here is no requirement that an incumbent be given extra credit for its status as an incumbent, or that an agency assign or reserve the highest rating for the incumbent offeror.”  Here, the Army found that it was reasonable for the Army to find that TBG’s transition plan merited two strengths and Integral’s only one.  Moreover, given the large difference in cost/price, there was nothing in the record to suggest that the single extra strength TBG received for its transition plan was “a discriminating factor in favor of TBG in the award decision.” GAO denied the protest. Make no mistake–incumbency often is an advantage.  According to a survey published last year, the win rate for incumbents was 54 percent in 2016.  But the incumbent win rate was down significantly from 2015, and the study’s authors suggested that pricing pressures may be largely to blame. Whatever the reasons, the GAO case law makes clear that mere incumbency does not entitle an offeror to the highest-possible ratings.  GAO has previously held that the incumbent is not entitled to the highest past performance rating.  As Integral Consulting Services demonstrates, the same holds true for transition plans.
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At GAO, Challenge of Restrictive Terms of Solicitation Tough Burden to Meet

How does a company go about challenging overly restrictive terms in a solicitation? In order to make such a challenge (and some of them do succeed), it is necessary to show something more than just the fact that a protestor cannot meet the terms of the solicitation. A recent GAO decision provides a real-world example of how not to challenge a solicitation as overly restrictive of competition and reinforces that this can be a difficult thing to prove at GAO. In Armstrong Elevator Company, B-415809 (March 28, 2018), Armstrong Elevator Company (Armstrong) protested an RFP from the GSA for elevator and escalator modernization and maintenance. The Solicitation sought a “contractor to perform a fixed-price design-build contract for a vertical transportation modernization project” for several sites including 16 passenger elevators. In particular, the base contract sought replacement of eight passenger traction elevators and one freight traction elevator, along with specified support functions such as electric and painting. The five option CLINS included tasks such as replacing eight additional passenger traction elevators and one freight traction elevator, modernization of elevators, and maintenance and call-back contract services. For past performance, the solicitation “required offerors to demonstrate successful experience as a contractor responsible for design and construction of three ‘similarly complex’ elevator projects that were substantially completed in the last five years.” A “similarly complex” project was defined as meeting all of the five requirements: The project included 10 or more traction elevators; The project included a follow-on maintenance and call-back contract services of at least three years; The project included fire recall replacement, electrical service revisions/upgrades, and emergency power interface, all in support of elevators; The total elevator project construction cost at award was at least $4 million; and The project was performed in an occupied and functioning building. Armstrong challenged the requirements for similar past performance projects as overly restrictive, noting it could meet all five requirements, but not with a single project. GAO explained that “[t]he determination of a contracting agency’s needs, including the selection of evaluation criteria, is primarily within the agency’s discretion and we will not object to the use of particular evaluation criteria so long as they reasonably relate to the agency’s needs in choosing a contractor that will best serve the government’s interests.” Further, “[t]he fact that a requirement may be burdensome, or even impossible for a particular firm, does not make it objectionable if it meets the agency’s needs.” In this case, the GAO found, the restrictive past performance requirements were reasonably related to the agency’s needs. The GAO wrote that, for example, the requirement for experience with 10 or more traction elevators was reasonable because “the entire scope of work would cover the modernization of 20 elevators and 6 escalators, and that the minimum requirements for this factor were developed in accordance with GSA’s practice to develop its technical evaluation based on a project’s full requirements.” GAO denied the protest, writing “[a]lthough the protester may disagree with the agency’s assessment of its needs, its disagreement with the agency’s solicitation approach and assessments, without more, does not render the agency’s determination unreasonable.” The Armstrong Elevator Company protest makes two important points. First, in order to challenge the terms of a solicitation as being overly restrictive, a firm must show more than the fact that the firm itself is not capable of meeting those terms. And second, GAO will review the agency’s explanation for the terms of the solicitation with some deference. So long as the solicitation’s restrictions are reasonably related to the government’s needs, the protest will likely be denied.
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SmallGovCon Week in Review: May 14 – 18, 2018

As we head into the second half of May, it is time for graduation parties and summer fun.  But before we enjoy the weekend, it’s Friday and time for the SmallGovCon Week in Review. In this week’s edition, we highlight GAO giving contractors a second chance to make it into the OASIS unrestricted pool; an audit showing that DOD isn’t giving small businesses enough opportunity; DSS’ plans for a new methodology to vet security of contractor facilities; and more. GSA plans to add vendors to two OASIS Unrestricted pools. [Bloomberg Government] Google employees resign over company’s involvement with Project Maven. [fedscoop] Auditor report states DSS only accomplished 60% of its workload during 2016.  [Nextgov] Google employees resign over company’s involvement with Project Maven. [fedscoop] North Carolina man sentenced to 6 years in prison for accepting bribes at U.S. Army Communications. [U.S. Department of Justice] Head of GSA looking to reshape procurement schedules to reduce duplication and save money. [fedscoop] Google employees resign over company’s involvement with Project Maven. [fedscoop]
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Late Bid Revision Costs Bidder The Award

When a bidder submits a bid under a sealed bid procurement, it is responsible for ensuring that the bid is timely submitted. But what happens if a bidder wants to revise a bid that’s already been submitted? As a recent GAO case shows, even a revised bid must be timely submitted in order for it to be considered. If a bidder tries to revise its bid too late in the process, it might end up costing itself the award. The facts in Williams Building Company, Inc., B-415317.3 (April 12, 2018) are pretty interesting. The Department of Veterans Affairs issued an invitation for bids for construction services and scheduled the bid opening for 9:00 on September 13. Williams Building Company submitted its bid at 8:30 but, as the deadline for opening drew close, it asked the Contracting Officer if it could change the bid. The Contracting Officer handed the bid back to Williams, who changed the bid and resubmitted it at 9:02. One minute later, the Contracting Officer opened the bids, and Williams’ revised bid was found to be the lowest price. After a couple of bid protests—first by Williams (challenging the rejection of its bid as late, to which the VA took a voluntary corrective action) and then by the second-lowest price bidder (arguing that Williams’ bid should have been considered late and, thus, unawardable)—the VA ultimately rejected Williams’ bid as late. Williams filed a GAO protest challenging its exclusion. It argued that even if its revised bid was considered late, the VA still should have considered its initial bid for the award. GAO rejected Williams’ argument, focusing on who had control of the bid at the time it was due. In doing so, GAO noted that “[t]he time a hand-carried bid is considered submitted is determined by the time the bidder relinquishes control of the bid to the government.” Although Williams’ initial bid was timely submitted, the VA relinquished control of the bid back to Williams when Williams asked to make revisions. Because the VA didn’t have control of Williams’ bid—either initial or revised—at the submission deadline, the VA could not have properly considered it for the award. When you think about it, this rule makes sense. Otherwise, bidders might be incentivized to submit incomplete or inaccurate bids by the deadline, only to “revise” them to include more complete terms or pricing after opening. Agencies wouldn’t know which bids are valid and which aren’t, and the bid submission deadline would be rendered a nullity. This result would cause chaos in the bid opening process. So what’s a bidder to do if it wants to make changes to its bid? GAO’s decision suggests a few possibilities. Perhaps most obviously, the bidder should give itself enough time to make any revisions before the submission deadline. But if the bidder is cutting it close, it might consider exchanging its submitted bid for another instead of “pulling back” the submitted bid to make revisions. That way, the bid remains in the government’s control and will be considered for the award. Though the underlying rule requiring bids to be timely submitted is important, the real reason I wanted to write about this decision is the irony of Williams’ bid revision: its initial bid was about $4.8 million, and its revised bid was for a little more than $4.9 million. The awardee’s bid, however, was almost $5.4 million. In other words, Williams’ bid would have been the lowest price awardee either way. Its late revision cost it the contract award. The rule discussed in Williams Building Company is relatively straightforward; its application can have enormous consequences. In this case, a late bid revision cost the bidder an award. Bidders under a FAR Part 14 procurement should be aware of the submission deadline to timely submit their bid packages.
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Thank You, Michigan!

I am back in Lawrence after a great trip to Flint, Michigan on Friday for the Region 6 PTAC’s Meet the Buyer event.  My luncheon keynote covered some of the most important recent developments for government contractors, including the SAM “hack,” some major pieces of the 2018 National Defense Authorization Act, and much more. A big thank you to Jasmine McKenney, Maureen Miller and their colleagues for inviting me to speak.  And thank you, as well, to everyone I met at the event–particularly those who stuck around after the keynote to ask such great questions. Next up on the travel agenda: a flight south to Houston, where I’ll be presenting next week at the 17th Annual DOE Small Business Forum & Expo.  Hope to see you there!
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VA Suspends SDVOSB/VOSB Applications Effective May 21

On May 21, 2018, the VA will suspend SDVOSB and VOSB applications for “approximately thirty (30)” days while the VA transitions to a new VIP interface. According to a notice posted on the VA OSDBU website, the suspension will affect “both new applications and applications for re-verification.”  However, the VA CVE “will continue processing previously submitted applications during the suspension.”  The VA doesn’t beat around the bush: “any applicants (Veterans) that desire to have their cases begin the verification process before the suspension start date, should strongly consider case submission completion to VIP prior to May 21, 2018.” The temporary suspension will draw the headlines–as it does in this post.  But the good new is that the updated system sounds like it will allow for a more user-friendly experience.  According to the VA’s notice, the updated system will allow for easier uploads, automatic validation of SAM profiles and DUNS numbers, and other features designed to make it easier for veterans and their representatives to use.  Fingers crossed that will be the case. In the meantime, SDVOSBs and VOSBs should circle May 21 on their calendars.  If you’re planning on an SDVOSB or VOSB application, it’s not “now or never,” but it is “now or June.”
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