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Trump Won’t Repeal Obama’s Order Prohibiting Contractor LGBTQ Discrimination

President Donald Trump won’t repeal former President Obama’s 2014 Executive Order prohibiting federal contractors from discriminating on the basis of sexual orientation and gender identity. According to CNN and other news outlets, the new Administration will allow Executive Order 13672 to remain on the books.  The Executive Order, which was codified in the FAR in 2015, adds sexual orientation and gender identity to the list of protected categories under the FAR’s Equal Opportunity clause, FAR 52.222-26. In recent days, the new Administration had faced repeated questions about whether Executive Order 13672 would remain in place.  While this week’s announcement puts those questions to rest, the fate of other government contracts Executive Orders signed by President Obama, such as the so-called “mandatory sick leave” Executive Order, remains uncertain.  My colleagues and I will keep you posted.
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Koprince Law LLC

Koprince Law LLC

 

SmallGovCon Weeks in Review: April 9 – 20, 2018

I was enjoying a day off last Friday, so we have a lot of catching up to do on government contracting news and notes.  It’s time for a special two-week super-sized edition of the SmallGovCon Week in Review. In this edition, the GAO looks at NASA’s investigations of contractor whistleblowing complaints, the SBA announces nine new Women’s Business Centers, the Coast Guard sinks $60 million into an electronic health record system procurement with nothing to show for it,  70,000 contractors must provide notarized letters in the wake of a “SAM scam” and much more. NASA contractor employees are legally protected for whistleblowing, but is the agency timely investigating reprisal complaints? [www.gao.gov] The SBA announced the addition of nine new Women’s Business Centers to help women entrepreneurs. [parsippanyfocus.com]  (Great news, but when is that elusive WOSB certification program coming?  Anyone?  Anyone?  Bueller?) The Coast Guard will adopt the same commercial Electronic Health Records system as DoD. [fcw.com] HUD invites comments on a proposed rule to amend HUD Acquisition Regulation. [federalregister.gov] The owner of transportation company that contracted with State Department sentenced to 14 months for stealing federal funds. [justice.gov] After a “SAM scam” resulted in some contractors’ bank information being changed, 70,000 contractors must get notarized letters to continue working for the government. [federalnewsradio.com] The DOJ has announced nine companies as the apparent winners of the SDVOSB track of the major ITSS-5 contract. [washingtontechnology.com] The owner of a private school has pleaded guilty in a VA bribery and kickback scheme. [justice.gov] In a final rule, VA amends six VAAR clauses and removes one duplicate clause. [federalregister.gov] SDVOSB and SDB fraud: three defendants have pleaded guilty to a long-term scheme. [justice.gov] NAICS is just part of it: Guy Timberlake breaks down how the government uses PSC codes–and why it matters to contractors. [govconchannel.com] One commentator offers tops on how contractors can take proactive steps now to benefit from $1.2 trillion fiscal 2018 funding package. [washingtontechnology.com] The Chairman of the House Armed Services Committee is pushing to implement many of the Section 809 Panel’s acquisition reform recommendations. [Federal News Radio]
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Past Performance: Does Duration Matter?

Past performance evaluations normally consider two aspects of an offeror’s prior work: whether that performance was recent and relevant. But in making its best value determination, must an agency also consider the duration of an offeror’s past performance? A recent GAO bid protest decision answered this question, at least under the rules established in the solicitation at hand. In Technica LLC, B-413546.4 et al. (July 10, 2017), GAO denied a protest challenging the sufficiency of an awardee’s past performance even though the awardee’s past performance was much shorter than the protester’s. At issue in the protest was a solicitation seeking logistics support services at the United States Military Academy at West Point from holders of the Enhanced Army Global Logistics Enterprise (EAGLE) basic ordering agreement. The Army would award a task order to the lowest-price offeror whose proposal was technically acceptable and whose past performance instilled substantial confidence. The Army originally awarded the order to Technica, for almost $47 million. Akima Support Operations, LLC—whose total evaluated price was about $1.5 million less than Technica’s—protested the award, asserting that the Army erred by not considering Akima’s work under a task order at Fort Carson, Colorado in its past performance evaluation. The Army took corrective action in response to Akima’s protest. After re-evaluating Akima’s proposal (and considering its work at Fort Carson), the Army assigned it a substantial confidence past performance rating and awarded it the contract. Technica then filed its own protest, saying that the Army’s consideration of Akima’s Fort Carson work was unreasonable. It based this argument on the relatively short duration of that contract—Akima had been performing at Fort Carson for less than one year at the time it was awarded the West Point task order. According to Technica, this short duration meant that the Army should have given less weight to Akima’s work at Fort Carson. GAO disagreed. In doing so, it noted that an agency has the discretion to consider the relevance and scope of an offeror’s past performance and, “[a]bsent a relevant solicitation provision, there is no minimum duration requirement that an offeror’s past performance reference must meet before performance of that requirement may be considered in the agency’s past performance evaluation.” Here, the GAO noted that “the RFP advised offerors that the past performance evaluation could consider the recency, relevancy, source, and context of the past performance information that the government evaluates,” and that the Army reserved the right to even consider information about past performance that occurred after proposals were due. “As such,” the GAO concluded, “the RFP contained no minimum duration requirement for an offeror’s past performance.” Under this backdrop, GAO found the Army’s past performance evaluation to be reasonable. As required by the solicitation, the Army considered a past performance questionnaire for the Fort Carson project that rated Akima’s performance as very good. Moreover, the Army noted that Akima had completed deadlines sooner than required, “executed the schedule flawlessly, taken on additional work,” and performed in a manner that “reduced the government’s costs.” Based on this feedback, the Army properly assigned Akima’s past performance a substantial confidence rating. The GAO denied Technica’s protest. The Technica decision is interesting: in some cases, it means that an offeror with relatively little past performance (say, one or two projects of short duration) might be evaluated as instilling more confidence than an established contractor. Experienced and inexperienced contractors alike should keep this decision in mind when preparing their past performance proposals.
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Koprince Law LLC

Koprince Law LLC

 

SmallGovCon Week in Review: November 6-10, 2017

Happy Veterans Day to all our SmallGovCon readers. We hope that you will take some time today and tomorrow to honor the strength, loyalty and commitment that our brave veterans dedicated to this country. Veterans, we are deeply grateful for your service. This edition of SmallGovCon Week In Review brings a look at six large companies with a high reliance on government contracts, the “Amazon Amendment” and how Amazon is looking to expand it’s operations through government procurement, the removal of Fair Pay and Safe Workplaces Rule, tips for WOSBs to succeed in the federal marketplace, and much more. In a $3.7 trillion federal government budget, there are going to be a lot of companies doing well–here are the top six. [The Motley Fool] Forbes offers tips for female business owners who are frustrated by the lack of opportunities and showcases the huge opportunity for women to get a piece of the set-aside contracts for women-owned businesses. [Forbes] Amazon has an opportunity to dramatically expand its hold on the logistics space as it tries to capture $53 billion in defense procurement. [Freight Waves] An alleged kickback and bribery scheme that went on for six years before being discovered has led to a Government contracting officer and his contractor facing a heap of trouble. [PNWC’s Government Contracting Update] Federal contractors will not face requirements aimed at protecting employees from wage and unsafe working conditions under rule the Trump administration finalized on Monday. [Government Executive] Effective November 6, 2017, the FAR Council finalized a final rule amending the Federal Acquisition Regulation for the removal of the Fair Pay and Safe Workplaces requirements. [Federal Register] At least 125 companies were discovered to owe the federal government a total of $40,633,951 in unpaid taxes while still receiving federal contract awards totaling more than $134 million. [Live 5 News] A jury deadlocked in a case against two men accused of SDVOSB fraud. [Arkansas Online] An elaborate scheme between a former Army official and a contractor has led to an 18 month sentence and forfeiture of over a quarter of a million dollars. [Department of Justice] A look at what did, and did not, make it through the conference version of the 2018 National Defense Authorization Act. [Nextgov]
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Koprince Law LLC

Koprince Law LLC

 

GAO: Agency Shouldn’t Have Allowed Bid Correction

When a contractor submits a sealed bid that includes a mistake, the contractor may be allowed to correct its bid, if there must be clear evidence of the error on the face of the bid. According to a recent GAO decision, however, absent clear evidence, it is unreasonable for an agency to allow a bid correction. Herman Construction Group, Inc., B-415480 (Jan. 5, 2018) involved a construction procurement for renovation and expansion at the Department of Veterans Affairs Palo Alto Health Care System Campus. Five bidders responded to the IFB, including Herman and Talion Construction, LLC. After the bid period closed, the VA announced that Talion Construction, LLC had submitted the lowest bid and been selected for award. Talion’s bid price was $6,635,332. Herman Construction Group, Inc. submitted the second-lowest bid: $7,820,508. After award, Talion contacted the agency and explained it had made a mistake in its bid regarding the cost of drywall installation. Talion asked to revise its bid price to $7,771,658–still the lowest bid, but more than $1 million higher than the awarded bid price. According to Talion, it had used $500,000 as a placeholder for its bid while waiting for a bid from its anticipated subcontractor. The day before bids were due, Talion’s drywall subcontractor faxed its bid of $1,498,770 to Talion for incorporation into the proposal. According to Talion, this number was not included because Talion typically utilizes subcontractor bids made on the day of proposal submission and had failed to include the drywall subcontractor’s bid price in Talion’s final bid. To support its contentions, Talion provided the agency with a copy of the fax it received from its subcontractor the day before bids were due. Talion also provide the agency with both its original and “corrected” bid worksheets. The original bid worksheet retained the $500,000 placeholder whereas the corrected worksheet utilized the $1,498,770 number. Notably, both worksheets still named Talion as the drywall contractor, not the subcontractor. Based on the evidence provided, the agency allowed Talion to correct its bid. Even with the correction, Talion was still the lowest priced bidder and named the awardee. The second place offeror, Herman, subsequently filed a bid protest. While Herman raised multiple allegations regarding the VA’s award to Talion, GAO focused only on the allegation that Talion was unreasonably given the opportunity to correct its bid. In the unique context of sealed bidding, FAR 14.407-3(a) affords agencies the discretion to allow an offeror to correct its bid after the bid submission deadline, provided the correction will only increase the bid, and “clear and convincing evidence establishes both the existence of the mistake and [what] the bid actually intended[.]” For its part, GAO will review all of the evidence used to establish the existence of an error, and “will not question an agency’s decision based on this evidence unless it lacks a reasonable basis.” GAO was not convinced such clear and convincing evidence existed here. While Talion may have known the $500,000 place holder in its bid was an error, GAO wrote “there is nothing irregular about the entry for drywall installation that would lead one to believe that a mistake had been made.” Consequently, there was nothing in the original bid to tip the agency off that there was something amiss with Talion’s bid, particularly since Talion’s bid listed Talion, not its alleged subcontractor, as the drywall installation contractor. Accordingly, GAO considered Talion’s explanation of its internal procedures to be “uncorroborated and self-serving, as well as not offering clear and convincing proof of a mistake, because the explanation has no connection to the worksheet other than the amount of the mistaken value.” Turning its attention to the agency, GAO concluded clear and convincing evidence of a mistake did not exist. Therefore, “the agency improperly permitted Talion to correct the mistake in its bid.” GAO recommended the agency cancel its current award to Talion and either re-award to Talion at its original price, or make award to Herman. GAO’s decision in Herman Construction highlights the importance of accuracy in sealed bidding. Taking Talion at its word, Talion’s internal procedures resulted in Talion submitting an incorrect bid that appeared complete. Self-serving or not, Talion’s statements about its procedures were not enough to constitute “clear and convincing” evidence of a bid mistake in the eyes of GAO. Having made a mistaken bid, Talion was stuck with it.
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GAO’s Electronic Filing System: First Impressions

SmallGovCon readers may recall that, in 2016, the Government Accountability Office proposed an electronic filing system for bid protests. GAO released a pilot version of its new system earlier this year, and Koprince Law LLC has had the opportunity to test it on several occasions through our bid protest work. Here are some first impressions on GAO’s Electronic Protest Docketing System. EPDS is very functional and easy to use. If you’ve ever clicked a link, selected an option from a drop-down menu, and uploaded a document to a website, you’d have no problems using the system. But even if you did run into trouble, GAO has published a comprehensive user guide and videos that thoroughly explain how to use the system. Upon logging in, the user’s dashboard displays a list of each protest it has pending before GAO. This list provides basic information about the protest—GAO’s docket number (or “B-number”), identification of the protester and agency, filing date, next due date, and case status. From this page, users can also file a new protest (once that feature is active upon EPDS’s formal roll-out) or intervene in a protest that’s currently pending. Users can drill-down into each individual protest to view even more detailed information, like the solicitation number, whether there is an intervenor or if the protest is consolidated, the protester’s size status, and the identification of the GAO attorney considering the protest. Links to filed documents also appear on this page: if allowed access by GAO, users can view the protest, agency report, comments, and any other filings made. It’s from this page that users can also file documents—a pretty simple process of selecting the type of filing from a drop-down menu, then attaching a PDF document. Registered users are notified of each filing via an instantaneous email and can access filed documents right away. Overall, we are very impressed with EPDS. But there are a couple tweaks that could make the system even more useful: A messaging function. We don’t mean an instant messaging function [does anybody miss AIM?], but instead an email-esque function where parties can discuss routine matters with GAO. For example, we recently needed to request access to a document following our admission to a protective order; rather than simply sending a message within EPDS, we had to prepare and upload a letter. GAO responded immediately, but sending an internal email would have been more efficient. EPDS does have a “no objection” button, which allows users to, for example, easily state that they have no objection to a protective order application. But a broader, simple messaging function would be useful for other quick communications. Indefinite storage of protest documents. Before EPDS, it was up to the parties how they would store bid protest documents. And under the pilot program, it still is. But could a party use EPDS as its primary document storage system? This could be a great convenience for bid protest attorneys, especially if certain documents will remain accessible on EPDS even after a protest is closed. That said, we would caution against any requirement that litigants only store documents within EPDS—even in 2018, there will still be occasions where an attorney or pro se protester will need access to protest documents offline. These issues don’t detract from EPDS’s functionality or its ease of use. GAO has obviously paid significant attention to developing an easy-to-use system. As EPDS is rolled-out, we expect it will be proven a tremendous leap forward for the GAO bid protest process.
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SmallGovCon Week In Review: September 18-22, 2017

Greetings from Omaha, where I’ve just wrapped up a great half-day training session sponsored by the Nebraska PTAC.  If you haven’t been to Omaha, you’re missing out: I’m enjoying exploring the Old Market District, and keep wondering when I’ll run into Warren Buffett. Of course, I’m not about to let a little road trip get in the way of our weekly roundup of government contracts news. In this edition of the SmallGovCon Week In Review, we have an update on an SDVOSB fraud case that we have been following for awhile, a push to close loopholes in the Buy American Act, some promising changes for the SBA Surety Bond Guarantee program, and more. After jurors became deadlocked, a retrial was scheduled in the case of an Arkansas businessman accused of falsely claiming to operate a SDVOSB. [Arkansas Online] Senator Chris Murphy is pushing hard to change federal rules regarding the government buying products from American companies, trying to close loopholes in the Buy American Act.  [New Haven Register] FEMA is seeking contractors to provide meals in the wake of Hurricane Maria, and will begin awarding contracts as soon as possible. [Markets Insider] Congressman Will Hurd is one step closer to making his dream of overhauling federal government information technology procurement a reality. [San Antonio Business Journal] The SBA is considering granting a request for a class waiver of the Nonmanufacturer Rule for Positive Airway Pressure Devices and Supplies Manufacturing. [Federal Register] The SBA has finalized two important changes to its Surety Bond Guarantee Program that will increase contract opportunities for small construction contractors. [SBA]
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Koprince Law LLC

Koprince Law LLC

 

SBA Proposes Consolidated SDVOSB Eligibility Rules

The SBA has released its proposed consolidated rule for SDVOSB eligibility, which was published in the Federal Register today.  Once the rule becomes final, it will apply government-wide, to both VA and non-VA SDVOSB contracts. For SDVOSBs, a uniform set of rules is a very good thing.  There has been far too much chaos and confusion under the current system, in which the SBA and VA have different SDVOSB eligibility requirements.  But how about the substance of the proposal itself?  Well, there are certainly some things to like–and some areas that could use improvement. As SmallGovCon readers will recall, the 2017 National Defense Authorization Act directed the SBA and VA to work together on a consolidated SDVOSB eligibility rule, with the SBA taking the lead in the effort.  As a result, the SBA’s proposal incorporates some pieces of the existing VA SDVOSB ownership and control rules.  The SBA also includes some entirely new provisions, such as an exception to the ordinary control requirements in a handful of “extraordinary” circumstances. Here are some of the highlights (and a few lowlights) of the proposal. Unconditional Ownership The proposed rule would update 13 C.F.R. 125.12 to provide additional guidance about how an SDVOSB must be owned.  Unsurprisingly, the rule retains the general requirement that an SDVOSB be “unconditionally and directly owned by one or more service-disabled veterans.” The proposed rule provides an exception for surviving spouses, but only in very limited circumstances: for a surviving spouse to qualify as an SDVOSB owner, the veteran must have either had a 100 percent service-connected disability, or have died as a result of the service-connected disability. The proposed rule also includes an exception for employee stock ownership plans, or ESOPs.  Unfortunately, however, the proposed exception is essentially worthless: it says that “n the case of a publicly traded business,” stock owned by an ESOP need not be 51% owned by veterans.  But when was the last time you saw a publicly traded SDVOSB?  The next time I run across one of those will be the first.  For everyone else, there’s still no exception for ESOPs, which is unfortunate.  In my view, service-disabled veterans ought to have the flexibility to offer ordinary ESOPs to their employees. The proposed rule adds a requirement that service-disabled veterans receive at least 51 percent of the profits of a corporation, partnership, or LLC.  Additionally, a service-disabled veteran’s ability to share in the profits “must be commensurate with the extent of his/her ownership interest in that concern.”  For example, if a service-disabled veteran owns 75% of an SDVOSB, he or she must receive 75% of the profits.  These profit-sharing requirements aren’t part of the SBA’s current SDVOSB rules, but have been incorporated essentially word-for-word from the VA’s regulations. The proposed rule also provides that service-disabled veterans must receive “100 percent of the value of each share of stock owned by them in the event that the stock or member interest is sold,” and “[a]t least 51 percent of the retained earnings of the concern and 100 percent of the unencumbered value of each share of stock or member interest owned in the event of dissolution of the corporation, partnership, or limited liability company.”  Again, these requirements aren’t found in the current SBA SDVOSB regulations, but have long been a part of the VA’s rules. Unconditional Control The proposed rule retains the requirement in 13 C.F.R. 125.13 that, for a company to qualify as an SDVOSB, “the management and daily business operations of the concern must be controlled by one or more service-disabled veterans.”  However, “in the case of a veteran with a permanent and severe disability, the spouse or permanent caregiver of such veteran” may control the company. I’m not a fan of the “spouse or permanent caregiver” provision.  No, not because I don’t think that veterans with permanent and severe disabilities ought to be able to delegate day-to-day control–to me, that’s fair.  My concern is that the SBA’s rule would continue to provide that the caregiver must “have managerial experience of the extent and complexity needed to run the concern.” Now how likely is it that the typical spouse or appointed permanent caregiver has that experience–much less the time and interest, when the caregiver is busy providing for the needs of a severely disabled veteran?  I’ll let Mr. Jerry Seinfeld answer that one.  In my view, it would be better to allow the veteran to designate a experienced non-caregiver manager, provided that the designated person satisfied certain reasonable criteria (e.g., no conflicts of interest).  This would ensure that the company is run by someone who knows what he or she is doing, and allow the caregiver to devote full attention to the disabled veteran, instead of spending his or her time trying to run a business. Unlike the current rule, the proposed rule would define “daily business operations.”  The proposed definition states that those operations “include, but are not limited to, the marketing, production, sales, and administrative functions of the firm, as well as the supervision of the executive team, the implementation of policies and the setting of the strategic direction of the firm.”  This one’s slightly odd: I think of “setting the strategic direction of the firm” as big-picture management, not a day-to-day operation.  Regardless, though, the added definition should provide some additional insight as to what the SBA wants to see when it comes to control. The SBA has provided some additional guidance about when service-disabled veterans will be deemed to control a company’s Board of Directors.  This language is largely borrowed from the 8(a) and VA regulations, and I don’t have any particular concerns about it. The proposed regulation includes another odd provision regarding super majority voting: it states that “[o]ne or more service-disabled veterans must meet all super majority voting requirements.”  That’s not the odd part, although it seems inconsistent with the limited “extraordinary decisions” language I’ll discuss momentarily.  The odd part is the requirement that “an applicant must inform the Department of Veterans Affairs, when applicable, of any super majority voting requirements provided for” in its governing documents. As I read it, this means that VA CVE applicants would have to highlight super majority voting requirements in their governing documents.  Does this mean that the SBA doesn’t trust the VA to find these during its document review?  And why should the veterans have to identify any requirements that they satisfy?  For instance, if a veteran owns 75% of a company, then a 66% super majority voting requirement shouldn’t be problematic, should it? The SBA’s proposed rule adopts some current VA regulations regarding situations where non-veterans may be found to control a company.  For instance, the SBA adopts the VA’s position that the service-disabled veteran generally must be the highest-compensated in the company.  But the SBA proposal provides additional examples of things that may constitute impermissible control.  SBA’s proposal says, for example, that impermissible control may exist “in circumstances where the concern is co-located with another firm in the same or similar line of business, and that firm or an owner, director, officer, or manager, or a direct relative of an owner, director, officer or manager of that firm owns an equity interest in the firm.” The SBA also proposes to adopt a “rebuttable presumption that a service-disabled veteran does not control the firm when the service-disabled veteran is not able to work for the firm during the normal working hours that firms in that industry normally work.”  In its comments, SBA says that “[t]his is not a full time devotion requirement” and that a veteran can rebut the presumption by “providing evidence of control.”  The SBA doesn’t explain what sort of evidence it will accept, however. The SBA also proposes a problematic new “close proximity” requirement.  This one says: There is rebuttable presumption that a service-disabled veteran does not control the firm if that individual is not located within a reasonable commute to firm’s headquarters and/or job-site locations, regardless of the firm’s industry. The service-disabled veteran’s ability to answer emails, communicate by telephone, or to communicate at a distance by other technological means, while delegating the responsibility of managing the concern to others is not by itself a reasonable rebuttal. I don’t like this one.  Granted, it’s just a rebuttable presumption–not conclusive ineligibility–but as the world moves more and more in the direction of telecommuting, it’s unfortunate that the SBA views physical location as so important, “regardless of industry.”  Also, the “and/or” in the proposed language doesn’t make any sense.  Does the veteran have to be close to headquarters, job sites, or both?  If both, how is that possible for a company that bids regionally or nationally, and has job sites spread across the country? Finally, the SBA says that it won’t find a lack of control “where a service-disabled veteran does not have the unilateral power and authority to make decisions in ‘extraordinary circumstances.'”  But only five actions would count as extraordinary: (1) adding a new equity stakeholder; (2) dissolution of the company; (3) sale of the company; (4) merger of the company; or (5) declaring bankruptcy.  Non-veteran owners could have veto power over these five actions, but nothing more. I’m glad that the SBA is recognizing that complete, unfettered unconditional control actually harms service-disabled veterans by scaring away potential investors.  But I think this list is too narrow, and misses some fundamental items that the SBA Office of Hearings and Appeals has identified in its size and affiliation cases.  These include such things as issuing new shares of stock (which could dilute the interests of minority members, even without adding a new owner), selling all the firms assets, increasing or decreasing the size of the Board of Directors, and selling or disposing of all of the firm’s assets.  I hope the SBA will look at broadening this list to better enable service-disabled veterans to attract qualified investors. Next Steps Keep in mind that for now, this is just a proposal, not a law.  The SBA is accepting public comments on the proposal on or before March 30, 2018.  To comment, go to the Federal Register and follow the instructions.
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SBA OHA Provides Clarity on the Nonmanufacturer Rule

To be eligible for a small business set-aside procurement seeking a manufactured product, an offeror has to either be the product’s manufacturer or otherwise qualify under the nonmanufacturer rule. Determining whether a business qualifies—either as the manufacturer or nonmanufacturer—can be a fact-intensive and confusing task. But it’s a vitally important one, as the penalty for not qualifying can be the loss of an awarded contract. Recently, however, the SBA Office of Hearings and Appeals provided important clarity on how a small business might qualify as a nonmanufacturer. Let’s take a look. Under SBA’s regulations, a firm may qualify as a nonmanufacturer if it meets four criteria: The business does not exceed 500 employees; It is primarily engaged in the retail or wholesale trade and normally sells the type of item being supplied; The business takes ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice; and The business will supply the end item of a small business manufacturer, processor, or producer made in the United States (or gets a waiver of this requirement). 13 C.F.R. § 121.406(b)(1). Recently, the OHA considered what it takes to comply with the second of these requirements, when it considered a small business protest alleging the awardee did not normally sell the items procured by the government. At issue in SeaBox, Inc., SBA No. SIZ-5881 (2018) was a Marine Corps procurement seeking ISO dry and refrigerated cargo containers. The solicitation was issued as a total small business set-aside, under a manufacturing NAICS code (specifically, code 332439, for Other Metal Container Manufacturing). After QAF Technologies, Inc. was awarded the contract, SeaBox filed a protest alleging that QAF didn’t normally sell the type of items being procured. SeaBox’s argument was somewhat interesting—though SeaBox acknowledged that QAF sold similar items to the federal government, it said that federal government sales were not sales in “the retail or wholesale trade,” as required under the second nonmanufacturer rule criterion. This argument was rejected by the SBA Area Office, and SeaBox filed an appeal alleging the same at the OHA. But it wasn’t successful at OHA, either. After considering the regulatory history, the OHA concluded that federal government sales qualify as sales within the retail or wholesale trade. What’s more, the regulation doesn’t require a company to sell the exact items procured, but only the type of item being procured. Thus, QAF’s past sales of similar items to the federal government were sufficient to meet the second criterion to the nonmanufacturer rule. The OHA denied SeaBox’s appeal and affirmed that QAF was an eligible small business under the procurement based on its compliance with the nonmanufacturer rule. As mentioned, complying with the manufacturer rule or nonmanufacturer rule is a prerequisite for a small business’s eligibility for a small business set-aside under a manufacturing NAICS code. For help determining if you comply, give me a call.
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Koprince Law LLC

Koprince Law LLC

 

SmallGovCon Week In Review: March 12-16, 2018

This is a month my office (which represents several different teams) gets excited for. The first week of March Madness is here, which means you may have found yourself being less productive than usual–don’t worry, that’s expected! But even during a time as captivating as the NCAA tournament, the world of government contracting doesn’t slow down. In this week’s edition of the SmallGovCon Week in Review, a communications company has agreed to pay over $12 million to settle civil False Claims Act allegations, antitrust critics fear that a winner-take-all contract for the Defense Department’s cloud computing could help tech giant Amazon corner the government contract market, a construction company lost $40 million in four years in a scheme to illegitimately gain government contracts, and much more. A San Diego communications company will pay more than $12 million to settle False Claims Act allegations regarding SBIR contracts. [www.justice.gov] Amazon’s attempt to land a major Pentagon job has stoked some antitrust fears. [thehill.com] A construction company owner fraudulently obtained set-aside contracts–but only gets probation. [post-gazette.com] During Sunshine Week, senators cite issues with FOIA request backlog. [Federal News Radio] Alliant 2 SB has been awarded–now comes the inevitable protest phase. [Washington Technology] The Pentagon tells its leaders to talk more with contractors–but less with the press. [Government Executive] One commentator says that the DoD’s cloud strategy stifles innovation. [Federal News Radio]
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Federal Circuit Affirms Sole-Source Justification

Not too many government contracting disputes make it to a federal court of appeals—the level just a step below the U.S. Supreme Court. The most notable recent examples would probably be the Federal Circuit’s decision in Kingdomware Technologies (which, as SmallGovCon readers know, was ultimately overturned by the Supreme Court in 2016) and the D.C. Circuit’s decision Rothe Development (which the Supreme Court declined to consider). But recently, the Federal Circuit issued a decision of note to government contractors. In AgustaWestland North America v. United States, the Court issued guidance on what constitutes a “procurement decision” and upheld the Army’s decision to buy helicopters on a sole-source basis. Let’s take a look. The facts of AgstaWestland date back to the Army’s 2005 decision to procure light utility helicopters by full and open competition. Airbus was ultimately awarded that contract in 2006 and, under it, the Army would purchase UH-72A Lakota helicopters. In 2012—four years before Airbus’s contract expired—the defense budget underwent dramatic reductions. As a result, the Army implemented Army Execution Order 109-14, which, among other things, retired the Army’s existing helicopter training platform and designated the UH72A Lakota (procured under Airbus’s then-ongoing contract) as its institutional training helicopter. To comply with the Order, the Army thought that it needed to increase its number of Lakota helicopters. It issued a sources sought notice in 2014 to explore its sole source options but ultimately decided to instead exercise Airbus’s remaining options (permitting the procurement of 412 helicopters). This left the Army 16 helicopters short of its total requirement; so, in late 2015, the Army issued a Justification & Approval to acquire these helicopters from Airbus on a sole-source basis. AgustaWestland was a disappointed bidder under the Army’s 2005 solicitation and filed a complaint in the Court of Federal Claims, challenging the Army’s sole-source decision here. The Court of Federal Claims granted AgustaWestland a preliminary injunction (preventing the Army from proceeding with the acquisition), from which the Army appealed. Ultimately, the Federal Circuit ruled in the Army’s favor and reversed the Court of Federal Claims. In doing so, it addressed a couple of questions important for government contractors to bear in mind: What is a “procurement?” This seems like a straightforward question, but it’s sometimes not. It’s important, too: under the Tucker Act, the Court of Federal Claims has jurisdiction to consider an alleged violation of a statute or regulation in connection with a procurement or proposed procurement. But the Act doesn’t actually define what a “procurement” is. But, applying the definition applied to the Office of Federal Public Policy, the Court noted that a “procurement” is “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion or closeout.” In other words, a “procurement” involves the initiation of the government’s process for determining the need for an acquisition all the way through contract closeout. Applying that definition, the Court found the Execution Order was not a procurement. It was instead a part of a restructuring initiative for existing Army assets; the Order did not direct or discuss the need to procure additional helicopters. On the other hand, the Army’s sole source acquisition of 16 helicopters from Airbus was a procurement decision. As a result, the Court of Federal Claims had jurisdiction under the Tucker Act to consider the propriety of the sole source decision. Was the sole-source decision properly supported? Under the FAR, a sole-source contract is permitted when it is a follow-on contract for the continued development or production of a major system or specialized equipment, and award to an alternative source would result in substantial duplication of costs or unacceptable delays in fulfilling the agency’s requirements. Applying this definition here, the Federal Circuit found it “irrelevant” that the sole-source award was a new contract to Airbus—all that mattered was that it was a contract for the continued development or production of a major system. Supporting the sole-source decision, the contracting officer found that Airbus was the only responsible source for the contract because it has exclusive ownership of all data rights required to produce, maintain, and modify the UH-72 Lakota. According to the Army, procuring a new helicopter from another source would result in significant duplication of costs and would unreasonably delay the Army’s ability to fill gaps in its helicopter fleet. The Federal Circuit found this rationale to be sufficient, meaning that the sole-source decision was neither arbitrary nor capricious. * * * At the end of the day, AgustaWestland’s nuanced legal principles will probably be more applicable to contracting officers (or government contracts attorneys) than contractors. But contractors considering a protest challenging a sole-source justification might nonetheless pay attention to the Court’s rationale. In any event, AgustaWestland is worth discussing given the relative infrequency of bid protest decisions from the Federal Circuit.
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“Using” an Affiliate’s Past Performance: GAO Explains the Test

Contrary to a common misconception, an offeror is not automatically entitled to “use” the past performance of parent companies, sister companies or other corporate affiliates. So when can an offeror rely on the past performance of an affiliate in submitting a proposal? A recent GAO opinion sheds some light on that question. Not meeting the GAO’s guidelines for describing the detailed involvement of the affiliate can have a harsh result—a sustained protest if award was made based on the affiliate’s past performance. In Language Select LLP, B-415097.2 (Nov 14, 2017), GAO considered the Social Security Administration’s issuance of a Federal Supply Schedule blanket purchase agreement to Cyracom International, Inc. for worldwide telephone interpreter services. The underlying Solicitation was based on best value, considering the factors of corporate experience (the most important factor), past performance, and evaluated price. Under corporate experience, vendors were to provide a “complete and full description” of three contracts demonstrating the firm’s relevant experience and how these contracts were “similar in size, scope, and complexity to the RFQ requirement.” Past performance ratings would be based on having each client from the three corporate experience contracts submit a completed past performance questionnaire form to SSA. SSA could contract the references and obtain past performance information from other sources. SSA would base its evaluation “‘in part’ by assessing the firm’s quality of service, its timeliness of performance, its management of personnel, and its business relations.” About a month before the evaluation was finalized, SSA contacted Cyracom for an explanation of the relationship between it and another entity (the name was redacted in the opinion but was referred to as Cyracom Affiliate), because Cyracom had listed the Cyracom Affiliate’s name on the past performance contracts.  Cyracom responded that Cyracom Affiliate was a wholly-owned subsidiary of Cyracom, that “its services are provided and managed by the parent company,” and that Cyracom “uses its divisions ‘[Cyracom Affiliate]’ and ‘CyraCom’ for marketing to different industries.” In evaluating the proposal of Language Select LLP, which was the incumbent contractor, SSA rated its corporate experience as “good.” For Language Select’s past performance, SSA reviewed FAPIIS/PPIRS information, past performance questionnaires, and SSA reports on incumbent performance. SSA identified one termination for cause from FEMA, and weighing this termination for cause against the multiple strengths, it assigned a “very good” rating for past performance. For Cyracom, SSA assigned a “satisfactory” rating for the corporate experience factor, taking into account the similarities of the contracts submitted in terms of scope and complexity. However, SSA found weaknesses because the contracts were smaller than SSA’s requirement. For Cyracom’s past performance, SSA noted that each prior contract was identified as performed by Cyracom Affiliate, rather than Cyracom. SSA noted that Cyracom Affiliate was a wholly-owned subsidiary of Cyracom and that its services were “provided and managed by the parent company.” There was one termination for cause in Cyracom’s past performance record, which the evaluation panel deemed a “minor problem.” The summary of the adjectival ratings and prices were; Language Select: Corporate Experience – Good, Past Performance – Very Good, Price $34.7 million. Cyracom: Corporate Experience – Satisfactory, Past Performance – Very Good, Price $29.9 million. Noting that the price difference of 13.65 percent outweighed the minimal risk of awarding to Cyracom, the contracting officer awarded the contract to Cyracom. Language Select protested the award, arguing that the SSA engaged in unequal discussions when it asked Cyracom for its relationship to the Cyracom Affiliate. SSA argued that the question to Cyracom was just a clarification, as it had already deduced that the Cyracom Affiliate was affiliated with Cyracom based on “the fact that CII’s quotation was printed on stationery that depicted an affiliation, and that information available online did also.”  GAO noted, with respect to affiliation, that GAO concluded that, when SSA sought an explanation of the role of the Cyracom Affiliate, it constituted discussions. Since Language Select did not receive an equivalent opportunity, SSA did not conduct discussions fairly and equally.  Language Select also challenged the reasonableness of SSA’s past performance and experience evaluation, arguing that it was improper for SSA to attribute the Cyracom Affiliate’s experience to Cyracom. SSA argued that it is sufficient that an affiliate “shares management with the offeror” or where “the parent company manages the entire corporate family.” GAO disagreed, noting that “[a]bsent a factual basis to conclude that the awardee had a commitment of resources from other separate corporate subsidiaries, we found the attribution of those affiliates’ past performance and experience to the awardee to be improper.” GAO held that the stationary and online information showing the affiliate relationship and the statement by Cyracom that the Cyracom Affiliate “was a wholly-owned subsidiary and that its services were ‘provided and managed by'” Cyracom was not enough to demonstrate the factual basis. This decision is important because it sets guidelines for evaluating past performance based on affiliates. Generally, in preparing a proposal that uses affiliate past performance, the offeror must clearly demonstrate the factual basis for how the affiliate will be involved in performance and how the affiliate will share resources with the offeror. Merely noting the affiliation between the offeror and the affiliate is not sufficient for use of an affiliate’s past performance.
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SmallGovCon Week In Review: June 27 – July 1, 2016

Happy (early) 4th of July! I hope you have something fun planned for this long weekend–and all the better if those plans include sunshine, fireworks, and plenty of BBQ. Before the holiday festivities begin, it’s time for our weekly dose of government contracting news and notes. This edition of SmallGovCon Week In Review includes articles about a DoD bribery scandal, the release of the solicitation for the major Alliant 2 IT contracts, a look a the top 100 rankings in federal IT spending and much more. Fourteen people have been charged in connection with a contracting scheme that involved the acceptance of bribes in the form of cash, travel expenses and the services of prostitutes in exchange for steering government contracts. [The United  States Department of Justice] Nearly a decade after a panel of experts recommended major changes to the way the government buys services, the General Services Administration is implementing two significant updates. [Federal News Radio] Vendors now have two months to read through the Alliant 2 Unrestricted and Alliant 2 Small Business RFPs and put together proposals for submission by the Aug. 29 deadline. [Federal Times] More Alliant 2: the biggest IT contract of the decade is about to hit the market with a total ceiling of $50 Billion. [The Daily Caller] New top 100 rankings reveal which firms earn the most from federal IT spending. [fedscoop] The Supreme Court’s Kingdomware decision could affect broader procurement regulations across government, according to the SBA. [Government Executive]
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SmallGovCon’s 1000th Post Is Coming Soon – Help Us Celebrate

When I started writing SmallGovCon back in 2012, I worried that there might not be enough happening in government contracts law to support a robust blog.  Needless to say, I’m not worried anymore. We’re rapidly approaching SmallGovCon‘s 1000th post (this one is No. 990).  To celebrate, we’re offering one lucky reader the chance to win a free webinar on the government contracting legal topic of your choice.  For details (and to enter) just click here. What do you like about SmallGovCon?  We want to hear from you!  Contact us and let us know, and check back here regularly in the coming weeks for much more on the SmallGovCon 1000th post celebration.
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Kingdomware Doesn’t Affect SBA Size Protest Timeliness, Says SBA OHA

The Supreme Court’s now-famous Kingdomware decision doesn’t affect the timeliness of SBA size protests of GSA Schedule orders. In a recent decision, the SBA Office of Hearings and Appeals rejected the notion–based in part on Kingdomware–that an GSA Schedule order is a “contract” for purposes of the SBA’s size protest timeliness rules.  Instead, OHA held, the SBA’s existing rules clearly distinguish between contracts and orders, and often effectively do not permit size protests of individual orders. OHA’s decision in Platinum Business Services, LLC, SBA No. SIZ-5800 (2017), involved a GSA request for quotations for transition ordering support assistance.  The RFQ was issued under the GSA Professional Services Schedule.  The GSA set aside the order for SDVOSBs under NAICS code 541611 (Administrative Management and General Consulting Services), with an associated $15 million size standard. After reviewing quotations, the GSA issued a  notice of award to Redhorse Corporation.  An unsuccessful competitor, Platinum Business Services, LLC, then filed a size protest, alleging that Redhorse was not small under the RFQ’s $15 million size standard. The SBA Area Office determined that, under 13 C.F.R. 121.1004, there are three times that a size protest may be timely filed in connection with a long-term contract, such as a GSA Schedule contract.  First, size can be protested when the long-term contract is initially awarded.  Second, size can be protested at the time an option is issued.  And third, size can be protested in response to a contracting officer’s request for size recertifications in connection with an individual order.  In each case, the size protest is due within five business days of the event in question (e.g., five business days after receiving notice of the award of the order, if recertification was requested). In this case, Redhorse was in its first option period under the PSS contract.  The option had been awarded long before the size protest had been filed.  The SBA Area Office inquired whether the GSA had asked offerors to recertify as small businesses in connection with the order; the GSA responded that no recertification had been required.  The SBA Area Office then dismissed the size protest as untimely. Platinum filed a size appeal with OHA.  Platinum argued, in part, that “a task order fits the definition of a contract,” citing Kingdomware.  Platinum contented that because the Supreme Court defined an order as a contract in Kingdomware, the SBA’s size regulations allowed it to file a size protest within five days of learning of the award of the “contract” in question, that is, the order awarded to Redhorse. OHA agreed that the SBA Area Office had correctly interpreted 13 C.F.R. 121.004.  OHA confirmed that the RFQ “does not include a specific request for recertification” and that “the CO expressly confirmed that she did not intend to request recertification.” Platinum’s “reliance on Kingdomware,” OHA continued, is “erroneous.”  OHA explained that Kingdomware “does nothing to disturb SBA’s regulatory scheme for establishing the times at which size protests may be placed against awards for long-term contracts.”  OHA denied Platinum’s appeal, and affirmed the dismissal of Platinum’s size protest. The impact of Kingdomware continues to be felt, and it is an open question whether the Supreme Court’s rationale might apply to the small business “rule of two.”  But unlike in Kingdomware–in which the statute in question simply discussed “contracts,”without defining that term–the SBA’s size protest timeliness rules clearly distinguish between orders and other types of contracts.  It remains to be seen how broadly Kingdomware will affect various aspects of the contracting landscape, but one question has been answered: the Supreme Court’s decision doesn’t impact the timeliness of size protests of GSA Schedule orders.
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Tax Extensions Don’t Impact Small Business Size, SBA OHA Confirms

Contrary to common misconception, a contractor’s small business status under a receipts-based size standard ordinarily is based on the contractor’s last three completed fiscal years–not the last three completed fiscal years for which the contractor has filed a tax return. In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that a contractor cannot change the relevant three-year period by delaying filing a tax return for the most recently completed fiscal year. OHA’s decision in Teracore, Inc., SBA No. SIZ-5830 (2017) involved the major DHS PACTS II solicitation for IT support services.  The solicitation was set aside for SDVOSBs and contemplated the award of numerous IDIQ contracts.  Functional Category 1, which pertained to program management and technical services, was assigned NAICS code 541611 (Administrative Management and General Management Consulting Services), with a corresponding $14 million size standard. On July 11, 2014, Teracore, Inc. submitted a proposal, self-certifying as an SDVOSB.  At that time, Teracore’s 2013 fiscal year had ended, but Teracore had not yet filed its 2013 tax return. In February 2017–about two-and-a-half years after Teracore submitted its proposal–the DHS announced that Teracore would be awarded a contract under Functional Category 1. Two competitors subsequently filed protests challenging Teracore’s size under the $14 million size standard. The SBA Area Office asked Teracore to produce its 2013 tax return, even though that tax return had not yet been filed on July 11, 2014.  The SBA Area Office then calculated Teracore’s size using Teracore’s 2011, 2012, and 2013 tax returns.  The SBA Area Office determined that Teracore exceeded the $14 million size standard, and was ineligible for award. Teracore filed a size appeal with OHA.  Teracore argued that the 2013 tax return was not available until October 2014, several months after Teracore self-certified as small for the PACTS II solicitation.  Teracore argued that the SBA Area Office should have calculated Teracore’s receipts using the company’s 2010, 2011, and 2012 tax returns. Under the SBA’s regulations at 13 C.F.R. 121.104(b)(1), “[a]nnual receipts of a concern that has been in business for three or more completed fiscal years means the total receipts of the concern over its most recently completed three fiscal years divided by three.”  Further, 13 C.F.R. 121.104(a)(2) specifies that where a company has not yet filed a tax return for a particular year, “SBA will calculate the concern’s annual receipts for that year using any other available information,” such as books of account, financial statements, or even “information contained in an affidavit by a person with knowledge of the facts.” In this case, OHA wrote that because Teracore self-certified as small in July 2014, “the proper period of measurement for computing [Teracore’s] receipts is from 2011 to 2013–‘the most recently completed three fiscal years’ immediately preceding self-certification.”  Although Teracore’s 2013 tax return had not yet been filed when Teracore submitted its proposal, “the unavailability of a tax return does not alter the period of measurement, but instead requires the consideration of ‘other available information.'” Of course, by the time the SBA evaluated Teracore’s size in 2017, Teracore had filed its 2013 tax return.  OHA held that it was appropriate for the SBA Area Office to consider the tax return, even though it had been filed after the July 2014 self-certification.  “At a minimum,” OHA wrote, “the Area Office could properly consider a tax return filed after the date of self-certification to be ‘other available information’ which can be used to calculate size.” OHA denied Teracore’s size appeal, and affirmed the SBA Area Office’s size determination. In my experience, contractors who are approaching a size standard ceiling often think–like Teracore–that they can affect the relevant three-year period by delaying filing a tax return.  Nope.  As the Teracore size appeal demonstrates, the SBA doesn’t decide which three-year period to use based on whether tax returns have been filed, but rather based on whether the fiscal year has been completed.
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In Memoriam: APTAC’s Becky Peterson

Small government contractors lost an important ally last week–and many of us lost a great friend. Becky Peterson, the longtime Interim Executive Director of the Association of Procurement Technical Centers, passed away on Thursday.  Her legacy lives on in the amazing network of PTACs across the country. I first met Becky a number of years ago, when she and the APTAC leadership team took a chance, and invited a little-known government contracts associate to give a breakout session at the APTAC national conference.  Many conferences later, Becky’s amazing blend of professionalism and kindness always stood out.  “You’re family here,” she would tell me, giving me a hug.  Then she’d pivot into a nuanced issue affecting small contractors, discussing how her PTAC counselors could best make a difference. Becky strongly believed in the mission of PTACs: to provide government contractors (mostly small businesses) with individualized counseling services, training and assistance in pursuing, winning and successfully performing government contracts.  Working with a network of nearly 650 procurement counselors nationwide, Becky sought to arm her team with the information they needed to best counsel their clients.  But more than that: she and the APTAC leadership team always emphasized the importance of ethics and compliance, helping make sure that PTAC clients were counseled on much more than just the nuts and bolts of the contracting process. She fought hard for her organization, working to raise its profile on Capitol Hill and ensure that it continues to receive much-needed political support (and funding).  And she didn’t stop fighting: just a few weeks ago, even while she battled illness, she was in Oklahoma helping organize the Indian Country Business Summit.  I am heartbroken to know that was the last time I’ll see her. You shouldn’t feel bad if you didn’t know Becky’s name.  She wasn’t one to seek the spotlight for herself.  Her focus was on PTACs, and all the wonderful things they do for contractors around the country.  In fact, if she could read this post, she’d probably say something like, “that’s very sweet, but enough about me–please remind your readers of the free PTAC counseling they can get right in their own backyards.” If you haven’t connected with your PTAC, there’s no time like now.  Visit the APTAC website to find your local PTAC and schedule an appointment.  I think you’ll be impressed with the organization Becky helped build and run. Those of us who knew Becky will miss her dearly.  And those who didn’t will feel the positive effects of her hard work for years to come.
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FAR & DFARS Have 27 Distinct Definitions of “Subcontract”

The FAR and DFARS have 27 distinct definitions of the term “subcontract,” according to an acquisition reform panel. In its first report, the Section 809 Panel urges policymakers to adopt a consolidated definition of the term “subcontract,” as well as a common definition of “subcontractor,” a term that has 21 distinct definitions in the FAR and DFARS. The Section 809 Panel was established by Congress in the 2016 National Defense Authorization Act, and tasked with recommending ways to streamline and improve the defense acquisition process.  The Panel intends to release a three-volume series of reports on ways to potentially improve and reform DoD acquisitions.  The Panel released its first report on January 31. The 642-page report is chock full of interesting information–including the fact that DoD small business contract awards have dropped sharply since FY 2011, something I wrote about earlier this week.  But the report also includes some other important nuggets that may fly under the radar, such as the need for common definitions of what it means to be a subcontractor or award a subcontract. The Panel writes that “[t]he FAR currently defines the term contract, an important term widely used throughout the FAR and DFARS.”  However, “neither the FAR nor DFARS defines the term subcontract, another term used throughout the FAR and DFARS.”  Similarly, the term “subcontractor” is used frequently, but does not have a common definition. The Panel says that both terms have “numerous definitions” under current regulations: A search of the FAR and DFARS produced 27 distinct definitions of the term subcontract.  Seventeen of these definitions were essentially the same with only minor differences.  The other 10 were unique one way or another, but shared many of the same common elements. *** The FAR and DFARS search also produced 21 distinct definitions of subcontractor.  Most of these definitions shared common elements that could be conducive to drafting a single, common definition.  Several had a unique element that would require an accommodation.  The Panel recommends adopting common definitions of the terms “subcontract” and “subcontractor,” and provides suggested definitions that could be adopted. The Panel’s discussion of this terminology is a very minor part of a very large report.  But it struck a chord with me, because clients have asked me many times whether a particular arrangement constitutes a “subcontract” or whether a particular company qualifies as a “subcontractor.” It drives me absolutely batty (yes, that’s official legal terminology), that I have to respond “it depends.”  And, as a policy matter, it makes little sense to treat an agreement as a subcontract in certain contexts, but as something else in others.  A set of rules that defines the same terms more than 20 different ways is the sort of unnecessary complexity that discourages companies–particularly small businesses–from participating in government contracts in the first place. The Section 809 Panel’s report will come under intense scrutiny, and some of its recommendations will likely garner significant push back from various segments of the government contracting community.  But I hope that pretty much everyone can get behind the need for common definitions of important terms like “subcontract” and “subcontractor.”
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GovCon Voices: A Culture of Compliance

When we talk about the federal contracting industry, one of the first things that comes to mind is compliance.  We are an overly regulated industry with a ton of laws to abide by, FAR changes to keep up with, legislation of which we need to stay on top.  None of it is particularly easy or straightforward, and it sometimes takes experts to keep your organization in compliance.  In short, no one can claim they are 100% compliant, nor can they claim to know everything with regards to this industry, especially a GovCon CEO.  That’s the bad news. The good news is that no one expects this of the CEO.  However, your attitude towards compliance goes a long way within the organization.  The example you set at the top will filter throughout the organization and will go a long way towards establishing and maintaining a company culture that follows the rules of this industry.  We all talk about making sure that the company is not on the front page of the Washington Post for getting into hot water with the law or for debarment. How can you contribute to that as a CEO?
How can you build your organization to take it seriously?
How do you keep from bogging down the wheels of progress and allow the mission goals for you and your clients to be met? Lead by example.  It sounds so easy, is in every leadership book, and is touted on every trending article on LinkedIn.  But ask yourself, who fills out your timesheet?  Do you throw 8 hours of your time into G&A and call it a day?  Do you have your admin fill out your timesheet?  Do you approve your direct reports?  Every GovCon has a timekeeping system that requires daily input and ultimately, signature submission and approval of direct reports time. Do you travel according to JTRs and/or within the per diem rates?  Do you expect your folks to abide accordingly?  As a GovCon, you just don’t travel extravagantly. Ever. Put your Money where your Mouth is.  How many emails from the Timekeeping Goon have you received?  Do you ever take the time to find out who the repeat offenders are and to speak with them about these transgressions?  Ever told your top sales person that they could have their pay docked or lose their jobs if they continue to be non-compliant?  It’s that type of discussion (and action) that shows that the company values compliance and takes it seriously. Have you had your HR folks scrub through your labor categories and the folks associated with them…proactively?  Have you righted any salary discrepancies to ensure that your workforce is fairly and consistently paid according to skill set and experience?  These suggestions all are dictated by FAR compliance and laws, but in general, they emulate good advice. Be the leader that the GovCon industry needs and keep your company on the front pages for the work you are contributing to this country; not for running afoul of the rules. Stephanie Alexander, CEO and Founder Stephanie Alexander has over 15 years’ experience providing leadership, management and problem solving to government contractors.  Stephanie has assisted businesses increase revenue, plan for manageable growth, and map successful strategies for expansion. Because government contractors often spend most of their resources on business development, but need to strengthen their back office, Stephanie founded BOOST to provide accounting, contracts, HR, and recruiting services to GovCons. She designed this unique business model to provide scalable, customized services to meet the specific needs of GovCons. In 2015, Stephanie and a partner founded govmates, a free business development tool for government contractors. Govmates is a proprietary database of government contractors seeking teaming partners to bid on opportunities. BOOST ahead: www.boostllc.net     govmates: www.govmates.com     Phone: 703-598-4595     Email: salexander@boostllc.net GovCon Voices is a regular 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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Kingdomware Doesn’t Require Recertification For GSA Schedule SDVOSB Set-Aside Orders

The Supreme Court’s landmark ruling in Kingdomware Technologies, Inc. v. United States does not require SDVOSBs to recertify their eligibility in connection with individual GSA Schedule task orders. In a recent decision, the SBA Office of Hearings and Appeals held that Kingdomware doesn’t affect the SBA’s SDVOSB eligibility regulation for multiple-award contracts, which specifies that if a company qualifies as an SDVOSB at the time of the initial offer for a multiple-award contract, it ordinarily qualifies as an SDVOSB for all orders issued under the contract. OHA’s decision in Redhorse Corporation, SBA No. VET-263 (2017) involved a GSA RFQ seeking transition ordering assistance in support of the Network Services Program.  The RFQ contemplated the award of a task order under the GSA Professional Services Schedule.  The order was set aside for SDVOSBs under NAICS code 541611 (Administrative Management and General Consulting Services).  The GSA contracting officer did not request that offerors recertify their SDVOSB eligibility in connection with the order. After evaluating quotations, the GSA announced that Redhorse Corporation was the apparent awardee.  An unsuccessful competitor subsequently filed a protest challenging Redhorse’s SDVOSB status.  The SBA Director of Government Contracting sustained the protest and found Redhorse to be ineligible for the task order. Redhorse filed an SDVOSB appeal with OHA.  Redhorse argued that it was an eligible SDVOSB under the Professional Services Schedule and was not required to recertify its status for the order.  Therefore, Redhorse contended, the SDVOSB protest should have been dismissed. OHA agreed with Redhorse and granted the appeal. The competitor then filed a request for reconsideration.  The competitor argued, in part, that OHA’s decision was at odds with Kingdomware.  According to the competitor, Kingdomware establishes that “any new order off of a multiple award contract . . . is an independent contract in and of itself,” and therefore requires a new SDVOSB certification. OHA wrote that the competitor hadn’t discussed Kingdomware in its initial appeal, and couldn’t raise it belatedly in a request for reconsideration.  But for good measure, OHA addressed the issue anyway. OHA wote that “because Kingdomware decided the narrow question of whether task orders must be set aside for veteran-owned small businesses pursuant to 38 U.S.C. 8127(d), Kingdomware does not affect SBA’s existing regulations pertaining to protests against task orders and recertification under long-term, multiple-award contracts.”  OHA continued: Kingdomware, then, is not inconsistent with the regulation at issue here, 13 C.F.R. 125.18(e)(1), which states that “if an [SDVOSB] is qualified at the time of initial offer for a Multiple Award Contract, then it will be considered an [SDVOSB] for each order issued against the contract, unless a contracting officer requests a new [SDVOSB] certification in connection with a specific order.  The CO did not request recertification for the instant task order, so Redhorse remains an [SDVOSB] for this task order based on its earlier certification at the GSA Schedule contract level. OHA dismissed the request for reconsideration and affirmed the original decision. As we approach the one-year anniversary of Kingdomware next month, it remains to be seen how broadly the decision will affect government contracting.  So far, OHA has held that Kingdomware doesn’t affect size protest timeliness and–as it ruled in Redhorse Corporation–doesn’t require SDVOSBs to recertify for individual GSA Schedule task orders.  But the SBA has also taken the position that Kingdomware should apply to the FAR’s small business “rule of two,” not just the SDVOSB/VOSB “rule of two” under 38 U.S.C.  And in the meantime, the VA seems to have implicitly determined that Kingdomware doesn’t apply to acquisitions subject to SBA nonmanufacturer rule waivers, but hasn’t provided any legal rationale (at least not of which I am aware) for that position. Needless to say, there will be plenty more protests, appeals and other decisions about the broader impact of Kingdomware.  Stay tuned.
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Welcome To 5 Things You Should Know

Welcome to 5 Things You Should Know, a new SmallGovCon series aimed at providing foundational information on topics relevant to government contractors. In the posts that follow, I’ll try to distill complex contracting topics to their very essence. Unsure about what, exactly, a claim or bid protest is? What is the All Small mentor protégé  program? I’ll walk through each of these topics (and others) and explain why they matter. These posts won’t be a treatise on each topic discussed, but hopefully they’ll help you navigate the complex world of federal contracts. If there’s a particular topic you’d be interested in learning more about, please send it to me. In the first post, we’ll tackle the basics of bid protests. Other posts will follow approximately every two weeks. Enjoy!
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Protest of Approved-Source Restriction Must Be Filed Before Proposal Deadline

I was grocery shopping the other day, and I had to make the tough choice between the name-brand cereal and the store-brand cereal. I don’t know about you, but with some products, the name brand has a certain flavor that the store brand just can’t replicate. When it comes to government contracts, the same is true–sometimes the government wants a certain brand or supplier and will accept no substitutes. GAO recently held that, where an agency required quotations including parts from one approved source of supply, and an offer is submitted that proposes an “alternate product,” the agency can reasonably reject the bid–and that a protest of the approved source restriction itself is untimely if it isn’t filed before the proposal deadline. The additional wrinkle in this decision is that, if the vendor wishes to protest the sole-supply-source restriction in the solicitation, the protest has to be made before the submission deadline for the solicitation. Therefore, the protester’s argument that it should be considered an alternate source was dismissed as untimely because the alternate-source issue is a term the protester should have raised prior to the solicitation submission deadline. This is yet another variation on the tricky rules of bid protest timeliness–in this case, involving the issue of proposing an alternative to the approved source set forth in the solicitation. GAO’s decision, W K Engineering Int’l, Inc., B-414932, (Oct. 13, 2017), involved an RFQ issued by the DLA for headrest pad assemblies associated with aircraft ejection seats.  The RFQ required that vendors submit one headrest for first article testing, and also noted that “[o]nly quotes from the approved source of supply or authorized dealers are acceptable. The dealer must provide a copy of the letter from the approved source of supply approving them to act as a dealer/distributor with their quote.  Quotes from secondary dealers will not be accepted.” The approved source of supply was AMI Industries, Inc., and the agency indicated the specific part number and listed no other approved suppliers. The solicitation also incorporated the terms and conditions set forth in the DLA master solicitation for automated simplified acquisitions. Under these terms, alternate products would not be evaluated if the solicitation was “automated,” and the DLA, with GAO concurrence, contended that the solicitation was indeed automated through DIBBS, the DLA’s Internet Bid Board System. WK Engineering submitted its bid with an alternate product to that required in the solicitation and did not include a letter from AMI approving WKE as a dealer of AMI’s product. WKE, upon submission for its quotation, received a notification from the DIBBS system that “[o]ffers of alternate products will not be evaluated for the current procurement.” DLA awarded the purchase order to AMI, the approved source of supply. GAO dismissed WKE’s protest, holding that, as applicable to WKE, “[a] protester is not an interested party to protest an award to an approved source where the protester would not be eligible for award because it is not itself an approved source for the item.” This seems fairly straightforward, at least as GAO describes it. If the solicitation says quotations must include an approved source of supply, and a quotation does not include that source of supply (or indicate the vendor will act as a dealer for the source of supply), then the protester could never be awarded the bid, so it is not an interested party to protest. The second part of GAO’s opinion is more nuanced. WKE argued that it should be considered equally with AMI, the approved source, because it is a “qualified manufacturer of similar parts.” GAO held that this amounted to a challenge “based upon alleged improprieties in a solicitation, which are apparent prior to the time set for receipt of initial quotations, [which] must be filed prior to the time set for receipt of initial quotations” under 4 C.F.R. § 21.2(a)(1). According to the GAO, since the requirement to use the specific source was clearly apparent in the RFQ, WKE should have been able to formulate its objection upon reading the RFQ, and therefore any protest was due prior to the proposal deadline. A problem that is clear on the face of the solicitation is sometimes called a patent defect, and patent defects ordinarily cannot be challenged after the date proposals are due. Since the protest was not filed until after award was made, this part of the protest was also dismissed. GAO’s holding is another reminder that, if a contractor believes there is an improper requirement or error in a solicitation, a protest must be made before any submission deadline. In this particular example, if a potential vendor thinks there should be alternatives to an approved source of supply, any protest of that issue is probably due before the quotation deadline. If you wait too long, GAO will not usually give you a second chance to raise this kind of issue in a protest.
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Koprince Law LLC

Koprince Law LLC

 

SBA “All Small” Mentor Protege Program: SBA Provides Application Instructions

The SBA’s new “all small” mentor-protege program will begin accepting applications on October 1, 2016–but applicants will have to contact the SBA for an application form. After November 1, 2016, the SBA will be processing electronic applications through its certify.sba.gov website. Earlier this fall, the SBA announced that it would begin processing mentor-protege applications on October 1.  The SBA’s official website for its all small mentor-protege program now provides the following instructions: The SBA will begin accepting applications for the All Small Mentor Protégé Program on October 1, 2016. If you would like to apply during the month of October, please send your request for an application to allsmallmpp_request@sba.gov.  An application and instructions will be emailed to you.  In November, 2016, you will be required to finalize the administrative process by adding your profile to certify.sba.gov and uploading your application and documents into that repository. After November 1, applicants will be instructed to go directly to certify.sba.gov to begin and complete the application process.  Watch this site for updates. It sounds to me like the SBA won’t really be “accepting” applications on October 1, so much as providing applicants the forms to complete and be submitted in November.  For those intending to apply to the program, it would make a lot of sense to email the SBA in early October, use the next several weeks to negotiate and complete the mentor-protege paperwork, and be one of the first to submit electronically in November.
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Koprince Law LLC

 

SmallGovCon Week In Review: April 24-28, 2017

I’m starting to feel like the old Johnny Cash and Lynn Anderson song, I’ve Been Everywhere. After two trips out west earlier this month, I spent time this week in Wichita with the Kansas PTAC, and soon enough I will be back on the road for the SAME Omaha Post 2017 Industry Day.  I am always grateful for the opportunity to meet contractors, government officials, and others in the industry–and I am always heartened by how many people I meet at these events have kind words to say about SmallGovCon. It’s Friday, and time for our weekly look at the latest in the government contracting world. In this edition of  SmallGovCon Week In Review, a contractor faces potential jail time for selling Chinese-made items to the government, Defense analysts anticipate little impact from the recent “Buy American and Hire American” executive order, one commentator says that a recent LPTA National Guard contract hurts those who work to support our troops, and much more. When it comes to wishlists for the last half of 2017, financial and contracting experts say perhaps the most agencies can hope for from Congress is the status quo. [Federal News Radio] Defense analysts are anticipating little impact from President Donald Trump’s “Buy American and Hire American” executive order. [National Defense] One commentator says that a recent “low-ball” National Guard contract is hurting those who work to ‘support our troops.’ [San Francisco Chronicle] The federal government’s biggest challenge in defending its civilian, military and intelligence networks from hackers isn’t technology, it’s people. [Nextgov] The Army has announced that several cloud RFPs are already in the works under the new ACCENT contract. [Federal News Radio] A contractor (who is also a member of the Army Reserves) has been convicted of selling Chinese-made items to the government in violation of the Buy American Act, Berry Amendment, and the contracts’ “100% U.S. MADE” requirement. [United States Department of Justice]
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SmallGovCon Week In Review: May 8-12, 2017

I have food memories of the 1990s–my Duke Blue Devils won back-to-back titles, it was the heyday of Seinfeld, and Furbies were all the rage.  (Ok, Furbies aren’t exactly a fond memory for much of anyone).  But somehow, despite soaking up all kinds of ’90s culture, I missed out on one of the biggest live acts of the decade: Garth Brooks.  But better late than never.  Tomorrow night, I’ll catch the 2017 version of Brooks’ country crooning–part of seven shows he is playing over the course of just two weekends in Kansas City (yep, KC loves some Garth). Before I go enjoy a country music time warp–followed by a Mother’s Day celebration–it’s time for some government contracting news.  In this week’s SmallGovCon Week in Review, a former USACE program manager is accused of bid rigging, the GSA is working on translating President Trump’s priorities into acquisition policy, and more. A former program manager for the Army Corps of Engineers in Nebraska is accused of rigging bids on nine contracts in exchange for about $33,000 worth of bribes. [The Oregonian] The GSA starts translating President Trumps priorities into acquisition policy. [Federal News Radio] A longtime DoD contractor in Afghanistan reflects on some lessons learned. [GovExec] A contractor who worked on the Navy’s supply and transport arm is facing a five-count indictment for his alleged role in a bribery scheme that allegedly netted him $3 million. [Federal Times] The SBA will start adoption of the Digital Accountability and Transparency Act but the CFO and Associate Administrator don’t have much faith in the new law. [Federal News Radio] Agencies “embrace of FedRAMP is still uneven,” a new report concludes. [FCW] More bad behavior: a former Army contractor pleads guilty to a bribery scheme involving contracts at Aberdeen Proving Ground. [Department of Justice]
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