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  1. The FAR Council recently moved forward with implementing provisions of Section 889(a)(1)(B) of the 2019 NDAA through an interim rule. This rule furthers the work begun previously of separating the federal government and its contractors from certain Chinese telecom and video surveillance companies. Last year, the FAR Council issued a rule to implement Section 889(a)(1)(A) of the 2019 NDAA. In that rule, the FAR Council amended the FAR to prohibit agencies from procuring or obtaining equipment or services that used telecom equipment produced or provided by certain Chinese companies. It required contractors to represent whether they would provide covered telecom equipment or services, and it gave contractors a single business day to report covered telecom equipment or services discovered during contract performance. But Section 889(a)(1) of the 2019 NDAA did not just prohibit agencies from procuring equipment or services from certain Chinese telecom companies. It also prohibited, under Section 889(a)(1)(B), federal executive agencies from from initiating, renewing, or extending a contract with a contractor that uses any equipment, system, or service that uses covered telecom equipment as a substantial or essential component of any system. The statute covers telecom equipment and services produced or provided by Huawei Technologies Company or ZTE Corporation (or their subsidiaries or affiliates) and video surveillance or telecom products produced or provided by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any of their subsidiaries or affiliates). The prohibition is designed to avoid disruptions to the operations of the federal government and its contractors and the exfiltration of sensitive data from contractor systems, which could harm important governmental, privacy, and business interests. So under the new rule, “[c]ontracting officers shall include the provision at FAR 52.204-24, Representation Regarding Certain Telecommunications and Video Surveillance Equipment and clause at FAR 52.204-25, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment as prescribed–n solicitations issued on or after August 13, 2020, and resultant contracts; and n solicitations issued before August 13, 2020, provided award of the resulting contract(s) occurs on or after August 13, 2020.” It also requires contracting officers to modify existing indefinite delivery contracts to include the appropriate FAR clause on future orders. In exercising options or modifying existing contracts or task orders to extend the period of performance, contracting officers should also include the pertinent clause. To assist implementing this new rule, DoD issued a memorandum with some additional guidance. The rule does allow for the head of an executive agency to grant a one-time waiver from 889(a)(1)(B) on a case-by-case basis that will expire no later than August 13, 2022. Agencies will grant waivers through market research and feedback from offerors during the acquisition process. In fact, offeror representations about the equipment it intends to use will play a large role in determining whether an agency might issue a waiver. Overall, however, the waiver process is intentionally designed to be difficult. So don’t plan on waivers becoming a routine practice. At this point, the federal government is getting very serious about enforcing the prohibitions on certain Chinese telecom products and services. It doesn’t even want its contractors using those products. Be on the look out, in new solicitations and otherwise, for FAR 52.204-24 and FAR 52.204-25 and their required representations. View the full article
  2. Joint ventures provide great opportunities for small businesses, including those in the SBA’s 8(a) Business Development Program. In this video, I provide 8(a) joint ventures a few reminders about what to include in their joint venture agreements. View the full article
  3. According to the U.S. Small Business Administration Office of the Inspector General, potential fraudsters have obtained $250 million in federal funds intended to help businesses survive the impact of COVID-19. The Inspector General also identified $45.6 million in potentially duplicate payments and warned that with well over $220 billion left to give out, rapid changes were needed. SBA Inspector General Hannibal “Mike” Ware published a memorandum July 28 addressed to Administrator Jovita Carranza that described “serious concerns” of potential fraud within the economic injury loan program created by the Coronavirus Aid Relief and Economic Stimulus Act. This potential fraud is widespread within the program, the memorandum said, noting that thousands of reports of suspicious activity were pouring in from financial institutions and through the fraud hotline, including credit checks on individuals who had never applied for such a loan or grant. The report detailed several “organized fraud rings” that use social media to recruit individuals to apply and split the proceeds with the fraudsters. Some of these schemes promise “free money” and use romance to entice applicants to unintentionally assist. The OIG suggested that the SBA work with the financial institutions to determine the fraudulent applications and potentially prevent disbursement of the funds. Unfortunately, the SBA does not currently have a process in place to review potentially fraudulent applications. View the full article
  4. Next week on August 5 you’ll have the opportunity to hear from two of our attorney-authors. First, Matthew Schoonover will be discussing “The SBA’s Mentor Programs: What You Need to Know” through an Iowa State University Webinar at 9 am central time that day. Then, at 2 pm central, I’ll be exploring the newest “Koprince Law LLC GovCon Handbook: Procedures and Pitfalls of Size Protests and Appeals” in a Koprince Law LLC Webinar. This past week had some important federal contracting news, including a call for more time to reimburse government contractors for costs related to COVID-19, the Pentagon planning for the next 25 years of cybersecurity, and new issues with the CMMC rollout. Government Executive: Advocacy Groups Press Congress to Support Pandemic Whistleblower Protection Legislation. [whistleblower.org] Extend contractor reimbursement period, trade groups urge Congress. [news.yahoo] DOD Seeing Enormous Jump in Telework, Remote Collaboration. [defense.gov] All things contracting. [federalnewsnetwork] Defense contractor pays $67K to settle gender bias dispute with GDOL. [valdostatoday] Pentagon planning for the next 25 years of cybersecurity. [fedscoop] HUD IG Warns Agencies to Watch Out for Bidding Fraud. [nextgov] CMMC board faces ‘passionate’ internal turmoil over new contract with DOD. [fedscoop] Spectro Scientific agrees to pay $1M to settle allegations related to Air Force’s Small Business Innovation and Research program. [justice.gov] DoD Releases Memo on Contracting Ban for Vendors Using Certain Telecom Equipment. [executivegov] Which new procurement laws should stay or go? [federalnewsnetwork] GAO: More Than Half of COVID-19 Government Contracts Not Competitively Awarded. [nextgov] Agencies may not have gotten the best deals on coronavirus contracts. [federalnewsnetwork] CMMC Official Backs Light-touch Option for Continuous Monitoring of Defense Contractors’ Cybersecurity. [nextgov] View the full article
  5. In the world of federal contracting, precision matters. In fact, precision is often essential when developing a winning proposal. When it comes to subjective evaluation considerations, however, it can be challenging to articulate relevant evaluation criteria with a high level of precision. Indeed, as one prospective offeror recently discovered, some evaluation terms are good enough for government work, despite being imprecise. Federal Acquisition Services Team OASIS JV, LLC, B-418776 (Comp. Gen. July 24, 2020), involved a Cybersecurity and Infrastructure Security Agency procurement for budget, acquisition, and contract management support services. The solicitation was issued as a task order under GSA’s One Acquisition Solution for Integrated Services (“OASIS”) government wide acquisition contract. Federal Acquisition Services Team (“FAST”) is an OASIS contract holder and was interested in submitting a bid in response to the task order. After reviewing the task order solicitation’s terms, however, FAST identified various evaluation provisions that it believed were ambiguous, which would hinder its ability to develop a competitive proposal. While FAST took issue with a number of the Solicitation’s provisions, we’ll focus on FAST’s challenges to the past performance evaluation factors. As relevant to FAST’s protest, the Solicitation instructed offerors to provide up to two examples of past performance. One example was to demonstrate an offeror’s ability to manage a procurement project through all acquisition phases. The other example was to demonstrate experience using innovative procurement methods. With respect to the procurement management factor, the Solicitation explained that competitors would be evaluated on their “[d]epth and breadth of expertise and knowledge in the federal procurement process at the tactical level, which includes the Quoter’s ability to support a customer in the execution [of] a procurement from acquisition planning to contract award while applying all required internal and external federal regulations, agency policies and processes.” The Solicitation never elaborated on what constituted “tactical level” procurement processes. The solicitation provided a similarly elaborate description of considerations for the innovative procurement methods evaluation factor. Specifically, past performance examples supporting this evaluation consideration would be evaluated as follows: Quoter’s demonstrated experience in using innovative procurement methods that incorporates the latest procurement[] trends to streamline actions that result in rapid, flexible, and agile procurements to allow [the agency] to “transcend beyond [the] status quo” or go beyond using traditional/routine procurement tools and methodologies and advance to innovate and sustainable approaches appropriate to support high tempo cyber and technology centric environments similar to the space in which [the agency] operates. Like the procurement management factor, the innovative procurement methods factor did not elaborate on what procurement processes would “transcend beyond the status quo.” In its protest, FAST alleged that the evaluation considerations for both the procurement management and innovative procurement methods factors were ambiguous. According to FAST, a number of phrases used in the evaluation procedures were not generally recognized terms of art, which resulted in the evaluation considerations being ambiguous. With respect to the procurement management factor, GAO summarized that “FAST argues that the phrase ‘at the tactical level’ is ambiguous because the term is nonsensical, as it is neither a term of art nor commonly understood.” FAST raised similar challenges to the language of the innovative procurement methods factor. As GAO summarized, “FAST argues that this evaluation criterion is vague because the phrase ‘transcend beyond [the] status quo’ is nonsensical, and because the agency does not identify what constitutes traditional/routine procurement tools.” GAO, however, took a different view of the solicitation’s past performance evaluation descriptions. Responding to FAST’s challenge of the procurement management factor, GAO explained that “[a]lthough we view the RFQ’s use of the word ‘tactical’ as imprecise, we do not conclude that the phrase will prevent vendors from competing on an equal basis.” GAO was similarly unreceptive to FAST’s challenge of the innovative procurements methods factor. According to GAO, “[a]lthough FAST complains that the phrase ‘transcend beyond [the] status quo’ is nonsensical, we disagree because the phrase adequately conveys that a vendor will be evaluated based on whether its quotation demonstrates innovative procurement tools.” Consequently, GAO denied FAST’s protest. GAO’s decision in Federal Acquisition Services Team seems to recognize one of the truths of language—you can communicate intent without perfect precision. Here, the agency provided offerors with sufficient information to ascertain the intent of its past performance evaluation. While there may have been more precise ways to describe the agency’s evaluation procedures, such exacting precision was not required for offerors to generally understand that the agency would be evaluating. View the full article
  6. When it comes to the 8(a) program, you might want to quit your day job. The 8(a) Business Development Program, similar to other SBA socioeconomic programs such as the service-disabled veteran-owned small business program, requires the disadvantaged individual owner to work full-time at the business during normal business hours of similar firms. If an owner has a second job outside the main company, that can create problems, as it did in a recent OHA decision. The decision reviewed an SBA determination to terminate Sonoran Construction Group from the 8(a) program. Sonoran, through owner Mr. Lez McKenzie, was admitted to the program in 2016. As part of being admitted, Sonoran had to maintain compliance with the 8(a) program rules. One of the rules is that a disadvantaged individual manager “must devote full-time to the business during the normal working hours of firms in the same or similar line of business.” 13 CFR § 124.106. The owner is also supposed to get pre-approval from SBA for outside employment. In 2019, Sonoran submitted its annual review with documentation. The review included tax returns that showed earnings from a bank. The report also stated that Sonoran’s owner was working as an “Equipment Manager” for the bank “from 7:00am to 3:00pm Monday through Friday, 40 hours per week.” Sonoran asserted that the bank employment didn’t conflict with managing the 8(a) company because Mr. McKenzie can work “from 4:00pm to midnight, if necessary, conducting all business-related activities. [Sonoran] is now at an early stage in its business, has only one project awarded to date, and does not require a full 40-hour commitment to effectively manage all its current activities.” SBA asked Sonoran to submit a formal request for approval of outside employment to “include the nature and anticipated duration of the outside employment, Petitioner’s hours of operation, Mr. McKenzie’s specific time commitment to the firm, and his duties in the company.” Sonoran responded that Mr. McKenzie’s bank position “is full-time Monday through Friday, 8:00 A.M. to 4:00 P.M. MST.” Since Sonoran can’t pay his salary, “Mr. McKenzie has no other options to acquire the financial means to meet his financial obligations. Further, Mr. McKenzie has no intention of resigning his secondary position until Petitioner can pay him and his employee a living wage.” In addition, Sonoran’s “regular hours of operation are Monday through Friday, 8:00am to 5:00pm MST” and Mr. McKenzie works there from 4:00pm to 11:00pm MST while a project manager “handles day-to-day operations, marketing, client visits, etc.” “SBA concluded that it could not determine that Mr. McKenzie, the individual upon whom Petitioner’s eligibility is based, is able to manage and control the day-to-day operations of the firm and work full-time for BMO Harris during normal working hours.” The outside employment hours directly conflicted with management of Sonoran and could hinder Sonoran from meeting its business plan objectives. SBA indicated it intended to terminate Sonoran from the 8(a) program. SBA terminated Sonoran’s participation in the 8(a) program for failure to maintain full-time day-to-day management and control, noting that an 8(a) company must get prior written approval for outside employment, that Mr. McKenzie had not gotten approval, that he had failed to disclose the employment at all, and that Sonoran had not generated any revenue in 2018. Sonoran appealed, arguing, in part, that it was not aware it had to seek approval for outside employment. In addition, because it is a construction company Mr. McKenzie could manage the business remotely and he would make all major decisions. OHA denied the appeal. Absent other evidence, “devoting 40 hours of work per week qualify as ‘full-time,’ and the hours of 8:00am or 9:00am to 4:00pm or 5:00pm, Monday through Friday, may be considered “’normal working hours.’” What can count as other evidence to refute the normal full-time hours? Based on OHA precedent, an 8(a) company must demonstrate the manager can work full-time at the 8(a) company and still maintain outside employment, generally through showing a history of successfully managing the company in the past while working another job. Here, Sonoran’s working hours, as submitted by the company itself, directly conflicted with the time the owner was employed at the bank. The fact that Sonoran earned no business revenue during the years when Mr. McKenzie worked at the bank demonstrated he wasn’t devoting full time hours to Sonoran. The takeaway here is that the full-time devotion requirement of the 8(a) program can be quite strict. While outside employment may be allowed in certain situations, the 8(a) company must retain detailed records demonstrating the disadvantaged manager of the business is working full-time at the business. Outside employment at odd hours (e.g. late night or on the weekends) is more likely to be allowed. Plus, pre-approval of outside employment may be required as part of the 8(a) participation agreement. View the full article
  7. I’m proud to announce that the new GovCon Handbook Procedures & Pitfalls of Size Protests & Appeals is now available! This video highlights some of the main topics from the book. You can order the book here. I’m also conducting a webinar on August 5 to explore some of the key insights. Be sure to check out the webinar or contact me if you have questions. View the full article
  8. In a recent decision, Eminent IT, LLC, B-418570 (June 23, 2020), GAO held that the Department of State improperly removed a requirement from the SBA’s 8(a) program where the solicitation did not create a “new requirement.” Before we delve into this holding, and what it means for 8(a) contractors, let’s take a look at how government acquisitions get set aside for 8(a) participants in the first place–and what it takes to remove the 8(a) designation. First, an agency must “offer” a procurement to the SBA for award through the 8(a) program. To do so, the contracting officer must submit a letter detailing the intent to offer a procurement as an 8(a) contract. It must also contain a number of specific details about the anticipated work. For more details, check out 13 CFR 124.502. After that, the SBA must decide whether it should accept the procurement into the 8(a) program. This process can get a little more complicated, but for the purposes of this background, it’s not necessary to dig into it in-depth (but you can read more here). What’s more important is what happens if a procurement is accepted for award through the 8(a) program. When the SBA accepts a procurement into the 8(a) program, a concept known as the “once 8(a), always 8(a) rule” kicks in. Both FAR 19.815 and 13 C.F.R. § 124.504(d) required that when a procurement is accepted by the SBA then awarded as an 8(a) contract, its follow-on or renewal acquisition must remain in the 8(a) program unless the SBA agrees to release it for non-8(a) competition. One exception: if the follow-on work qualifies as a “new requirement,” it does not require the SBA’s release. We’ve discussed a little bit about how to determine whether something is a “new requirement” or not here. But, in short, SBA’s regulations state that something is a “new requirement” where it is modified or expanded such that it requires a “price adjustment of at least 25 percent” or “require significant additional or different types of capabilities or work.” Here, the State Department attempted to rely on the “new requirement” exception to solicit “the maintenance, operation, and management of PeopleSoft v9.x or later in a production environment using Scaled Agile Framework (SAFe), for competition among small businesses.” (For those of us not hip to the IT lingo, this work falls under the broad and ever growing umbrella category of IT services.) GAO, however, determined that the work was not a new requirement and, therefore, did not meet the exception. GAO reached this conclusion because back in 2015, the State Department had awarded a task order for very similar “People-soft related” services to an 8(a) business under GSA’s 8(a) STARS II GWAC. The SBA weighed in to assist GAO’s decision making, explaining that “the primary and vital requirements of the two solicitations are ‘nearly identical’” and any pricing changes were due to services “ancillary to the primary and vital requirements under the contract [. . .], or general inflation of labor rates[.]” GAO agreed with the SBA’s analysis and sustained the protest. This case provides an important reminder for 8(a) participants: if you know that work was previously 8(a), but the government is now seeking the same services outside of the 8(a) program, it may be worth looking into! If you have questions about 8(a) set-aside procurements, you can reach us here. View the full article
  9. Last week, I tried to see the Comet NEOWISE, but I couldn’t locate it. Guess that’s why I’m a lawyer and not an astronomer! Maybe some of you had better luck. As we move through the dog days of summer, I hope all our readers are staying cool and healthy. This week saw a number of interesting federal contracting stories. Among them were tallying up record federal spending during the pandemic, cyber hygiene as part of CMMC, and potential waivers for the Huawei ban. Record federal contract spending during a pandemic. [Federal News Network] Cyber Hygiene is the Key to CMMC Compliance Preparedness. [Nextgov] When is a notice not a notice of a proposed contracting action? [dvids] DoD Contractor Workplace Safety Data Lacking, GAO Finds. [FEDweek] As Huawei ban looms, waivers are an option. [FCW] Defense Contractor to Pay Nearly $1 Million to the United States to Resolve Allegation of Overbilling on NSA Contract [U.S. Department of Justice] View the full article
  10. Veterans of the bid protest process know that it’s not uncommon for a protester to make half a dozen arguments and prevail on only one. Know what that’s called? A win. But when a protester goes seven for seven, you have to tip your cap. In Leumas Residential, LLC B-418635 (July 14, 2020), the protester argued that the three deficiencies and four significant weaknesses the U.S. Navy assigned to its proposal were all flawed. GAO agreed. First, the agency said that Leumas’s proposal showed on its face that Leumas did not intend to comply with the limitation on subcontracting. All the evaluation said was that the “subcontractor, ProDyn, LLC, is going to be gaining more than 50 percent of the work requirement.” The parties’ teaming agreement had said that the subcontractor would “perform the mowing, tree maintenance, and landscape maintenance at a minimum.” The Navy argued that on its face that language indicated a lack of compliance. GAO said no: “we cannot find the agency’s conclusions to be reasonable or properly documented. The language that the agency relies upon in the subcontractor/teaming arrangement does not, on its face, indicate that Leumas did not intend to comply with the requirement that at least 50 percent of the cost of contract performance incurred for personnel would be expended by Leumas.” Next, the protester argued that it was unreasonable for the agency to give it a deficiency because it concluded that the proposal’s color coding indicated that the quality control manager and site safety/health officer would be off-site workers. The protester noted that the color coding was not defined in the proposal and nothing in the solicitation required offerors to explain that those two workers to be on-site, although they would be. GAO agreed with the protester, saying “To the extent that the agency made ‘inferences’ on these subjects, these inferences are not supported by the contemporaneous evaluation record.” For the last deficiency, the agency said that the proposal failed to demonstrate knowledge of Virginia Department of Environment requirements because the proposal promised that the managers would familiarize themselves with the requirements and train workers. The Navy took this to mean that they were currently unfamiliar and untrained. The protester pointed out that the solicitation did not require offerors to demonstrate knowledge of these environmental requirements. GAO agreed, saying “the record only shows that the agency assessed a deficiency because Leumas’s proposal did not demonstrate current knowledge of VDE requirements, which the agency asserts–but cannot demonstrate–was a requirement of the solicitation.” That made the protester three for three on deficiencies challenged. Moving to significant weaknesses, things did not get better for the agency. For example, the Navy had given Leumas’s proposal a significant weakness because it interpreted language in the proposed phase-in plan to mean that all employees were currently untrained. GAO said that the phase-in plan seemed to meet the minimum requirements and the “untrained” concern was only brought up during litigation and “the record includes no support for the agency’s now-articulated concern regarding Leumas’s alleged untrained workforce.” The agency had also given Leumas’s proposal a weakness for lack of corporate oversight. The protester argued that the solicitation did not require direct corporate oversight of on-site managers. During litigation, the Navy explained that Leumas’s proposal indicated that it would “empower [its] project managers with the authority to act on behalf of the company to commit resources,” and this made the Navy think that Leumas was delegating all authority to the managers on site. GAO rejected that argument noting that the evaluation documents didn’t say that: “While the agency reasonably might have found that the extent of Leumas’s proposed delegation of authority to its project managers was a flaw that appreciably increased the risk of unsuccessful contract performance, there is nothing in the contemporaneous evaluation record to suggest that this concern was the basis for the agency’s assessment of the significant weakness. Instead, the record shows only that the agency found that Leumas’s proposal failed to provide direct corporate oversight which was considered to be a significant weakness.” The next weakness was for a supposed lack of a pest control plan. The agency explained to GAO that in its view the proposal included “a long narrative about having certified pest control employees,” but that wasn’t good enough to be a “comprehensive work plan.” The protester argued that the Navy was again offering explanations for its evaluation which were not in the record. It said that the agency was putting words in the mouth of the evaluation board that “are entirely absent from and contradicted by the contemporaneous record.” If you’re keeping score, that made the protester six for six. Finally, the agency gave the proposal a deficiency in the safety factor for supposedly providing no safety data for two of three years. In fact, for those two years Leumas had entered “0” meaning it had “no annual losses in insurance claims against its policy premiums; had no OSHA Days Away from Work, Restricted Duty, or Job Transfer occurrences; and had no recordable OSHA cases.” The Navy argued that it was unclear whether the rate was actually zero or if the “0” entered meant no data. GAO said that nothing in the solicitation required an offeror to explain the rates provided and zero was an allowable answer. In fact, the “solicitation required an affirmative statement and explanation only if the offeror had no safety data for any particular year.” GAO again agreed with the protester (update: seven for seven). It sustained the protest. While winning on every issue brought before GAO—especially in such a technical protest—is unusual, it does show that GAO has little patience for certain agency actions, such as making assumptions about a proposal that are unsupported by the proposal, failing to document these assumptions, and shifting its rationale during litigation. View the full article
  11. The SBA’s 8(a) program provides a number of opportunities for small businesses owned by socially and economically disadvantaged individuals. In this video, I discuss the economic disadvantage eligibility requirement, highlighting the regulatory changes imposed last Wednesday: Want to know more about how to apply for the 8(a) program? Check out our 8(a) Handbook here or reach out to us here. View the full article
  12. Happy Friday to you all and here’s to the weekend! Please mark your calendars as my colleague Matthew Schoonover will be giving a presentation on August 5 discussing the SBA’s All-Small Mentor-Protégé Program. Here are more details on the event. This week saw its fair share of government contracting updates as well. These included STARS III details, progress on GSA’s schedule mass modification, and predictions for a government fourth quarter spending spree. Navy automates supply chain analysis for microelectronics. [fedscoop] Pentagon’s Digital Services Spending Rises Rapidly: This Is IT. [bloomberggov] Defense execs press lead lawmakers for COVID reimbursements. [defensenews] VA Wants a Veteran-Owned Business to Upgrade Wichita Facility’s IT Ahead of Health Records Rollout. [nextgov] Congress Is Investigating Contracts Tied To Mask And PPE Shortages. [npr.org] How accurate are agencies’ procurement forecasts? [federalnewsnetwork] What Bidders Can Expect on the $50 Billion STARS III: Top 20 [bloomberggov] Lacking teeth, GSA creates alliances to spur transition to new telecommunications program. [federalnewsnetwork] Most contractors have accepted GSA’s Mass Mod. [fedscoop] Silicon Valley Giants — Not Start-Ups — Dominate DoD Tech $$ [breakingdefense] What will replace Alliant 2 Small Business after GSA’s cancellation of the program?[federalnewsnetwork] Agencies expected to spend almost $200B on acquisition in Q4 2020. [federalnewsnetwork] Class Waiver of the Nonmanufacturer Rule for diabetic test stripes. [amazonaws] View the full article
  13. As of July 15, the initial caps on net worth, adjusted gross income, and fair market value of assets for the 8(a) program have gone up. The dollar amounts for initial 8(a) economic disadvantage eligibility have increased quite a bit, making more people economically eligible. Read on for the details on this change. We wrote about this revision in a couple of posts (here and here). But the rule is now official, and the 8(a) program should be open to many more applicants under the new rules. The rules now state: “The net worth of an individual claiming disadvantage must be less than $750,000.” (increased from $250,000, making initial and continuing eligibility the same number) “SBA will presume that an individual is not economically disadvantaged if his or her adjusted gross income averaged over the three preceding years exceeds $350,000.” (increased from $250,000, making initial and continuing eligibility the same number) “An individual will generally not be considered economically disadvantaged if the fair market value of all his or her assets (including his or her primary residence and the value of the applicant/Participant firm) exceeds $6 million.” (increased from $4 million, making initial and continuing eligibility the same number) In addition, to address an issue older applicants were facing (as we raised on the blog), “retirement accounts will now be excluded from calculations of an economically disadvantaged individual’s net worth, irrespective of the individual’s age.” This change should make it a little easier to qualify for the 8(a) program, so kudos to the SBA for making this change. View the full article
  14. In the competitive federal marketplace, businesses are always looking for ways to make their proposals more competitive. With millions of dollars at stake, it is no surprise that some competitors develop clever approaches to give their proposal a competitive edge. As one competitor recently discovered, however, there is a point where an offer can get too clever, which may result in proposal elimination. Especially when an agency views the clever approach as violating a solicitation staffing requirement. Wilson 5 Service Company, Inc., B-418650.1 (Comp. Gen. June 17, 2020), involved a General Services Administration (GSA) procurement to establish a blanket purchase order for operations and maintenance services at six facilities in Alabama. Specifically, GSA sought staff to perform maintenance work on various infrastructure components ranging from landscape irrigation to heating, ventilation, and air conditioning (HVAC) systems. Importantly, the Solicitation placed an emphasis on developing a close working relationship between the contractor and GSA. To facilitate this, the solicitation requested the contractor to propose a full-time on-site project manager. According to the Solicitation, “[t]he Contract Project Manager or On-site Supervisor shall have complete authority to act for the Contractor in every detail during the terms of the Contract. . . [t]he Contractor can fulfill this requirement by having the Contract Project Manager located onsite or having an additional onsite Supervisor.” In addition to the project manager, competitors were to propose nine full-time “productive” staff, including seven HVAC personnel, one electrician, and one production control clerk. The Solicitation was explicit that the management personnel would not count toward the nine productive staff. In response to the solicitation, Wilson 5 proposed the required nine full-time productive staff, but it did not propose a project manager. Instead, Wilson 5 proposed to have one of the HVAC technicians also serve in a managerial capacity. Presumably, this gave Wilson 5’s proposal a price advantage, as it would utilize fewer personnel. During its evaluation, GSA eliminated Wilson 5’s proposal on technical grounds. According to GSA, Wilson 5 “failed to include a full-time on-site Project Manager as required and instead offered an HVAC technician working in dual capacity as the site supervisor.” Consequently, GSA concluded that Wilson 5’s proposal was technically unacceptable. Wilson 5 protested its elimination before GAO. In essence, Wilson 5 argued the solicitation could be interpreted to allow offerors to propose that one of the nine productive personnel would also serve as the manager. In response, GSA argued that the solicitation contained no such option, and clearly instructed offerors that the project manager was a separate individual. GAO agreed with GSA’s position. According to GAO, “Wilson 5’s argument that the RFQ’s requirement for an on-site project manager/site supervisor could be satisfied by a full-time HVAC technician performing in a dual role capacity is not reasonably supported by the plain terms of the solicitation.” GAO pointed to the various instances where the solicitation instructed offerors to propose a dedicated full-time on-site supervisor. According to GAO, in light of these references, Wilson 5’s interpretation was not reasonable. Since GAO was not persuaded that the solicitation’s language was open to Wilson 5’s interpretation, it denied the protest. Wilson 5’s experience is a cautionary tale for offerors. Creativity is an essential component of any successful bid, but there is a limit. Agencies are required to specify their needs in proposals to allow offerors to compete intelligently with one another. Offerors that do not clearly respond to the Solicitation’s minimum requirements can find themselves eliminated from competition, regardless of how advantageous the proposal approach would be to the government. Developing a unique approach can make or break a proposal, but—as Wilson 5 found—there is a limit to proposal creativity when contracting with the federal government. View the full article
  15. The Federal Acquisition Regulation has officially been updated to increase the micro-purchase threshold and the simplified acquisition threshold, effective August 31, 2020. Various federal agencies had already increased the thresholds through deviations, but this rule makes it official across the board. A few additional thresholds will increase due to inflation. Read on for the details on how this could impact federal procurement. The proposed rule to increase the acquisition thresholds came out in October of last year, as we discussed on the blog. The changes to the micro-purchase and simplified acquisition thresholds implemented sections from the 2017 and 2018 NDAA. As readers of the blog may know, there is often a delay between when Congress says a rule should change–and when the agencies actually make the change. However, some agencies had already made the changes to the thresholds. For instance, GSA, had increased both thresholds in March 2018, while the DoD raised the thresholds in a deviation back in fall 2018. Here are what the new thresholds will be under the FAR. The Micro-Purchase Threshold would be increased from $3,500 to $10,000. The Simplified Acquisition Threshold would be increased from $150,000 to $250,000 The rule will also eliminate the specific dollar amounts listed in other parts of the FAR, and simply replace those amounts with the terms “micro-purchase threshold” and “simplified acquisition threshold.” This will save some work when adjusting these thresholds in the future. The increase in the Micro-Purchase Threshold is expected to allow for increased use of purchases without competition, as micro-purchases may be awarded without soliciting competitive quotations, if the contracting officer or individual appointed considers the price to be reasonable. Those micro-purchases do not have to be set aside for small businesses. However, increasing the simplified acquisition threshold should result in more small business purchases. Purchases “above the micro-purchase threshold, but not over the simplified acquisition threshold, shall be set aside for small businesses” if there are two or more small business offerors expected to compete. FAR 19.502-2. In addition, purchases under the simplified acquisition threshold are exempt from a number of regulatory requirements, such as certain Contract Work Hours and Safety Standards dealing with Overtime Compensation. FAR 13.005. Inflation Adjustments In addition, FAR acquisition-related thresholds are subject to adjustment for inflation every five years under 41 U.S.C. § 1908. However, many of the thresholds, such as the micro-purchase and simplified acquisition thresholds as discussed above, will not go up because they had already been increased by statute. Comments are due by August 31, 2020 on these proposed increases. Some notable increases for inflation include: The prime contractor subcontracting plan (FAR 19.702) floor will increase from $700,000 to $750,000, but the construction threshold of $1.5 million will not change. The simplified procedures for certain commercial items ceiling (FAR 13.500) will increase from $7 million to $7.5 million. * * * These acquisition thresholds can have an impact on what procurement procedures are used for purchases meeting these thresholds. Contractors should stay aware of the changing thresholds. View the full article
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