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  1. For years, it had been difficult for joint ventures to get Facility Security Clearances to go after DoD contracts where a facility clearance was required. The DoD and many contracting officers had long required that the joint venture entity itself, rather than each individual joint venture member, have the FCL. SBA thought it had fixed this problem when it updated its joint venture rules in November 2020 to eliminate the need for the joint venture to have an FCL, as we wrote at that time. But DoD contracting officers had been ignoring this rule, setting up a showdown at GAO to decide if the SBA’s rule did actually apply to the DoD. The decision, InfoPoint LLC, B-419856 (August 27, 2021), involved an Air Force procurement for command and control, intelligence, surveillance, and reconnaissance (C2ISR) support services. The Solicitation stated: “Offerors shall possess or acquire a facility clearance equal to the requirement on the DD254 (Attachment 2) without additional authorization (i.e. National Interest Determination (NID)) by the proposal due date. If an Offeror does not have the required clearance at the time of proposal submission, the proposal will not be evaluated and is not eligible for award.” Plus, the Air Force noted in response to a question that “[t]he individual partners to the [joint venture] having the [facility clearance] is not sufficient.” InfoPoint, a joint venture, protested that the solicitation requirement that a small business joint venture offeror hold a facility clearance was inconsistent with SBA’s recent rule change. SBA joined the argument and noted that the solicitation term was inconsistent with the National Defense Authorization Act (NDAA) for fiscal year 2020, which specifically prohibits requiring a joint venture to have an FCL separate from its members. Here is a little background on SBA’s rule change regarding joint venture FCL requirements. In the commentary to the final rule, SBA stated that: SBA understands that some procuring agencies will not award a contract requiring a facility security clearance to a joint venture if the joint venture itself does not have such clearance, even if both partners to the joint venture individually have such clearance. SBA does not believe that such a restriction is appropriate. The SBA rule allows a joint venture to rely on the security clearances of its members. The rule states: 4) Facility security clearances. A joint venture may be awarded a contract requiring a facility security clearance where either the joint venture itself or the individual partner(s) to the joint venture that will perform the necessary security work has (have) a facility security clearance. (i) Where a facility security clearance is required to perform primary and vital requirements of a contract, the lead small business partner to the joint venture must possess the required facility security clearance. (ii) Where the security portion of the contract requiring a facility security clearance is ancillary to the principal purpose of the procurement, the partner to the joint venture that will perform that work must possess the required facility security clearance. The 2020 NDAA provision in section 1629 stated: TERMINATION OF REQUIREMENT FOR DEPARTMENT OF DEFENSE FACILITY ACCESS CLEARANCES FOR JOINT VENTURES COMPOSED OF PREVIOUSLY-CLEARED ENTITIES. A clearance for access to a Department of Defense installation or facility may not be required for a joint venture if that joint venture is composed entirely of entities that are currently cleared for access to such installation or facility. GAO held that “section 1629 of the NDAA specifically states, and the plain meaning of the statute leads us to conclude, that it unambiguously prohibits DOD from requiring that a joint venture hold a facility clearance if the members of the joint venture hold the required facility clearances.” GAO also confirmed that: The SBA regulation at section 121.103 is consistent with the 2020 NDAA, where the regulation states that joint ventures may be awarded contracts requiring facility clearances where either the joint venture itself or the individual partners to the joint venture hold a facility clearance. The SBA regulation therefore provides how procuring agencies should evaluate whether small business joint ventures are eligible for the award of contracts that require facility security clearances. Under the regulations, the relevant inquiry is whether the joint venture itself, or the individual partners that make up the joint venture, hold a facility security clearance The Air Force argued, among other things, that GAO “should give deference to the statutory delegation of authority to DOD concerning security clearances” and that “the plain language of the 2020 NDAA” would conflict with existing regulations and policies. GAO rejected the Air Force’s arguments, noting that “the plain language of the 2020 NDAA states that DOD ‘may not’ require that a joint venture hold a facility clearance where the members of the joint venture hold the required facility clearances.” Similarly, SBA’s rules allowing the joint venture to not hold an FCL is SBA “is consistent with the 2020 NDAA with regard to the issue raised by the protester–whether DOD may require a joint venture to hold a facility clearance even where the members of the joint venture individually hold the required facility clearances.” Thus, SBA’s rules constitute an additional reason to grant the protest. Bottom line, GAO affirmed that a joint venture does not have to hold the facility clearance where its members do hold the required facility clearance. This is a strong affirmation of SBA’s rules and Congressional intent regarding joint ventures. It should make it easier for small businesses joint ventures to go after awards requiring facility clearances, which is a good result for small businesses. Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO Affirms SBA Rule: Only Joint Venture Members, not the JV, Need Facility Clearance first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  2. The nonmanufacturer rule is one that is commonly misunderstood in the federal government contracting realm. But it is also one we encounter quite often in our role assisting federal contractors. On September 21, please join my colleague, Steven Koprince, and me as we dive deep into the nonmanufacturer role, tackling the ins and the outs of the rule and answering some of your questions surrounding it. The webinar will be hosted by our friends at the Iowa State University CIRAS PTAC, and it is easy to register: just click here. The post Event: The Ins & Outs of the Nonmanufacturer Rule first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  3. Happy Friday, Readers. It’s sad that summer is coming to an end but the good news is that fall is upon us which means it is time for cool weather, falling leaves, and football! It seems everyone is filled with optimism at the start of the season. Here’s hoping your favorite team is victorious and in between games here’s a few interesting articles on what’s going on in federal government contracting this week. Have a great weekend! Go Team! Class Deviation—Limitations on Subcontracting for Small Business [DoD]2021 Growth Accelerator Fund Competition and SBIR Catalyst Competition Result [SBIR]Defense Wants to Know More About Potential Barriers for Small Businesses Contracting [NextGov]Where does waste, fraud and abuse in the military stand after Afghanistan? [FedNewsNet]Minimum Wage for Federal Contracts Covered by Executive Order 13658, Notice of Rate Change in Effect as of January 1, 2022 [FedReg]Five Ways 9/11 Changed the Defense Industry [GovExec]Questions Linger on Vaccine Mandate for Federal Contractors [GovExec]Pentagon official says CMMC changes will be finalized ‘very soon’ [FedNewsNet]Industry’s patience wearing thin with DoD’s CMMC, GSA’s follow-on to OASIS [FedNewsNet]Air Force software platform expansion stalled by cybersecurity concerns [FedScoop]Parkville Man Pleads Guilty to $335 Million Fraud, $615,000 Tax Violations [DoJ]One contractor learned that it’s a bad idea to bribe federal officials [FedNewsNet]Former Walter Reed department head pleads guilty to federal charge [FedNewsNet]SBA Announces Entrepreneur, Investor, and Award-winning Entertainer Jennifer Lopez to Headline National Small Business Week Virtual Summit 2021[SBA] The post SmallGovCon Week in Review: September 13-17, 2021 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  4. In February 2017, the SBA announced that applications for its new All Small Mentor-Protégé Program were being processed, on average, in just eight days. Fast forward four-and-a-half years, and the SBA’s mentor-protégé application processing timeline has gotten just a wee bit longer. As in, 105 days. Unfortunately, that’s no typo. If you’re looking to establish an SBA-approved mentor-protege relationship, you better be willing to wait more than three months for your application to be approved. I recently sent an email to the SBA’s main Mentor-Protege Program email address. The automatic response I received included this nugget: The application process takes 105 days – 15 days for screening and 90 days for processing. In fairness, the SBA was never going to maintain an eight-day pace. (And, in hindsight, it probably shouldn’t have set lofty expectations by touting that initial blistering pace back in 2017). But 105 days is . . . not good. Among other problems, such a long wait makes it much more difficult for potential mentors and protégés to establish compliant joint ventures in advance of key solicitations, like the upcoming Polaris vehicle. And for 8(a) companies–who, following a November 2020 rule change, no longer have access to a separate 8(a) mentor-protégé program–the delay is especially troublesome. After all, 8(a) Program participation is strictly limited to nine years. Every extra day that an 8(a) company has to wait for its mentor-protégé agreement to be approved is one less day that the 8(a) protégé is eligible to use that mentor-protégé relationship to help it bid 8(a) contracts. I don’t have any inside knowledge as to why the application processing timeline has expanded so dramatically in just a few years. I suspect the consolidation of the 8(a) and All Small Mentor-Protege Programs has played a role, as did the addition of new screening questions regarding affiliation. Nevertheless, the application itself is not terribly lengthy or complex–certainly far less lengthy and complex than the VA’s SDVOSB/VOSB application, which the VA says is processed in an average of 34 days. If I had to guess, I’d speculate that the major culprit is likely a staffing/funding issue. Whatever the cause, I hope SBA works to address it, and soon. I don’t expect we’ll ever return to a world of eight-day application processing. But 105 days is far too long to force qualified applicants to wait to access this important program. Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post From Eight Days to 105 Days: The Incredible Lengthening of the SBA’s Mentor-Protégé Program Timeline first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  5. You may recall a post of ours back in April 2021, where we discussed a little-known change to SBA’s size determination rules that occurred in October 2020. SBA created an exception, at 13 C.F.R. § 121.404(g)(2)(iii), to the usual “size is determined at offer date” rule. Now, prior to award, when a small business is part of a merger or acquisition after it makes an offer on a solicitation, the business has to recertify its size, and depending on when that acquisition occurred, if the business is now large, it may lose its award. However, the rule is for better or worse not that straightforward, as a small business learned in a recent GAO decision. Because a part of the rule says that task order awards in such cases may not be treated as small business awards, GAO concluded that such awards are still allowed. Here’s the necessary background. In December 2020, GSA issued a solicitation under its One Acquisition Solution for Integrated Services (OASIS) small business pool contract for a fixed-price task order for engineering, program management, and technical support services for the Rocket Systems Launch Program at the Space and Missile Systems Center at Kirtland Air Force Base, which is undoubtedly one of the coolest solicitations I’ve ever seen. In any event, GSA received 5 proposals by the closing date. One was from Millennium Engineering and Integration Company (“Millennium”), and another was from Odyssey Systems Consulting Group, Ltd. (“Odyssey”). GSA eventually awarded the task order to Millennium. The thing is, 38 days after submitting its proposal, Millennium (now “Millennium Engineering and Integration LLC”) was acquired by QuantiTech, LLC. Upon recertification, it would no longer qualify as a small business. In light of this information (and on other grounds), Odyssey protested the award. In its protest, Odyssey noted the new exception in 13 C.F.R. § 121.404(g) states: If the merger, sale or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award. If the merger, sale or acquisition (including agreements in principal) occurs within 180 days of the date of an offer and the offeror is unable to recertify as small, it will not be eligible as a small business to receive the award of the contract. If the merger, sale or acquisition (including agreements in principal) occurs more than 180 days after the date of an offer, award can be made, but it will not count as an award to small business. Millennium was acquired only 38 days after it submitted its proposal. Therefore, Odyssey reasoned, Millennium must recertify and, because it would not recertify as small, Millennium would be ineligible for award. However, GSA noted that the above rule only applies to recertification under the “master contract” (in this case, the original OASIS contract). 13 C.F.R. § 121.404(g)(4) provides: The requirements in paragraphs (g)(1), (2), and (3) of this section apply to Multiple Award Contracts. However, if the Multiple Award Contract was set-aside for small businesses, . . . then in the case of a contract novation, or merger or acquisition where no novation is required, where the resulting contractor is now other than small, the agency cannot count any new orders issued pursuant to the contract, from that point forward, towards its small business goals. This, GSA argued, meant that Millennium remained eligible for award; the only effect is that GSA now couldn’t count the task order award towards meeting its small business goals. GAO invited SBA to comment on the matter. SBA stated that 121.404(g)(2)(iii) does apply to task orders as well. But SBA said this interpretation didn’t control in this case, considering the circumstances. Siding with GSA, SBA explained 121.404(g)(4) is an applicable exception, as the underlying contract is a multiple award contract set aside for small businesses. This seems like an odd finding, considering 121.404(g)(4) doesn’t say anything about the eligibility of the awardee. GAO agreed, noting: The regulation at issue here is not a model of clarity. On the one hand, the result identified by section 121.404(g)(2)(iii) could apply here just as easily as the result outlined in section 121.404(g)(4). In attempting to reconcile the applicability of these two provisions, we note that the SBA has expressly identified a rule that would result in ineligibility of an entity under section 121.404(g)(2)(iii), but has not expressly revoked that rule under section 121.404(g)(4). On the other hand, while section 121.404(g)(4) is silent on a firm’s eligibility for award, its express indication–that new orders issued under a multiple award contract to firms that are other than small cannot count against an agency’s small business contracting goals–implies (or seems to assume) that the agency is permitted to issue task orders to firms when the procurement is set aside for small businesses. In short, because 121.404(g)(4) says that new orders issued cannot count towards the agency’s small business goals, this must imply the agency can still order those issues. GAO continued: “In our view, the protester’s contention that section 124.404(g)(4) only repeats the rules already set forth in section 121.404(g)(2)(iii) would render much of the language in (g)(4) surplusage.” (Surplusage is one of those odd lawyer terms which basically means that rules should be interpreted in a way that doesn’t leave extra unused provisions lying around with no purpose, and judges and the GAO equivalent of judges don’t like surplusage). GAO empathized with Odyssey, noting it was “not convinced that SBA’s interpretation is the only reasonable interpretation of the regulation at issue.” But, it would defer to SBA as SBA’s reading is also reasonable. After rejecting the other grounds for Odyssey’s protest, GAO dismissed the protest. So, for now, it appears that even if you are acquired within that 180 day time frame after offer, if it’s a task order under a multiple award contract, you’re off the hook, at least on size grounds. However, we agree with GAO that the regulation in question could use a little supplementing for clarity’s sake. This case is also a great reminder of the power an agency’s interpretation of a regulation can have on a decision. Had SBA agreed with Odyssey, things may have been completely different. Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Small Business Being Acquired by a Large Business? For Multiple Award Contracts, the 180-Day Rule Doesn’t Apply to Task Orders, says GAO first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  6. Welcome to Friday, SmallGovCon readers! Now that the weather is cooling off a little, we hope you’re able to enjoy the great outdoors a little more. However, before you head outside, maybe you’d like to take a few minutes to check out some articles we’ve selected for you about federal government contracting. We’d especially like to turn your attention to our first featured article about National PTAC Day coming up next week with a special shout-out to them for all the great work they do supporting small businesses. Other interesting news includes the remaining CIO-SP4 protests and how to prepare for a continuing resolution in government funding. Enjoy the articles and have a fantastic weekend! National PTAC Day is coming up next week APTACEight bid protests over CIO-SP4 solicitation yet to be resolved FedScoopThe DOD is seeking public comments on barriers facing small businesses in working with the agency Federal RegisterNow is the time for federal contractor to prepare for a continuing resolution Federal News NetworkOf 20 Construction of Facilities projects audited by NASA’s Office of Inspector General, “6 incurred significant cost overruns ranging from $2.2 million to $36.6 million and 16 of the projects are 3 months to more than 3 years behind their initial schedules.” Oversight.govThis fiscal year will likely end with a continuing resolution. How should contractors prepare? PSCGSA names Raylene Yung director of Tech Modernization Fund FedScoop20 years after 9/11, TSA officers renew calls for higher pay Federal News NetworkFormer DOD Subcontractor Sentenced to Federal Prison for Submitting False Claims For Hours Worked United States Department of JusticeSBA Announces National Small Business Week Virtual Summit Event Schedule for September 13-15 SBA.govData Rights Relevant to Weapon Systems in Air Force Special Operations Command RAND.org The post SmallGovCon Week in Review: September 6-10, 2021 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  7. NAICS codes are limited in what they can challenge, but can have a powerful effect on a procurement. A NAICS code appeal can challenge the size limit attached to a specific government procurement. This can level the playing field by limiting to smaller businesses, or expand the size of businesses that are able to compete. So, it’s good to know a NAICS code appeal works. 1. What is a NAICS Code? A NAICS code is a six digit code assigned to various industries under the North American Industry Classification System (NAICS), a standard used in classifying business establishments. The codes are assigned by the US Census Bureau for “business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.” The NAICS manual lays out the system for assigning NAICS codes. For our purposes, it’s important that the SBA assigns a different size standard to each NAICS code based on dollar number of receipts or number of employees. SBA publishes a table of all the size standards. Here’s an example. NAICS code 541511 is for Custom Computer Programming Services and has a size standard of $30 million per year. The NAICS manual describes this code as follows: “This U.S. industry comprises establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer.” So, if an agency assigns 541511 to a solicitation, then only contractors whose average receipts are under $30 million per year can bid on the procurement. 2. How are NAICS codes assigned? A contracting officer must must assign the proper NAICS code based on what best describes the principal purpose of the product or service being acquired in light of the industry descriptions in the NAICS Manual, the description in the solicitation, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being acquired. 3. When to challenge a NAICS code. These appeals must be filed within 10 calendar days after issuance of the solicitation or amendment to the solicitation affecting the NAICS code. This, of course, differs from the ordinary rule for protesting a defect in a solicitation. At the GAO and Court of Federal Claims, protests of other solicitation defects ordinarily are timely if filed before the due date for initial proposals. 4. How to challenge a NAICS code. A NAICS code appeal can be an extraordinarily powerful tool for a business to challenge whether a contracting officer assigned the correct NAICS code in setting aside a procurement. SBA’s regulations allow “any person adversely affected by a NAICS code designation” to challenge its designation. OHA evaluates NAICS code appeals primarily by comparing the solicitation’s statement of work to the NAICS code definitions in the Census Bureau’s NAICS Manual. The review of a NAICS code assignment is procedurally different from other types of OHA appeals in that OHA is directly reviewing the contracting officer’s action. For other types of appeals, such as size determinations or SDVOSB eligibility determinations, OHA is reviewing the SBA Area Office’s initial determination. The key to having a good NAICS appeal is to show that, based on clear examples from the solicitation’s scope of work and level of effort, the NAICS code assigned doesn’t match the main purpose of what the agency is purchasing. Look at the majority of work under the solicitation, as well as past examples of similar work (or possibly even the incumbent work) being procured under a different NAICS code. OHA processes NAICS code appeals before other matters and will issue decisions as soon as practicable. As a result of this expedited treatment, the NAICS code appeal process takes an average of 18 to 30 days to complete. 5. How successful are NAICS code challenges? Not that many contractors file NAICS codes appeals. But of those that do, and avoid procedural mistakes, they are quite successful. As noted in a GAO report, most NAICS Code appeals (57%) were dismissed for various reasons. It’s noteworthy that contractors only file about 20 NAICS code appeals annually. The reasons for dismissal are: not filing before the 10-day deadlinethe contracting officer cancelled the solicitationthe appeal was withdrawnthe contracting officer amended the NAICS codethe appellant was not authorized to file an appeal Counting just those NAICS code appeals decided on the merits, about 45% were granted. This is actually a fairly high success rate, especially given the appellant’s burden of proof. Statistically, then, a NAICS code appeal is likely to succeed almost half the time, provided there are no procedural defects. Final Thoughts There you have it, five key things to remember about NAICS codes appeals. They can be a powerful tool to alter the procurement landscape by contracting or expanding the size of businesses that can bid on the contract. But there are very short timelines for filing a NAICS code appeal, so if you see a problem with the initial NAICS code assigned to a solicitation, make sure you consider filing a NAICS code appeal early. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Five Things You Should Know: NAICS Code Appeals first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. Like any other offeror, a joint venture must be registered in the System for Award Management. And, as one joint venture recently learned the hard way, if a JV is not registered in SAM by the award date, the missing registration could prove costly. The GAO’s bid protest decision in Continuity Global Solutions-Secure Me WLL Security, JV, B-419875 (Aug. 12, 2021), involved a State Department RFP for the provision of local guard services at the United States embassy in Bahrain. The RFP was issued under the procedures of FAR Part 15 (Contracting by Negotiation) and incorporated FAR 52.204-7 (System for Award Management). Award was to be made on a lowest-price, technically acceptable basis. The version of FAR 52.204-7 included in the RFP stated that “[b]y submission of an offer, the Offeror acknowledges the requirement that a prospective awardee shall be registered in the SAM database prior to award, during performance, and through final payment” under any contract awarded from the RFP. (FAR 52.204-7 has since been updated to also require SAM registration at the time the offer is submitted). Continuity Global Solutions-Secure Me WLL Security JV submitted the lowest-priced proposal and was evaluated as technically acceptable. CGS-SM was not registered in SAM, however, so the agency contacted the joint venture to inquire whether it would be registered in SAM before award. CGS-SM explained that it had “initiated the SAM registration process and expected the registration to become active within two weeks and prior to award.” Over the next several weeks, the agency checked SAM on four occasions. Each time, CGS-SM remained unregistered. After six weeks had passed, the agency awarded the contract to another offeror. CGS-SM filed a bid protest with GAO. It argued that the requirement to be registered in SAM was a “minor informality or irregularity” that the agency should have waived pursuant to FAR 14.405. The agency responded that FAR 14.405 “only applies in the context of FAR part 14 sealed bidding procedures and therefore is not applicable to the [FAR Part 15] negotiated procurement procedures used here.” The agency further contended that even if FAR 14.405 applied, it only required the agency to give the offeror the opportunity to cure a minor informality; it did not mandate that the informality be waived. The GAO agreed with the agency. It wrote that FAR 14.405 “is not applicable here” because the solicitation was issued under FAR Part 15. The GAO continued: The facts as alleged by the protester show that the agency gave the protester an opportunity to cure its defect of not being registered in SAM when it notifed the protester, on April 14, of its unregistered status and requested verification. Therefore, the protester’s allegations fail to establish anything improper with the agency’s decision, in accordance with FAR provision 52.204-7(d), to proceed with award to the next otherwise successful registered offeror when it found that the protester was not registered in SAM on the date of contract award. The GAO dismissed CGS-SM’s bid protest. As the CGS-SM case demonstrates, a SAM profile doesn’t pop up instantaneously after the process is initiated. Instead, it can take a matter of weeks for the profile to become active. And FAR 52.204-7(a)(4) defines “registered in SAM” to mean an active profile, not just a new profile in process. JVs are often established specifically to bid a particular opportunity. Sometimes the paperwork (or, these days, the pixel-work), such as SAM registration, isn’t appropriately prioritized, or sometimes, the procurement timeline itself is short. Either circumstance can leave JVs struggling to obtain active SAM profiles by the deadline to submit proposals, which–as I noted earlier–is required under the current version of FAR 52.204-7. Joint venture members should register in SAM as soon as possible to make sure there is enough time for the JV’s profile to go “active” before the proposal is due. Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Reminder: Joint Ventures Must Be Registered in SAM first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  9. Happy Labor Day weekend, Readers! Here are 5 fun facts about Labor Day according to Google: -The first Labor Day holiday was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union. The Central Labor Union held its second Labor Day holiday just a year later, on September 5, 1883. -By 1894, 23 more states had adopted the holiday, and on June 28, 1894, President Grover Cleveland signed a law making the first Monday in September of each year a national holiday. -Some records show that in 1882, Peter J. McGuire, general secretary of the Brotherhood of Carpenters and Joiners and a co-founder of the American Federation of Labor, suggested setting aside a day for a “general holiday for the laboring classes” to honor those “who from rude nature have delved and carved all the grandeur we behold.” -Recent research seems to support the contention that Matthew Maguire, later the secretary of Local 344 of the International Association of Machinists in Paterson, New Jersey, proposed the holiday in 1882 while serving as secretary of the Central Labor Union in New York. -According to the New Jersey Historical Society, after President Cleveland signed the law creating a national Labor Day. Have a great, relaxing, long weekend and here are some newsworthy articles in federal government contracting this week. SBA Awards Funding for Veteran Federal Procurement Entrepreneurship Training Program [SBA]The Goldilocks principle: Getting rapid contracting ‘just right’ [DefNews]Hicks says DOD will take ‘meaningful action’ to remove barriers for small contractors [FedScoop]Strong Growth Expected in Federal IT Spending [NatDefMag]Lawmaker to Propose Bill to Incentivize Industry Cybersecurity Cooperation Within Days [NextGov]Air Force Software Chief Provides Update on DOD’s Enterprise DevSecOps Initiative [NextGov]FASC has opportunity to bring supply chain efforts under its umbrella [FedNewsNet]Businessman Sentenced to 14 Months in Prison for Paying Bribes to Federal and D.C. Employees [DoJ]General Services Administration Acquisition Regulation (GSAR); Extending Federal Supply Schedule Orders Beyond the Contract Term [FedReg]GSA awards coworking space contract in bid to rethink federal office space [FedNewsNet]Department of Defense 5G lead Evans steps down [FedScoop]New Jersey Healthcare Staffing Company Pays $263K to 46 Workers at Veterans’ Medical Centers Following US Department of Labor Investigation [DoL]Obituary: GSA’s Rob Coen [FedNewsNet] The post SmallGovCon Week in Review: August 30-September 3, 2021 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  10. For many contracts, large businesses must establish and have the government approve a subcontracting plan that details the goals and efforts the large prime contractor will take to award subcontracts to various types of small businesses. Well, how does the government hold large businesses accountable for these goals? The FAR will soon have a final rule addressing good faith efforts to comply with a small business subcontracting plan. Back in late 2019, SBA updated its own rules on subcontracting plans to address. The SBA rules were intended to make it easier to hold large business prime contractors accountable for meeting the goals of their small business subcontracting plans. In line with the 2017 NDAA, SBA updated its rules found at 13 C.F.R. § 125.3(d) so that it will be a material breach of a contract or subcontract if a contractor with a subcontracting plan fails to comply in good faith with the requirement to submit reports and cooperate with agencies to determine subcontracting plan compliance. Now, the FAR has followed suit in a rule effective September 10, 2021. This will eliminate the inconsistencies between the FAR and SBA rules, which is always nice so both contractors and agencies are on the same page when it comes to subcontracting plans. Here’s a little background on the changes. Small business subcontracting plans are required from large prime contractors when a contract is expected to exceed $750,000 ($1.5 million for construction) and has subcontracting possibilities. These plans are required for the acquisition of commercial items and COTS items. FAR 19.704 lists what is required in these plans. This includes goals for subcontracting efforts to provide fair opportunities to compete for subcontracts for various types of small business concerns, including small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. Failure to make a good faith effort to comply with the plan can result in liquidated damages under FAR 52.219-16. There are two main changes in the rule. First, all indirect costs, with certain exceptions, are included in commercial plans and summary subcontract report (SSRs). Second, revised FAR 19.705-7 now has examples of a good faith efforts to comply with a subcontracting plan, and examples of a failure to make a good faith effort. Here are some takeaways from the implementation of this rule. Material Breach. The comments to the rule make clear that “a failure to make a good faith effort to comply with a subcontracting plan is a material breach, sufficient for the assessment of liquidated damages, and also for other remedies the Government may have.” So, this is not something to be taken lightly by prime contractors operating under a subcontracting plan. Key Good Faith Actions. The rule provides examples of actions that indicated good faith efforts to comply with the subcontracting plan. Here are a few of those: Market research to identify small businesses “through all reasonable means, such as searching SAM, posting notices or solicitations on SBA’s SUBNet, participating in business matchmaking events, and attending preproposal conferences.”“Assisting interested small businesses in obtaining bonding, lines of credit, required insurance, necessary equipment, supplies, materials, or services.”“Participating in a formal mentor-protégé program with one or more small business protégés.” Like the SBA rule, the FAR rule now provides examples of actions that could be considered “failure to make a good faith effort to comply with a subcontracting plan” at FAR 19.705-7. Contractors should take a close look at these examples. But here are some highlights: Turning in subcontracting plan reports late.Not paying small business subcontractors “terms of the contract” with them.Not having a designated employee to monitor the subcontracting plan.Failure to maintain records or procedures to show compliance with subcontracting plan requirements.Not doing market research (such as outreach, industry days, and database searches) to identify small business subcontractors.“If a contractor does not either correct substantiated findings or participate in subcontracting plan management training offered by the Government, it could be perceived by the contracting officer as a failure to make a good faith effort.” But the rule is clear that agencies need to look at “the totality of the contractor’s actions” and, interestingly, mere failure “to meet its subcontracting goals does not, in and of itself, constitute a failure to make a good faith effort.” And there is an example of what may constitute a valid explanation: if there are no available small business sources for certain types of work. Rebuttal. Note that there is an opportunity for a contractor to respond to an accusation of failure to make good faith efforts. In the rule on liquidated damages, it states: “Before the Contracting Officer makes a final decision that the Contractor has failed to make such good faith effort, the Contracting Officer shall give the Contractor written notice specifying the failure and permitting the Contractor to demonstrate what good faith efforts have been made and to discuss the matter.” As in most things in dealing with government agencies (and other aspects of life), failure to respond can be taken as an admission of fault. This new rule is important for both large prime contractors and subcontractors. Prime contractors need to make sure they are making these good faith efforts to comply and provide actual opportunities for subcontractors. By that same token, it’s good for small business subcontractors to know about these rules as well and take advantage of these opportunities. Now that the FAR has been updated, there’s no excuse for large prime contractors not to comply and no excuse for agencies not to enforce these rules. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post FAR Update: Good Faith in Small Business Subcontracting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  11. Hello and happy Friday to all of our readers. It’s an exciting and busy time in Lawrence, Kansas with all of the college students flowing back into our city. It was also another busy week in federal government contracting. Enjoy the articles that we have put together for you. Have a great weekend and stay cool. GSA hits 11 years of top marks on small business procurement scorecard [FedNewsNet]Army Issues Solicitation for $10B IT Enterprise Solutions-4 Hardware Contract Vehicle [GovConWire]Death of the JEDI: Pentagon Learning from Terminated Cloud Initiative [NatDefMag]Cyber experts seek clarity on NIST supply chain framework [Fedscoop]House Bill Aims to Bridge Acquisition ‘Valley of Death’ In Race to Counter China [NextGov]Florida Man Pleads Guilty To Procurement Fraud [DoJ]With Afghan government falling, Pentagon deciding what to do with money for security forces [FedNewsNet]What another continuing resolution could mean for contractors in 2022 [FedNewsNet]Industry Groups Work to Help an Unknown Number of Contractors Get Out of Afghanistan [GovExec]FACT SHEET: The Build Back Better Agenda Will Provide Greater Tax Fairness for Small Businesses [Whitehouse]SBA Administrator Isabella Casillas Guzman Statement on meeting with President Biden, Cabinet Officials, Private Sector Leaders to Discuss Strengthening Cybersecurity for America’s Small Business Economy [SBA]GAO report identifies 10 government agencies researching facial recognition [Fedscoop]Kendall merges Air Force acquisition offices to support Space Force [FedScoop]Maryland Subcontractor Pays $531K in Back Wages to 45 Ironworkers After US Department of Labor Investigation [DoL]AFRL’s Entrepreneur Opportunity Program turns people, ideas into new private sector businesses [USAF] The post SmallGovCon Week in Review: August 23-27, 2021 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  12. SBA’s requirement that 8(a) participants maintain a bona fide place of business in the geographic location of any 8(a) construction contracts has been an encumbrance for many federal contractors–even prior to the global pandemic. But fortunately, SBA has recently recognized the additional challenges that COVID-19 has caused for 8(a) contractors seeking to comply with this rule. And as such, SBA has suspended this requirement in an effort to help our nation’s small disadvantaged businesses during these arduous times. Under SBA’s current 8(a) Business Development Program regulations, an 8(a) participant must have “a bona fide place of business in the applicable geographic area” to be awarded a contract “if the procurement is for construction[.]” SBA defines “bona fide place of business” as “a location where a Participant regularly maintains an office which employs at least one full-time individual within the appropriate geographical boundary.” You can read more about SBA’s bona fide place of business requirements here. On August 25, 2021, SBA “announced a moratorium on the requirement that participants in SBA’s 8(a) Business Development Program must establish a bona fide place of business in a specific geographic area in order to be awarded any construction contract through the 8(a) Program due to the ongoing challenges of COVID-19.” SBA’s suspension of this requirement is effective August 25 “and applies to all 8(a) construction contracts offered to the 8(a) Program between August 25, 2021, and September 30, 2022.” While the bona fide place of business requirement is suspended, 8(a) participants will no longer be required to establish or have a bona fide place of business in any specific geographic location in order to receive seeking 8(a) construction contracts on a sole source or competitive basis. The Associate Administrator for SBA’s Office of Government Contracting and Business Development, Bibi Hidalgo, explained: The SBA is committed to finding innovative ways to assist small businesses, particularly small disadvantaged businesses that have been historically underserved[.] This change to the SBA’s 8(a) program — our flagship contracting program born out of the Civil Rights movement — will help small businesses continue to drive our economic recovery and position themselves at the forefront of our nation’s reimagined economy. The suspension of this cumbersome requirement–even temporarily–will certainly make it easier for many 8(a) contractors to meet the eligibility requirements for 8(a) construction contracts. With increased opportunities to compete for these awards, we can only hope to see further development of our nation’s small disadvantaged businesses. SBA has also encouraged any 8(a) participants with questions about this moratorium to email or reach out to their local servicing District Office or to visit the 8(a) Business Development Program website. The post SBA Suspends Bona Fide Place of Business Requirement for 8(a) Construction Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  13. Congress is at work on the 2022 National Defense Authorization Act–major annual legislation that often includes significant changes to the laws impacting government contractors. This year’s NDAA promises to be no different. Among potential changes: the House Subcommittee on Cyber, Innovative Technologies, and Information Systems has proposed to establish a pilot program to help transition more Phase II SBIR/STTR awardees to Phase III. The Subcommittee proposes to add a Section 822 to the upcoming 2022 NDAA. Section 822 would be named “Designating Certain SBIR and STTR Programs as Entrepreneurial Innovation Projects.” The Subcommittee explains its proposal as follows: This section would direct the Secretaries of Defense and the Secretaries of the military departments to each carry out a pilot program to more effectively transition Small Business Innovation Research programs and Small Business Technology Transfer programs into Phase III. This section would direct the Secretaries to each designate five completed Phase II programs to include in the next Future Years Defense Program as Entrepreneurial Innovation Programs, and to consider them as part of the Department of Defense’s planning, programming, budgeting and executive process. The Secretary of Defense would be responsible for submitting a report annually to the congessional defense committees on the programs selected for the duration of the 5-year pilot. Achieving a Phase III award is, of course, the goal of every SBIR and STTR awardee–but for many Phase I and II awardees, Phase III can prove elusive. If it becomes part of the final NDAA, this pilot program may help a few more awardees reach Phase III–and, as a “pilot,” could serve as the genesis of a broader initiative if it is successful. The House Armed Services Committee is scheduled to consider this proposal on September 1. We will keep you posted on this proposal and other relevant portions of the 2022 NDAA as Congress’s work progresses. Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post House Subcommittee Proposes New SBIR/STTR Phase III Transition Pilot Program first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  14. Given the amount of competition in most solicitations, the ability of a contractor to receive feedback on its proposal can provide valuable information to help the contractor hone its response to best address the key factors sought by the agency in its solicitation. On those rare occasions when an agency reopens its solicitation and provides feedback to the individual offeror’s initial proposal, the contractor is provided such an opportunity–except when the contractor gets left out of the feedback party. In a recent decision, an agency failed to disclose a flaw it first identified in its reevaluation of a contractor’s unchanged proposal after a corrective action. When the proposals were evaluated after the corrective action, the contractor ended up losing an award for which they were previously selected. As a result, the contractor filed a protest primarily asserting that, because the agency failed to provide feedback on its proposal, the agency’s evaluation of the proposal was unreasonable. GAO sustained the protest. The case is Sunglim Engineering & Construction Company, Ltd., B-419067.3 (August 6, 2021). In March 2020, the Department of the Army, Corps of Engineers issued a request for proposals, to provide paving and related construction services at airfields in South Korea. The agency received proposals from 10 offerors, including Sunglim as well as Yibon Construction Co., Ltd. The agency determined that the management plan included in each offeror’s proposal was the most important factor to consider. In its evaluation, the agency excluded several proposals from consideration, including Yibon’s, because it failed to comply with certain solicitation requirements. In evaluating Sunglim’s proposal the agency identified several strengths and no weaknesses with respect to the key factor, the management plan. Based upon this evaluation, the agency assigned Sunglim’s proposal the highest rating, “outstanding” and ultimately selected Sunglim’s proposal for award. Yibon filed a protest of the award with GAO, challenging the agency’s exclusion of its proposal from the competition. In response to Yibon’s protest, the agency decided to take corrective action on the basis that “the solicitation’s instructions might be confusing.” The agency subsequently suspended performance of the contract awarded to Sunglim. The agency also issued a solicitation amendment that clarified the solicitation requirements and, among other items, requested revised proposals from all of the original offerors. Along with the amendment, the agency sent discussion questions to some offerors, which included weaknesses that the agency identified in evaluating their proposals. The agency’s discussion letter to Sunglim did not provide information as to any aspect of the proposal that it could strengthen because the agency’s evaluation of Sunglim’s initial proposal did not identify any such weaknesses. Both Yibon and Sunglim submitted revised proposals; Sunglim’s was not materially changed from its initial proposal. A new agency evaluation board, in reviewing Sunglim’s revised proposal, identified multiple strengths, but also identified a weakness in the management plan proposed. Because of this weakness, Sunglim received a rating of “good” instead of the “outstanding” rating the agency assigned to the initial proposal. In evaluating Yibon’s revised proposal the evaluation board identified several strengths and no weaknesses under its proposed management plan and assigned a rating of “outstanding.” Based on the evaluation of Yibon’s management plan, and because of its lower price coefficient, the agency selected Yibon’s proposal for award. In other words, Yibon had now replaced Sunglim as awardee. Sunglim subsequently filed a protest challenging the agency’s evaluation of its revised proposal. Sunglim argued that the relevant part of its proposal submitted following the agency’s corrective action had not materially changed from its initial proposal and the agency failed to conduct meaningful discussions when it issued the amendment to the solicitation. In response, the agency acknowledged that the evaluated weakness in Sunglim’s revised proposal under the most important factor, management plan, “resulted in Sunglim’s management plan rating declining from Outstanding to Good.” However, the agency asserted that it could not have identified this weakness to Sunglim in the discussion letters issued because the initial evaluation identified no significant weaknesses or deficiencies. Since the weakness did not exist in the record there were no discussion items to provide to Sunglim. GAO disagreed with the agency and sustained Sunglim’s protest. GAO in its ruling expressed that “discussions with offerors must be meaningful.” In explaining meaningful GAO wrote “[a]n agency must point out weaknesses, excesses or deficiencies in a proposal that require correction or amplification in order for the offeror to have a reasonable chance for award. At a minimum, the agency must discuss all deficiencies, significant weaknesses and adverse past performance information to which the offeror has not had an opportunity to respond.” In this regard, when an agency seeks revised proposals, its reevaluation may identify flaws in a materially-unchanged proposal that the agency would have been required to discuss with the offeror had the flaws been identified when the proposal was initially evaluated. In that situation, the agency must reopen discussions in order to disclose its concerns, thereby giving all offerors similar opportunities to revise their proposals.” GAO concluded that the weakness the agency identified in Sunglim’s final proposal was under the most important evaluation factor and the factor that ultimately led to the agency awarding the contract to Yibon. Therefore, the flaws the agency identified in Sunglim’s proposal were a significant factor in Sunglim losing the award. As a result, GAO determined that the agency was obligated to reopen discussions with Sunglim to disclose the newly-identified, pre-existing weakness. Because the agency did not reopen discussions, the agency failed to conduct meaningful discussions with Sunglim. GAO sustained Sunglim’s protest and recommended that the agency reopen the procurement, conduct appropriate discussions with all offerors whose proposals were in the competitive range, request revised proposals, and make a new source selection decision. In this matter, the agency arguably could not provide a discussion of Sunglim’s weaknesses which were not originally identified. However, as GAO agreed, the agency should have disclosed the flaws to Sunglim once they were discovered. Sunglim, in effect, was punished because it originally provided a good proposal. GAO’s decision supports a basic sense of fairness in procurements; that all offerors have the same information and same opportunities in the solicitation process. This same principle should hold true in cases where an agency reopens a solicitation, seeks revised proposals and provides discussion items to the prior offerors. The underlying purpose of an agency issuing discussion letters is to make offerors aware of weaknesses identified in their proposals with the ultimate goal of getting the best response. Need help with a government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Meaningful Discussions Must Disclose Proposal Weaknesses Discovered After a Corrective Action first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  15. It has been a long time coming, but the Department of Defense, in conjunction with the GSA and NASA, are finally issuing a final rule amending the FAR guidance regarding limitations on subcontracting. In this post, we are going to explore just what these changes are and what they mean for government contractors such as yourself. The hope is this brief summary and analysis will provide you some insight as to just what the new rules do. If you can believe it, this latest rule change is based on regulatory changes made by the SBA all the way back in May of 2016 to implement statutory requirements from the National Defense Authorization Act for Fiscal Year 2013! In fairness, the DoD, GSA, and NASA did propose this rule back in December 2018, although we wonder why it took another two and a half years to reach this point. In any event, this new rule will come into effect on September 10, 2021. We did discuss this rule earlier, back in December 2018. As we noted then, “The substance of the proposed FAR rule isn’t terribly surprising, nor should it be. Substantively, the rule largely conforms with the SBA’s rule codified in 13 C.F.R. 125.6. Indeed, in its commentary discussing the proposed rule, the FAR Council repeatedly mentions the intent to align the FAR with the SBA’s regulation.” With this new rule, FAR clause 52.219-14, Limitations on Subcontracting, will have the same language as the SBA rule stating that subcontracts to similarly situated entities will not count against the limit on subcontracting. No longer will that clause simply state, for example, that for services, “[a]t least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.” Now it will state, for services, that the prime “will not pay more than 50 percent of the amount paid by the Government for contract performance to subcontractors that are not similarly situated entities.” In other words, the calculation language for the FAR limitation on subcontracting will now match the SBA rule. Additionally, FAR 19.001 is changing. The rule finally provides a definition for “similarly situated entities.” Although there was a general understanding of what made an entity “similarly situated”, it lacked an actual definition. The rule will state: “Similarly situated entity means a first-tier subcontractor, including an independent contractor, that— (1) Has the same small business program status as that which qualified the prime contractor for the award (e.g., for a small business set-aside contract, any small business concern, without regard to socioeconomic status); and (2) Is considered small for the size standard under the NAICS code the prime contractor assigned to the subcontract.” In summary, an entity is similarly situated if it has the same sort of SBA classification as the prime contractor and is a small business under the NAICS code of the subcontract. If the prime contractor is an 8(a) certified company and the subcontract is for, let’s say, roofing contractor services, then the subcontractor will have to be an 8(a)-certified company with average annual receipts of less than $16.5 million (assuming that is the size standard applicable to the subcontract). If the contractor is simply a small business with no further statuses, then the subcontractor only needs to be a small business with less than $16.5 million in average annual receipts (or whatever “NAICS code the prime contractor assigned to the subcontract”). In other words, it is unlikely much will be changed in terms of how SBA will treat these matters, but it cements the long-existing standards into the FAR, which provides some clarity. For FAR 19.505, on limitations on subcontracting alone, we now have clarification that the 50 percent limitation only applies to the services part of a mixed contract if the contract has a services NAICS code, and only applies to the supplies part of a mixed contract if the contract has a supplies NAICS code. Additionally, the regulation now makes it clear that if similarly situated subcontractors use their own subcontractors, the work the latter is counted towards the limitation on subcontractors, without exception. In addition, for both the limitations on subcontracting and the nonmanufacturer rule, they are being extended to apply to contracts awarded using the HUBZone price evaluation preference. Additionally, the rules in this regulation are extended to cover set-asides for federal supply schedules for small businesses under FAR 8.405-5 and indefinite-delivery contract orders outside of the fair opportunity process under FAR 16.505. The final rule reflects the clarification that the nonmanufacturer rule and the limitations on subcontracting apply to set-asides and sole source awards made pursuant to subparts 19.8, 19.13, 19.14, and 19.15 of FAR, as well as awards using the HUBZone price evaluation preference pursuant to subpart 19.13, regardless of dollar value. In any event, we hope this information gives you some sense of what these changes mean. That said, as always, this doesn’t constitute legal advice. If you have any specific concerns regarding compliance with these new rules or how they specifically might apply in a given situation, you should consult an attorney. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post FAR Final Rule on Limitations on Subcontracting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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