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  1. It’s Friday, which means it’s time for the SmallGovCon Week In Review. In this edition, we’ll look at a potential impact to the change to DUNS numbers, cybersecurity requirements, and increased opportunities with the Corps of Engineers. Have a great weekend, everyone! Army Corps of Engineers turns to private sector in face of budget cuts. [FederalNewsNetwork] How DUNS Number Changes Could Affect Your Business. [Nav.com] Keeping up with DoD cybersecurity compliance demands. [GTPAC.org] Sunnyvale firm to pay $545,000 to settle claims it sold Chinese-made equipment to U.S. government. [EastBayTimes] How oversight issues led to ineligible contract awards. [FederalTimes] GSA has adjusted some components of its IT Schedule 70 contract, the federal government’s largest IT purchasing vehicle, to give agencies a more efficient way to buy software services. [Federal Times] View the full article
  2. Government contractors seeking to be certified through the Vets First Verification Program under the VA’s Center for Verification and Evaluation have to submit a number of documents. We’ve recently been hearing that CVE is taking a closer look at some of these documents, and this is in line with VA’s recent rule change expanding its list of required documents for verification. Specifically, CVE will examine franchise agreements and similar documents like distributor agreements. Depending on the language in those agreements, this could lead to a denial of CVE verification. Because of that, we offer a reminder of CVE’s position on these types of agreements, which seems to still be quite strict in spite of regulatory changes implemented last fall. One important aspect of the SDVOSB rules is that one or more service-disabled veterans must be in unconditional control of the business. “Control by one or more service-disabled veterans means that both the long-term decisions making and the day-to-day management and administration of the business operations must be conducted by one or more service-disabled veterans.” 13 C.F.R. § 125.13(a) The SBA’s consolidated SDVOSB rules at 13 C.F.R. § 125.13(i), which took effect in October 2018, contain a number of rebuttable presumptions about what can lead to loss of veteran control. The rule states that “[n]on-service-disabled veteran individuals or entities may not control the firm. There is a rebuttable presumption that non-service-disabled veteran individuals or entities control or have the power to control a firm in any of the following circumstances, which are illustrative only and not inclusive.” In particular, one rebuttable presumption of non-veteran control is where “usiness relationships exist with non-service-disabled veteran individuals or entities which cause such dependence that the applicant or concern cannot exercise independent business judgment without great economic risk.” In 2016, the CVE issued a fact sheet that discusses when franchise agreements might create control issues for an SDVOSB under these rules. While the fact sheet was issued before the consolidation of SDVOSB rules under SBA, it’s still the best guidance out there from the VA as it appears that CVE will continue to follow it. In addition, the VA’s verification rules, as of October 1, 2018, now includes franchise agreements in the list of required documents found in the rules at 38 CFR § 74.12. Prior to this date, franchise agreements had not been a required document in the regulation. The fact sheet says that “[m]ost franchise agreements seek to maintain control of the company in a manner which prevents the Veteran from making decisions concerning day-to-day operations and the overall direction of the company.” In other words, it can be difficult, if not next-to-impossible, to obtain verification as an SDVOSB when operating under a franchise agreement. The fact sheet provides further examples of provisions that could create control by someone other than a service-disabled veteran: Franchisee shall participate in the systemwide marketing and advertising established by the franchisor. Franchisee shall contribute to marketing and advertising fees. The franchise owner must devote full business time and attention to the operation of the franchise, cause the franchise to be effectively and efficiently operated, and attend such training sessions as may be reasonably deemed necessary. Franchisee may not delegate primary responsibility for the operation of the franchise, the primary place of business, or any additional office or training facility, without franchisor’s written consent. The franchise owner may at no time be employed by, perform any service for, or operate any business of any kind other than the franchise business, wherever located, without the prior written consent of the franchisor. If the franchisor consents to the franchisee being employed by, performing any service for, or operating any other business, then the franchisor may require the franchisee to delegate primary responsibility for the operation of the franchise business. These control concerns could also arise in the case of agreements somewhat akin to franchise agreements, such as some distributor agreements. And similar provisions in any ongoing agreement could cause issues with non-veteran control, such as restrictions on sales strategies or restrictions on sale of an ownership interest. While the fact sheet has been out for a while, CVE still appears to be taking an aggressive approach to franchise agreements and agreements somewhat like them, even under the new consolidated SDVOSB rules. It would be a good idea for SDVOSBs and aspiring SDVOSBs to review not only franchise agreements, but also similar agreements such as distributor agreements, prior to submission for CVE verification. Provisions like those listed above could still cause significant problems at CVE. View the full article
  3. Evaluation and selection of an offeror for award of an “Other Transactional Agreement,” or “OTA,” are significantly more flexible than a traditional procurement under the FAR. This was at issue recently in GAO case MD Helicopters Inc., B-417379 (Comp. Gen. Apr. 4, 2019), where GAO clarified that it does not have jurisdiction to hear protests regarding OTA award decisions. Generally, OTAs, are utilized by the Department of Defense for research and development and prototype related projects under 10 U.S.C. § 2371b. Notably, OTAs are not covered by the FAR. Instead, OTAs are intended to be a more efficient and highly adaptable means of quickly securing certain types of high-dollar procurements, usually valued at between $100 million and $500 million. OTAs come in three flavors: Research, Prototype, and Production OTAs. Research OTAs, as the name implies, are for research and development. Prototype OTAs are intended to create prototypes which can transition into follow-on Production OTAs without competition. Unlike traditional solicitations for goods or services under the FAR, the OTA solicitation process is no where near as regulated and, according to the DoD’s OTA Guide, have included more creative processes like “Tech Demonstrations, Design Sprints, Hackathons, Innovation Workshops, Rodeos, Shark Tank-like presentations, Prize Contests and other similar events.” Additionally, under 10 U.S.C. § 2371b(d)(1)(A)–(D), OTAs may only be awarded if one of four general circumstances exists: At least one nontraditional defense contractor (as defined under 10 U.S.C. § 2302(9)) or nonprofit research institution is participating on a prototype project “to a significant extent”; All significant participants in the transaction other than the Federal Government are a small business or nontraditional defense contractors; At least 1/3 of the total cost of the prototype project is to be paid out of funds provided by sources other than the Federal Government; or By permission from the senior procurement executive for the agency. In the case, MD Helicopters, a small business based in Mesa, Arizona, protested the U.S. Army Futures Command’s decision not to enter into an OTA with MD “for the development of a future attack reconnaissance aircraft competitive prototype,” alleging that the Army incorrectly evaluated its proposal and “otherwise failed to reasonably promote small business participation” under 10 U.S.C. § 2371b(d)(1). GAO, however, confirmed that it does not have jurisdiction to hear protests related to the award of OTAs. While GAO stated that it may review “a timely pre-award protest that an agency is improperly using its other transaction authority to procure goods or services,” it cannot hear protests concerning “the agency’s evaluation of proposals and award decision, which are not within [GAO’s] bid protest jurisdiction” without statutory authority. GAO also clarified the meaning of 4 C.F.R. § 21.5(m), which states that “GAO generally does not review protests of awards, or solicitations for awards, of agreements other than procurement contracts.” MD argued that “generally” indicated that GAO could, within its discretion, hear protests of OTA award decisions, but GAO stated instead that “the term is not intended to connote some reserved discretion for GAO to consider hearing cases involving the award or proposed award of an OTA, or other non-procurement agreement.” Instead, the use of “generally” “connotes that GAO may, in limited circumstances, hear a protest that tangentially impacts an agency’s award or proposed award of other than a procurement contract.” In this case, GAO clarified, it could only hear an OTA related protest if it alleged that an agency “improperly [used] its statutory OTA authority to acquire goods or services that should be acquired via a procurement contract.” As OTAs are predicted to become more and more common, small business contractors and others should remain aware of the differences between OTAs and traditional FAR based procurements. For questions about OTAs, contact us! View the full article
  4. Happy Friday, everyone! It’s a beautiful day in Lawrence, as we seemed to have dodged the bullet with the massive mid-April winter storm that’s affected our friends up north. No matter where you’re located, we hope you’ve had a great week, too. Before we head out for the weekend, it’s time for the Week In Review. In this week’s edition, we’ll take a look at the nominee to head the SBA, VA contracting goals, a new DoD rule to implement the nonmanufacturer rule to 8(a) contracts, and more. Have a great weekend! Trump to nominate US Treasurer to replace McMahon as SBA head. [FederalNewsNetwork] VA increases contracting with SDVOSBs. [VA.gov] Thornberry considering punishing DoD for moving too slowly on new laws. [FederalNewsNetwork] Pentagon contract managers failed to police overpayments to executives. [GovExec] A proposed DoD rule would make the non-manufacturer rule apply to all 8(a) contracts. [Federal Register] What I wish I had known. Tips for government contracting. [ClearanceJobs] Watchdog questions NSA’s $636 million in award fee incentive contracts. [GovExec] View the full article
  5. The Contract Disputes Act requires a contractor to present a claim to the contracting officer “within 6 years after the accrual of the claim.” 41 U.S.C. 7103(a)(4)(A). But a claim doesn’t typically accrue until the contractor should have known that it was damaged by the Government. As discussed below, some legal claims might not arise until a contractor takes discovery in an appeal already before the Civilian Board of Contract Appeals. The contract at issue in Amec Foster Wheeler Env’t & Infrastructure, Inc., CBCA 5168 et al. (February 27, 2019) related to construction work on the historic Alcatraz prison in San Francisco Bay. In particular, the relevant task order, awarded in September 2011, required Amec Foster to perform stabilization and repair work to the underground citadel and shower rooms. Amec Foster alleged that it substantially completed the project in June 2014. Initially, Amec Foster appealed the contracting officer’s denial of a certified claim for an equitable adjustment and a 521 day extension. Relying on the theories of constructive change and breach of the duty of good faith and fair dealing, Amec Foster alleged that the National Park Service provided inadequate specifications and significantly changed the work. After discovery (discovery is a process by which one party to litigation obtains information from the other party) was conducted in this first appeal, Amec Foster submitted a new certified claim to the contracting officer for monetary relief largely overlapping with its appeal. The contracting officer denied the claim, and Amec Foster appealed. It raised two new theories of recovery: superior knowledge and negligent estimate. Specifically, Amec Foster alleged that NPS knew, or should have known, that the prison was “crumbling ” faster than bidders were told and that the contractor would need to replace more structural beams (and use beams with more extensive shoring) than the statement of work indicated. NPS argued that Amec’s superior knowledge and negligent estimate claims were barred by the statute of limitations. In NPS’s view, Amec Foster knew, when it began work in January 2012, that the prison’s condition allegedly was not accurately reflected in the solicitation. With respect to the superior knowledge claim, NPS further argued that Amec Foster could have established that NPS knew of the prison’s condition simply because NPS owned and operated the facility. And, with respect to the negligent estimate claim, NPS argued that Amec Foster should have discovered misestimates when it was actively engaged in developing a shoring plan in early 2012. CBCA, however, agreed with Amec Foster, holding that Amec Foster plausibly didn’t have enough information to assert its two new claims before taking discovery in the first appeal. It further refused to accept a more general legal proposition: that a contractor must plead every possible theory when submitting a claim to a contracting officer. [NPS’s] contention that Amec could have asserted superior knowledge and negligent estimate claims as soon as it started work in 2012 implies that a contractor should consider asserting every conceivable legal theory of relief as soon as it encounters an unforeseen condition. We cannot endorse that view. As [NPS] acknowledges, Amec’s claims at issue here differ in their operative facts from constructive change or differing site conditions claims. . . . A contractor cannot in good faith assert a claim based on withholding of superior knowledge or similarly misleading conduct unless the contractor has a solid evidentiary basis to allege such conduct. So, if you have claims against the Government, raise theories of recovery that you have facts to support. If, later, you discover facts supporting additional theories, then you may be able to lump those in with your dispute. CBCA doesn’t expect, or even encourage, you to plead every theory under the sun when filing a claim or an appeal. But, of course, if you have facts to support a legal theory, and fail to raise it, you may be barred from raising down the road. View the full article
  6. In late 2018, Congress passed the Small Business Runway Extension Act, which had a single purpose: change the three-year average annual receipts calculation period (for determining small business eligibility) to a five-year calculation period. Small businesses, for the most part, have been watching with bated breath for the SBA to comply with the Runway Extension Act. But as we’ve previously written, the SBA has thus far refused to do so (albeit under shifting rationale). Now, the SBA has cemented its position against applying the Runway Extension Act—according to the SBA, “usinesses must continue to report their annual receipts based on a 3-year average until the SBA amends its regulations.” I’m not convinced the SBA has it right. The SBA’s latest statement on the Runway Extension Act is from an April 10, 2019 whitepaper, discussing its revised size standard methodology. Responding to a comment about its proposal, the SBA briefly discussed the Runway Extension Act: The [Runway Extension Act] amended section 3(a)(2)(C)(ii)(II) of the Small Business Act by changing the period for calculation of average annual receipts of businesses providing services from three (3) years to five (5) years. This change to the calculation of annual average receipts requires the issuance of a proposed rule and approval by the SBA Administrator. Accordingly, SBA will be initiating a rulemaking to implement the new law into SBA’s regulations. Businesses must continue to report their annual receipts based on a 3-year average until SBA amends its regulations. This statement is notable for two reasons. First, it suggests the SBA has abandoned its argument that Runway Extension Act doesn’t apply to the SBA. By confirming that it will take some action in response to the Runway Extension Act, the SBA must agree that the Act applies to the SBA—if the SBA thought otherwise, one would assume that its whitepaper would have said so. Second, it (again) confirms the SBA’s belief that its rules—as opposed to a law, passed by Congress and signed by the President—carry the day. This belief, however, seems dubious: because the Runway Extension Act should be considered effective as of the date it was signed, see Gozlon-Peretz v. United States, 498 U.S. 935, 404 (1991) (“It is well established that, absent a clear direction by Congress to the contrary, a law takes effect on the date of its enactment.”), and because a statute trumps over an inconsistent regulation, see Farrell v. United States, 313 F.3d 1214, 1219 (9th Cir. 2002) (“It is well-settled that when a regulation conflicts with a subsequently enacted statute, the statute controls and voids the regulation.”), the SBA’s insistence that it must first amend its regulations for the Runway Extension Act to become applicable seems misplaced. In any event, the SBA’s latest statement shows that, as of now, it still believes the 3-year reporting period applies. For some businesses, it might not matter whether their size is calculated under a three-year or five-year period—they’d be small (or large) regardless. For others, though, application of one reporting period over the other could make all the difference in its small business eligibility. And though the SBA says that it will issue a rulemaking to incorporate the Act, it hasn’t said when that rulemaking might come; small businesses who might benefit from the Runway Extension Act are therefore still in a lurch, waiting for the SBA to comply. If you have questions about the Runway Extension Act, or how its application might impact your business, please give me a call. View the full article
  7. What are federal contractors supposed to do when FedBid (now Unison) requests additional information related to a proposal and the awarding agency ignores that information in its awarding decision? GAO recently held that the agency must consider all information gathered by reverse auction providers. In BCW Group, LLC, B-417209, 2019 WL 1398813 (Comp. Gen. Mar. 27, 2019), BCW protested the Department of Interior, Bureau of Indian Affairs’ award to another offeror. The award was the result of a reverse auction conducted by FedBid, on behalf of the agency. The reverse auction was for work related to procurement, installation, and maintenance of Promethean ActivPanels, or other similar products. BCW’s bid included a general verification that it complied with “all terms listed by the Buyer[,]” but the bid did not specifically state that it included the required one-year maintenance. At the close of the reverse auction, a representative of FedBid reached out to BCW asking the following: Is your bid price correct, complete (meaning all items requested are included in your bid) and inclusive of all costs the Buyer would incur if your bid is selected? In response, BCW confirmed that the price included, among other things, “once a year maintenance for 3 years on the panels I install.” The agency subsequently reviewed the five submitted bids and chose a different offeror because BCW’s offer, although lower priced, did not specifically mention the required maintenance. The agency did not review the exchange between FedBid and BCW, where BCW confirmed that maintenance was included in its offer, because the contracting officer was “not aware that FedBid” had the post-bid exchange with BCW regarding the maintenance issue. BCW protested that its lower priced bid should have been accepted because it met the procurement requirements. The core issue addressed by GAO was how FedBid and the agency should have handled FedBid’s follow up question and BCW’s response. To understand FedBid’s role in this procurement, we need to provide a brief overview of FedBid and reverse auctions, compliments of GAO. FedBid was the largest third-party provider authorized to conduct government-wide reverse auctions. While FedBid’s website is still active, it was recently acquired by Unison. (All references to FedBid within this blog post incorporates Unison as they are effectively one and the same following the acquisition). Reverse auctions are intended to encourage multiple vendors to compete against each other for a solicitation by bidding lower than other vendors for that solicitation. Theoretically, this lowers the price the agency pays for a fairly uniform product or service. Generally, the bidder who submitted the lowest price bid, in line with the procurement’s technical requirements, will be the awardee. In 2017, reverse auctions accounted for approximately $1.5 billion in government acquisitions. With this background, there is still the question of how BCW lost the bid even though it was the lowest-priced offeror and its proposal satisfied the procurement’s technical requirements. Fortunately, GAO provides a clear answer. Here, FedBid was conducting the reverse auction on behalf of the Bureau of Indian Affairs. In this arrangement, the agency authorized FedBid to act on the agency’s behalf. When FedBid reached out to BCW for clarification as to the provision of maintenance on the provided products, it did so on behalf of the agency. GAO wrote that “FedBid is a private company. However, as we have stated before, when FedBid hosts a reverse auction on its website for the government, it acts as an agent for the agency conducting the procurement.” In essence, BCW’s communications with FedBid were as if BCW was communicating directly with the agency. With this close interworking of FedBid and the agency, GAO found that “the agency was required to consider” the information provided by BCW at FedBid’s request “in evaluating the bids it received.” GAO said it did not matter that the contracting officer claimed that he did not know FedBid reached out to BCW because “the agency authorized FedBid to act on the agency’s behalf.” BCW was the lowest bidder and also complied with FedBid’s request for information regarding its maintenance of the Promethean ActivPanels, which complied with the Solicitation. For these reasons, GAO found ” that the agency was required to consider [FedBid’s requested] information before making an award.” Unfortunately for BCW, the awardee had already performed the contract, so GAO only awarded BCW reimbursement for its bid preparation costs. For the rest of us, BCW’s lesson is one well-learned. When an agency relies on a third-party reverse auction provider for a procurement, the agency must consider all communications between that provider and the offerors in making its awarding decisions. View the full article
  8. Past performance is an important evaluation factor in many solicitations. Essentially, it allows an agency to guess as to the likelihood of an offeror’s successful performance under a solicitation by looking to its history of performance on similar projects in the past. GAO recently confirmed it is “axiomatic” that past performance examples should align with the solicitation’s requirements. If an offeror submits unrelated examples, it risks a downgraded past performance score. The operative facts of Technica LLC, B-417177 et al. (Mar. 21, 2019) are relatively straightforward: Technica was one of three offerors on a solicitation issued by the Transportation Security Administration for airport screening services at Punta Gorda Airport, in Punta Gorda, Florida. The solicitation was issued on a best value basis and included an assessment of an offeror’s past performance. The past performance evaluation factor informed offerors that their submitted past performance examples would be assessed for relevance—that is, whether the example reflected a comparable level of size, scope, and complexity to the services sought under the solicitation. Technica submitted three past performance examples, but TSA considered only one to be relevant to the airport passenger and baggage screening services sought. The remaining two examples submitted by Technica were for warehousing and distribution services, and operations, management, and logistics services; neither of these two examples involved screening airline passengers or baggage. Based on this one example, TSA assigned Technica a satisfactory confidence past performance rating—a step below the awardee’s significant confidence rating. Technica challenged the past performance evaluation, arguing that TSA erred by not considering all three of its submitted past performance examples. According to Technica, TSA’s failure to consider its two submitted past performance examples reflected an unstated evaluation criterion: namely, that the examples submitted had to involve airport screening support services. Because the solicitation did not directly require past performance to involve these services, Technica apparently believed TSA should not have held its examples to this standard. GAO denied Technica’s protest. Doing so, it noted that “the past performance factor explicitly contemplated consideration of the scope of the past performance examples.” Even if the solicitation did not specifically require offerors to submit airport screening performance examples, GAO concluded that the solicitation’s evaluation criteria should have made this point obvious: We consider it axiomatic that an agency may reasonably find a past performance example not relevant where the scope of the contract did not involve performance any of the airport security screening services being solicited. In short: because Technica’s two past performance examples did not align to the solicitation’s requirements, TSA was justified in not considering them in its evaluation. *** What’s the takeaway from Technica? Simple, really: an offeror should submit past performance examples that clearly align with the solicitation’s stated requirements, and the proposal should explain how its performance under those projects reflects its likelihood of successful performance on the work at hand. If you have any questions about past performance evaluations, please give me a call. View the full article
  9. Happy Friday, everyone! With what seemed like the longest winter ever now officially behind us, it’s getting to be the time of year stuffed with weekend activities. At least that’s the case in my house: this weekend, my son has his first soccer game (and his dad has his first game coaching). We hope that you’re gearing up for a weekend, too. Before we punch out, though, let’s review the news of the week. In this edition of the Week In Review, we’ll look at proposed improvements to DoD’s procurement process, additional cybersecurity considerations, improvements being made for the DoD procurement process, more cyber security suggestions, efforts to improve the supply chain, and more. Have a great weekend! Intelligence leaders look to secure the supply chain from beginning to end. [Government CIO] DoD eyes amendments to fixed-price contract regulations. [InsideDefense] DoD will crack down on contractors not complying with cybersecurity standards. [FederalNewsNetwork] Contractor for a renovation project at the Federal Reserve Bank of New York to pay $420,335 in back wages. [DOL] White House targeting opportunities to use emerging technologies to improve the federal acquisition process. [FedScoop] Sen. Marco Rubio unveils Federal Advance Contracts Enhancement or FACE Act. [FloridaDaily] Outsider tips for succeeding in government procurement. [SpendMatters] View the full article
  10. For service-disabled veteran owned small businesses, or SDVOSBs, contracting with the VA, verification by the VA’s Center for Verification and Evaluation, or CVE, is essential. CVE verification is mandatory to compete for VA SDVOSB set-asides and listing on the VA’s Vendor Information Pages (VIP). The SBA Office of Hearings and Appeals recently confirmed that notice and opportunity to respond to allegations is required before a business’ verification is cancelled. In Tactical Office Solutions, LLC, SBA No. CVE-104-A (Mar. 18, 2019), Tactical Office Solutions appealed the CVE’s 2018 cancellation of its SDVOSB verification. Tactical received its first Notice of Proposed Cancellation from CVE in June 2016. The notice requested clarification of Tactical’s relationship with FENS Associates, LLC. FENS’ Managing Partner was the father of Tactical’s sole owner and the two businesses operated out of the same building. Tactical responded, demonstrating that FENS and Tactical had no relationship beyond arms-length transactions. Tactical rented office space on the second floor of the building, while FENS operated separately out of the first floor. Tactical did hire FENS as a subcontractor for specific projects, but overall, Tactical explained, no one at FENS had any ability or authority to make any decisions for Tactical. CVE agreed and based on the evidence submitted by Tactical, agreed to maintain Tactical’s verification. Thus, Tactical remained an eligible SDVOSB with its listing on VIP. A little over two years later, Tactical received another Notice of Proposed Cancellation much less congenial than the first. In the second Notice, CVE accused Tactical of lying in its response to the initial Notice and alleged that FENS and Tactical in fact co-mingled their accounting practices, shared office space, and shared employees. Notably, CVE did not attach any documents to verify its allegation, but instead relied “almost entirely on ‘findings’ purportedly made by the VA [Office of the Inspector General].” Additionally, the second Notice cited 38 C.F.R. § 74.2(c), which states that “f, after verifying the participant’s eligibility, CVE discovers that false statements or information ha[d] been submitted by a firm, CVE will remove the participant from the VIP database immediately, notwithstanding the provisions of § 74.22.” Notably, 38 C.F.R. § 74.22(a) generally requires proposed cancellation notices to “set forth the specific facts and reasons for CVE’s findings and will notify the participant that it has 30 days from the date CVE sent the notice to submit a written response to CVE explaining why the proposed ground(s) should not justify cancellation.” Despite the “immediate removal” language of 38 C.F.R. § 74.2(c), OHA determined that CVE was in fact required to provide specific facts and explanations for its allegations and to provide Tactical a chance to explain itself. “Due to the vague and conclusory nature of the allegations presented,” OHA concluded that CVE had not provided enough “to meet the requirement that Appellant be informed of ‘the specific facts and reasons’ for its proposed cancellation.” Further, OHA stated that “nder 38 C.F.R. § 74.22, it is improper for CVE to base a cancellation decision on issues that the participant has had no opportunity to address or refute.” While OHA did not explicitly overrule 38 C.F.R. § 74.2(c), which permits CVE to immediately cancel the verification of SDVOSBs it believes has submitted false information during the verification process, OHA’s decision confirms that an SDVOSB has the right to a certain level of due process regarding CVE cancellation decisions. View the full article
  11. Clients who own businesses under one of SBA’s socioeconomic designations have often asked us, what happens after I’m gone? Meaning, if the key owner becomes incapacitated or dies, what happens to the set-aside designation for future contracts and ongoing contracts, and are there restrictions on transferring the ownership interest? While we can’t answer all their questions, my recent article in the March 2019 issue of of Contract Management Magazine (the monthly publication of the National Contract Management Association), outlines some of the key issues and answers from the government contracting perspective. The magazine has nicely allowed us to reprint the article. Click here to read! View the full article
  12. This afternoon, news broke that Linda McMahon, the SBA’s Administrator, is expected to resign. Though people might quibble about specific, individual decisions by the SBA, we believe that Ms. McMahon’s tenure as SBA Administrator has been positive for small businesses. Ms. McMahon has appointed competent and capable individuals within the SBA who genuinely care about advancing the interests of small businesses. The SBA, moreover, has continued to try to make access to federal contracting easier for small businesses—not only through the roll-out of the All-Small Mentor/Protégé Program (which technically started in 2016), but also through major overhauls to the SDVOSB and HUBZone programs. We hope that Ms. McMahon’s successor will continue the SBA’s mission of advancing the interest of small businesses. There’s no word yet on who that successor might be, but we’ll keep you posted. View the full article
  13. It’s a rainy Friday here in Lawrence—the perfect type of weather to either take a nap or read something interesting. Because we can’t do the former, we’ll settle on the latter. In this edition of the Week In Review, we’ll look at a list of the largest government contractors, a new secure cloud, and more examples of #govcon personnel behaving badly. Have a great weekend! DoD testing secure cloud to help small contractors protect data. [FederalNewsNetwork] Ex-Army colonel pleads guilty in contractor kickback scheme. [GovExec] These 30 companies, including Boeing, get the most money from the federal government. [USAToday] A review of NASA’s engineering and technical services contracts. [SpaceRef] Michigan man charged with falsely claiming SDVOSB status in order to receive $12 million in contracts. [Justice.Gov] House oversight committee approves ‘ban the box’ bill for agencies, contractors. [FederalNewsNetwork] What does ‘best-in-class’ really mean for federal contracts? [FederalNewsNetwork] Immediately effective policy memo released for accounting firms auditing the DoD. [Memo] View the full article
  14. The Department of Energy has joined the ranks of government agencies aligning part of its respective small business regulations with the SBA. The DOE has issued a class deviation expanding the pool of companies eligible to be proteges under the DOE mentor-protege program. This deviation comes almost 20 years after DOE first published guidelines for its formal DOE mentor-protégé program and almost three years after SBA formally established a government-wide mentor-protégé program. DOE issued a Class Deviation on the Department of Energy Acquisition Regulation (DEAR) Mentor Protégé Participation on February 21, 2019. The primary purpose of the deviation is to allow all small business concerns to be potentially eligible proteges. Prior to this deviation, only the following types of small businesses could be proteges: those certified in SBA’s 8(a) program; other small disadvantaged businesses; women-owned small businesses; Historically Black College and Universities and other minority institutions of higher learning; service-disabled veteran-owned small businesses; veteran-owned small businesses; and HUBZone small businesses. The deviation’s expansion to all small businesses is a big change. While the deviation better aligns the DOE’s mentor-protégé program with the SBA’s, DOE will still operate its own mentor-protégé program, subject to approval by the SBA. On July 25, 2016, the SBA published a rule establishing a government-wide mentor-protégé program for all small business concerns. One purpose of this rule was to create consistency among most government mentor-protégé programs by more closely aligning them with the SBA’s 8(a) mentor-protégé program. Possibly in an effort to encourage a consolidation of mentor-protégé programs, the rule mandates that most government agencies, DOE included, conducting their own mentor-protégé program must first receive approval from the SBA. The SBA initially approved DOE’s mentor-protégé program in February 2018, and again when it was amended in July 2018. The effect of this deviation is immediate, although it has yet to be formally included in the DEAR. Do not lose sight of the fact that this deviation only expands the pool of small businesses eligible to be a protégé under DOE’s mentor-protégé program. DOE’s mentor-protege regulations still contain many rules which vary from the SBA’s mentor-protege regulations. Let us know if you need any help navigating these regulations as you embark on your own mentor-protégé agreement. View the full article
  15. In late 2017, we wrote that the VA was considering using tiered evaluations to simultaneously 1) comply with the VA’s statutory Rule of Two (and Kingdomware), and 2) address situations in which SDVOSBs and VOSBs might not offer “fair and reasonable” pricing. Since then, the VA has instituted the tiered evaluation process for certain solicitations, using one of three approaches: Tiered Evaluation for SDVOSBs and VOSBs only: Offers made by SDVOSBs are first evaluated. If no SDVOSB submits an offer, or none would result in a award at a fair and reasonable price, then the VA evaluates offers made by VOSBs. If none are submitted, or none would result in a fair and reasonable price, the solicitation is cancelled and resolicited. Tiered Evaluation for SDVOSBs, VOSBs, and small business concerns: This approach first evaluates SDVOSB and VOSB offers as described above. But if no SDVOSB or VOSB submits an offer (on none are submitted at a fair and reasonable price), then the VA evaluates proposals from other small businesses, with 8(a) participants and then HUBZone small business concerns being given priority over other small business concerns as required by 38 U.S.C. 8127(i). If none are submitted by these types of entities, then the solicitation is cancelled and then resolicited as an unrestricted procurement. Tiered Evaluation for SDVOSBs, VOSBs, small business concerns, and large business concerns: This approach first evaluates SDVOSBs, VOSBs, and small businesses as described above. But if no SDVOSB, VOSB, or small business submits an offer (or none would result in a fair and reasonable price), then the VA evaluates offers from large business concerns. If none are submitted, then solicitation is cancelled and additional market research is conducted to inform a follow-on acquisition strategy. The VA justifies these tiered evaluation approaches because they may prevent procurement delays. For example, if VA uses a tiered evaluation approach that includes SDVOSBs, VOSBs, small business concerns, and large business concerns, the VA doesn’t have to reissue another solicitation if no SDVOSB or VOSB submits a reasonable offer. Of course, the practice remains controversial because the tiered evaluation approach isn’t a true set-aside for SDVOSBs. Some argue, for example, that the VA could simply rule out SDVOSB or VOSB offers as not fair and reasonable based on more advantageous pricing offered by non-SBVOSB/VOSB small business concerns (or perhaps even large business concerns) for the same solicitation. In addition, whether the tiered approach complies with the Supreme Court’s decision in Kingdomware has been an open question–until now. Indeed, a recent case from the Court of Federal Claims supports VA’s use of a tiered evaluation scheme for procurements. In Land Shark Shredding, No. 18-1568C (Fed. Cl. Mar. 21, 2019), the VA issued a solicitation for a firm, fixed-price FSS contract for on-site document shredding and pill bottle destruction for VA facilities in Florida. The solicitation noted that it was “a Service Disabled Veteran Owned Small Businesses (SDVOSB) set-aside with Small Business Set-aside using a tiered or cascading order of preference.” The tiers of preference were as follows: SDVOSBs, then VOSBs, then all other small businesses, then all other businesses. (In essence, it followed the third approach described above.) Three offerors submitted proposals: Land Shark (an SDVOSB), a non-SDVOSB small business, and a large business. The SDVOSB’s price was $2.8 million, while the small business’s price was $474,000 (the large business’s price was somewhere in between the two). The small business’s price was closest to the VA’s independent government cost estimate of $490,000. Ultimately, the small business was awarded the contract. In its protest, Land Shark raised several arguments. Here we’ll focus solely on protester’s two arguments relating to the VA’s tiered evaluation scheme. First, Land Shark argued that the VA erred by comparing its price to other non-SDVOSB offerors. In Land Shark’s view, this process violated the holding in Kingdomware. In response, the VA argued that because the comparison of quotes was a methodology established by the solicitation, Land Shark should have raised the issue in a pre-award protest. The Court did not decide whether the protest was untimely, but went right to the merits. In doing so, the Court found that the Kingdomware doesn’t address price comparisons or instruct the VA how it should determine that an SDVOSBs price is fair and reasonable. Specifically, the Court held: The court agrees with the government that plaintiff has not cited any authority which supports its position. Kingdomware does not address price comparisons, in general, or the specific question of how the VA should determine that a SDVOSB’s prices are fair and reasonable. The Federal Acquisition Regulation (FAR) provision cited by plaintiff is a policy statement that does not regulate procedures for the price evaluation of proposals in procurements such as this one. In sum, plaintiff objects to the price comparison conducted by the VA here because it does not do enough, in plaintiff’s view, to secure government contracts for SDVOSBs. That is a policy argument, unmoored from statute or regulation. Without more, that policy argument is an insufficient ground for this court to invalidate a procurement decision of a federal agency. Second, Land Shark attacked the use of tiered evaluation process head on. In part, it argued that the process violated the Rule of Two and Kingdomware. But again, the Court was unconvinced and found that the VA did not violate the Rule of Two: The VA in this procurement conducted a Rule of Two analysis, as required by Kingdomware, but the VA did not find that this procurement could be entirely set aside for veteran-owned businesses. . . . As defendant notes, the solicitation clearly indicated that, in addition to veteran-owned small businesses and SDVOSBs, small businesses and large businesses were welcome to apply. . . . The court sees no violation of Kingdomware in the agency’s Rule of Two analysis, its use of a cascading system of preferences placing SDVOSBs in the first tier, or in the selection of [the small business] as contract awardee. While this decision certainly lends support to the VA’s use of a tiered evaluation procurements, it isn’t a wholesale endorsement. The analysis may have been different if Land Shark had, say, offered a fair and reasonable price (the Court found that its price was not fair and reasonable) or, perhaps, if Land Shark had leveled a better-advocated attack against the practice in the context of a pre-award protest (which would have concentrated purely on the legal validity of the tiered evaluation process without the distracting factual issue of fair and reasonable prices). That said, the decision overall favors the VA. Another challenge–hopefully one that is better planned and executed–will likely arise later. But for now, the VA is unlikely to change course. So expect to see the VA’s continued use of the tiered evaluation scheme in, at least, the near future. If anything changes, we’ll be sure to let you know. View the full article
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