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  1. As you may be aware, the 2020 National Defense Authorization Bill (H.R. 2500) recently made its way through the House Committee on Armed Services. With some space-centric NAICS codes, such as 517410 (Satellite Communications), seeing a 134%+ increase in small business participants in the last decade, how the U.S. approaches the final frontier should be on the mind of many small business government contractors. It definitely was on the mind of the Committee on Armed Services. The 2020 NDAA did not contain much substance on “Other Space Matters” before going before the Committee on Armed Services. If you review the document, you will see that almost the entirety of “Other Space Matters” under Title IX, Part II was added by the Committee. The same goes for “Space Activities” under Title XVI, Subtitle A. These additions contain several nuggets that we want to bring to your attention. Remember that as of this writing the 2020 NDAA is only in draft form. It is likely that some changes will be made as the bill progresses through the House and Senate. First, Sec. 921 establishes United States Space Corps under the Air Force. This is not the Space Force that the President talked about just over a year ago. In fact, the Space Force is notably absent from the 2020 NDAA. Once created, the Space Force will be its own branch of the armed services. The Commandant of the Space Corps, in contrast, will still report to the Secretary of the Air Force. Of particular note to small businesses that currently pursue acquisitions under the Air Force, Sec. 922 directs “all functions, assets, and obligations of the space elements of the Air Force” to transfer to the Space Corps. Congress’s intent is that Space Corp will eventually exercise its own acquisition authorities. Second, Sec. 1605 details a “prototype program for multi-global navigation satellite system receiver development.” If the substance of this program aligns with the title, then opportunities may start showing up under the SBIR program. For the unfamiliar, the Small Business Innovation Research Program (SBIR) encourages small businesses to engage in research and development projects. SBIR operates in funding rounds of progressively greater value. The Air Force has awarded more than 1,500 SBIR contracts in the last three years, and I would expect Sec. 1605 will result in many more. Third, Sec. 1606 calls for development of “commercial space situational awareness capabilities.” This effort appears to expand on the proposed satellite regulations I recently wrote about, which is looking to limit the impacts of future space debris. Sec. 1606 looks at current abilities to “detect and track space objects in low earth orbit below the 10 centimeter threshold.” With an increasing number of small businesses engaged in satellite communications procurements, it is likely that Sec. 1606 will have an impact on a number of them. Fourth, and finally, Sec. 1608 calls for the development of “resilient enterprise ground architecture.” This section focuses on ground-based architecture that supports all space operations. The goal is to transition to a service-based platform with a focus on commercially available capabilities and technologies. The intent of this transition is to increase the flexibility and adaptability of the Air Force by focusing on commercially available capabilities and technologies. Moving to a service-based platform will likely open the door to a plethora of new small business opportunities. As of June 21, the 2020 NDAA is on the House calendar for a vote. In the wild west that is D.C. politics it is very likely that the current version will not be identical to the version the President signs. We will keep you updated of any major changes along the way. Regardless of your thoughts on this current bill, remember that our democracy affords us the right to make our voices heard. If you have thoughts or concerns about this bill we encourage you to reach out to your local Representative or Senator and let them hear you. View the full article
  2. On June 11, the House Armed Services Committee published its draft of the 2020 National Defense Authorization Act (NDAA), which was updated June 19. Among other proposed sections impacting small business contractors which will be discussed in future blog posts, the draft reduces the monetary threshold for comprehensive Department of Defense debriefings and renews the DoD’s Mentor-Protégé Program. Enhanced Debriefings Threshold In section 818 of the 2018 NDAA, discussed on this blog, Congress introduced “Enhanced Post-Award Debriefing Rights” for certain DoD procurements. Specifically, the section required that where the DOD awards a contract valued at $100 million or more, the DoD also has to provide a redacted version of the “agency’s written sources selection award determination” to offerors during their debriefings. In section 828 of the draft 2020 NDAA, however, the contract value triggering this requirement is reduced by half to $50 million. While the 2018 NDAA significantly increased the amount of information disclosed as part of DoD debriefings generally, the proposed 2020 NDAA meaningfully enhances the number of procurements in which additional information must be disclosed. DoD Mentor-Protégé Program Permanent Authorization In addition to increasing the number of contracts subject to enhanced debriefing rights, the draft 2020 NDAA also permanently authorizes the DoD’s Mentor-Protégé Program. Just last year, the DoD significantly altered the program, directly impacting eligibility and certification rules and requirements. Now, the draft 2020 NDAA also requires the DoD’s Office of Small Business Programs to set Mentor-Protege performance goals and provide Congress periodic reviews of its success in meeting those goals. Finally, the draft NDAA also alters the DoD Mentor-Protege Program definition of “Disadvantaged Small Business Concern.” While the 1991 NDAA, which first implemented the Program, referred to a “disadvantaged small business concern” as “a firm that has less than half the size standard corresponding to its primary North American Industry Classification System code,” the 2020 draft only requires that a disadvantaged firm is not larger than the applicable size standard. The draft 2020 NDAA includes a number of other important potential changes relevant to the world of government contracting. Stay tuned to SmallGovCon online or through our monthly email newsletter for more information on the 2020 NDAA. Additionally, if you have general questions about debriefings, check out our handbook, Debriefings and Bid Protests: A Guide to Protest Rules and Regulations View the full article
  3. On Monday, June 24, SBA will issue its long-awaited proposed rule implementing the Small Business Runway Extension Act. We intend to explore the proposed rule and the accompanying commentary more fully over the next few days (as we have been doing over the past few months), but we wanted to provide a quick update to our readers on the main changes in the proposed rule. The key takeaway is that, once the rule is in place, SBA size standards will be based on a 5-year average. SBA “proposes to change its regulations on the calculation of annual average receipts for all receipts-based SBA size standards and other agencies’ proposed size standards for service-industry firms from a 3-year averaging period to a 5-year averaging period.” In the proposed rule, SBA recognizes nuanced distinctions in the Small Business Act between which allow agencies other than the SBA to adopt their own size standards. These agency-specific standards, however, require an agency to “obtain approval from the SBA’s Administrator for adopting its own size standard.” This provision “permits any agency to use a 3-year average outside of the service industries[.]” However, “SBA proposes to adopt a 5-year averaging period for calculating annual receipts of businesses for all industries that are subject to receipts-based size standards, including the retail trade, agricultural, and construction industries.” The calculation methodology for determining average annual receipts in 13 C.F.R. § 121.104 will stay the same, but use a 5-year standard rather than a 3-year standard. The proposed rule states: (c) Period of measurement. (1) Annual receipts of a concern that has been in business for 5 or more completed fiscal years means the total receipts of the concern over its most recently completed 5 fiscal years divided by 5. (2) Annual receipts of a concern which has been in business for less than 5 complete fiscal years means the total receipts for the period the concern has been in business divided by the number of weeks in business, multiplied by 52. (3) Where a concern has been in business 5 or more complete fiscal years but has a short year as one of the years within its period of measurement, annual receipts means the total receipts for the short year and the 4 full fiscal years divided by the total number of weeks in the short year and the 4 full fiscal years, multiplied by 52. In the rule, SBA proposed treating service industries and other non-service-industry firms subject to receipts-based size standards the same. While SBA believes section 2(a)(2)(C) of the Small Business Act allows for different treatment of these two subsets of firms, “separating out service-industry firms would cause confusion and create a greater compliance burden on firms that participate in both services and non-services industries . . . with receipts-based size standards.” We’ll provide additional analysis of this proposed rule soon, and we’ll follow any updates from the SBA. Be sure to read the full proposed rule once it is published and provide any comments to the SBA. [Editor’s Note: thanks to Rob Kampen for helping to draft this post] View the full article
  4. As government contracts attorneys, we find even the mundane aspects of federal contracting law (for example, CAGE codes) pretty interesting and important. But a recent FBI warning detailed in one of the stories from this weeks reminds us all that government contractors are crucial to the safety and well-being of the nation. As reported in the story, the FBI has warned contractors “about foreign intelligence services using social media accounts to target and recruit employees with US government clearance.” The FBI warns that “US adversary intelligence officers are using popular US-based social media platforms to identify, recruit, and conduct operations against USG clearance holders, to include private sector employees or contractors supporting the USG.” This is a good reminder of the high stakes involved in working for the government. Read on for this story and other interesting government contracting news, such as updates on a bill for back pay for contractors during the government shutdown, making cyber security an allowable cost, and a hack that exposed thousands of license plate numbers. FBI warning: Foreign spies using social media to target government contractors. [ZDNet] At least 50,000 license plates leaked in hack of border contractor not authorized to retain them. [WRAL] Contractor Back Pay Bill Advances, Administration Seeks Dismissal of Shutdown Compensation Lawsuit and More. [Government Executive] Cleveland aerospace company accused of Pentagon profiteering. [Cleveland.com] Much Of Our Government Digital Surveillance Is Outsourced To Private Companies. [Forbes] Lost in the din: Good news in the KC-46 tanker program. [FederalNewsNetwork] DOD unveils plans for contractor cybersecurity standards. [Fedscoop] DHS looking to evolve biometrics systems. [Fedscoop] Why DoD’s decision to make cybersecurity an ‘allowable cost’ matters. [FederalNewsNetwork] View the full article
  5. The General Services Administration is conducting market research for its planned consolidation of the Multiple Award Schedule (MAS) Program. Earlier this month, GSA publicly announced the new single solicitation format, including streamlined terms and conditions, and its intention to collect feedback from government contractors in the industry. According to GSA, the consolidation is part of its two-year modernization process for the program that began in November of 2018. The consolidated MAS solicitation is scheduled for release later this year. And if you have concerns or suggestions for GSA on this significant consolidation, there is still time for your input. On June 7, GSA publicized its plan to restructure the MAS Program by issuing a news release on GSA.gov and posting an RFI to FBO.gov. GSA announced that it intends to streamline the federal acquisition process by consolidating its 24 MAS into a single schedule for products, services, and solutions. It hopes to complete the new consolidated schedule, which it calls “Phase One” of the project, during this fiscal year. According to GSA, this new schedule will be organized and categorized in accordance with the current government-wide category structure. It explained that all of GSA’s existing schedules’ Special Item Numbers (SINs) are currently under review, and once the review is complete, “the new proposed SINs will be available for public comment” as well. GSA said it plans to release the consolidated MAS solicitation later this year, after considering the market research and industry feedback it collects. GSA hopes to transform this federal acquisition program to improve the buying and selling experience. And it believes this consolidation is a crucial step in that process. GSA called this initiative “one of the four Cornerstone initiatives of GSA’s Federal Marketplace (FMP) strategy, GSA’s plan to modernize and simplify the buying and selling experience for customers, suppliers, and acquisition professionals.” According to GSA, it hopes the new MAS structure will “provide consistency in the program for all stakeholders, make it easier for customers to find total solutions under one contract vehicle, ensure terms and conditions meet the needs of our customers, and eliminate duplicate contracts.” GSA believes the project “is on track to do exactly what we set out to achieve—create a new solicitation with one easy-to-understand set of terms and conditions for a single schedule by the end of FY19.” GSA has worked “to remove legacy, duplicative, and unnecessary clauses so that it’s easier to buy and sell with the federal government,” in order “to reduce the administrative burden for all who interact with GSA schedules.” But GSA is seeking additional comments. The “RFI will allow us to further hear from industry on the needs of today’s buyers and sellers,” because “[p]artnering with customers and industry has been a key component of MAS Consolidation.” That is why, according to GSA, feedback from the industry is such a crucial part of this plan. GSA has already solicited some feedback from customer agencies and industry partners by hosting events and meetings and performing surveys. But GSA now plans to work directly with buyers and sellers to maximize the efficiency of the new structure. GSA’s goal for “this round of market research is to gain input on two components of the new consolidated solicitation: the proposed format of the consolidated solicitation [and] the updated terms and conditions that will be found in the new solicitation.” To meet this goal, GSA provided a link in the RFI to the consolidated solicitation draft and provided its proposed terms and conditions for the new and improved program. GSA is currently seeking input from all interested parties on the MAS consolidation and the structure and content of the draft solicitation. GSA is also seeking specific feedback on its three selected categories of terms (required, required as needed, and not included) and whether clauses were correctly categorized as such in the new solicitation. The RFI provides instructions for those interested in participating in the market research and a link where feedback can be submitted with a submission deadline of July 5. All current MAS contractors and any government contractors who may be interested in contracting with GSA through the MAS Program should take advantage of this opportunity to provide valuable input to the agency. Go check out the draft version of the consolidated solicitation and the MAS Program’s streamlined terms and conditions. You should provide your own input before it’s too late. After all, GSA’s whole purpose for this initiative was to make your life easier. Probably wise to make sure that’s what it does! View the full article
  6. It’s no secret that the VA has tried to find ways around the statutorily-mandated rule of two–i.e. VA must set aside procurements for VOSBS if it has a reasonable expectation that it will receive fair and reasonable offers from two or more veteran-owned small businesses. Although the U.S. Supreme Court has already told VA, in Kingdomware, that it cannot circumvent the rule of two, VA apparently is still seeking ways to avoid it. Recently, VA tried to go around the rule of two by using GPO as its buying agent. This tactic was protested and GAO confirmed that the rule of two still applies. In Veterans4You, Inc., B-417340 et al. (June 3, 2019), VA wanted to buy suicide prevention gun locks for distribution through its Veterans Crisis Line. The gun locks consisted of a cable and keyed padlock that can be used on essentially any handgun, rifle, or shotgun. In addition to the device itself, the solicitation required that: 1) the padlock to be coated in vinyl and printed with the Veterans Crisis logo and contact information; 2) a wrap-around sticker be attached to the cable, also printed with the Veterans Crisis logo and contact information; and that 3) the package include a wallet card printed with the Veterans Crisis logo and contact information and information about identifying suicide risks. VA designated the procurements as a “printing requirement” instead of a acquisition of suicide prevention gun locks; so it sent a requisition to GPO requesting that it procure the gun locks on VA’s behalf. GPO issued the solicitation under 44 U.S.C. § 501-502, which provides GPO with unique authority to provide and procure printing services for the Government. Veterans4You protested the terms of the solicitation, arguing that VA was not giving priority to veteran-owned small businesses–contrary to the Rule of Two statutory mandate in 38 U.S.C. § 8127(d). VA and GPO countered that the Rule of Two did not apply because the procurement was being fulfilled under GPO’s independent acquisition authority–and GPO did not have to apply the Rule of Two. GAO agreed with Veterans4You. After discussing the rule of two generally, GAO explained that 38 U.S.C. § 8128(a) requires VA to observe the Rule of Two even where other statutes apply. It outlined a recent case from the Federal Circuit (which we’ve blogged on before) where the Court held that “the terms of 38 U.S.C. § 8128(a) required that the VA procure all goods and services from SDVOSBs or VOSBs where the VA’s research shows that the rule of two is satisfied, even where the procurement in question would otherwise be governed by the mandatory requirements of [another statute].” GAO then summarized its holding this way: As the discussion above demonstrates, the requirement for VA to determine whether there are at least two eligible concerns capable of meeting its requirements at a fair and reasonable price consistently has been interpreted by both our Office and the courts as both mandatory, and of universal application. We reach that same conclusion here with respect to the applicability of the [Rule of Two statute] to all VA printing acquisitions, especially in view of the express provisions of 38 U.S.C. § 8128(a), which states in no uncertain terms that: “In procuring goods and services pursuant to . . . any other provision of law, the Secretary shall give priority to a small business concern owned and controlled by veterans.” Simply stated, any time the VA is acquiring goods or services–without limitation–it is required to determine whether there are at least two SDVOSBs or VOSBs capable of meeting the agency’s requirements at a fair and reasonable price. As noted by GAO, this latest decision reaffirms several GAO and court decisions recognizing the rule of two’s extremely broad reach. VA simply can’t escape the rule–even if it desperately wants to. And because GAO and courts are hyper-sensitive to VA’s rule of two, any deviation from the rule in a VA procurement likely provides fertile grounds for a pre-bid protest. View the full article
  7. I am happy to announce that Gregory Weber has joined the great team of attorney-authors here at SmallGovCon. Greg is an associate attorney with Koprince Law LLC, where his practice focuses on federal government contracts law. Before joining the team, Greg worked on federal and state regulatory compliance as a corporate officer for the nation’s largest home health and hospice company. Check out Greg’s full biography to learn more about our newest author, and don’t miss his first SmallGovCon post on size protests of task orders. View the full article
  8. So, your company has made it past the first big hurdle and got on a GSA schedule. You see a small business task order pop up that you believe your company would be perfect for, but another company gets the award. Based on information you have heard or read, you believe something fishy may be going on and the awarded company may be a big fish that found its way into the small pond. But can you timely protest the task order award? Just last month, OHA reiterated the general rule that size protests on task orders are not timely in Tic Security, LLC, SBA No. SIZ-6007, 2019 (May 31, 2019). This matter arises from a task order issued in response to a US Navy Request for Quotations issue October 2, 2018. The contracting officer set aside a task order under GSA schedule 84 exclusively for small businesses with a size standard of $11 million in average annual receipts. It is important to note that the contracting officer did not request recertifications of size with this task order. SigNet was awarded the task order on February 25, 2019. After the award of the task order, TIC Security filed a size protest alleging that that task order awardee, SigNet, was acquired by a “nearly billion-dollar entity” in July 2017, consequently no longer meeting the size standard at the time of its quotation for the task order. On March 26, 2019, the SBA Area Office dismissed the size protest as untimely. In the Area office’s decision, they reiterated that the US Navy request for quotations sought a task order on a long-term GSA Schedule contract. In this circumstance, a protestor may only protest size at three instances: 1) Upon long-term contract award; 2) When an option is exercised; and 3) When the contracting officer requests a size rectification for an individual order. 13 C.F.R. § 121.1004. The task order at issue did not fall into one of those three categories. TIC Security then appealed this decision to OHA. OHA affirmed the area office. The contracting officer for this task order did not request a recertification of size for the task order, no contract option was exercised, and an award of a task order is not a long-term contract award. Therefore, the size protest was untimely and properly dismissed. OHA went on to address the size evidence presented by TIC Security. Regardless of how strong TIC Security’s evidence of SigNet’s size may have been, OHA would not consider the evidence of it because “the underlying protest was untimely.” If the protest doesn’t meet one of the three occasions to file a size protest on a long-term contract, none of your other arguments or evidence matter, and your size protest will be dismissed. Size protest for task orders have come before OHA repeatedly and the result is generally same, the protests are untimely. This case is a good reminder that if you believe a rival company may be violating size limits, the options for protesting size for a task order are limited to three specific instances. A protest outside outside of these three instances might be dismissed. View the full article
  9. Recently, a member of the Senate Committee on Small Business & Entrepreneurship called for increased small business participation in federal contracts during a hearing on the SBA’s contracting programs. Senator Ben Cardin based his concern on a recent report showing that the number of small businesses with federal contracts was at a 10-year low. The report found that federal agencies had awarded contracts to 32 percent fewer small businesses in 2018 versus 2009. In contrast, the number of large contractors receiving awards fell only 4% during the same time frame. The Senator’s take on this report was that, “while contracts are getting bigger and bigger, we are creating an insular club where fewer and fewer businesses successfully compete for government contracts.” He added, “[t]hat’s contrary to what these set-asides and programs are all about, which is encouraging new small businesses that can bring innovation and job growth to our economy and help our nation.” Sen. Cardin also noted that, while federal agencies are meeting their goal of spending 23 percent of contracts on small businesses, “the data shows that we have a shrinking base of contractors rather than an expanding base of contractors.” In other words, fewer small businesses are receiving the benefit of those set asides. A few agencies stood out. “Since Fiscal Year ‘09, the number of companies working on contracts with the Department of Defense has declined by 24,000. Similarly, the General Services Administration has seen an 8,000-company decline while the Departments of Veterans Affairs and Interior have both contracted with 13,600 fewer companies.” In the hearing, the Senate asked SBA what can be done to address this issue. SBA responded with one possible solution–small businesses could be exempted from category management. The term category management, according to an executive branch memo, “refers to the business practice of buying common goods and services as an enterprise to eliminate redundancies, increase efficiency, and deliver more value and savings from the Government’s acquisition programs.” In effect, this means buying more things from fewer businesses in a coordinated manner. But increasing efficiency and centralization of purchases can shut out small businesses. The report raises an interesting question. How to measure whether the small business programs are working. While the 23% goal for total overall dollars is one way to measure progress, the number of small businesses in federal contracting also has to be examined. Using that second metric, small business participation has been going down over the last 10 years. Other government goals, such as category management, may be at odds with increasing the role of small businesses in federal contracting. Now that Congress has recognized this issue, the question becomes: What policies might change to increase the participation of small businesses in federal contracting? And can that be squared with the goal of category management? We’ll be watching and will keep you posted. View the full article
  10. Congress and the SBA continue to disagree about the timing for implementation of the implementation of the Runway Extension Act (conveniently allowing my Star Wars references to continue). SBA recently provided testimony before the U.S. Senate Committee on Small Business & Entrepreneurship. Senator Marco Rubio called the hearing to address, among other things, why the “SBA has refused to follow the Runway Extension Act.” (We have wondered the same thing.) If you are unfamiliar with the Runway Extension Act, check out the links at the bottom of the page for our take on several aspects of the Act and its journey thus far. As is common with Congressional testimonies, SBA prepared a statement which the Senate Committee has released. Within it, SBA briefly discusses the Runway Extension Act. Of particular note, “SBA has just completed and will be publishing a proposed rule, making necessary revisions to its regulations to implement the Runway Extension Act.” The proposed rule will “apply the same 5-year averaging period for all” small businesses subject to revenue-based size standards “for consistency,” and not just those in services industries. While we have questioned the SBA’s decision to delay implementation of the Runway Extension Act, SBA has now indicated it will start the rulemaking process to implement the Act. Up until now SBA has been slow to act on Congress’s clear instruction that the Act is effective immediately. Following Mr. Wong’s oral testimony it appears that SBA has been working behind the scenes on drafting the proposed rule. For that, we give credit to the SBA. The hearing was held June 12, 2019. You should be able to access it here and here. If you missed the live-stream, replays are commonly available a short time after the hearing closes. Keep an eye on smallgovcon.com for updates on the continuing saga that is the Runway Extension Act. View the full article
  11. While the overarching goal of the federal procurement system is to provide as many opportunities for competition as possible, there are those instances where the unique circumstances of a procurement require limiting the pool of offerors. In a recent decision, GAO determined that the need for proprietary maintenance information was a sufficient reason to limit competition. Chromalloy San Diego Corp., B-416990.2 (June 3, 2019) involved a procurement by the Navy to service the LM2500 engine. The LM2500 is a gas turbine engine used in the Navy’s Ticonderoga-Class guided missile cruisers. The Ticonderoga-class is an integral part of the Navy’s ballistic missile defense operations. As relevant to the protest, the LM2500 was developed as a commercial item by General Electric (“GE”) independent of the Ticonderoga-Class cruisers. According to GAO’s decision, the engine has also been used in the oil and gas industries, as well as foreign navies. In connection with the development of the engine, GE drafted a service manual that provides the necessary technical information for overhauling the engine. The manual is periodically updated with new information by GE. Importantly, GE considers this information for be confidential and proprietary. In fact, the cover of the manual expressly states, “[t]he information contained in this document is GE proprietary information and is disclosed in confidence. It is the property of GE and shall not be used, disclosed to others, or reproduced without the express written consent of GE[.]” GE’s manual divides engine service tasks into four “Levels.” Whereas Level I maintenance is comparatively routine and can be carried out by Navy personnel, Level IV repairs and overhauls are of such a complexity that only certified GE depots can perform the work. There are currently 6 locations that are licensed by GE to perform Level IV overhauls. Chromalloy is not licensed to perform Level IV overhauls. In late August 2018, the Navy issued a Solicitation to “perform depot-level overhaul of the LM2500 turbine gas generators.” Competition under the Solicitation was restricted to those sites that possessed Level IV licenses from GE. In response, Chromalloy filed a GAO protest arguing the Solicitation’s terms were unduly restrictive of competition. In response, the Navy took corrective action. As part of its corrective action, the Navy amended the Solicitation to expand the potential pool of offerors. The amended Solicitation now instructed offerors “that, to be technically acceptable, an offeror must either hold a GE level IV license or ‘have access to all relevant LM2500 [Original Equipment Manufacturer] service manuals, updates to those manuals, and service bulletins concerning the LM2500 engine, periodically issued by the [Original Equipment Manufacturer].’” Additionally, offerors were also required to demonstrate they had access to proprietary GE tools to complete the overhaul. Once again, Chromalloy protested the terms of the Solicitation arguing the requirement for access to technical data and specialty tooling were unduly restrictive of competition and “overstate the Navy’s actual requirements.” With respect to the technical data, Chromalloy argued that the Navy has acquired “unlimited rights” to GE’s technical data, thus the Navy was free to share the necessary technical information with offerors that did not possess Level IV licenses. In support of this argument, Chromalloy explained that the Navy had previously supplied it with GE technical data to complete a different contract. In response to Chromalloy’s arguments, the Navy explained that the LM2500 was a complex piece of equipment that must be maintained to exacting standards. Given the Ticonderoga-class cruisers’ role in ballistic missile defense missions, breakdowns were not an option. The Navy also explained that it had never obtained unlimited data rights to the LM2500 engine. To the contrary, Navy explained that GE had consistently marked its manuals and confidential and proprietary and that the Navy had never sought to obtain unlimited data rights to the manual’s technical information. Indeed, the Navy admitted that while it had previously supplied Chromalloy with proprietary GE technical data on another job, that distribution should not have occurred. GAO agreed with the Navy. As GAO explained, “[t]he record provides ample support for the proposition that the [Original Equipment Manufacturer] information is necessary for successful contract performance[.]” Additionally, GAO also found that “the record is consistent with the Navy’s assertions that the information was developed by GE at its own expense, and that GE has consistently identified the information as proprietary.” Thus, the Navy had not obtained unlimited data rights to GE’s technical data relating to the LM2500, and was not at liberty to distribute the technical information to contractors. Under these circumstances, GAO concluded the Solicitation’s limitation to facilities with GE Level IV licensing was reasonable. GAO was similarly unpersuaded by the arguments about specialty tooling. According to Chromalloy, the non-specialized tools it possessed should have been adequate to complete the necessary overhauls. In response, the Navy explained that GE’s tools are built to particular specifications and that it could not verify the adequacy of Chromalloy’s own tools. GAO concluded that the requirement that offerors have GE’s specialty tools did not overstate the Navy’s requirements. As GAO explained, “the record establishes that the requirements at issue relate to national defense and human safety and reasonably supports the agency’s determinations regarding the necessity of the tools to successfully perform the contract requirements.” As such, the Solicitation restrictions were reasonable. Chromalloy is an excellent example of how multiple government procurements can interact with one another, occasionally limiting subsequent competition. When the Ticonderoga-class cruisers were procured, the Navy came to possess a number of GE gas turbines. As the Navy did not acquire data rights in the engines, subsequent procurements for complete overhaul maintenance must be restricted. In this away, a data rights decision made decades ago is still impacting federal procurements today. View the full article
  12. Welcome to another addition of SmallGovCon’s week in review. While you might be on vacation (and feel free to wait to read this until you get back), the world of government contracting spins on. In this week’s edition, there are some interesting updates including paying back wages to federal government contractors who were not paid during the government shutdown, merging OPM with the General Services Administration and the latest in space contracting. Have a great weekend! SpaceX Sues the Government Over $2 Billion In Rocket Contracts. [YahooFinance] Leading lobbyist launches new space firm. [Politico] Savannah River Site contractor settles false claims allegations for $1.6 million. [AikenStandard] The F-35 and the Captured State. [POGO] Congress, DoD and the military branches had warnings and proof of problems in base housing. [WUSA9] Oracle’s latest JEDI filings cite AWS, ex-DoD official’s conflict of interest. [FederalNewsNetwork] House expected to approve back pay for federal contractors from January shutdown. [WashingtonPost] Getting rid of an agency isn’t easy. [RollCall] View the full article
  13. Congratulations! After a hard bidding process, your company has earned an award. But though this award process might’ve been long and tough, potential issues are still ahead. In our practice, we often hear stories of soured relationships with the government during contract performance. Adverse performance issues can come at a hefty cost—in terms of money, time, and reputation. Here are some suggestions to help guard against performance disputes with the government. First, it’s vitally important to review your contract carefully before signing. This idea seems simple, but it’s often overlooked. Sometimes, a final contract might not incorporate important aspects of an offer or might even tweak the performance from what was included in the solicitation. Know what you’re agreeing to before you agree to it—if necessary, propose amendments to the contractual language to clarify the terms or performance requirements; otherwise, it might be hard to dispute the terms down the road. Second, take great notes and keep detailed records as you’re performing the contract. Having contemporaneous documentation will help in the event of any dispute over performance. Obviously, the scope of notes will depend on the work being performed. If you’re performing a construction contract, consider taking photos of the site every day. You might also have daily logs that document site conditions (including the weather), any work impediments, and the scope of daily performance. For general services contracts, maybe have a daily log sheet that documents your performance and difficulties encountered. You might also consider retaining records of all hours worked by employees and subcontractors. Regardless of the type of contract, conversations with the agency about performance should be documented. Take (and review!) objective, non-self-serving meeting minutes, and send emails documenting conversations. Having a written record of conversations will be helpful for any potential issue. Importantly, immediately inform the contracting officer of any delays or changed/differing conditions that might affect your performance. If these issues might impact your price, you can let the agency know that too. But because your ability to claim delays or damages down the road might be impacted by notice to the government, it’s usually best to keep the agency as informed as possible. Third, and along these same lines, make sure your contracting officer informed of what’s going on with the project. Again, this seems like an obvious suggestion. But oftentimes, a contracting officer might be located offsite, while the contracting officer’s representative is on location. As a result, your day-to-day interaction may be with the COR. Oftentimes, a COR’s proximity to the project might compel her to request changes to your performance. Only a contracting officer, however, has the authority to order changes to the contract. So if you’re requested to make any changes by someone other than the contracting officer, consider sending a brief email to the contracting officer asking for permission to proceed; if you don’t, you might be left holding the bag for costs associated with this additional work. *** These suggestions are generalized ideas, based on our experiences. Of course, each contract and every situation are different, so there could also be unique issues worth considering. But no matter the circumstances, it’s important to guard against any potential disputes: the more prepared you are, the easier it’ll be to reach a favorable resolution. If you have any questions, please give me a call. View the full article
  14. GAO dismissed a protest recently that was the 38th docketed GAO bid protest action regarding a single solicitation. GAO said the protest was untimely. The decision is a reminder that even seasoned protesters who have gone through complicated bid protests have to stay mindful of GAO’s timeliness rules. The matter, CredoGov, B-414389.38 (May 31, 2019), had to do with a Department of the Army solicitation seeking off-the-shelf items like computers, workstations, notebooks, and printers. CredoGov, an Irvine, California business, had argued against amendments to the solicitation and that it was unreasonably held out of the competitive range. GAO dismissed both arguments, the first as an untimely challenge to the terms of the solicitation and the second as simply late. Before we get in to it, a little background: This solicitation was issued May 2016 and has an estimated value of $5 billion. More than 50 companies submitted proposals and 11 months later, the Army selected nine awardees. Several unsuccessful offerors protested to GAO and the Army agreed to take corrective action. It sent discussion letters to several unsuccessful offerors (including CredoGov) seeking revised proposals. In response, several of the awardees filed complaints with the U.S. Court of Federal Claims alleging that the proposed corrective action was too broad. The court agreed and issued an injunction against the corrective action. The Army attempted to comply with the court’s ruling by accepting proposal revisions from “only those offerors whose deficiencies could be resolved through clarifications.” Clarifications, by the way, generally are reserved for minor issues like typos or obviously curable errors. Several of the unsuccessful offerors appealed the court’s decision to the United States Court of Appeals, Federal Circuit. The appeals court reversed the decision and reinstated the corrective action. In the meantime, the Army had advised 12 additional offerors (including CredoGov) that they had not been selected for award. Those 12 filed bid protests at GAO. However, a 13th unsuccessful offeror protested directly to the Court of Federal Claims, rendering the GAO protests academic. GAO dismissed all 12 bid protests. By this time, it was nearly the end of 2018, two-and-a-half years after the Army issued the solicitation. The Army decided it needed to revise the solicitation, re-solicit to all offerors, and seek new proposals. CredoGov (and 46 others) submitted proposals. On March 14, the Army told CredoGov its proposal was excluded from the competitive range. CredoGov protested on March 27—13 days later. CredoGov accused the Army of ignoring the Federal Circuit’s decision and said that the Army must make it’s decision based on the best and final offers that came out of the original corrective action. It also argued that the Army should not have eliminated it from the competitive range this time. GAO dismissed both protest grounds. The first, GAO said, was an untimely challenge to the terms of the solicitation and that “a protest allegation that challenges the ground rules the agency has announced for performing corrective action and recompetition is analogous to a challenge to the terms of the solicitation and must be filed prior to the deadline for submitting new or revised proposals.” In other words, once you agree to play by the agency’s rules, you’ve forfeited your right to protest those rules. For the second argument, GAO dismissed it simply because CredoGov waited too long. CredoGov learned it was eliminated on March 14 and did not protest until March 27. Because that was “more than 10 days after it knew or should have known of its alleged basis for protest” GAO said “complaints regarding exclusion of its proposal are not timely filed.” GAO’s decision is a good reminder that even if litigation seems endless, GAO’s deadlines are incredibly strict. And for what it is worth, GAO has not seen the end of this solicitation, not by a long shot. The 40th protest action related to this solicitation was filed May 13 and is currently open. View the full article
  15. The Department of Defense awarded contracts to an average 30,806 small businesses each year in fiscal year 2016, 2017, and 2018. A proposed rule to update the DFARS may lead to these same businesses receiving payments from the government, or prime contractors, within 15 days of invoicing. The proposed rule is found at 84 FR 25225. It was published on May 31, 2019 and comments close on July 30, 2019 if you’d like to put in your two cents. The proposed rule acknowledges that “[c]urrent DoD policy, as stated in DFARS 232.903, is to pay small business contractors as quickly as possible after receipt of invoices and proper documentation.” Section 852 of the National Defense Authorization Act for Fiscal Year 2019 (“NDAA for FY 2019”) provides two types of accelerated payments. First, accelerated payments to small business prime contractors. Second, accelerated payments to small business subcontractors through DoD “accelerating payments to their prime contractors.” NDAA for FY 2019 Section 852 requires DoD “to establish an accelerated payment date, with a goal of 15 days after receipt of a proper invoice, if: (1) A specific payment date is not established by contract, and (2) the contractor agrees to make accelerated payments to the subcontractor without any further consideration from, or fees charged to, the subcontractor.” Note that this language does not guarantee payment in 15 days. This establishes “a goal of 15 days” if a few other conditions exist. That being said, “a goal of 15 days” is better than the existing prompt payment provisions. Accelerated payment provisions can be found at FAR 52.232-40 and DFARS 232.903. Neither of these clauses contain the “15 days” benchmark. Neither of these clauses prohibits requiring “further consideration from, or fees charged to, the subcontractor” in exchange for the 15-day benchmark. So not only will the proposed rule likely lead to faster payments, it will also lead to fewer costs associated with obtaining these faster payments. I’ll focus for a minute on the “further consideration from, or fees charged to” a subcontractor issue. In this regard, DoD admits that “it is not possible . . . to estimate the number of small business contractors” who have had to provide further consideration or pay fees for accelerated payment. “[N]or is it possible to estimate the dollar value of the consideration provided or fees paid.” Due to this lack of data, DoD is specifically looking for comments addressing these costs. Not only will this data help shape the current rule, but it could impact future rules and policies as well. The proposed rule draws special attention to two categories of contracts: those below the simplified acquisition threshold (“SAT”) and commercially available off-the-shelf (“COTS”) items. These two types of contracts were highlighted given how common they are in DoD procurements. DoD estimates that “approximately 96 percent of DoD contracts are valued at or below the SAT[.]” Because almost all procurement contracts fall under the SAT, “DoD intends to determine that it is in the best interest of the Federal Government to apply the rule” to these below-the-threshold contracts. DoD also estimates that “more than half of DoD’s contractors are small businesses providing commercial items, including COTS items[.]” For this reason “DoD intends to determine that it is in the best interest of the Federal Government to apply the rule” to COTS contracts. Whatever your opinion of this proposed rule is, comments are due by July 30, 2019. We encourage you to reach out to DoD on this matter and make your voice heard. View the full article
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