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  1. Happy Friday, Readers! December is already here and as we kick off the holiday season, it’s hard to believe that the year is wrapping up already. And speaking of “wrapping” there’s sure to be some of that in the next few weeks. My advice is to pace yourself. The holiday season often feels like we are sprinting, as we try to get it all done and to attend all the holiday festivities. Make sure you slow down enough to really enjoy friends and family. I’ve been enjoying our downtown holiday lights which get better every year, it seems. Tuesday: U.S. Small Business Administration Set to Preview New Certification Program for Veteran-owned businesses [SBA] A costly new climate rule is coming for federal contractors [FedNewsNet] Not Just Another Customer: Six Differences Between Government Contracting And Commercial Markets [Forbes] ITI, Coalition of Businesses Underscore Need for Industry Engagement with New Made In America Office Director [ITI] Ohio Company Settles False Claims Act Allegations of Billing for Non-Existent Construction Materials [Justice.gov] FAR too complicated? Procurement rules hurt contracting, report says [FederalTimes] 4 things for contractors to watch on Capitol Hill now and into 2023 [FCW] Veteran-Owned Small Business and Service-Disabled Veteran-Owned Small Business-Certification [Federal Register] FedRAMP reform bill to be considered by Senate lawmakers in coming weeks [Fedscoop] Services contractors are dealing with a lot of new federal mandates [FedNewsNet] Government Contractor Agrees to Pay $8.4 Million to Resolve Claims Related to its Failure to Disclose Cost or Pricing Data [Justice.gov] DOD wants cyber apprenticeships for contractors, but acquisition regs may remain an obstacle [FCW] GAO dismisses bid protests filed over $50B IT services procurement [Fedscoop] 4 Contractors Added to $25B VA IDIQ for General Management, Business Support Services [GovConWire] What Are the Top General Dynamics Government Contracts? [GovConWire] A banner year for GSA IT contracts [FedNewsNet] Federal Acquisition Regulation: Effective Communication between Government and Industry [FedRegister] Texas Man Pleads Guilty to Lying About Origin of Chinese-Made Products [Justice.gov] The post SmallGovCon Week in Review: November 28-December 2, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  2. The federal government contracting solicitation, proposal, and selection processes are something that all federal government contractors should strive to know. These methods, found in FAR parts 14 and 15, respectively, can be boiled down to two methods: sealed bidding and contracting by negotiation. Contracting by negotiation can occur either through a competitive award or a sole source award. When used effectively, the parts of the FAR clue contractors into the methods that agencies use to evaluate proposals and can help contractors tailor their proposals to better target agencies’ needs, thereby increasing chances of award. Of particular importance is the method an agency will use to evaluate proposals, and the weight given to technical components of the proposal against the weight given to price. In KPMG LLP, B-420949 (Nov. 7, 2022), GAO takes a look at how agencies evaluate technical proposals and price, and how those evaluations work together in a best-value tradeoff decision. Contracting by negotiation via competitive awards is likely the method most used by agencies when soliciting products or services, and it is without a doubt the method that we see come across our desks most often here at KMP. As mentioned above, competitive awards are evaluated by either a tradeoff process, where the agency weighs price against the technical evaluation, and lowest price technically acceptable, where price is more important than technical evaluation, so long as the offeror meets the requirements of the solicitation. However, the solicitation in KPMG LLP was unclear, as it called for evaluation of proposals using both a “highest technically rated offeror with a fair and reasonable price and a best-value tradeoff method.” (emphasis added). These two methods are mutually exclusive because “highest technically rated offeror with a fair and reasonable price” means a higher priced proposal may receive the award because the “technical factor is significantly more important than price,” while the best-value tradeoff weights the benefits in the technical evaluation with the price. After evaluation of all proposals, KPMG was notified that it was not a successful offeror due to a weakness assessed for concluding that KPMG’s inclusion of a particular data platform increased its risk of unsuccessful performance because the “acquisition spans more than the current … data platform.” Because of this weakness, KPMG protested on three grounds: the agency’s evaluation of its technical proposal, the agency’s price reasonableness evaluation, and its best-value tradeoff decision. Now, anyone who has even slightly considered protesting an agency’s best-value tradeoff evaluation knows that agencies are given broad discretion when reviewing technical proposals, and it has been long-established that GAO will not look at technical proposals with intent to reevaluate. Instead, GAO solely looks at the agency’s evaluation to determine that the evaluation was “reasonable and consistent with the solicitation’s evaluation criteria and with procurement statutes and regulations.” For protestors, this means that GAO will not sustain a protest simply because the protester doesn’t agree with the agency’s determination. Further, a protest challenging the terms of the solicitation filed anytime after the date proposals are due will be dismissed as untimely. So, while there may have been grounds prior to the solicitation deadline due to the “patent ambiguity,” the GAO denied the protest’s first and second grounds because the unchallenged ambiguity meant the agency could use either evaluation method mentioned in the solicitation. However, when GAO looked further into the method the agency used, which was the best-value tradeoff method, it determined that the agency improperly performed the best-value tradeoff. The agency eliminated all offerors who received a technical evaluation lower than “outstanding” when choosing what offers would receive awards. The use of a best-value tradeoff requires weighing price and non-price factors to determine if the non-price factors justify the higher price. If the agency makes an award to a higher-priced offer that is technically superior to a lower-priced but acceptable one, the agency must support that decision with an explanation of how the higher-priced offer is technically superior and why it is worth the higher price. Here, because the agency eliminated all offerors rated below “outstanding,” and did not take price into consideration beyond deeming the offerors’ proposals “reasonable, realistic, and balanced,” no best-value tradeoff occurred, and offerors received awards based solely on the adjectival rating of “outstanding,” a practice that is prohibited under the FAR and prior GAO decisions. In the end, GAO determined that the agency’s lack of a true best-value tradeoff was unreasonable and prejudiced offerors, and recommended the agency perform and document a new source selection decision, and terminate any of the awards made if the outcome ends in a different result. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO Sustains Protest to Best Value Trade Off Where Agency Only Considers “Outstanding” Proposals, Without Weighing Price/Non-Price Factors first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  3. SBA has issued its final rule for its takeover of the Veteran-Owned Small Business (VOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB) Certification program. The rule will have an effective date of January 1, 2023. We discussed the proposed rule in our post here. Below are a few key takeaways from the final version of the rule. SBA issued the rule in line with the 2021 National Defense Authorization Act (NDAA), which transferred authority for certification of SDVOSBs and VOSBs from the VA to the SBA as of January 1, 2023 and created a one-year grace period for businesses to get certified. Key Aspects Here are some of the key aspects of the final rule, as updated by SBA from the proposed rule. New Year’s Takeover SBA is taking over certification of SDVOSBs on January 1, 2023 (the Transfer Date). Self-certified SDVOSBs that apply within the one-year grace period after that date will maintain eligibility until SBA makes a final eligibility decision. Despite comments to the contrary, SBA has will continue allowing self-certification for SDVOSBs for subcontracting purposes and for purposes of SDVOSB goaling credit. Interestingly, SBA says it will eliminate these forms of self-certification after five years. SBA’s SDVOSB Rules SBA is establishing a Veterans Certification Program (Vets Program) to handle the required certifications for SDVOSBs and VOSBs. SBA will house the Veterans Certification Program rules in a new 13 CFR part 128. Generally, the eligibility rules would be similar to the SDVOSB ownership and control rules that currently exist in SBA’s rules. SBA has basically adopted the procedural rules from the VA’s former verification process. SBA will now provide certifications for VOSBs for VA set-aside contracts, but the eligibility rules are the same as for SDVOSBs. SBA generally adopted the procedures that the VA had used for application guidelines, rules on continuing eligibility, program examinations, and program exit procedures. Some of these procedural rules adopted from VA include (1) the duty to notify SBA within 30 days of a change in ownership of an SDVOSB; (2) reapplication wait period of 90 days after a denial; (3) appeals to OHA of denials; (4) recertification within 120 calendar days before the end of an eligibility period; and (5) a three-year program eligibility term. This is not an exhaustive list, so please review the regulations and SBA’s guidance on the procedures. Firms that were already certified with the VA will continue to be certified for the remainder of the 3-year eligibility term. SBA will grant reciprocity to participants in the 8(a) Program and Women-Owned Small Business (WOSB) program that are owned and controlled by veterans or service-disabled veterans. Various Rule Changes There are some interesting changes from how things worked under the CVE verification process. Right of Refusal. SBA is adding a “a limited exception for a commercially reasonable right of first refusal” to the general rule of unconditional ownership by a veteran. If the non-veteran exercises the right, the firm first must notify SBA of the change in ownership. This allows the non-veteran to have a “right of first refusal granting the non-qualifying-veteran the contractual right to purchase the ownership interests of the qualifying veteran” as long as it follows “, does not affect the unconditional nature of ownership, if the terms follow “normal commercial practices.” This is a change that could make things smoother for those companies with non-veteran investors. Size of Firms. Firms can qualify if they are small for any NAICS code listed on its SAM profile, not necessarily its primary NAICS code. Parole Removal. SBA removed consideration of whether an individual owner being incarcerated, on parole, or on probation should affect certification. Therefore, the good character review would be limited to whether a company was debarred or suspended. JV Certification. The final rule makes clear that “The joint venture itself need not be a certified VOSB or SDVOSB.” So, there is no certification process for joint ventures under this rule. However, it also states that a “VOSB or SDVOSB cannot be a joint venture partner on more than one joint venture that submits an offer for a specific contract set-aside or reserved for VOSBs or SDVOSBs.” Rebuttable Presumptions? SBA received a number of comments on the so-called rebuttable presumptions and whether they should be amended. For instance, there is a “rebuttable presumption that non-service-disabled veteran individuals or entities control” an SDVOSB if the “non-service-disabled veteran individual or entity who is involved in the management or ownership of the firm is a current or former employer or a principal of a current or former employer of any service-disabled veteran individual.” SBA has revised these rules (now at § 128.203) to be more consistent with 8(a) Program control rules to create more flexibility. As an example, for full-time devotion, a “veteran cannot engage in outside activities that prevent the individual from devoting sufficient time and attention to the business concern to control its management and daily operations.” The old rule said that there “is a rebuttable presumption that a service-disabled veteran does not control the firm when the service-disabled veteran is not able to work for the firm during the normal working hours that businesses in that industry normally work.” The new rule: “Where a qualifying veteran claiming to control a business concern devotes fewer hours to the business than its normal hours of operation, SBA will assume that the qualifying veteran does not control the concern, unless the concern demonstrates that the qualifying veteran has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management of the business.” The effect seems to be similar, but SBA has changed it from a presumption to an assumption. It will be interesting to see how SBA applies this language. One other note, there continues to be a list of five “extraordinary circumstances” that a non-veteran minority owner can have veto power over: adding a new equity stakeholder; dissolution of the company; sale of the company; the merger of the company; and the company declaring bankruptcy. SBA declined a request to add amending bylaws to this list, so non-veterans cannot have a veto power over amending the bylaws of an SDVOSB. Conclusion The SBA’s new rules will require veteran-owned businesses to get certified if they want to go after VOSB and SDVOSB set-asides. While they don’t change the substantive rules too much, there are a few important changes. SDVOSBs would do well to review these rule changes closely. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Issues Final Rule on SDVOSB Certification first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  4. In this webinar, Govology Legal Analyst Steven Koprince and I will cover the most important legal developments for federal contractors in 2022, including new small business rules, recent domestic preference changes under the Buy American Act, key provisions of the 2023 National Defense Authorization Act, and much more. I hope you will join us. Registration Link is here. The post Govology Webinar Event: 2022 Government Contracts Year-End Review, December 8, 2022, 1:00 pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  5. Happy Thanksgiving! Here at SmallGovCon, we strive to provide concise, up-to-date, and actionable legal updates and analysis to people in the federal government contracting community and we want to take this opportunity to thank our blog readers. We hope that you will enjoy a few days off spending time with family and friends. We will provide our regular Week in Review next week. Enjoy that pumpkin pie! The post Happy Thanksgiving from SmallGovCon! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  6. In an effort to comply with Executive Orders issued by the President, and to lower greenhouse gas effects, the Department of Defense, NASA, and GSA have recently issued a proposed rule that would change the FAR to create further requirements for contractors to report and disclose greenhouse gas emissions, as well as create emission targets. This proposed rule will add various requirements to the FAR that create additional reporting for contractors based on their size. Contractors should review these potential changes carefully, provide comments, and begin preparing for compliance with the new requirements. Below is our summary of the key changes. On November 14, 2022 the DoD, NASA, and GSA released a proposed rule that aims to help curb climate change and greenhouse gas (“GHG”) effects. According to the proposed rule, climate change risks such as extreme weather, supply chain disruptions, and risks to infrastructure and businesses need to be addressed. As such, the proposed rule states that it is important for the United States’ focus to shift from carbon intensive energy, to decarbonized climate-resilient economies, as that will increase the United States’ competitiveness and economic growth. The proposed rule also purports to be issued in accordance with President Biden’s May 20, 2021, Executive Order 14030, Climate-Related Financial Risk, which asked for Agencies to consider amending the FAR to “require major Federal suppliers to publicly disclose greenhouse gas emissions,” address climate-related financial risk, set science-based reduction targets, and ensure Federal procurements minimize climate risks. Categories of Contractors The Proposed Rule hopes to meet the aims of the Executive Order by creating a new FAR subpart at 23.XX that will be titled “Public Disclosure of Climate Information”. The new FAR subpart will expand on the solicitation representation provisions found at FAR 52.223-22, and 52.212-3, while establishing a new standard of responsibility for certain contractors according to FAR 9.1. This new FAR subpart will apply to two categories of “major Federal suppliers” or contractors, called “significant contractors” and “major contractors”. A “significant contractor” is considered to be a contractor who has received $7.5 million or more, but not more than $50 million in Federal contract obligations in the prior Federal fiscal year. A “major contractor” is defined as a contractor who received more than $50 million in contract obligations in the prior federal fiscal year. The Proposed Rule states that about 4,413 businesses would qualify as significant contractors, of which 64% are small businesses, while there are about 1,353 businesses that would qualify as major contractors, of which 29% are small businesses. So, these changes are expected apply to many contractors across the board. These distinctions are important to keep in mind as they will dictate what reporting requirements apply to you as a contractor. The Proposed Rule states that under the new proposed FAR subpart, a contracting officer is required to treat the two categories of contractors discussed earlier as “non-responsible” if they do not inventory their annual GHG emissions and disclose their total emissions in SAM.gov. In addition, “major contractors” will also be treated as non-responsible unless they have made available on a publicly accessible website, an annual climate disclosure using the CDP Climate Change Questionnaire, and set targets to reduce emissions. Types of Reporting The inventories of GHG emissions that both categories of contractors will be required to produce shall include “Scope 1” and “Scope 2” emissions. Scope 1 emissions are GHG emissions from sources that are owned or controlled by the reporting company itself, while Scope 2 emissions are GHG emissions associated with the generation of electricity, heating, and cooling, or steam, when they are purchased or acquired for the reporting company’s own consumption but occur at sources owned or controlled by another company. When compiling Scope 1 and Scope 2 GHG emissions for inventory, contractors will be required to follow the “GHG Protocol Corporate Accounting and Reporting Standard“. The inventories must show emissions during a continuous period of 12 months, and “major contractors” are required to conduct an inventory of “Scope 3” emissions as well. Scope 3 GHG emissions are emissions that are a consequence of the operations of the reporting company but occur at sources other than those owned or controlled by the company. There are additional reporting requirements outside of inventories that major contractors must comply with as well. Major contractors will also be required to complete an annual climate disclosure and develop “science-based targets” for GHG emissions. For this annual climate disclosure, major contractors would complete it within the major contractor’s current or previous fiscal year. The report would include GHG emission inventories of scope 1, 2 and 3 emissions, as well as a description of the company’s climate risk assessment process and any risks identified. These Annual Climate Disclosures would be based on CDP Climate Change Questionnaires that align with TCFD and must be made available on a publicly accessible website (accessible through the company’s website or the CDP website). For the development of science based targets, the major contractor would develop targets for reducing GHG emissions that are in line with emission reductions that the latest climate science deems necessary to meet the goals of the Paris Agreement to limit global warming to well below 2 degrees Celsius above pre-industrial levels and pursue efforts to limit warming to 1.5 degrees Celsius. To find the most recent climate science for these items, the Proposed Rule states that major contractors should review the 2018 Intergovernmental Panel on Climate Change Special Report. Also, the science based targets set by major contractors need to be validated by SBTi within the previous five calendar years and made available on a publicly accessible website. The Proposed Rule does seem to provide exceptions to the inventory, reporting, and science based targets if the company is a Tribal or Native American owned company, a higher education institution, nonprofit research entity, a state or local government, or an entity that derives 80 percent or more of its annual revenue from Federal management and operating (“M&O”) contracts that are already subject to agency annual site sustainability reporting requirements. Also, if a “major contractor” is considered a small business for its primary NAICS code or it is a non-profit organization, then it will not be required to complete an annual climate disclosure or set science based targets. However those small business contractors would still be required to complete the inventory of scope 1 and scope 2 emissions and report the total annual emissions in SAM.gov. As stated, this is a proposed rule, with a lot of new complex requirements placed on a variety of categories of contractors. The agencies proposing this rule realize there is a necessary delay to allow contractors to compile data and determine what items need to be addressed internally. So, starting one year after the publishing of the final rule, the two categories of contractors must have completed the GHG emission inventory and disclosed the total annual scope 1 and 2 emissions. The Proposed Rule states this one-year period should provide the time needed for contractors to become familiar with the new requirements. For “major contractors,” the additional compliance requirements will start two years after publication of the final rule, so that the major contractor can have time to inventory scope 3 GHG emissions, complete risk assessments, complete climate change questionnaires, and develop science based targets. As you can likely tell by the length of this blog post, this Proposed Rule is quite complex, and presents some large changes to GHG emission reporting for Federal Contractors. This blog post simply reviews the surface level requirements, so we highly recommend you read the proposed rule as it has further details on reports, exemptions, waivers, impacts, and responsibility determinations. When you review the Proposed Rule, keep in mind that the proposed rule calls for comments until January 13, 2023, and has a link to submit formal comments on the Federal Register site. Given the length and depth of the Proposed Rule, it is likely this will lead to many comments, and should provide further clarification. We here at SmallGovCon will keep an eye out for any updates or changes, and as always will keep alerting you to changes in the Federal Contracting industry. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Proposed FAR Regulation Turns up the Heat on Federal Contractor Greenhouse Gas Emission Reporting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  7. Happy Friday, Readers! We had our first snow this week which was a reminder that winter is blowing in. The birds are flocking to the bird feeders, the geese are flying overhead and there seems to be a red-tailed hawk on every farm fence hunting for food. I say it’s time to snuggle in where it’s warm and enjoy some sports on the television, this weekend. There was a lot of activity in federal government contracting this week. Here are some articles that we think might be of interest. Enjoy the weekend! Ohio State University Pays Over $875,000 to Resolve Allegations that It Failed to Disclose Professor’s Foreign Government Support [DoJ] CISA seeks public comment on upcoming major cyber incident reporting regulations [FedScoop] The latest developments in key acquisition policy programs [FedNewsNet] A procurement potpourri [FedNewsNet] Construction Company Owner Pleads Guilty to Bid Rigging and Bribery [DoJ] Proposed Rules Would Add Scrutiny of Environmental Impact to Major Federal Contracts [Fedweek] Justice Department’s Procurement Collusion Strike Force Announces Four New National Law Enforcement Partners as it Enters its Fourth Year [DoJ] Federal Acquisition Regulation: Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk [FedReg] Contractors ponder the murky midterm election results [FedNewsNet] The GAO ponders a steady drop in bid protests coming its way [FedNewsNet] How Hispanic-owned businesses can thrive in government contracting [Technical.ly] The post SmallGovCon Week in Review: November 14-18, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. It probably doesn’t need to be said that all of us have been chafing under inflation lately, and federal contractors are certainly no exception. Rises in costs for goods and labor have exerted serious pressure on businesses and households worldwide. However, not all inflation is bad. SBA recently released a final rule taking into account the inflation of the past few years when it comes to the various receipts-based size-standards and economic disadvantage limits, as well as finally adjusting the 8(a) Business Development Program sole source limits. These changes are crucially important for those businesses that have just barely exceeded the applicable size standards, or that were getting close to the maximum. In this post, we’re going to explore this rule. Size Standards It is worth noting that this adjustment is somewhat unusual as the agency had just completed an adjustment in 2019. As SBA notes, it “is required to assess the impact of inflation on its monetary-based size standards at least once every five years,” so the next planned adjustment was supposed to be 2024. But the key phrase there is “at least.” SBA can certainly make adjustments before another five years passed. The last few years have had a major impact on businesses, to say the least. With the COVID-19 pandemic, supply-chain issues, and related economic effects, SBA decided that further adjustments were needed in light of the unusual inflation that has been experienced. First, the agency calculated the inflation that has occurred since the last adjustment (which was based on 4th quarter 2018 prices): The GDP price index for the base period (i.e., 4th quarter of 2018) was 111.191 and, according to the BEA GDP advance estimate released on July 28, 2022 (the latest available when this rule was prepared), the GDP price index for the end period (i.e., 2nd quarter of 2022) was 126.367. Accordingly, inflation increased 13.65 percent from the fourth quarter of 2018 to the first quarter of 2022 (((126.367 ÷ 111.191) – 1) x 100 percent = 13.65 percent). The agency then took this 13.65 percent figure and adjusted the size standards up by multiplying the size standards by 1.1365, and then rounding the result to the nearest $500,000 (nearest $250,000 for agricultural industries). This resulted in some pretty hefty increases. Here are a few example changes: NAICS 236220, Commercial and Industrial Building Construction, had an old size standard of $39.5 million. $39.5 million times 1.1365 equals $44.89 million, which rounds up to $45 million. Therefore, $45 million is the new size standard for NAICS 236220. NAICS 541511, Custom Computer Programming Services, had an old size standard of $30 million. $30 million times 1.1365 equals $34.09 million, which rounds down to $34 million. Therefore, $34 million is the new size standard for NAICS 541511. NAICS 561730, Landscaping Services, had an old size standard of $8.5 million. $8.5 million times 1.1365 equals $9.66 million, which rounds down to $9.5 million (remember, it’s to the nearest $500,000 for non-agricultural industries and nearest $250,000 for agricultural industries.) Therefore, $9.5 million is the new size standard for NAICS 561730. Economic Disadvantage The size standard change is good news for businesses getting near the size standards. But that’s not the only change the rule made. The SBA also looked at the standards for what makes an individual “economically disadvantaged” in the 8(a) Business Development Program as well as the Economically-Disadvantaged Women-Owned Small Business (EDWOSB) Program. 13 C.F.R. 124.104 requires that individuals claiming “economically disadvantaged status” for the 8(a) program have a net worth under $750,000, an aggregate gross income (averaged over the past three years) under $350,000, and less than $6 million in total assets. Those standards are the same for the EDWOSB Program under 13 C.F.R. 127.203. These figures were implemented in May 2020. Because the figures were established in 2020, the inflation calculation used to adjust the standards is not the same as it was for size standards. Since the second quarter of 2020, inflation has increased by 11.86 percent. Therefore, that is the figure that SBA used to adjust these economic disadvantage limits. Multiplying each limit by 1.1186, we get figures of $838,942 for net worth, $391,506 for aggregate gross income, and $6,711,534 for total assets. SBA then rounded these figures, so now, with this new rule, the net worth limit for economically disadvantaged individuals is $850,000, the aggregate gross income limit is $400,000, and the total asset limit is $6.5 million. For those companies that were just over the standards, this is welcome news. 8(a) Sole Source While reviewing the various figures, SBA realized something. 8(a) Program participants, excluding those owned by Native American/Alaskan/Hawaiian tribes, may not receive 8(a) sole source contracts where they have received a combined total of competitive and sole source 8(a) contracts in excess of $100,000,000 during their participation in the program. But this figure of $100,000,000 was set all the way back in 1998. Since then, no adjustments have been made to that figure! Applying the same GDP price index formula, it used for size standards and economic disadvantage limits, SBA found inflation has increased by 68.33 percent since 1998. Accordingly, SBA increased the 8(a) sole source limit by that amount, rounded to $168,500,000. Effective Date The rule does also address the issue of exactly when these changes would come into effect. SBA notes: “Typically, as is the case with the July 2019 IFR, SBA’s changes to size standards become effective 30 days after publication of the corresponding final or interim final rule.” Indeed, the page says that the rule will become effective December 19, 2022. SBA also addresses how this works in the context of ongoing procurements: “(I)n accordance with 48 CFR 19.102(c), it is the contracting officer’s decision whether to amend a solicitation to incorporate the new size standards if SBA amends the size standard and it becomes effective before the due date for receipt of initial offers.” So, carefully check your solicitations to see what size standards apply if your offers are due after December 19, 2022. If they are due before then, you will use the old 2019-adjusted size standards. Thoughts This is good news in general for small business federal contractors across the board. It is particularly good news for those in the 8(a) program: Not only are the size standards increased, but it is easier to qualify for economically disadvantaged status and the sole source limit has finally been raised. This was a needed move by SBA considering the recent high levels of inflation and, for the 8(a) sole source limit, a needed adjustment for a figure set almost 25 years ago. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Friendly Inflation: SBA Adjusts Size Standards, Economic Disadvantage Limits, and 8(a) Sole Source Dollar Limits for Inflation first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  9. Two of the Small Business Administration’s programs require the applicant to demonstrate that they are economically disadvantaged: the 8(a) Business Development Program (8(a) Program) and the Economically Disadvantaged Woman-Owned Small Business Program (EDWOSB). The 8(a) Program requires applicants to be owned and controlled by both socially and economically disadvantaged individuals per 13 C.F.R. § 124.101. Applicants of the EDWOSB program must be owned and controlled by one or more economically disadvantaged women per 13 C.F.R. § 127.200(a)(2). But what exactly does it mean to be “economically disadvantaged,” and do both programs have the same requirements? Below I discuss the economically disadvantaged requirement contained in both programs. Read on to find out whether they are the same, and more. Woman-Owned Small Business 13 C.F.R. 127.203 states, “[a] woman is economically disadvantaged if she can demonstrate that her ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business.” So how is an applicant to prove this? Well, the answer lies in three criteria. The woman’s personal net worth must be less than $750,000, excluding her ownership in the applicant firm, her personal residence, and any investment she has made into an IRA or other retirement account. A woman is disadvantaged if the woman’s personal income was $350,000 or less per year when averaged over the three years preceding the application. If over that limit, SBA will presume the woman is not economically disadvantaged, but this presumption may be rebutted if she is able to prove that an income exceeding this requirement was unusual and not likely to occur in the future. Additionally, income that was reinvested into an applicant concern that is an S corporation, LLC, or partnership will be excluded. The woman’s fair market value of all assets, including primary residence and value of the business, must be at or below $6 million. Note, this requirement still excludes investments made into an IRA or other retirement account. It is important to note that assets transferred in the two years prior to application will be included in any calculations if the assets were transferred to an immediate family member or a trust that has a beneficiary of an immediate family member unless the transfer was for the family member’s education, medical expenses, essential support or in recognition of a special occasion like a birthday or graduation. Additionally, SBA may consider the woman’s spouse’s financial situation when determining a woman’s access to credit and capital when the spouse is not employed by the applicant firm but will include it when the spouse has a role in the applicant firm or the spouse has provided financial assistance to the applicant firm. 8(a) Program 13 C.F.R. § 124.104 also states individuals are economically disadvantaged if they are socially disadvantaged and, “[their] ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities.” To be determined economically disadvantaged for 8(a) purposes, the socially disadvantaged individual must demonstrate they meet the following criteria: The socially disadvantaged individual’s personal net worth must be less than $750,000, excluding her ownership in the applicant firm, her personal residence, and any investment she has made into an IRA or other retirement account. A socially disadvantaged individual’s personal income was $350,000 or less per year when averaged over the three years preceding the application. If over, SBA will presume the individual is not economically disadvantaged, but this presumption may be rebutted if she is able to prove that an income exceeding this requirement was unusual and not likely to occur in the future. The fair market value of all assets held by the socially disadvantaged individual, including primary residence and value of the business, must be at or below $6 million. Note, this requirement still excludes investments made into an IRA or other retirement account. Look familiar? It should. The criteria for admittance to the 8(a) Program and the criteria to be certified as an EDWOSB are identical. Therefore, it should come as no surprise that determining eligibility for the 8(a) Program also has the same requirements and exceptions for transfers and whether SBA will include the spouse’s income. *** Naturally, many women readers may ask themselves, “If I qualify for the EDWOSB program, should I also apply for the 8(a) program, or vice versa?” The answer to that is two-fold. Although each situation is different, generally women who are members of a presumed disadvantaged group, as contained in 13 C.F.R. § 124.103(b), would benefit greatly from admittance into the 8(a) Program, SBA’s most longstanding socioeconomic set-aside program for federal government contracting. And the steps required for applying (as explained in this post) are fairly similar to those for EDWOSB. Women who are not part of a presumed disadvantaged group would also benefit generally, but there will be more of a hurdle because the applicant must draft a social disadvantage narrative to demonstrate, among other things, that her distinguishing feature caused a social disadvantage that was chronic, substantial, and negatively impacted her entry into or advancement in the business world. Therefore, the question you must ask yourself is whether the reward of having a larger pool of solicitations to choose from is worth extra effort to be admitted into an additional program, and whether you could qualify as socially disadvantaged. Questions about this blog? email us at info@koprince.com Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post 8(a) Program and EDWOSB: Are they Economically Disadvantaged Twins or Siblings? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  10. On this Veteran’s Day, our firm salutes veterans. Veterans are extraordinarily modest. They don’t ask for, or expect, a “thank you.” But that doesn’t mean they don’t deserve one. If you are a veteran, thank you very much for your service. If you are not a veteran, take a moment today to thank the veterans in your life. We appreciate you and we truly thank you for your service today and every day. We’ve included some articles on federal government contracting that we found informative, this week. Enjoy the weekend and happy Veteran’s Day! U.S. Department of Veterans Affairs: Who Is a Veteran? [CRSReport] How to find data on millions and millions of pandemic federal funding awards [FedNewsNet] The Biden-⁠Harris Administration Advances Equity and Opportunity for Black Americans and Communities Across the Country [Whitehouse] Agency Set to Exceed Small Business, Procurement Goals [DoD] Fewer contractors are protesting bids and awards [FedNewsNet] Senate to vote on Pentagon contract adjustments amid inflation [FedTimes] Leidos hit with DOJ subpoenas as part of antitrust, fraud probes [FedScoop] Former Air Force Contracting Specialist Sentenced to 30 Months for Bribery Scheme Involving Millions in DOD Contracts in Alaska [DoJ] Insulation Contracting Firm Sentenced for Rigging Bids [DoJ] The federal procurement elephant can dance [FedNewsNet] Pilot Program to Incentivize Contracting with Employee-Owned Businesses [DoD] Supporting Veterans’ Business Dreams [SyracuseU] The post SmallGovCon Week in Review: November 7-11, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  11. GAO’s annual bid protest report is a fall tradition for federal contracting attorneys. It’s perhaps not quite as tasty as stuffing in my book, but always interesting. In it, GAO summarizes its slate of bid protests for the previous fiscal year, and we can glean insights from how the protest numbers have changed from prior years. Here are some key points from this year: (1) the key effectiveness metric, showing numbers of sustains and corrective actions at GAO, was up again to 51% for the 2022 fiscal year and (2) total bid protest numbers are down slightly, continuing a trend from the last few years. The annual bid protest is based on GAO’s statutory duty to report to Congress (1) each instance in which a federal agency did not fully implement a recommendation made by GAO (2) if any bid protest decision was “not rendered within 100 days after the date the protest is submitted,” and (3) “include a summary of the most prevalent grounds for sustaining protests.” It also summarizes the general statistics for bid protest decisions. One important point about the GAO bid protest process: GAO met its 100-day deadline to process a bid protest in all cases. But unlike recent years, one agency declined to follow GAO’s recommendations. Interestingly, one agency declined to carry out the recommendations made by GAO in connection with a bid protest. This agency was the Navy. This is a reminder that the GAO can only make recommendations to agencies, it can’t order them to do anything. This is something that has not happened for a few years, so it’s quite rare. The protester renewed its protest at the Court of Federal Claims, and the Navy did take corrective action to take another look at the evaluations and correct any errors, consistent with what GAO recommended. It’s an isolated incident and the exception proves the rule: agencies generally follow GAO’s recommendations. Cue the Numbers 1658 protests. This is down from 1897 in 2021 and 2149 protests in 2020. Compared to 2021, total protests are down about 12%. 455 – Number of cases decided on the merits, rather than through dismissal. 59 – Number of sustained protests 13% – Percentage of sustained protests, a little bit lower than last year but fairly similar to the past few years. 51% – Effectiveness rate (percentage sustained or where agency took corrective action). This is up a little bit from the prior year but shows about half of all protests result in a sustain or corrective action. This roughly 50% effectiveness rate has been the norm for the last few years. Less than 1% – Percentage of cases with hearings. Hearings are not common at GAO. Many have theorized why protests are done. For instance, the enhanced debriefings implemented by DoD provide more information about why companies lost an award. This may eliminate those protests where a company just simply wanted more information. Anecdotally, I think there is truth to this theory. I have personally seen protests avoided where a company found out through a debriefing that its proposal was missing some key information. Another possible reason for reduced protests is simply that there are less federal contractors over all and fewer contracts. As larger companies have consolidated, there are fewer small businesses. And, category management has been pegged by some as resulting in a decrease in overall contracts, as more contracts are pushed to government wide acquisition contracts (or GWACs). All of these theories may be true, but some of this may be simply random decreases in protests overall, or a multitude of other reasons. For instance, some companies prefer the more robust discovery available at the Court of Federal Claims. Why Are Cases Sustained? The report summarizes the common reasons for sustaining protests at GAO. These are helpful to know what types of issues are most likely to get traction at GAO, although GAO is not too generous on detail. The three most common grounds (and an example of each) were: Unreasonable technical evaluation, such as “where the agency improperly assessed a weakness in the protester’s proposal under the corporate experience factor, which was directly contradicted by the contents of the protester’s proposal that showed the protester had the required experience.” Flawed selection decision, “where the awardee never submitted a complete quotation and the agency relied upon part of a quotation from the awardee’s previously excluded team member in selecting the awardee.” Flawed solicitation, where “where the solicitation contained obvious conflicting information as to whether certain requirements were due at the time of proposal submission or after award.” We at SmallGovCon can help you decide if a GAO protest may be right for your company, based on what types of arguments can be successful at GAO. It will be interesting to see if protest numbers continue to go down, or if next year will show that the decrease has leveled off. We’ll keep you updated as we follow the trends on GAO protests. Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post 2022 Bid Protest Report, Success Rate Up, Total Protests Down first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  12. In our line of work, we regularly litigate protests, claims, appeals, etc., against the Government. But often, procuring and contracting issues can be resolved without the need for litigation–via a little-known method we like to call “talking things out with your CO.” There are also some important things to keep in mind regarding contract performance communications. This article is the last of three articles aimed at providing helpful tips for communicating with your contracting officer. Part 1, which focused on pre-solicitation and solicitation communications, can be found here. And Part 2, which focused on proposal submission communications, can be found here. This article will focus on contract performance communications. Only the Contracting Officer, Acting within their Scope of Warranted Authority, has the Power to Bind the Government Regarding Contract Modifications! So, let’s say you read Parts 1 and 2 of this blog series, and you did, in fact, communicate openly with your contracting officer to make sure you understood the solicitation, got your complete proposal in (on time), and won this award (you’re welcome). Now, you are performing the contracted work. But–as frequently happens–there are some changes that need to be made to your performance (i.e. government needs changed, materials became unavailable, storm damaged the work site, etc.). So, who are you going to call? No surprises here, still, your contracting officer–but only your designated contracting officer. Indeed, only your designated contracting officer, acting within the scope of authority assigned to them under the FAR, the prime government contract, and the agency head, can bind the government regarding your contract. FAR subpart 1.6 covers contracting authority, and generally, establishes that the government is only bound by the actions of those with the authority to bind it. Specifically, FAR 1.601 states, “Contracts may be entered into and signed on behalf of the Government only by contracting officers.” And FAR 1.602-1 states: Contracting officers have authority to enter into, administer, or terminate contracts and make related determinations and findings. Contracting officers may bind the Government only to the extent of the authority delegated to them. Finally, FAR part 43 covers contract modifications. And it says: (a) Only contracting officers acting within the scope of their authority are empowered to execute contract modifications on behalf of the Government. Other Government personnel shall not – (1) Execute contract modifications; (2) Act in such a manner as to cause the contractor to believe that they have authority to bind the Government; or (3) Direct or encourage the contractor to perform work that should be the subject of a contract modification. So, what all these FAR provisions are getting at is that only the contracting officer can bind the government with respect to your federal contract–seems simple enough! But in reality, this concept is not always as straightforward as it sounds on paper. You, being a successful and responsible government contractor, want to please your government client. So, when someone flashes a fancy government badge at you (complete with a government title) and tells you to do something, the gut instinct is often to do it. This seems to be especially true when the request is something closely related to the work you are already doing–or something that adds or removes some aspect of it. For example, most contractors would rightfully hesitate if a government officer asked them to “go ahead and landscape” the building they are pouring concrete around. But if a government officer said, “hey, while you are pouring concrete on this lot, go ahead and fill in the crack in the lot beside it,” it would be easier to understand a contractor blindly obliging. But this is where things get a bit sticky–as doing so could cost you! And you may not be entitled to any additional costs you incur. Information Systems & Networks Corp. v. United States, 81 Fed. Cl. 740 (2008), a 2008 case at the Court of Federal Claims, provides a cautionary tale. In Information Systems, the agency asked the contractor to submit a change order proposal. The Contracting Officer’s Technical Representative (COTR) then told the contractor, in writing, that the agency had “technically approved” the proposal–but it was never signed by the contracting officer. The contractor proceeded with the work anyway, incurring almost $900,000.00 in costs in performing the work under the change order proposal. And unfortunately, the court denied the claim for the additional costs finding that the designated contracting officer never ordered or instructed the contractor to perform the work. The court said: [F]or a constructive change to occur, the informal order or the other conduct that causes the contractor to exceed the scope of the contract must originate from someone who is authorized to bind the Government. It would be startling, indeed, if the law were otherwise on this point, as this limitation seemingly reflects the basic notion that the United States cannot be subjected to liability based upon the conduct of those not authorized to act in a particular regard. In Information Systems, the contractor learned a very expensive lesson. And it is not one anybody needs to repeat! Keep in mind too, it is not just the unauthorized modifications for additional work that could cost you. If a government official without the authority tells you “not to worry about” something included in your contract–and you don’t–you could be on the hook for a potential breach of contract as well. When in doubt, always ask your contracting officer for an official written modification before you agree to incur additional costs or responsibilities under your contract–or agree to change the terms of your contract at all. But what if someone else just gives you instructions that modify your work–similar to what happened in Information Systems? Well, in that case, you need to make sure your contracting officer ratifies the unauthorized commitment before agreeing to anything. Your Contracting Officer can Ratify an Unauthorized Commitment–but Watch Out for the Ratification Trap! Let’s start with some definitions from the FAR. Ratification “means the act of approving an unauthorized commitment by an official who has the authority to do so.” And an unauthorized commitment “means an agreement that is not binding solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government.” The FAR explains that, under certain circumstances, commitments by unauthorized representatives may be ratified by a contracting officer (or another officer) with authority. So, let’s look back at Information Systems. In that case, if the contractor had taken the proposal–that the COTR said was “technically approved” by the contracting officer–and gotten it actually approved by the contracting officer before proceeding, they would likely be almost $900,000.00 richer! Even though the COTR was not authorized to approve the proposal when he/she did so, the contracting officer could easily have ratified that unauthorized commitment–binding the government to the additional costs. But this brings up a very important point as well, beware of the ratification trap! In the scenario we just described, let’s say the contractor had to submit a second change order proposal. And this time, the COTR said, “again, this is technically approved, just like I said it was last time–then, it was.” It may be tempting for the contractor to give in, remembering that the contracting officer ratified this guy’s unauthorized commitment last time. But that, again, could be costly. We call that the “Ratification Trap,” wherein receiving behind-the-scenes ratifications can mislead contractors into believing that unauthorized actions were authorized. Just because there was one ratification does not mean that the agency will grant future ratifications. Always obtain the commitment from the officer with actual present authority before proceeding with any modifications. * * * So, the takeaway here is that talking with your contracting officer can be crucial when you are performing under your contracts as well. Don’t be fooled by just any ol’ government badge. And don’t let one agency ratification of an unauthorized commitment make you lazy–always get the authority you need to proceed–and when at all possible, do so in a signed, written official contract modification to protect your interest. Questions about this blog? email us at info@koprince.com Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Who You Gonna Call? Your Contracting Officer (Part 3) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  13. Happy Friday, Readers and Happy November! I’m excited to be attending the APTAC Conference in Washington DC next week. It should be a great week to chat with PTAC procurement specialists from around the country. If you are attending, please stop by our table and say hello. We’ve included some articles below on the happenings in federal government contracting, this week, including updates on the GSA UEI delays and the CIO-SP4 procurement. Enjoy your weekend! 50,000 companies on hold because of GSA’s UEI validation problems [FedNewsNet] Executive Pleads Guilty to Criminal Attempted Monopolization [DoJ] NASA taking a page out of DHS’ book with a new acquisition innovation lab [FedNewsNet] Army diving ‘headfirst’ into SBOMs to secure software supply chain [FedNewsNet] White House Pushes Domestic Manufacturing [NatDef] Competition for Potential $900M Army Modernization Priorities IDIQ Contract Kicks Off [GovConWire] GAO Bid Protest Annual Report to Congress for Fiscal Year 2022 [GAO] Unsuccessful CIO-SP4 bidders may have renewed hopes [WashTech] 50,000 companies on hold because of GSA’s UEI validation problems [FedNewsNet] White House taps tech funds to upgrade AbilityOne procurement list [FedTimes] Latham Company Pays $75,000 for Selling Counterfeit Batteries to Department of Defense [DoJ] Federal Contract Spending Decreases Again in Fiscal 2022 [NextGov] GAO spikes the Federal Supply Schedule cross-walk; sellers beware [FedNewsNet] It’s Better Together With Joint Ventures: Chelsea Meggitt [BGov] GAO reports 12% drop in protests filed during 2022 fiscal year [FedScoop] Administrator Guzman Announces Path Forward for Veteran Small Business Certification Program [GlobeNewsWire] GSA constructing another bridge across the SBIR ‘valley of death’ [FedNewsNet] The post Week in Review: Oct. 31-Nov 4, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  14. I’m excited to be headed to the APTAC Fall Conference from November 6-9 in DC. Hope to see many folks there! This event supports PTAC professionals around the country. Procurement Technical Assistance Centers (PTACs) help small businesses succeed in public sector marketplaces by providing no-cost advising on all aspects of selling to the federal, state, and local governments. PTAC Procurement Counselors are dedicated to helping companies advance their business development, and they are great people to reach out to. The post Event: APTAC Fall Conference November 6-9 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  15. On a daily basis, the Department of Defense (DoD) issues innumerable memorandums and orders, as one might expect when dealing with one of the largest institutions in human history. Most of these have little to no impact for most government contractors. However, a recent class deviation is an exception, as it should make things easier for the many contractors that use small business joint ventures in contracting with the DoD. On October 26, 2022, the Department issued a memorandum mandating alternate procedures for verifying small business joint venture offeror eligibility: “Effective October 28, 2022, contracting officers shall use the alternate procedures in this deviation to verify small business joint venture offeror eligibility in lieu of using the System for Award Management (SAM). Accordingly, in lieu of using the System for Award Management (SAM), contracting officers shall include the following statement in solicitations: ‘A small business joint venture offeror must submit, with its offer, the representation required in paragraph (c) of FAR solicitation provision 52.212-3, Offeror Representations and Certifications-Commercial Products and Commercial Services, and paragraph (c) of FAR solicitation provision 52.219-1, Small Business Program Representations, in accordance with 52.204-8(d) and 52.212-3(b) for the following categories: (A) Small business; (B) Service-disabled veteran-owned small business; (C) Women-owned small business (WOSB) under the WOSB Program; (D) Economically disadvantaged women-owned small business under the WOSB Program; or (E) Historically underutilized business zone small business.’” To simplify, some time ago, a number of things changed regarding joint ventures that you are now probably already familiar with. For example, one allowed joint ventures to qualify as small where all parties to the joint venture qualified as small under the size standard associated with the NAICS code for the solicitation. However, there were certain FAR provisions that contradicted aspects of the SBA’s rules, and these simply sat on the books for a number of years. Finally, in September 2022, DoD, GSA, and NASA got around to fixing this. These changes to the FAR add some required representations by joint venture offerors when submitting bids. Normally, this would just be reflected in SAM: The representations would simply be present on the offerors’ SAM page. However, there’s been a lag in updating SAM to account for this new rule, so contracting officers can’t rely on just looking at SAM to verify joint venture offeror eligibility. So what does this mean for joint venture offerors? Well, now they have to submit the representations required in FAR 52.212-3(c) and 52.219-1(c) with their offer. A bit of a hassle admittedly, but something that can easily be overlooked when trying to get proposals out the door. It is a small thing, but it can have major implications if you do not abide by this. Likewise, there could be issues if contracting officers fail to include this requirement in a given solicitation, it may raise potential protest grounds. As to how long this will last? Well, it’s indefinite. The memorandum states: “This class deviation remains in effect until rescinded.” It was issued because SAM needs updates to account for the new FAR rules, so, presumably, it will be rescinded when that is completed. No doubt DoD will issue another memorandum when this time comes. For now, remember this when submitting proposals. Questions about this blog? email us at info@koprince.com Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post A Slight Deviation: DoD Implements Temporary Verification Requirement while SAM Updates first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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