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  1. DoD, GSA, and NASA are issuing a final rule that amends the Federal Acquisition Regulations (FAR), effectively implementing a provision of the 2016 National Defense Authorization Act. The rule permits and encourages agency acquisition personnel to engage in responsible and constructive exchanges with the industry, provided that such exchanges remain consistent with the applicable law and refrain from promoting any unfair competitive advantages. The final rule amends FAR 1.102 by revising section (a)(4) and adding section (a)(5). It will read as follows: 1.102-2 Performance standards. (a) * * * (4) The Government must not hesitate to communicate with industry as early as possible in the acquisition cycle to help the Government determine the capabilities available in the marketplace. Government acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry (e.g.,see 10.002 and 15.201), so long as those exchanges are consistent with existing laws and regulations, and do not promote an unfair competitive advantage to particular firms. (5) The Government will maximize its use of commercial products and commercial services in meeting Government requirements. By way of background, DoD, GSA, and NASA published the proposed rule at 81 FR 85914 on November 29, 2016, in order “to revise the FAR to implement section 887 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 114-92).” The provision requires the FAR Council to prescribe a regulation making clear that agency acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry, so long as those exchanges are consistent with existing law and regulation and do not promote an unfair competitive advantage to particular firms. There were nineteen respondents which submitted comments to the proposed rule. And the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed those public comments to assist in the development of the final rule. In summary, minor changes were made to the proposed as a result of public comments. At section (a)(4), the words “the commercial sector” were deleted and replaced with “industry”, and the words “as part of market research (see 10.002)” were replaced with “(e.g., see 10.002 and 15.201)”. According to the Councils, such changes were made to “clarify that FAR 1.102-2(a)(4) applies to communication with all of industry.” As for the second sentence of section (a)(4), the Councils abbreviated the text that describes examples of exchanges with industry “to provide citations to those descriptions in their respective parts of the FAR[.]” The text was changed from “so long as those exchanges . . . promote a fair competitive environment,” to “so long as those exchanges . . . do not promote an unfair competitive advantage to particular firms[.]” And according to the Councils, this change was made “in order to clarify the purpose of the sentence and better align with the statute.” The Council stated that “[t]he rule is expected to benefit both the Government and industry by encouraging more constructive communication during the Government’s market research efforts.” And if you follow our blog, you probably know that we strongly encourage such communications as well. In fact, you can actually read a three part series on the subject for more ways to facilitate such contractor-contracting officer communications (found here: Part 1, Part 2, and Part 3). 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 Final FAR Amendment Encourages Procuring Agencies to Engage with Industry first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  2. The annual National Defense Authorization Act (NDAA), in essence Congress’ annual budget for the Department of Defense (DoD), commonly includes various riders and attachments that amend or create other federal laws. For example, the 2022 NDAA (finally) gave SBA’s Office of Hearings and Appeals the authority to hear appeals of HUBZone protests (something SBA just recently proposed a rule regarding), and the 2021 NDAA is why SDVOSB self-certification is ending and SBA is taking over the job of carrying out certifications from the VA (SDVOSB contractors, SBA will start accepting applications on January 9, 2023, as we discuss here.) The 2023 NDAA is no exception, and as it is currently proposed, the DoD would get a lot more discretion to help out its contractors in light of inflation. We’re guessing we don’t need to remind you that inflation has been a real concern for contractors in 2022, as well as the general public. In fairness to the DoD, the department has tried to address the concern as far as federal law allowed as well. Back in May, it released guidance outlining its plan to include economic price adjustment clauses with upcoming firm-fixed price contracts, which would more easily allow for adjustments for inflation. Then, in September, it released another memorandum that, while still providing for no general policy of adjusting firm-fixed price contracts for inflation, noted that through FAR Part 50, Extraordinary Contract Actions, established under 50 U.S.C. § 1431, some contracts could be adjusted for inflation as an “extraordinary contract action.” The problem is that DoD can’t really go any further considering the laws in place. As of the time of this post, FAR Part 50 is quite stringent in its application. FAR 50.102-3 explains that “no contract, amendment, or modification shall be made under 50 U.S.C. § 1431’s authority…(u)nless the approving authority finds that the action will facilitate the national defense,” among other limitations. This is not a low bar. FAR 50.103-2 further provides that “the fact that losses occur under a contract is not sufficient basis for exercising the authority conferred by 50 U.S.C. § 1431. Whether appropriate action will facilitate the national defense is a judgment to be made on the basis of all of the facts of the case.” FAR Part 50 isn’t titled “Extraordinary Contract Actions” without reason. To get around this, Congress needs to act. And so far, it has. The 2023 NDAA, which has now passed the House, contains language that will amend 50 U.S.C. § 1431 so as to give the DoD more discretion in allowing adjustments to contracts to account for inflation, although this allowance will only be temporary, lasting from when the NDAA is signed by the President until December 31, 2023. First, it is important to clarify this language will not mandate DoD to grant adjustments to contracts for inflation. It simply gives them the broad authority to do so even if it is not crucial to the national defense. So, if you’re currently facing a loss on your DoD contract due to inflation, do not assume that this language, if and when it becomes law, gives you a clear legal right to an adjustment. It is still up to the agency. They do not have to grant you the adjustment. The new law would simply mean that now they have free rein to do so if you’re facing losses due to inflation. On that point, note that the language states the DoD may “make an amendment or modification to an eligible contract when, due solely to economic inflation, the cost to a prime contractor of performing such eligible contract is greater than the price of such eligible contract.” Notice the caveat: the language here specifies this authority is only given if the prime contractor would otherwise face a loss on the contract due to the increase in cost, and only if the increase in cost is due to inflation. If you aren’t facing a loss on the contract, or the reason for the loss isn’t cost increases due to inflation, the language does not grant DoD general discretion to adjust. How it will be determined what can and cannot be attributed to inflation isn’t addressed, which will certainly be an issue of contention for some contracting officers. Second, the language doesn’t just benefit prime contractors. It covers subcontractors facing a loss due to inflation too, and subcontractors may even take their claim straight to the government if their prime does not take their claim to the government. This latter change is a notable departure from the usual state of affairs. Third, while the language in FAR Part 50 normally requires some sort of recompense or consideration from the contractor in order to get the adjustment, adjustments under this expanded temporary authorization will not require such consideration. Certainly, this is good news. Fourth, it is worth noting that, normally, a contract adjustment under FAR Part 50 that exceeds $50,000 needs approval “by an official at or above the level of an Assistant Secretary or his Deputy, or an assistant head or his deputy, of such department or agency, or by a Contract Adjustment Board established therein.” 50 U.S.C. § 1431. The language in the 2023 NDAA would change that $50,000 to $500,000, which certainly will make it much easier to get larger adjustments than before. Furthermore, that change to $500,000 applies to all extraordinary contract actions involving DoD contracts, and it is not part of the temporary adjustment. (For those with potentially very large losses, it also changes the monetary threshold at which Congress must be notified before any potential adjustment is made from $25 million to $125 million.) Those monetary threshold changes, then, can be expected to be permanent changes, assuming the law is passed as it is written. Finally, it must be clarified that all these changes only apply to DoD contracts. So, if your contract is with a civilian agency, unfortunately, the language in the 2023 NDAA will not be of assistance to you. This is a welcome and needed break for contractors, many of which we know have been suffering significantly due to inflation. Hopefully, Congress goes a step further, and extends this discretion to the civilian agencies. In the meantime, if this language is passed (and we suspect it will be), this will be a great relief to DoD contractors. Questions about this post? Email us. Need legal assistance? 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 Help on the Way? Proposed National Defense Authorization Act for 2023 Grants DoD Discretion to Allow Inflation Relief for DoD Contractors first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  3. Happy Friday, Readers. We hope you have had a great week and are excited about the holiday season. There’s only one more weekend to get that shopping done! No matter how prepared I think I am, it seems there is always something that sneaks up at the last minute. We do hope you find time to sit and relax a bit this weekend and we’ve included some articles about federal government contracting that we believe are worth a read, including updates on the government shutdown and NDAA. Enjoy! Senate passes one-week government funding bill, averting a partial shutdown [CNBC] Defense Department Launches Innovation Pathways Website [DoD] Class Deviation—Small Disadvantaged Business Threshold [DoD] U.S. Small Business Administration Awards New Regional Grants to Spur Innovation and Support High-Quality Jobs [SBA] Small Business Development Centers [FedReg] United States Settles False Claims Act Allegations Involving Medical Product Manufacturer For $14.5 Million [DoJ] SBA Announces End-of-Year Capital Benchmarks Showing Historic Support for Small Businesses Under Administrator Guzman [SBA] State Dept supporting ‘data for diplomacy’ through contracting modernization [FedNewsNet] The secret ingredient for Artemis I’s success: How small businesses are taking us to the moon [Fortune] The new Defense authorization bill nails down some longstanding issues [FedNewsNet] Russian Military and Intelligence Agencies Procurement Network Indicted in Brooklyn Federal Court [DoJ] Contractors Vexed by Federal Definition of AI: Dr. Lance Eliot [BGov] VA pivoting away from $2.6 billion logistics system that failed to meet user needs [FedNewsNet] DIA to release AI strategy as Pentagon grapples with tech talent challenges [FedNewsNet] The post SmallGovCon Week in Review: December 12-16, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  4. The Small Business Administration (SBA) has proposed to amend the rules of practice for its Office of Hearings and Appeals (OHA) and the Historically Underutilized Business Zone (HUBZone) Program to “implement procedures authorizing appeals to OHA” from adverse status determination protests for certified HUBZone small business concerns. Currently, HUBZone status protest determinations are decided by the Associate Administrator of Government Contracting and Business Development per 13 C.F.R. § 126.805. But those appeals, in our experience, are fairly limited and SBA does not publish the appeal decisions, meaning they provide little help for companies and attorneys wishing to understand how SBA interprets its HUBZone This is a big step for SBA and will certainly bring consistency and insights to the protest process and regulatory interpretation for HUBZone participants, bringing that program more in line with other SBA programs. The inclusion of HUBZone appeals was written into the the National Defense Authorization Act for Fiscal Year 2022, as we discussed. Congress required SBA to prepare rules for HUBZone appeals by by December 27, 2022. Currently, if a company loses a HUBZone status protest, the only “appeal” process is to request a review by the SBA’s Associate Administrator, Office of Government Contracting & Business Development. There is no opportunity to seek a decision from an administrative judge, no way to review or cite to prior published decisions to use as precedent, and no ability to review any administrative record of the decision. These appeals are considered very quickly, within 5 business days of the filing, and there is no opportunity for additional briefing after the initial filing. Status determinations happen when an offeror’s representation as a small business, service-disabled veteran owned small business (SDVOSB), woman-owned small business (WOSB), or HUBZone participant is challenged through a protest. If a challenge is made, SBA will evaluate the status of the concern, and make a formal determination which is binding. SDVOSB and WOSB and status determinations are reviewed by OHA, but HUBZone status determinations historically have not. While there are no 8(a) Program protests, certain 8(a) denials–not including based on potential for success–could be challenged at OHA. HUBZone, then, was the odd man out as there were no OHA decisions discussing HUBZone rules. (Our law firm did FOIA request past HUBZone decisions, but that is a more involved process than simply looking on SBA’s website.) To implement this addition, SBA plans to add a new subpart, subpart M, to the OHA appeals regulations found at 13 C.F.R. § 134. In doing so, SBA will include language applying 13 C.F.R. § 134 subparts A (detailing the jurisdiction of OHA) and B (rules of practice for OHA appeals establishing timelines, deadlines, etc.) to HUBZone status determinations. These rules will be found in 13 C.F.R. § 124.1301 through § 134.1316 and will essentially mirror the rules already in place for SBA status appeals of SDVOSB, WOSB, and 8(a) participant decisions. For instance, HUBZone “appeals must be filed within ten (10) business days after the appellant receives the protest determination.” Note that this is a different timeline than the 15-calendar day rule for size protest appeals found in 13 C.F.R. 134.304(a). In addition, a protester may appear in the appeal and file a response. It is important to note that the OHA appeals for HUBZone status determinations will still not include an avenue for appealing a denial of a HUBZone certification application. For more information, and to read the entire proposed rule visit the Federal Register. SBA is taking comments via https://www.regulations.gov through January 14, 2023, or 30 days after publication in the Federal Register. This rule is identified as RIN 3245-AH88. Questions about this post? Email us. Need legal assistance? 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 Breaking: SBA Proposed Rule Gives OHA Jurisdiction over HUBZone Status Protests first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  5. The Department of Defense (DOD) and the Small Business Administration (SBA) signed a memorandum of understanding (MOU) on Friday, December 2, 2022, in a bid to strengthen and expand small business development nationally. The most obvious immediate change is that the more than 90 Procurement Technical Assistance Centers (PTAC) will be renamed APEX Accelerators, and the DOD and SBA are hopeful that this rebranding will bring new life to the program, which provides free procurement assistance to small businesses that work with all levels of the government, whether federal, state, or local. The SBA and DOD have worked together in the past, but the agencies are now expecting to collaborate more. The agencies will be working together closely to find ways to integrate training from each agency to benefit small business contractors, and plan to conduct one national event each year. Formerly housed within the Defense Logistics Agency, APEX Accelerators will now be part of the DOD’s Office of Small Business Programs (OSBP). APEX Accelerators mission is to “serve as the axis for existing and new business to strengthen the defense industrial base by accelerating innovation, fostering ingenuity, and establishing resilient and diverse supply chains,” but, the assistance is not solely for contractors working with the DOD. APEX Accelerators can be very helpful for those companies that are just starting out in the federal contracting business, that are looking to expand their footprint, or that want some free advice on business development. They can also provide referrals to many other resources out there. Small business contractors can get assistance from the SBA at the more than 1,000 Small Business Development Centers (SBDC) and at APEX Accelerators locations. In general, the assistance provided through the SBDC or APEX Accelerators is offered free of charge, and both offer a wide range of assistance to government contractors. Help is offered to all government contractors through APEX Accelerators, while the SBDCs offer assistance solely to small businesses. More specifically, assistance is given to small businesses in the pursuit of federal, state, and local government contracts. This includes help with the small business certification process, registration in the System for Award Management (SAM), identification of contracting opportunities, help understanding requirements and preparing bids, and assisting with the early stages of starting a business. In addition to the assistance listed specifically by APEX Accelerators, local APEX Accelerators list the following forms of assistance, and more: Free and confidential one-on-one counseling Vendor website registration assistance Electronic Bid Matching Service Interpreting government solicitations Government contract research assistance Contract preparation GSA Federal Supply Schedules Help finding bidding partners Identification of contract teaming and joint venture partners SAM registration and registering your business in government databases Marketing to government and prime contractors Responding effectively to solicitations Obtaining federal Set-Aside certifications Federal accounting and invoicing practices Research strategies for accessing federal, state and local government markets Even though DOD’s PTACs will rebrand as APEX Accelerators, the more than 1,000 SBA Small Business Development Centers will continue operating under that name. The Director of the DOD OSBP, Farooq Mitha, stated that the transition to APEX Accelerators is expected to be complete by the end of 2023. Currently, it is unclear whether APEX is an acronym, or simply a catchy name. For additional information on APEX Accelerators, and to find the office nearest to you, visit APEX Accelerators. For additional information on the SBA’s Small Business Development Centers, visit Small Business Development Centers. Questions about this post? Email us. Need legal assistance? 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 Goodbye PTAC, Hello APEX Accelerators first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  6. Federal contracting rules and laws are complicated, and the rules aren’t always intuitive. Many contractors make legal mistakes routinely, involving everything from completing SAM profiles to calculating small business size to communicating with government contracting officers. I invite you to join Greg Weber and myself as we discuss the Top 21 Most Common Legal Mistakes that contractors make time and time again hosted by the El Paso Chamber of Commerce. You will learn what these common mistakes are and how to avoid them. Hope to see you there! Click here to register. The post Webinar Event: December 15, 2022 at 2:00pm MST: The Do’s & Don’ts of Federal Contracting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  7. Happy Friday, Readers. We hope you have a great week and are finishing the year strong. There were several announcements in federal government contracting this week. The SBA issued a statement regarding the recent announcement by the Department of Defense (DoD) on the creation of the Office of Strategic Capital (OSC) as well as releasing a statement on the Coronavirus Crisis Report Concerning Fraud in the Paycheck Protection Program. Please read more on those announcements below and other federal government happenings. Have a great weekend! Statement from SBA Administrator Isabella Casillas Guzman on the U.S. Department of Defense’s New Office of Strategic Capital [SBA] U.S. Small Business Administration Statement on the House Select Subcommittee on the Coronavirus Crisis Report Concerning Fraud in the Paycheck Protection Program [SBA] A new rule for those involved in federal acquisition [FedNewsNet] Government Contractor Agrees to Pay over $500,000 to Resolve False Claims Act Allegations [DoJ] GSA Announces New Political Appointees [GSA] DOD wants cyber apprenticeships for contractors, but acquisition regs may remain an obstacle [FCW] Numerical Scoring in Source Selection: Lessons To Be Learned [Wifcon] Women Veterans Alliance Shines a Light on Women Veteran Business Owners [DigJrnl] Feinstein, Whitehouse, Colleagues Ask Biden to Require Disclosure of Political Spending by Federal Contractors [Feinstein] All Polaris protests now rest in the courts [WashTech] Agencies Partner to Aid Small Businesses [DoD] DoD ends cloud contracting saga with four awards [FedNewsNet] Pentagon Awards $9B Cloud Contract to Amazon, Google, Microsoft, Oracle [NextGov] Can the money that brought us Facebook and PayPal bring us better defense technology? [FedNewsNet] The post SmallGovCon Week in Review: December 5-9, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. In its recent decision, the Court of Federal Claims decided whether and when an agency can cancel a FAR part 15 procurement and start from scratch. Agencies have historically been afforded extremely broad discretion in cancelling solicitations. But in this case, the court agreed with the protester that cancellation was wrongful. It also laid out the details of a proper versus improper solicitation cancellation quite nicely. Thus, this landmark decision provides crucial guidance on the subject for agencies and federal contractors alike. The court decision in Seventh Dimension, LLC v. United States, 160 Fed. Cl. 1 (2022), concerned an Army solicitation for “role player and direct support to field and situational training exercises in all ARSOF courses” for the U.S. Army John F. Kennedy Special Warfare Center and School. The solicitation was 100% set aside for service-disabled veteran-owned small businesses (SDVOSB). It anticipated a single-award of an indefinite-delivery, indefinite-quantity (IDIQ) contract, under which firm fixed-price (FFP) task orders would be issued. Initially, the Army received nine proposals and established a competitive range. The Army amended the solicitation fifteen times, most of which were issued after initial proposals were due. One such amendment, issued after the Army initiated discussions, amended the solicitation to require the contractor provide land training facilities as well. Based on the amendment, the Army allowed final proposal revisions from those in the competitive range. Seventh Dimension protested this amendment at GAO. But GAO denied the challenge, finding the amendment reflected the Army’s needs, provided sufficient detail to offerors, and was reasonably within the Army’s discretion. After that, the Army made the award to another offeror, Aquila. Seventh Dimension then successfully protested Aquila’s SDVOSB status with SBA, leading the Army to retract its source selection decision. The Army established a new competitive range and resumed its selection process. This time around, the Army made the award to yet another offeror, Reservoir. After that, Seventh Dimension filed another GAO protest, this time, challenging the award to Reservoir on the basis that Reservoir’s key personnel and proposed training facility did not meet the solicitation’s specifications. The Army ultimately decided to take corrective action in response to that protest. It cancelled the award to Reservoir, terminated the corresponding contract, and expressed its intent to “assess whether the requirements of this acquisition are still valid.” That GAO protest was dismissed accordingly. In the end, the Army decided (as expressed in multiple internal memorandums) to cancel the solicitation. Essentially, the Army explained that it had reviewed the scope of this solicitation and another contract in order to save money. It determined the United States Army John F. Kennedy Special Warfare Center and School would no longer require the contractor to provide land and facilities. The contracting officer said the Army had to cancel the solicitation “due to extensive changes to their requirement.” It cited to GAO precedent for the assertion that the Army could cancel a solicitation if it had “a reasonable basis” to do so, and it gave an example of “when a solicitation does not accurately reflect the agency’s requirements, [and] particularly where cancellation . . . and the issuance of revised solicitation would present the potential for increased competition.” As such, the Army concluded that cancellation was proper here because “[w]ith a revised PWS (which reflects the [Army]’s current requirement) and a reduced scope in terms of ceiling value, it is reasonable to assume that there will be additional competition for this effort.” The contracting officer also explained that the new IDIQ, with a lower ceiling value, could be established to accommodate the planned changes and government estimates. As such, the Army formally announced its decision to cancel the solicitation and issue a new solicitation due to “significant budget reductions[,] which have resulted in extensive changes to their requirement,” including the removal of the facility requirement. After that, Seventh Dimension filed its first protest with the Court of Federal Claims, alleging that the Army’s cancellation determination “lacked a rational basis, was pretextually driven, and violated provisions of the FAR and SBA regulations.” After yet another corrective action by the Army–and the corresponding dismissal of the initial Court of Federal Claims protest (without prejudice), the Army eventually stood behind its cancellation decision. As such, Seventh Dimension filed again with the Court of Federal Claims. And this time, the court took a look at the Army’s procurement and ultimately, agreed with the protester that cancellation was improper. The final complaint at the Court of Federal Claims alleged four counts: (1) the Army’s cancellation of the Solicitation based on changed training requirements and contract type lacks a rational basis and contravenes procurement law (Counts I and II); (2) the Army’s decision to cancel the Solicitation is pretextual (Count III); (3) the Army’s decision to cancel the Solicitation is conclusory and insufficiently documented (Count IV); and (4) the Army violated statutory and regulatory obligations in cancelling the Solicitation (Count V). The court stated that, in its review, it would apply the standard contained in the Administrative Procedure Act (APA). Explaining the deference provided to agencies under such standards, it said: this Court reviews an agency’s procurement decisions to determine whether they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” In applying the APA standard of review, this Court affords considerable deference to an agency’s procurement decisions.” In reviewing an agency’s procurement decision, the Court “determine[s] whether ‘the contracting agency provided a coherent and reasonable explanation of its exercise of discretion.’” The Court “will uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” The court also explained that, on the other hand, it would “not put words in an agency’s mouth or invent supporting rationales the agency has not itself articulated in the administrative record; post hoc explanations for agency decisions ordinarily will be rejected.” It said: A plaintiff succeeds on the merits where it demonstrates, based on a trial on the administrative record, that either: “(1) the [agency]’s decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure.” In reviewing each party’s position in this case, he court first explained that “the government generally has broad discretion to assess and define its needs,” and “[t]he Federal Circuit has confirmed that such discretion extends to the decision of whether to amend or cancel a solicitation based on changed circumstances.” But as the court also stated, “[a]n agency’s discretion, however, is not boundless.” It said, “[i]ndeed, not only has Congress imposed limits on the Executive Branch regarding when it may cancel a solicitation but also the Executive Branch has imposed limits upon itself via the FAR.” The court first looked to the statutory provisions that may guide its decision. It said: Congress has instructed: “Except as provided in section 3301(b) of [Title 10], the head of the agency shall award a contract with reasonable promptness to the responsible source whose proposal is most advantageous to the United States, considering only cost or price and the other factors included in the solicitation.” Then, it coupled this provision with another section of the same title, which “in turn, provides that “[a]ll sealed bids or competitive proposals received in response to a solicitation may be rejected if the head of the agency determines that such action is in the public interest.” In the court’s interpretation of these statutes, it explained that the two “must be read together to require an award unless the head of the agency properly determines that” it is in the “public interest” to reject all proposals. The court said, “[t]hus, the statutes, read together, set up two mutually exclusive alternatives: (1) award a contract pursuant to the operative solicitation; or (2) reject all proposals (and cancel the solicitation).” The court then looked to the FAR’s implementation of these statutes, explaining that: The FAR appears to implement those two statutory provisions, albeit with some modifications to the operative language: “The source selection authority may reject all proposals received in response to a solicitation, if doing so is in the best interest of the Government.” FAR 15.305(b) (“Proposal evaluation”) (emphasis added).19 FAR 15.305(b) thus swaps out “the head of the agency” in favor of “[t]he source selection authority” and “the public interest” in favor of “the best interest of the government.” The court did point out that, in supporting its cancellation decision, the Army did not cite to nor rely on these statutes or this provision of the FAR. Instead, it relied on a separate section of the FAR, which covers amending a solicitation, and which requires the contracting officer to issue a solicitation amendment to cover any agency changes to a requirement or terms and conditions. The court then drew attention to the cancellation provisions of the FAR provision the agency relied upon, noting such were “[o]f dispositive significance to this case.” Those provisions explain: If, [1] in the judgment of the contracting officer, [2] based on market research or otherwise, [3] an amendment proposed for issuance after offers have been received [4] is so substantial as to exceed what prospective offerors reasonably could have anticipated, [5] so that additional sources likely would have submitted offers had the substance of the amendment been known to them, [6] the contracting officer shall cancel the original solicitation and issue a new one, [7] regardless of the stage of the acquisition. In applying these provisions to the facts here, the court said that only the first, second, fourth, and elements were at issue. In the court’s words: [T]his case comes down to whether the CO reasonably exercised her “[1] judgment . . . [2] based on market research or otherwise” that the Army’s proposed amendment “[4] is so substantial as to exceed what prospective offerors reasonably could have anticipated, [5] so that additional sources likely would have submitted offers had the substance of the amendment been known to them.” Id Now, the Army’s position here was that: (1) the word “judgment” provides the CO with maximal discretion to cancel a solicitation, (2) the phrase “based on market research or otherwise” places no constraint on the CO’s judgment, (3) notwithstanding the “so substantial” language, a proposed amendment need not constitute a cardinal change to warrant cancellation of a solicitation, and (4) it is sufficient if resolicitation may increase competition. But the court rejected “almost every aspect of the government’s interpretation and application” of such FAR provision–except it did agree that this section of the FAR provided an alternative means to cancelling a solicitation to those the court previously discussed in statute and alternative provisions of the FAR. After a brief analysis of how these statutes and regulatory provisions work together in the situation at hand, the court summarized its conclusion on the applicable rules as follows: In sum, where (1) a proposed solicitation amendment would so substantially alter the fundamental nature of the procurement such that it would essentially be a new and different procurement (i.e., where the amendment would constitute a cardinal change), and (2) the CO has some concrete basis for believing that additional sources likely would participate in the competition if they were aware of the proposed amendment, an agency cannot arbitrarily limit the field of competition by transmitting the amendment only “to all offerors that have not been eliminated from the competition.” Rather, in such a case, the agency must reopen the competition to any prospective offeror by cancelling the solicitation and starting over from scratch. The FAR clearly permits a cancellation for such purposes at the very least up until contract award — i.e., “regardless of the stage of the acquisition.” Id. Thus, here, the “key predicate question” was whether “an amendment proposed for issuance” is “so substantial” as to constitute a cardinal change, and the court explained that such must be determined on a case-by-case basis. The court noted that the FAR commits such an assessment, in the first instance, to the contracting officer’s judgment “which, along with the required impact-on-competition assessment, must be ‘based on market research or otherwise.’” It also noted the “the competing statutory requirement to award the contract (unless properly cancelled),” which naturally constrains the contracting officer’s authority in the FAR. The court explained: Although the FAR permits the CO to exercise “judgment” regarding whether a proposed amendment would constitute a cardinal change that “likely” would have competition implications, that “judgment” must be “based on market research or otherwise.” If such “judgment” is reasonably exercised — again, “based on market research or otherwise” — to conclude that a proposed amendment would constitute a cardinal change such that there likely would have been greater competition had the substance of the proposed amendment been known, then the CO “shall cancel” the procurement and start over. After explaining the rules at issue, the court applied the rules to the facts of the matter to ultimately determine that “[t]he Administrative Record Does Not Support the Army’s Decision to Cancel the Procurement.” First it looked to whether the contracting officer based her judgement on market research or otherwise, and it found that she had not. The Army actually conceded that point, stating “[t]he contracting officer did not have any market research[,]” the decision was based “solely on FAR 15.206(e)”; and “did not rely on FAR 15.305(b)” since the contracting officer “did not base her decision on the need to reject all proposals[.]” In response, the Army argued that FAR 15.206(e) did not require market research, instead it allowed the contracting officer’s decision to be based on something “otherwise” per the regulation. The court said that such a position was consistent with the government’s argument in its briefs that “the regulatory standards for the cancellation of a negotiated procurement are so extraordinarily permissive that they impose no constraints upon a contracting officer’s discretion beyond what reasoned judgment requires.” The government thus argues that “as applied to the cancellation of a negotiated procurement, the APA standard reduces to nothing more than rational-basis review.” But the court did not agree. It explained that the Army’s interpretation of the rule effectively deleted the regulatory phrase “based on market research or otherwise.” In fact, the court said, the Army “goes so far as to assert that the CO’s mere ‘assumption that additional firms may well be interested in participating in a competition’ is acceptable, if it is reasonable.’” And relying on the noscitur a sociis canon of construction, the court rejected such an interpretation. Instead, the court interpreted the phrase “based on market research or otherwise” to mean “based on market research or evidence similar to market research.” It said that such “may include information or data already in an agency’s possession or perhaps even an agency’s concrete experience[.]” But here, according to the court, the Army did not provide any citation to the administrative record to support this decision, because “the administrative record is devoid of any facts, beyond the changes themselves, supporting the CO’s judgment ‘that additional sources likely would have submitted offers.’” The court reiterated that it “must be clear about the relationship between the agency decision at issue and the administrative record[,]” and the contracting officer’s decision under review “has to be tested against the record that underlies it.” The court said: The APA requires more from the Army than a mere hypothesis or conjecture that competition likely would increase were the Solicitation cancelled; it requires reasoned judgment based on evidence or facts contained in the administrative record. A plaintiff succeeds on the merits where the administrative record lacks evidence to support an agency’s determination. And here, the court found the Army’s decision to cancel the solicitation was “conclusory” and failed to meet the FAR’s requirements. It said that the lack of record evidence here in support of the Army’s decision was sufficient for the court to rule in favor of Seventh Dimension on the merits. In another attempt to justify the cancellation decision, however, the Army pointed to the change in contract type, stating: Here, neither the offerors of existing proposals nor the offerors of proposals eliminated from the competitive range could have anticipated such a sweeping change in contract type. This material change completely alters an offeror’s proposed pricing. Cancellation is the only option that is reasonable and logical and per the FAR. But the court also disagreed with the Army on this count. The court said, the Army’s “memorandum d[id] not invoke a statutory or regulatory basis for cancelling the Solicitation but d[id] summarize a number of changes to the Special Forces Qualification Course and related exercises that Army wanted to implement[,]” and “[t]here [wa]s no discussion or analysis of why the IDIQ contract contemplated by the ARSOF Solicitation was inadequate to meet the Army’s needs.” The court added that the “memorandum contain[ed] no explanation of why the contemplated IDIQ could not meet the Army’s needs” because the original solicitation had no requirement to spend a set amount. The court said, “it is a ceiling, not a floor” and also that “an IDIQ is by its nature flexible in terms of both ordering quantities and scope of services.” The court explained: [N]ot only is there zero evidence in the record to substantiate that assertion, but also the relevant standard is not whether an offeror “may view” the revised solicitation more favorably, but rather whether “additional sources likely would have submitted offers had the substance of the amendment been known to them.” No evidence in the record supports that proposition. Moreover, the idea that “an offeror may prefer the guarantee of work through a FFP contract” — in lieu of an IDIQ — is undermined by the Army’s own asserted reasoning for preferring an FFP vehicle: “a[n] FFP contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.” The court added: As for whether other offerors “of existing proposals” or “offerors of proposals eliminated from the competitive range could have anticipated such a sweeping change in contract type,” that conclusion similarly is inapposite with respect to the justification FAR 15.206(e) requires for cancellation (as it has nothing to do with whether yet “additional sources likely would have submitted offers”). Finally, the court pointed out that the Army initially did not value the land training facility requirement as being substantial (in response to Seventh Dimension’s initial GAO protest)–but then relied upon the “substantial” nature to argue its point in this protest. The court said: “at a minimum, the government’s flip-flop critically undermines the Army’s justification for cancellation; at worst, the government’s new position is barred by the doctrine of judicial estoppel.” In its conclusion, the court explained: “the CO and the government before this Court point to no facts in the administrative record justifying the Army’s cancellation of the Solicitation pursuant to FAR 15.206(e).” The court also pointed out here, that the “lack of a viable explanation for the proposed amendment here is particularly troubling where, as here, the cancellation comes at the eleventh hour and when there is only one viable, awardable offeror remaining.” But the court did find that the record here did not support Seventh Dimension’s allegations of bad faith and dismissed that count of the protest. In its conclusion, the court granted Seventh Dimension’s motion for judgment on the administrative record and denied the agency’s same motion. The court vacated the agency’s cancellation of the solicitation, demanded it be reinstated, and offered the agency two choices: Within sixty days, the agency could “[a]ward a contract to Seventh Dimension pursuant to the reinstated solicitation” (consistent with the FAR) or it could “[i]ssue a new cancellation decision in compliance with the applicable statutes and regulations as explicated herein.” * * * This decision could provide hope for contractors on the receiving end of a cancelled solicitation–which happens quite frequently in the government contracting world, again, especially given the vast discretion historically allotted to the cancelling agencies. The court here, in a very lengthy and thorough decision, provided immense insight into when and how an agency may cancel a FAR part 15 procurement and start over–and it clarified that agencies will be afforded discretion, but that discretion is certainly not unlimited. It must be supported, at a minimum, by an agency’s reasoned judgment based on evidence or facts contained in the administrative record. Questions about this post? Email us. Need legal assistance? 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 Agencies Do Not Have Unlimited Discretion to Cancel Solicitations, Says the COFC first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  9. On December 6, 2022, the SBA held a virtual Q&A session to discuss the roll-out of the Service-Disabled Veteran Owned Small Business (SDVOSB) and Veteran Owned Small Business (VOSB) certification program. They will be assuming responsibility as of January 2023 and the SBA will begin accepting applications for certification on January 9, 2023. Through the Q&A session, the SBA provided some tips for contractors, an explanation of the processes that are controlling the SBA’s SDVOSB and VOSB certification program, and even gave attendees a preview of the software that will be used. Of course, SmallGovCon was there to get all the details so that we can break them down for you. The SBA’s Q&A described the proposed processes, a preview of the certification system, and information on how the system will interact with other government websites. As you avid readers know, SmallGovCon has had their finger on the pulse of these changes and provided updates each step of the way (see our posts on the proposed rule, and the final rule). While we will provide a summary of what was presented here, the SBA did state that they would post the webinar on their YouTube page, so if you have a chance, you should give it a watch once it is uploaded. Other resources that the SBA stated may be helpful, in the run up to the grand opening of the SBA certification portal, are the SBA veteran certification website http://www.sba.gov/vetcert and an email address for questions and updates, cvetransfer@sba.gov. With that in mind, let’s dive into what SBA told contractors at their Q&A session on December 6, 2022. The SBA started with a discussion of the goals of the program. The SBA hopes that this new certification program will be seen as the “gold standard” of certification processes and will help enable further veteran business participation in federal contracting. The SBA will call this new certification program, the “Veteran Small Business Certification Program” (shortened to VetCert on SBA’s website) and SBA anticipates that a new certification “badge” will be produced for SDVOSB and VOSB businesses to use in their marketing to show their verified status. As you likely know, the VA has not accepted any new applications for certification since October of this year, leaving businesses with certification hopes, currently without a place to submit their applications. The SBA states that they will be able to start accepting applications for SDVOSB and VOSB certification on January 9, 2023, so applicants wanting to be certified will only have to wait for about another month to submit an application. The SBA also confirmed that they were able to secure funding for the transition of the certification from the VA, and much of the employees at the CVE will now be moving over to the SBA to work on certification for the SBA. The SBA next moved onto the processes, policies, and roll-outs surrounding the SDVOSB and VOSB certification process. After January 1, 2023, SDVOSBs will need to be certified by SBA to receive sole-source or set-aside contracts from ANY federal agency. The SBA will roll-out the certification system, but also a publicly searchable database of SDVOSB certified businesses, that the public and contracting authorities will be able to search. This database will not merge with SBA’s DSBS and will have separate information. As stated earlier, the certification system will be open to receive applications on January 9, 2023. The SBA also provided some good news for any contractors who are currently certified, and will be certified as of January 1, 2023. If a business is certified as of January 1, 2023, you will get one whole year added to your eligibility, thus pushing your recertification due date out a year. This will allow contractors to adjust to the new system, and SBA to prepare further. Of note, this extension will NOT be reflected in systems until SBA gets its database and search tool in place. The SBA stated that contractors do not need to take any action to receive this extra year, as it will be automatically applied to anyone certified as of January 1, 2023. So, for example, if your SDVOSB certification is due for re-certification January 10th, 2023, the SBA states that your due date for recertification would now be January 10, 2024. If you are a self-certified SDVOSB, then you can continue to be self-certified for 2023. However, you MUST apply for certification through the SBA for a determination of your SDVOSB status prior to the end of 2023. Also, if you are a certified SDVOSB or VOSB through the VA and are still certified as of January 1, 2023, you will be grandfathered into the SBA program. Any protests of SDVOSB or VOSB certification will go through the SBA’s Office of Hearings and Appeals. The SBA also clarified that their certification will not be NAICS code specific, or limited to a certain NAICS code. The SBA will focus on if you are small in at least one NAICS listed on your SAM.gov account. If so, you will meet the definition for “currently operates” and be certified, but you must be small and currently operate in the NAICS of any contract which you are claiming SDVOSB status for. The SBA will also be issuing their own documents for certification, so the current VA documents will be obsolete come January 2023. The SBA then moved on to a demonstration and description of the certification system itself. The SBA’s aim, as one would hope, is for the system to be efficient and user-friendly. As such, the SBA has tried to include multiple reminders of eligibility requirements, avenues to receive information, and have no proverbial “dead ends”. For example, before you even log in, you are greeted with a screen that runs through the basic eligibility requirements for SDVOSB or VOSB status. Once you enter the application program itself, you have a home screen that shows open applications, certification, invitations to applications, and a way to message the SBA. Within the application, you conduct a pre-assessment that will remind you of certification requirements, and throughout, as you input answers or documents, the SBA will provide you with further information on each question asked. This program will pull much of its information from SAM.gov, and will interface with the VA’s records. So, Form DD214 may no longer be a submission requirement, as the information will be pulled over from the VA. Additionally, SBA will try and make it so that users that have other SBA certifications (i.e. 8(a) or WOSB) will have their previously submitted information or documents pulled into the VA application. Also, if you are forming a SDVOSB or VOSB Joint Venture, you will notate on the SBA certification portal that you are the managing venturer for the Joint Venture. The portal will then interface with other searchable databases to indicate that the Joint Venture is SDVOSB or VOSB, who the venturers are, and their roles. You will need a new login for SBA’s portal, and those with VA CVE log-ins should receive emails with invitations to create an account in SBA’s new system. One of the most repeated tips in the Q&A was to make sure your SAM.gov profile is up to date. As you may have noted, the SBA plans to have their certification portal interact and pull information from multiple sources. One of the most important is SAM.gov. As the SBA transitions certifications from the VA to the SBA they will be relying on information from SAM.gov for much of the SDVOSB and VOSB business information. The portal will also interface quite frequently with SAM.gov going forward and on applications. Ensuring everything is up to date on SAM.gov now will make any applications on SBA’s portal later much smoother. It appears that the SBA has truly devoted quite a large amount of time and resources to try and create a smooth transition for SDVOSB and VOSB contractors from being certified through VA, to being certified through the SBA. But as with any change, there are complicated moving parts that must be kept in mind. Contractors should check out SBA’s website, sign up for updates, and look out for any emails from SBA with instructions on their new certification process. Contractors also should keep an eye out for any correspondence from the VA, as the VA continues to work on completing application reviews for those submitted prior to the October deadline. And as always, ensure that your SAM.gov profile is up to date. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Provides Answers on Vets Certification Program Roll-Out in Q&A Session first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  10. 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
  11. 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
  12. 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
  13. 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
  14. 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
  15. 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
  16. 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
  17. 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
  18. 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
  19. 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
  20. 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
  21. 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
  22. 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
  23. 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
  24. 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
  25. One of the things the Small Business Administration may be best known for is its small business loan programs, such as the section 7(a) and 504 Loan Programs. These programs have been a staple of the small business landscape for quite some time. Unsurprisingly though, there are multiple rules associated with them. Among these myriad rules and requirements, is the determination as to whether a loan applicant is a small business. One of the things that can affect whether a business is small is affiliation with other businesses push that company over the size limit. In a new proposed rule, it appears the SBA plans to dramatically scale back the ways that a business may be seen as affiliated, by practically getting rid of affiliation through “control”–only for for loan purposes, not procurement purposes. As this presents quite a shift in operations, all of us here at SmallGovCon wanted to make sure we have provided you, our readers, a breakdown of these proposed changes to a cornerstone of the SBA. First, it may be good to think about how the SBA got to this point. As you may recall, during the early periods of the COVID-19 Pandemic, the SBA launched the Paycheck Protection Program. That loan program was geared towards helping small businesses through the COVID-19 Pandemic, and eventually the SBA granted ways for businesses to request forgiveness of those PPP loans. As was noted in a previous blog post, here at SmallGovCon, SBA’s affiliation rules related to loan programs, were applied to the PPP and generally were found to be a point of confusion for many working through that program. Well, through a proposed rule, published by the SBA on October 26, 2022, the SBA admits that based on its experiences with the PPP and over time with their other loan programs, SBA may gain some efficiencies by streamlining its process related to loan approval and affiliation rules. Before getting into the meat of the loan program rules related to affiliation, it is important to note that any changes to affiliation regulations for SBA loans DO NOT change affiliation rules related to procurements. For information about that form of affiliation, check out our two part series on affiliation here, and here. Now, let’s get back to our chat about the SBA’s new proposed changes to its loan programs’ affiliation rules. SBA’s loan programs look at affiliation based on 13 C.F.R. § 121.301, to determine if a business is “small” for 7(a) and 504 loans (as well as other loans such as PPP). These rules historically would determine if there were shared ownership, or “control” between businesses (such as shared management). If there was shared ownership or control, meeting the standards of 13 C.F.R. § 121.301, the applicant business would be combined in SBA’s eyes with the affiliate business as one business, and SBA’s determination of whether the business was “small” would be based on the combined receipts or employees of the businesses. Well, with the newly published proposed rule, the SBA is stating that they plan to basically do away with “control” between two businesses as an affiliation factor, seemingly focusing on ownership as the determining factor. SBA states in its proposed rule that determining affiliation based on “control” was burdensome for applicants as well as lenders to understand the requirements, and focusing on affiliation, based mainly on ownership, pretty much captures the aim of the “control” component of affiliation. So, separate “control” factors are no longer necessary. In order to achieve this aim, the SBA is revising multiple sections of 13 C.F.R. § 121.301. 13 C.F.R. 121.301 currently states that a “small business” is one that is independently owned and operated, which is not dominant in its field of operating. As alluded to earlier, when determining if a business fits this definition, any “affiliate” of the company is included with the applicant business to determine the size of the applicant company. So, how affiliation is determined may truly mean the difference between a business being seen as small and receiving a loan, or not. The proposed rule would update the definition of “ownership” in the regulations to remove the principle of control of one entity over another. Additionally, the SBA would clarify in the rules that certain affiliation by ownership will only arise if the applicant business and another business are operating in the same 3-digit NAICS subsector. SBA hopes that this will restrict affiliates to businesses in the same field. Finally, the SBA wants to further update the ownership definition to state that businesses in which the applicant business (or its owners) is a majority owner, are affiliates of the applicant business. If the other business does not have any majority owner (i.e. 51% owner), then SBA will review to see if the applicant business (or its owners) has 20% ownership in a business within the same 3-digit NAICS. If SBA finds this, then ownership affiliation would likely be found between the applicant business and the other business. Additionally, SBA wanted to make it clear, that with its focus on ownership going forward, if there are family members with ownership in companies, the ownership interests of spouses, and minor children will all be combined with the the applicant to determine ownership affiliation. For the SBA loan program affiliation regulations related to Stock Options, Securities and Merger Agreements, SBA states they will be examining businesses with those categories for current effects on ownership, but not control. Also, the affiliation determination based on management will be removed from the regulations, as the SBA believes the decision to hire a management company is a decision best left to the business itself. Additionally, SBA proposes to remove affiliation based on identity of interest, because the SBA states “it is inherently unfair and impractical to require close relatives to provide multiple years’ worth of financial statements for review by a lender and by the SBA when the close relative is not a principal of the applicant business.” Of note, this does not affect the requirement to combine ownership interests of spouses and minor children when determining ownership affiliation. Finally, SBA has stated that they propose to remove affiliation based on franchise and license agreements and will no longer publish the SBA’s Franchise Directory. However, SBA will still request the franchise identifier number and other items from applicants that have franchise and license agreements, when applying for loans under the SBA. Also, the SBA will still look into franchised businesses for affiliation based on ownership like any other applicant. The SBA states in this proposed rule that they hope these changes will help lenders utilize technology and lessen the burden on applicants. It is also important to point out that these affiliation rule changes are not the only things SBA is proposing to change related to its loan programs. For example, the proposed rule also contains a myriad of other changes, including but not limited to, possibly eliminating hazard insurance requirements for 7(a) and 504 loans under $150,000, and allowing the Director, Office of Financial Assistance, to delegate reconsideration requests to a designee. So, even if you are not interested in the changes to the affiliation rules related SBA’s loan programs, it may be worth your time to give this proposed rule a read over your lunch or morning coffee. The SBA is requesting comments by December 27, 2022, regarding this rule, and a link to submitting comments can be found on the Federal Register page for this proposed rule. So, while that may have felt like a whirlwind of information, legalese, and changes, it does truly represent quite a change in how the SBA may look at businesses’ sizes when applying for loans. That being said, this is only a proposed rule at this time, and has quite the way to go through the rule-making process still. So, until the rule is finalized, affiliation based on “control” is still present when applying for loans through the SBA and should be kept in mind when applying for any SBA loan at this time. Here at SmallGovCon, we will of course keep you updated on any other changes proposed by the SBA, as well as other Federal Government Contracting news, and we encourage you to check our blog regularly. Questions about this post? Email us. Needing 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 SBA’s 7(a) and 504 Loans Proposed Rule: Affiliation Based on “Control” Soon to be a Thing of the Past first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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