Koprince Law LLC

The SBA’s Mentor-Protégé Program offers a myriad of benefits to both Mentors and Protégés who participate in the Program. Small business Protégés benefit from the assistance provided by their SBA approved Mentor, which can include anything from guidance on how to find solicitations and make offers, to financial support in the form of loans or bonding. Mentors benefit because participation allows them to compete for and be awarded contracts in which they may not otherwise qualify for. In fact, SBA even provides a bare bones template for Mentor-Protégé Agreements, complete with 21 yes or no questions that every Mentor-Protégé Agreement must include. A “yes” answer to any of those questions requires the applicant to provide additional information demonstrating why this should not disqualify the Mentor and Protégé from working together. But have you ever stopped to consider the reasoning behind these questions? Likely not, if you have never had to check a “yes” answer. However, knowing the “why” behind these questions is information that every small business federal contractor could benefit from. I’m going to take you through these questions to demystify their application, which will allow you to quickly identify potential problems in the future. When SBA reviews proposed Mentor-Protégé Agreements (MPA), it is always on the lookout for a few potential problems that could disqualify the Mentor and Protégé from the Program. In fact, some of the issues could even result in the Protégé no longer being considered small, and therefore ineligible for SBA’s small business contracting programs entirely. These “problems” are control, ownership, and affiliation. In addition, there are requirements that limit the number of Agreements both the Mentor and the Protégé are permitted to participate in, both concurrently and over time. Questions A Though D The first four questions ask whether the Mentor or the Protégé have another SBA approved MPA or an MPA through another program governed by another agency, but why? Well, first, Mentors and Protégés are limited in the number of Mentor-Protégé relationships that they may participate in. Mentors may participate in up to three Protégés at a time as long as the Mentor can prove that the additional relationships with Protégé(s) will not adversely affect the development of the other firm(s). 13 C.F.R. § 125.9(b)(3). This prohibits any of the Mentor’s Protégés from being competitors with each other. Protégés’ participation, on the other hand, is limited to formally working with only two Mentors in total for the lifetime of the business, and generally only one at a time. 13 C.F.R. § 125.9(c)(2). SBA will consider a Protégé’s request for a second simultaneous Mentor-Protégé relationship if the businesses can demonstrate that the second relationship will not compete or conflict with the first relationship. Question E Question E states, “Protégé and Mentor do ( ) agree to the assistance being provided through the agreement will help the protégé firm advance its goals as defined in its business plan.” SBA rules require Mentors to demonstrate that it is “capable of carrying out its responsibilities to assist the protégé firm under the proposed [MPA],” and that it “[c]an impart value to a protégé firm.” 13 C.F.R. § 125.9(b)(1). Essentially, Question E requires the Mentor and Protégé to confirm that the Mentor has the means and capability required to benefit the Protégé as laid out in the MPA. Note that you can’t say no on this one, so I don’t suggest trying to write in a “no” answer. Questions F Through N and P The largest portion of these questions, nine to be exact, focus on affiliation. I won’t go through the entire catalogue of the ways that affiliation may be found because that was recently done. (To learn more on affiliation, see our recent post about the basics of affiliation both in general and in depth.) For today’s purpose, it’s important to know that affiliation generally looks at control over the Protégé. It is a requirement of the Mentor Protégé Program that the small business Protégé not be controlled by the Mentor. This principle is based on the affiliation rules that apply to small business requirements. While an affirmative response to any of the questions in the Mentor-Protégé Agreement must include an explanation, the affiliation-related requirements are the ones that we see causing an issue most often. SBA wants to know that the Protégé not affiliated with the Mentor, thus making it vital to include satisfactory explanations. Question O Question O is not exactly a question, but rather a duty that the Mentor must agree to. One of the requirements of a Mentor is that it must possess good character and a favorable financial position. Therefore, if the initial term of the Mentor-Protégé Agreement is less than the six years permitted by SBA rules, the Mentor and Protégé may extend the term of the Agreement up to a cumulative total of six years. The MPA simply requires the Mentor to agree that, if extended, it will re-certify on an annual basis that it continues to possess good character and a favorable financial position. Conclusion SBA’s Mentor-Protégé Program is a popular and successful program that assists small business owners in a multitude of ways. Accordingly, SBA reported 1632 active Mentor-Protégé Agreements as of September 1, 2022, and that number is likely to continue growing. Understanding the questions discussed above will help you identify potential hurdles to participation in the Mentor-Protégé Program, and help to either avoid mistakes that could affect eligibility, or be prepared with knowledge of how to fight the negative presumptions of a “yes,” by knowing SBA’s intent behind the questions. SBA’s Mentor Protégé Program Agreement can be found here. Questions about the Mentor Protégé Program? Or need help with another government contracting legal issue? Email us. 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 Yes, No, Maybe? Understanding the Reason Behind SBA-Required Mentor-Protégé Agreement Questions first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In our line of work, we regularly litigate protests, appeals, claims, 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 opportunities to communicate with your contracting officers for networking and marketing purposes that many contractors (often unnecessarily) shy away from. This article is the first of two articles that will provide you with some tips for when and how to communicate with your contracting officer. This article will focus on pre-solicitation and solicitation communications, and the next will focus on contract administration. Don’t be Afraid to Ask Questions–Even Unsolicited Ones! Most of us are familiar with formal Q&As during the Government’s solicitation procedures. When offered, formal Q&As give offerors the opportunity to: (1) clarify ambiguities or uncertainties in the solicitation; (2) encourage amendments or changes to the solicitation; and/or (3) resolve potential protest issues. So, without a doubt, you should always take full advantage of Q&As when they are an option for you. Many times, the agency is simply unaware of inconsistencies or errors in its own solicitation–typically it wasn’t even the one who wrote it. As a responsible offeror, carefully reading the solicitation and identifying those issues to the agency in a non-adversarial manner can lead directly to their resolution–via an amendment or other change to the solicitation’s terms. A formal Q&A can provide the perfect avenue to address these issues in an amicable setting and, again, even potentially get them resolved. And one pro tip for formal Q&As is to ask targeted questions to resolve your uncertainties. But a formal Q&A is not always offered. So, many think, “no formal Q&A means no questions!” Even if one is offered, the Q&A is almost always limited to a specific window of time. So, another thing we hear a lot is, “if the Q&A period has expired, I cannot ask my questions!” Well, generally speaking, neither one of these have to be the case! Don’t be afraid to contact your contracting officer before or after a formal Q&A for any questions your have that don’t conveniently fit into the formal Q&A window. Worst case, the Government ignores you or says “no” to giving you an answer. Best case, the Government gives you the answer you need or realizes it must resolve an issue on its own end. As long as the Government is giving all offerors the same information and the same opportunities to revise or fix their proposals, it is fine to reach out with questions or concerns on your own, outside the formal Q&A. Of course, your mileage may vary with whether and how fast the Government responds. But it never hurts to ask. The FAR explains: After release of the solicitation, the contracting officer must be the focal point of any exchange with potential offerors. When specific information about a proposed acquisition that would be necessary for the preparation of proposals is disclosed to one or more potential offerors, that information must be made available to the public as soon as practicable, but no later than the next general release of information, in order to avoid creating an unfair competitive advantage. . . When conducting a presolicitation or preproposal conference, materials distributed at the conference should be made available to all potential offerors, upon request. So, basically, as long as information clarifying the solicitation or its requirements is provide fairly and evenly, the Government should be able to do so (again, provided all the FAR’s improper business practices rules are followed in the process)! Now, there are, of course, situations where the agency is unresponsive or being a bit difficult when it comes to getting answers or pointing out issues in the solicitation. In which case, the pre-award protest avenue may be the best option. But the point is, you may be able to avoid such litigation by simply asking your questions first! You May Be Able to Meet One-on-One with the CO for a Solicitation you are Pursuing. We see a lot of hesitation in our line of work when it comes to contractors marketing themselves to the Government. And don’t get me wrong, there is good reason for such caution–given the bevy of procurement integrity rules out there for federal contracting, of which you should be very familiar in all your endeavors (with conflicts of interest and undue influence, to name a few). But generally, such concerns may not prohibit quite as many communications as many believe they do. From market research to more general pre-solicitation and solicitation discussions with offerors, the Government has policies in place that actually foster open communication! The Government’s communication policy is set forth in the FAR: The Government must not hesitate to communicate with the commercial sector as early as possible in the acquisition cycle to help the Government determine the capabilities available in the commercial marketplace. So, the million dollar question is, when is it ok, and when is it not? Now, that is always going to come down to a fact specific analysis–and one that is often very wise to have counsel guide you through. But there are some great resources out there, that many are unaware of, wherein the Government gives us some guidance on this matter. In a 2011 Memorandum by the Office of Management and Budget’s Office of Federal Procurement Policy (OMB OFPP), the agency explained that, generally, Government officials can meet one-on-one with potential offerors, provided that none of the offerors receive preferential treatment. The agency noted that many offerors fear that such pre-solicitation discussions could exclude them from participating in the competition. But that is not necessarily the case. The OMB OFPP explained an important distinction between a vendor working on a solicitation for the Government and other pre-solicitation communications, stating, “a vendor who, as part of contract performance, drafts the specification for a future procurement will almost certainly be barred by OCI rules from competing for that future procurement[.]” But “pre-solicitation communications are generally less structured, less binding, and much less problematic.” Where a contractor is drafting the specifications for an upcoming acquisition, it is crucial that the vendor provides impartial advice regarding the requirements used to meet the Government’s needs. To do so, the vendor should not be motivated by a desire to win that contract. But as the OMB OFPP explained: This differs dramatically from the pre-solicitation context, [wherein] the Government is not looking for impartial advice from one source, but is instead looking for a variety of options from a variety of sources, each one understandably, and reasonably, attempting to demonstrate the value of its own approach. These marketing efforts, in themselves, do not raise OCI concerns. Sure, this memorandum is over a decade old. But it is absolutely worth a read. It is full of helpful nuggets of information just like this one. So, marketing your company to the government may not be a bad thing–and in fact, can be extremely beneficial for both your company and the Government, as it tries to determine what is out there in structuring its acquisitions. Promoting your Company to Your Contracting Officer Can Actually Benefit Everyone! In accordance with the FAR, the Government must conduct “appropriate” market research for its acquisitions. Now, this can take the form of Requests for Information (RFIs), Industry Day, etc.; but the agency has very broad discretion. In a nutshell, market research is used to determine whether (among other things): (i) there are capable sources out there; (ii) commercial items will meet the Government’s needs; (iii) a set-aside will be required, and if so, which one; and (iv) bundling is appropriate. We could definitely talk about market research all day, and won’t do so here, but the point is, when you communicate with the Government about your company’s capabilities, as we have discussed throughout this article, it gives the Government valuable information in structuring its acquisitions. * * * So, the takeaway here is that talking with your contracting officer can be hugely beneficial for you, for other offerors, for the industry at large, and even for the Government itself–as long as you aware of and careful to abide by the rules for doing so properly and fairly. 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 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers. We have had some contrasting weather conditions here in Kansas, this week. One day we are at 100 degrees and the next day we are in the 60’s. You know what they say in Kansas? If you don’t like the weather, just wait a minute and it will change. That has certainly been true this week. I think I speak for all of us, when I say that the cooler temperatures of fall are a welcome change from the hot and dry conditions we have experienced throughout the summer. We hope you are able to get out an enjoy the weather in your neck of the woods this weekend. Here are a few articles we thought were particularly interesting concerning federal government contracting this week, including extension for the SBIR program, more Polaris solicitation drops, and inflation’s effects on contractors. Have a wonderful weekend! GSA’s Polaris Contract Continues to Support Equity in Federal Procurement [GSA]GSA opens second round of bid submissions for multibillion-dollar Polaris solicitation [FedScoop]Federal agencies racing to spend billions by Sept. 30 [FedTimes]DARPA launches new program to let small innovators behind the classified curtain [FedNesNet]Pentagon Urges Defense Contractors to Wean Themselves Off China-Made Chips, Raw Materials [GovConWire]Biden-Harris Administration Announces Groundbreaking Partnerships to Connect Small and Disadvantaged Businesses to Infrastructure Programs [SBA]A Nonprofit Business Accelerator Is Offering Grants to Veteran Small Business Owners [Military]Union organizers gain access to contractors working on government projects [FedNewsNet]Former U.S. Department of Housing and Urban Development Assistant Inspector General Convicted of Falsifying Financial Disclosure Forms [DoJ]General Services Administration backs inflation contract adjustments [FedTimes]Commerce Department’s Minority Business Development Agency Awards $4.7 Million in Funding to Strengthen Business Centers Across U.S [DoC]The SBA Announces Expansion of Ascent Online Digital Platform Programming [SBA]SBA Announces Inaugural Small Business Cyber Summit to Take Place During National Cybersecurity Month [SBA]GSA reveals 28 members of new acquisition policy advisory committee [FedScoop]Why the US government will require software vendors to certify the security of their products [FedScoop]Senate pulls SBIR back from brink of sunsetting [FedNewsNet]How inflation has hit federal contractors [FedNewsNet] The post SmallGovCon Week in Review: September 19-23, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

One of the common questions small business contractors ask themselves when planning performance of a contract is “how much of this work are we allowed to subcontract?” Trying to answer this question inevitably leads contractors to one of the most commonly used and frequently misunderstood rules in federal contracting, the Limitations on Subcontracting. In this post, we will break down some of the basics of this rule, and hopefully clear up any basic misunderstandings regarding it. What is the Limitations on Subcontracting rule? The Limitations on Subcontracting rule is found at 13 C.F.R. § 125.6 and FAR 52.219-14. The rule sets limits on how much work assigned to a prime contractor may be subcontracted by the prime contractor to subcontractors that are not similarly situated. Why does the Limitations on Subcontracting rule exist? The Limitations on Subcontracting rule was created to help balance two policy goals: 1) ensuring small businesses don’t serve as “pass-throughs” for large entities; and 2) allowing small businesses the resources needed to complete set-aside and sole source contracts. By allowing subcontracting by small businesses who were awarded contracts, it gives small businesses a better chance to adequately perform contracts and gain experience they may not be able to do on their own. Meanwhile, by placing limits on the amount that can be subcontracted, it ensures that the small business has to perform some amount of meaningful work, so they don’t simply serve as pass-throughs. When does the Limitations on Subcontracting rule apply? This rule is applied in two situations: When a contract is set-aside for small business that has a value above the simplified acquisition threshold; orWhen a contract is set aside or sole-sourced for 8(a) BD Program, SDVOSB/VOSB, WOSB/EDWOSB, or HUBZone participants. Does the anticipated performance provided under the contract effect the Limitations on Subcontracting rule? The Limitations on Subcontracting rule dictates how much a prime contractor may subcontract, based on what category of contract was awarded. The rule places contracts in four categories: Services contractsSupplies contractsGeneral Construction contractsSpecialty Trade Construction contracts What category a contract falls into is determined by the NAICS code assigned to it. For example: if the NAICS code description states it is for services, it is likely that it would fall under the services contract category. What are the limitations on subcontracting? Service contracts allow for 50% of the work to be subcontracted outSupply contracts allow for 50% of the work to be subcontracted outIMPORTANT NOTE: This does not apply when the nonmanufacturer rule is being utilized, as it has its own rules around subcontracting. For more information on the nonmanufacturer rule, check out our Back to Basics post on the nonmanufacturer rule. General Construction contracts allow for 85% of the work to be subcontractedSpecialty Construction contracts allow for 75% of the work to be subcontracted How are the limitations on subcontracting applied? To determine how much can be subcontracted and apply the designated percentage, contractors should look at the overall dollar value amount of the contract itself. Then, the designated percentage is applied to the dollar value amount of the contract. This should give contractors the amount of the contract that may be subcontracted. For example, if there is a service contract for $500,000, 50% of $500,000 (or $250,000) would be the maximum that could be subcontracted. Are there any exceptions to the Limitations on Subcontracting rule? Depending on the category of the contract, there are certain designated items in the rule that could have their dollar value subtracted from the total contract dollar value amount prior to applying the subcontracting percentage. The most common exception is that the cost of materials is excluded from the calculation for all construction contracts and for supply contracts as well. Additionally, if the small business prime contractor subcontracts to a “similarly situated entity,” it can actually count towards the prime contractor’s required performance and is considered not to be subcontracted for purposes of the rule. What is a “Similarly Situated Entity”? A similarly situated entity is a subcontractor that has the same socioeconomic designation required by the prime contract (i.e., SDVOSB, 8(a) etc.). It is important to remember that being a similarly situated entity is not something that is set in stone for the life of a contract, but rather is something that could change at any time based on the subcontractor’s business growth, certification status, or other changes in circumstance. So, any prime contractors looking to use this portion of the Limitation on Subcontracting, should be in regular contact with their subcontractor regarding its size and/or certification status. What happens if I don’t follow the Limitations on Subcontracting rule? The consequences for not following the Limitations on Subcontracting rule can be quite varied. The regulation itself states that there could be substantial fines placed on contractors, and possibly even debarment. The Limitations on Subcontracting rule can feel quite complicated, and its application is always very contract specific. Hopefully this blog post will help clear up the basics of the rule, and some of the rationale behind it. If you find yourself grappling with the Limitations on Subcontracting rule, give us a call and we would be happy to help analyze your situation. 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 Back to Basics: Limitations on Subcontracting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Please join us for a very informative webinar hosted by The Catalyst Center for Business & Entrepreneurship. Joint ventures can be a powerful tool for multiple businesses to compete for proposals and combine the best capabilities they have to offer. But how do businesses keep their agreements in order? This presentation will address the benefits of a joint venture, including use of past performance and capabilities such as facility clearances. Recent changes to how federal agencies must view past performance from a joint venture are important for contractors to understand. But it will also describe how to make sure a joint venture agreement is compliant with the latest rules and the ones that can trip up offerors. Companies will learn how to advise on the best uses of joint ventures, how to set them up, and how to avoid some traps when creating them. Register here. Hope to see you there! The post Webinar Event: Catalyst Joint Ventures/Legislative Updates Virtual Workshop, Thursday, September 22, 2:00-4:00pm CDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA has issued new proposed rules relating to the 8(a) Program. The rules clarify some aspects of ownership and control requirements for the 8(a) Program, including making change of ownership a little easier and cleaning up some 8(a) set-aside processes. The rule would also allow for populated joint ventures between similarly situated joint venture members. Here are some of the key changes from the proposed regulation. This doesn’t cover everything, so please review the regulations closely if you are in the 8(a) Program. There are a number of tweaks throughout the regulations. Comments are due November 8, 2022. 8(a) Ownership Under the proposed changed, SBA includes “a process for allowing a change of ownership for a former Participant.” The current rule provides that “any Participant that was awarded one or more 8(a) contracts may substitute one disadvantaged individual for another disadvantaged individual without requiring the termination of those contracts or a request for waiver under § 124.515.” The change would specify that a change of ownership could apply to a former Participant as well as to a current Participant under 13 C.F.R. § 124.105(i). This is most likely to benefit “an entity (tribe, ANC), Native Hawaiian Organization (NHO), or Community Development Corporation (CDC)) [that] seeks to replace the principal of a former 8(a) Participant.” In addition, the proposed rule clarifies that an SBA-approved mentor can own up to 40 percent of its protégé. This would apply to an 8(a) protégé, even where the mentor is in in the same or similar line of business. This would allow a mentor in the same line of business as its 8(a) protégé to own up to 40% of the 8(a) protégé. Under the ownership rules, an 8(a) Participant can change its ownership “where all non-disadvantaged individual owners involved in the change of ownership own no more than a 20 percent interest in the concern both before and after the transaction.” To avoid issues where two or more immediate family members try to purchase ownership and get around the 20% cap, “the proposed rule would provide that SBA will aggregate the interests of all immediate family members in determining whether a non-disadvantaged individual involved in a change of ownership has more than a 20 percent interest in the concern.” 8(a) Contracting and other Rules There are a number of proposed changes to clean up the 8(a) regulations. For potential for success, the proposed rule would clarify that a company “that has performed no private sector work but has demonstrated successful performance of state, local or federal government contracts is eligible to participate in the 8(a) BD program.” No private sector contracts are needed.Where a company had federal debts, it may still qualify if it can “demonstrate that the financial obligations have been settled and discharged/forgiven by the Federal Government.”Because some tribes don’t file tax returns, the proposed rule would state that a tribally-owned applicant can submit financial statements.“The proposed rule would merely add a sentence to § 124.501(b) to clarify SBA’s current position that would prohibit a contracting activity from restricting an 8(a) competition to Participants that are also certified HUBZone small businesses, certified WOSBs or eligible SDVO small businesses.”Also, “an agency may award an 8(a) sole source order against a multiple award contract that was not set aside for competition only among 8(a) Participants.” Joint Venture Rules Populated Joint Ventures. The proposed rule essentially revives populated joint ventures in limited circumstances. SBA had years ago decided that a joint venture must be unpopulated, meaning that if a joint venture exists as a formal separate legal entity, it may not be populated with individuals intended to perform contracts awarded to the joint venture. “The proposed rule would clarify, however, that a populated joint venture could be awarded a contract set aside or reserved for small business where each of the partners to the joint venture were similarly situated ( e.g., both partners to a joint venture seeking a HUBZone contract were certified HUBZone small business concerns).” In other words, two small businesses with the same socioeconomic designation as the set-aside designation for the solicitation could do a populated joint venture. Dissimilar joint venture partners, such as those commonly in a mentor-protégé relationship, could not have a populated joint venture. For populated joint ventures, the rule would also state that revenues must be divided according to the same percentage as the joint venture partner ownership share in the joint venture. Contracts versus Orders. Finally, SBA has cleared up the age old question about orders versus contracts. “SBA’s current policy is to allow orders to be issued under previously awarded contracts beyond the two-year period.” But SBA was fed up with getting this same question over and over. (Government contracts attorneys also receive the question frequently). As SBA put it: “Although SBA’s current policy is to allow orders to be issued under previously awarded contracts beyond the two-year period (since the restriction is on additional contracts, not continued performance on contracts already awarded), SBA continues to receive questions as to whether orders beyond the two-year period are permissible.” So, the rule will now clearly state that “a joint venture may be issued an order under a previously awarded contract beyond the two-year period.” Ostensible Subcontractor. The proposed rule would specify what counts as the primary and vital parts of a contract for construction contracts for purposes of ostensible subcontractor affiliation. As SBA explains: The primary role of a prime contractor in a general construction project is to superintend, manage, and schedule the work, including coordinating the work of various subcontractors. Those are the functions that are the primary and vital requirements of a general construction contract and ones that a prime contractor must perform. . . . SBA believes that the ostensible subcontractor rule for general construction contracts should be applied to the management and oversight of the project, not to the actual construction or specialty trade construction work performed. The prime contractor must retain management of the contract but may delegate a large portion of the actual construction work to its subcontractors. In addition, for unusual reliance on an ostensible subcontractor, SBA will specifically mention two risk factors when affiliation is more likely: reliance on incumbent contractor’s management personnel and the reliance on the subcontractor’s experience. These would just be part of the overall consideration in a size determination. *** This rule clarifies a number of aspects of rules relating to 8(a) Program ownership and contracting issues. It also addresses some joint venture rules to clear those up. Good on SBA for continuing to sharpen the clarity of its rules. Those in the 8(a) Program or working with joint venture would do well to review it in full. 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 SBA Proposed Rule Relaxes Change of 8(a) Program Ownership, Allows Limited Populated Joint Ventures first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! Our weather here in Kansas has decided it’s not quite ready to be cooler for Fall just yet. You can bet though, when it does, it will decide abruptly. I’m taking my family on a camping trip this weekend to extend summer just a bit longer. Hope you are able to enjoy a great weekend with your family and friends. Along the way, enjoy this roundup of the latest federal contracting news, including the new DoD deviations on flexibility in the face of inflation and SAM registration delays. Have a great weekend. Federal contract workers call for wages to keep pace with inflation [FedTimes]DOD’s Updated Guidance Suggests Ways to Manage Inflation-Related Cost Increases Under FFP Contracts [GovConWire]Updated Guidance on Managing the Effects of Inflation With Existing Contracts [DoD]The Keys to Becoming a Strong Government Contractor with Tiffany Bailey, OSC Edge [MyABSN]Contractors race for year-end business, while agencies rush to spend [FedNewsNet]DoD issues deviation after continued UEI transition delays [FedNewsNet]The White House is releasing important cybersecurity guidance today [WashPost]Multiple Award Contracts Ain’t All That: Go-To-Guy Timberlake [BGov]Companies and Owner Sentenced in Federal Court for Defrauding Government Agencies [DoJ]Class Deviation—System for Award Management [DoD]White House publishes final President’s Management Agenda learning roadmap [FedScoop]CISA to develop ‘self-attestation’ cybersecurity standards for federal software vendors [FedScoop] The post SmallGovCon Week in Review: September 12-16, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Many SBA programs and offerings have their origins in other agencies or parts of the federal government. Contractors who do not work with the DoD might be surprised to learn that the DoD’s own Mentor-Protégé Program is in fact the oldest continuously operating mentor-protégé program, dating back to the First Gulf War. Recently, this program received some updates, one of which will greatly expand the pool of eligible proteges. Let’s take a look at these changes in more detail. Back in February 2022, the DoD proposed a number of changes to its Mentor-Protégé Program (DoD MPP) in order to implement section 872 of the National Defense Authorization Act for Fiscal Year 2020. That part of the act reauthorized the DoD MPP, but as part of that authorization wanted to see some changes made to how it operates. The goal of these changes is to make the program more expansive. The most impactful change that the rule will bring about concerns eligibility for proteges. Prior to this rule coming into effect, the DoD MPP limited protégé eligibility to small business concerns whose size was less than half the SBA’s size standard for the applicable primary NAICS code. This unusual requirement severely limited the pool of potential protégés under the program. The rule removes this oddity: So long as a company meets the SBA’s applicable size standard, it is eligible to be a protégé if it meets the other eligibility requirements. Some of the changes are fairly straightforward. For starters, the program is reauthorized so that eligible companies can enter into a mentor-protégé agreement under the program until September 30, 2024. Another change is that the program participation term will change when this rule becomes effective. Previously, the program participation term for a mentor-protégé agreement was three years, although the parties could request an extension of up to two additional years for five years in total if they showed justification for such an extension. Now, the program participation term is two years, and the parties may request an extension of up to three years for a maximum term of five years provided they can justify it. Some other rules are more peculiar to the program itself. For example, the DoD MPP provides for mentors to apply for such reimbursement for developmental assistance costs, or at least it did, but that part of the program had expired on September 30, 2021. The new rule extends the date for mentor reimbursement for developmental assistance costs incurred under the program to September 30, 2026. Similarly, the rule extends the date for the mentor to use developmental assistance costs as credit towards subcontracting goals in its small business subcontracting plan from September 30, 2021, to September 30, 2026. We think these changes will be greatly helpful to all parties with an interest in the DoD MPP. Particularly, the old “half the size standard” rule was a very arbitrary and needless limitation that held the DoD MPP back without any real benefit to small companies. The SBA size standards exist for the reason of determining what is and is not a small business to the government, and it was odd to simply apply an absolute standard of “half the SBA standard” regardless of industry, considering that each industry is unique in its makeup. This is good news for the government contractor. Questions about this post? Email us. 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 The DoD Mentor-Protégé Program’s New Look: Expanded Protégé Eligibility first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Government contracting law is complex, and the rules aren’t always intuitive. As a result, many contractors make the same legal mistakes, involving everything from completing SAM profiles to calculating small business size to communicating with government contracting officers. In this webinar, I will unveil the top 21 most common legal mistakes I see contractors make time and time again and how to avoid them. I hope you will join me! Register here. The post Govology Webinar Event: Top 21 Legal Mistakes in Government Contracting, September 15, 2022, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, SmallGovCon Readers. The sunflower, which is the state flower or Kansas, are in full bloom. They have been spectacular this season! Sunflowers exhibit a trait called heliotropism, which means that they turn to face the sun. The tallest sunflower ever recorded was 30 feet tall! Wow! I haven’t seen one that tall but they sure are beautiful. We hope you can get out and enjoy the September flowers in your neck of the woods and here’s a few noteworthy articles on federal goverment contracting that we hope you will find informative. Have a great weekend! Procurement & the acquisition workforce [FedNewsNet]Union organizers now allowed on GSA-owned property to interact with contractors [FedNewsNet]Biden Administration Releases Implementation Strategy for $50 Billion CHIPS for America program [DoC]GSA Rule Seeks to Address Barriers to Worker Organizing for Federal Contractors; Robin Carnahan Quoted [ExecGov]NASA offers more details on $2B IT contract for all its centers [FedScoop]Fat Leonard’s escape as stunning as his Navy bribery case [FedNewsNet]Pentagon planning new guidance to help contractors squeezed by inflation [FedNewsNet]Contractors are happy the vaccine mandate has mostly evaporated [FedNewsNet]Ernst Urges Federal Government to Fulfill Commitment to Service-Disabled Veteran-Owned Small Businesses [Ernst]GSA Announces First Public Meeting of Advisory Committee to Address Climate and Sustainability in Federal Buying [GSA]Colorado Company and Owner Agree to Pay $625,000 for Alleged False Claims Related to Buy American Act Violations [DoJ]NSA sets 2035 deadline for adoption of post-quantum cryptography across national security systems [FedScoop]Pentagon acquisition chief optimistic — but not certain — that hypersonics will transition into production soon [FedScoop] The post SmallGovCon Week in Review: September 5-9, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

A recent SBA decision showcased the strict manner in which SBA interprets its joint venture agreement rules. After an agency awarded a contract to a joint venture entity, SBA determined the joint venture was ineligible due to fairly small deficiencies in a joint venture agreement. It’s a situation that no federal contractor wants to encounter. SBA requires strict adherence to the requirements that must be contained in nearly all joint venture agreements. Unfortunately, one company learned this lesson the hard way. Background The case, Gray Venture, LLC, SBA No. VET-276, 2022 (July 21, 2022), arose when the Missile Defense Agency (MDA) released a Request for Proposal (RFP) in May 2021. This RFP was released as a service-disabled veteran owned small business (SDVOSB) set aside. Gray Venture, LLC (Gray Venture)–a joint venture comprised of GEBC, LLC, an SDVOSB, and Thompson Gray, Inc. GEBC’s SBA approved mentor–and separate company Strategic Alliance Solutions, LLC (SAS) were among the offerors. In February 2022, Gray Venture was notified that it was the apparent successful awardee under the RFP. Following this notification, SAS filed a size protest and an SDVOSB protest, challenging Gray Venture’s eligibility. The size protest alleged that Gray Venture was other than small because GEBC was affiliated with a large business. The SDVOSB protest alleged that Gray Venture was ineligible as an SDVOSB because its joint venture agreement (JVA), which was comprised of an Operating Agreement and two Teaming Agreements, did not conform to the requirements contained in 13 C.F.R. § 125.18(b)(2). When the SBA Government Contracting office reviewed Gray Venture’s JVA for the SDVSOB protest, it determined that the agreement did not meet three of the requirements found in 13 C.F.R. § 125.18(b)(2). As a result, SBA found that Gray Venture did not qualify as an SDVOSB joint venture and was therefore ineligible for award. Gray Venture appealed this decision. OHA Decision One joint venture issue occurred because neither the Operating Agreement nor the Teaming Agreements specifically named the Managing Venturer and the Responsible Manager. An SDVOSB joint venture agreement must designate an SDVOSB as the Managing Venturer, and it must designate a “named employee,” as the Responsible Manager, who will be responsible for contract performance. 13 C.F.R. § 125.18(b)(2)(ii). The operating agreement stated that GEBC would be the “Manager” for Gray Venture, and that the “Manager” would appoint a “Project Manager.” However, both the Operating Agreement and the Teaming Agreements did not identify the name of the “Project Manager.” As a result, the Area Office concluded the JVA failed to meet regulatory requirement at 13 C.F.R. § 125.18(b)(2)(ii). Gray Venture asserted that it did name a Managing Venturer and Responsible Manager, citing to Section 8.1 of the Operating Agreement, which stated a Small Business Concern” would be designated the “Manager.” GEBC was identified as the Small Business Concern elsewhere in the Operating Agreement. Additionally, the Teaming Agreements named GEBC’s CEO as Gray Venture’s “contractual representative.” This same individual signed the Operating Agreement on behalf of GBEC. Therefore, Gray Venture argued, reading the agreements together makes the Managing Venturer and Responsible Manager apparent. However, SBA maintained that the Operating Agreement and Teaming Agreements “must designate GEBC as a managing venturer, and specifically identify a (responsible) manager,” and that the “mental gymnastics” required of SBA to determine the Managing Venturer and Responsible Manager in this situation falls short of the specificity required by 13 C.F.R. § 125.18(b)(2)(ii). In addition, an SDVOSB joint venture agreement must include the “responsibilities of the parties with regard to negotiation of the contract, source of labor, and contract performance.” 13 C.F.R. § 125.18(b)(2)(vii). In this case, general information was described in both the Operating Agreement and Teaming Agreements, but the Area Office determined that this requirement was not in compliance because the Teaming Agreements were drafted prior to the issuance of the solicitation, which meant the Teaming Agreements could not be specific to this solicitation. Accordingly, the JVA was not in compliance with 13 C.F.R. § 125.18(b)(2)(vii). Gray Venture claimed that the documents that made up its JVA set out the responsibilities of the parties, pointing to various provisions in the Operating Agreement and Teaming Agreements. For example, the Operating Agreement stated that the Manager had authority to make all decisions related to negotiation. Other responsibilities discussing labor, major equipment, facilities, resources provided by each member, negotiations related to each member’s requirements were to be incorporated into an addendum to the Operating Agreement, but that addendum had not been completed at the time of proposal submission. Finally, the Teaming Agreements named GEBC’s CEO as the contractual manager. Gray Venture asserted that reading the agreements in conjunction with one another demonstrated that GEBC’s CEO was responsible for negotiation and “setting the requirements for the provision of labor and other resources from the members.” In response, the SBA asserted that Gray Venture’s appeal pointed to a “few sentences from the ‘vast provisions’” of the Operating Agreement. Those sentences included general responsibilities, but none were specific to the solicitation in question, leading OHA to determine that general grants of authority and a “mere mention of the upcoming solicitation is not enough to meet the specificity requirements.” Conclusion OHA agreed with the SBA and DD/GC on two issues. First, OHA held that Gray Venture’s failure to specifically name a Responsible Manager in any of the agreements meant Gray Venture’s JVA was not in compliance with 13 C.F.R. § 125.18(b)(2)(ii). Additionally, OHA noted that the Operating Agreement and the Teaming Agreements were not specific to the RFP because they were executed prior to the RFP’s release. As such, Gray Venture’s lack of specificity with regard to the source of labor, negotiation, and contract performance was “fatal,” and did not comply with the regulatory requirements of 13 C.F.R. § 125.18(b)(2). There are a couple lessons to be learned from Gray Venture’s situation. First, follow the requirements set forth for joint venture agreements because SBA requires strict adherence to the regulations. Second, always include a project-specific addendum if your joint venture agreement does not include the specificity required by SBA rules. And third, do not leave room for interpretation by assuming reviewers at SBA or any other agencies will simply infer necessary information. Questions about this post? Email us. 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 Open to Interpretation? Don’t Guess if Your Joint Venture Agreement Plays by the Rules first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In a recent SBA decision, SBA’s judges had the opportunity to review three different simultaneous challenges to whether a service-disabled veteran controlled a SDVOSB. Because there were three different challenges reviewed at once, SBA took a deep dive into the SDVOSB certification standards around the requirement of control of a SDVOSB. With such a deep dive, SBA provided some explanations of SDVOSB control concepts that could be helpful to contactors looking to certify or re-certify as an SDVOSB. In these cases, a SDVSOB owner had a second job, and job experience in a different field, but SBA found the owner had the necessary control over the SDVOSB to remain certified. As there were three different protests combined into one, it is good to lay some initial groundwork to keep things straight. In Caduceus Med. Logistics LLC, SBA No. CVE-239 (2022), a SDVOSB was challenged related to three different contracts they received for Medical Courier Services. The SDVOSB was 81% owned by a service-disabled veteran and 19% by a non-veteran. So, the major focus of the protests were on whether the service-disabled veteran “fully controlled” the SDVOSB. The service-disabled veteran served as the CEO and the managing member of the company, while the non-veteran owner served as the President of the SDVSOB. The three protests (and their supplemental filings) presented basically the same arguments and allegations related to control, which were focused on the experience of the service-disabled veteran owner, the full-time devotion of the service-disabled veteran owner to the SDVOSB, and the service-disabled veteran owner’s oversight of the SDVOSB and its work. First, the SBA looked at allegations surrounding the experience of the service-disabled veteran owner. Allegation: The service-disabled veteran owner doesn’t have any experience in the medical courier services industry so they lack the necessary managerial experience. Consequently, the SDVOSB and service-disabled veteran owner are dependent on the SDVOSB President’s past personal experience in the medical courier services field. Therefore, the President is the one truly exercising control of the company.SBA Analysis: In addition to military experience as an engineer, the service-disabled veteran owner had extensive experience in automation, brewing, and was head of brewing/production for a brewing company. At that brewing company the service disabled veteran was in charge of: “purchasing decisions, marketing strategy and generating of business contacts, management of personnel and sales, and management of operations for successful sustainment of business.” The SBA found that while none of this is so-called “direct experience” in the field of medical courier services, this experience does meet the standard set forth in the regulations, that the service disabled veteran owner should have managerial experience not subject level expertise. (as a note, the SDVOSB regulations were recently moved, and previous citation numbers have consequently been changed) Next the SBA reviewed allegations surrounding the service-disabled veteran owner having a second job and therefore not showing full-time devotion to the SDVOSB. Allegation: The service-disabled veteran has another full time job at nights and on weekends at brewery, so they cannot commit the necessary time to run the SDVOSB.SBA Analysis: While the service-disabled veteran owner did have a second job at a brewing company, it did not interfere with or reduce the amount of time he spent with the SDVOSB. The service-disabled veteran owner showed they were fully committed to working for the SDVOSB full-time during normal business hours, made themselves available when needed outside of normal business hours, and the other job had flexible hours (nights and weekends). Crucially, the SDVOSB provided documentation to support that the service-disabled veteran owner was dedicated full-time to the SDVSOB. These documents included “meeting logs, a flight ticket from Georgia to Washington, signed contracts, e-mails, text messages, and 6-month call logs between [service-disabled veteran owner] and [SDVOSB President], purporting to show that [service-disabled veteran owner] fully controls the daily operations of [SDVOSB].” Finally, the SBA reviewed allegations around the service-disabled veteran owner’s oversight of the SDVOSB and its work. Allegation: The contracts were for medical courier services in Washington state, while the headquarters of the SDVOSB are in Georgia (the service-disabled veteran owner’s home). Therefore, the service-disabled owner can not exercise the necessary oversight and control “virtually” over the performance of the contract from states away, and the owner is not within a reasonable commute of the work. SBA Analysis: The headquarters of the SDVOSB is the service-disabled veteran’s home, so the owners commute to the work is not at all lengthy (likely a couple of steps and a cup of coffee), and the service-disabled veteran owner exercises full oversight/control of individuals performing contracts across the country through supervisory structures set up in the company’s operating agreement to report to the service-disabled veteran owner for authority and decision making. The standard cited by the SBA for this analysis is “over delegation of authority,” such as abdicating day-today decision-making authority. As was shown in the documentation submitted by the SDVOSB related to full-time devotion of the service-disabled veteran owner, the service-disabled veteran owner was willing to travel as needed out to work sites in Washington, hold meetings, and be in frequent contact with work sites. So, there was no “over-delegation” of authority by the service-disabled veteran owner. These findings may feel like common sense to some, but they represent some great benchmarks for current and future SDVOSB contractors to review. It is quite common for SDVOSB certifications to fail due to the service-disabled veteran owner having another job, not having a clear operating agreement designating the service-disabled owner as the ultimate control and majority owner, or the service-disabled veteran owner is not located near enough to the company’s headquarters/work. This case demonstrates that an SDVOSB can be successfully overseen and controlled by a service-disabled owner who has a second job, so long as that second job is not more important than the SDVOSB and occurs outside of the SDVOSB’s normal business hours. Additionally, as industries across the nation have shifted to being run from homes, it may be possible for service-disabled veteran owners to exercise the needed control over their SDVOSBs, if the headquarters are located at their home (or rather close to it), they have robust oversight structures in place, and they truly are exercising the day-to-day and long term decision making authority that is expected of them. Of course, the bedrock of all of this, was a strongly established reporting, decision making, and authority structure built into the SDVOSB, established through its operating documents, which ensured control (and ownership) was undoubtedly with the service-disabled veteran owner. In the end, if you are wanting to be an SDVOSB, or are re-certifying as an SDVOSB soon, what matters is that you have all your “ducks in a row” so-to-speak from the ground up, from operating documents to the day-to-day work done by the service-disabled veteran owner. If you are worried about whether your SDVOSB stacks up to the regulatory standards and has its “ducks in a row”, or you would like to learn more about becoming certified as an SDVOSB, please let us know, and check out our back-to-basics article on SDVOSB Certification. Questions about this post? Email us. Legal assistance needed for a federal government contracting issue? Call us 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 SDVOSB Owner Avoids Brewing Up Trouble with a Second Job first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Labor Day weekend, Readers. Monday is a federal holiday so I’m sure everyone is looking forward to an enjoyable, long weekend and perhaps a parade. It turns out that the first Labor Day parade was in New York City on September 5, 1882 when, according to the US Department of Labor, a newspaper account of the day described “men on horseback, men wearing regalia, men with society aprons, and men with flags, musical instruments, badges, and all the other paraphernalia of a procession.” While some of the parade marchers returned to work, most continued on to the post-parade party; even some unions that had not participated in the parade showed up to join in the post-parade festivities that included speeches, a picnic, an abundance of cigars, and “Lager beer kegs… mounted in every conceivable place.” – US Department of Labor It sounds like a good time was had by all! Enjoy the long weekend and here are a few noteworthy happenings in federal government contracting news to peruse at your leisure. OMB seeks feedback on plans to bridge federal ‘data divide’ hampering equity goal [FedNewsNet]SBA Opens Program to Get Women Owned Businesses Federal Contracts [SmlBizTrends]Appeals court partially lifts ban on federal contractor vaccine mandate [FedNewNet]Struggling to Nab a Federal Contract? The SBA Just Made Things a Little Bit Easier [Inc]Can government go green without overhauling procurement rules? [FedNewsNet]SBA Administrator Guzman, WIPP, AMEX Announce the Return of Government Contracting Education Initiative for Women Entrepreneurs: ChallengeHer [SBA]Some do’s and don’ts for contractors as the end of the fiscal year approaches [FedNewsNet]Quantum computing’s threat to cybersecurity — winter is coming [FedNewsNet]New NASA IT contract may consolidate 10 programs [FCW]How the VA’s adoption of Login.gov is going [FCW] The present and future of FedRAMP [FCW]VA installs Lynette Sherrill as permanent chief information security officer [FedScoop]Philips North America Agrees to Pay $4.2 Million to Resolve Allegations of False Claims Act Violations [DoJ] US Department of Labor Obtains Court Order Preventing Federal Contractor From Retaliating Against, Intimidating Workers on Maryland Projects [DoL]Defense Federal Acquisition Regulation Supplement: Reauthorization and Improvement of Mentor-Protégé Program (DFARS Case 2020-D009) [FedReg]AbilityOne brings Goodwill, other nonprofits into federal contracting [FedTimes]READOUT: Administrator Guzman Meets with Hawaii Native Business Owners & Community Partners to Highlight Economic Recovery & Local Impact of American Rescue Plan & Inflation Reduction Act [SBA] The post SmallGovCon Week in Review: August 29- September 2, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As we’ve discussed, the SBA will soon take the reins over from VA to run the certification process for Veteran-Owned Small Businesses (VOSBs) and Service-Disabled, Veteran-Owned Small Businesses (SDVOSBs). Self-certification for SDVOSBs will go away on December 31, 2023, so be sure to get your SDVOSB ownership and control documents up to snuff in order to stay compliant with the SDVOSB rules. One of those rules concerns unconditional ownership by the veteran. A recent federal court case sheds some additional light on that topic, as explored in this post. The case is E&L Constr. Grp., LLC v. United States, No. 21-1765C (Fed. Cl. Aug. 3, 2022). The issue of unconditional ownership is one that we see time and time again in our discussions with SDVOSB owners, and owners of other SBA socioeconomic certified companies such as WOSB and 8(a) Program participants. Therefore, it’s worth exploring the additional decisions related to this same set of circumstances. There is some history to the case (we discussed an SBA OHA decision from 2012 here). Originally, a company called Randy Kinder Excavating protested the award to E&L Construction Group (E&L), arguing that E&L was not a proper SDVOSB. SBA’s Office of Hearings and Appeals (OHA) ruled against E&L, stating that various restrictions on the right of the veteran owner of E&L (including a right of first refusal held by the other owners), meant that the veteran’s owner did not have unconditional ownership. In particular, OHA noted that, for an SDVOSB, there can be no “impediment to the exercise of the full range of ownership rights” for the veteran owner and the owner “must immediately have an absolute right to do anything they want with their ownership interest or stock, whenever they want.” This language comes from an older OHA decision, Wexford Group International, Inc., SBA No. SDV-105 (2006). Because the E&L veteran owner had restrictions on transfer of ownership, the ownership was not unconditional and not compliant under the SDVOSB rules. E&L, understandably unhappy with the result, asked a federal court to reconsider this result. The Court of Federal Claims gave E&L a partial victory. It remanded the case back to SBA, asking OHA (who had made the earlier decision against E&L) to explain its reasoning regarding why the same level of unconditional control applies as in the past, even though SBA has since amended its regulations. The court stated: “OHA did not explicitly articulate why it believes the cited rule-making document supports its conclusion that the Wexford definition remains largely undisturbed.” Upon remand, OHA explained its reasoning more thoroughly, to the court’s satisfaction. OHA noted: “The definition of [SDVOSB] unconditional ownership was thus taken from SBA’s 8(a) BD program.” This means that SDVOSB and 8(a) Programs use the same rules on unconditional ownership. In addition, the only time there can be limitations on ownership is when the ownership interest is used as collateral, such as in connection with a standard commercial loan. OHA addressed the updated rule, and explained why it was consistent with existing SBA interpretations of unconditional ownership–and the court agreed. This recent decision confirms that the ownership of a key individual in an SDVOSB (or an 8(a) company) has to be free of any restrictions, other than for death, incapacity, and pledges of stock as collateral. Those companies looking to get or remain certified under these programs would do well to heed these warnings and keep their ownership unfettered. 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 Federal Court Confirms Strict SDVOSB Unconditional Ownership Requirements first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We are pleased to announce that, back by popular demand, our updated Koprince McCall Pottroff LLC GovCon Handbook, on Joint Ventures, is coming soon! This handbook–complete with all of the SBA’s important changes from the past couple years–was co-authored by me and Nicole Pottroff as well as firm founder Steven Koprince. It will be published through Amazon in the coming weeks. We’ll provide more updates soon on the publication date and how to reserve an advance copy. The Joint Venture Handbook is one of our most requested–for good reason. Joint ventures are a powerful tool for small businesses to partner with other companies and enhance their chances of success on federal contracts. But there are a lot of SBA-required components–miss one, and your joint venture might lose out an award. That’s why the Joint Venture Handbook provides a step-by-step, easy-to-understand method for working through the SBA joint venture process. Stay tuned to SmallGovCon and social media to be updated when the Joint Venture Handbook becomes available. 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 New GovCon Handbook Arriving Soon! Joint Ventures–Updated Edition first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

While it is understandable why people focus on the 50 states, the United States is not just those areas. In addition to the states, the United States has 14 territories. Five of these have a permanent population: Puerto Rico, the Northern Marianas Islands, Guam, American Samoa, and the U.S. Virgin Islands. Up until recently, Puerto Rico received preferential treatment for the surplus property program and under the mentor-protégé program, but the other four territories did not. However, a new final rule by the SBA is finally extending these privileges to all the permanently populated U.S. territories. In this post, we will explore just what that entails. Surplus Property Program To start, it may be worth discussing what the surplus property program is. First, it really is less a single program than a collection of programs. As you might imagine, the federal government often ends up with significant amounts of surplus goods and equipment that it will not otherwise use. Most of this property simply goes to states and their agencies, however, certain small businesses (such as 8(a) participants and veteran-owned small businesses (VOSBs)) can apply to receive the property from the state through the state’s State Agency for Surplus Property (SASP). Provided the business uses the property in certain ways, the state will donate that property to the business. Quite a valuable resource, obviously! In 2018, Congress passed the National Defense Authorization Act (NDAA) for Fiscal Year 2019. Section 861 of that act provided that SBA may transfer technology or surplus personal property to small business concerns in Puerto Rico, if the small business otherwise meets the requirements for such transfer, regardless if the business is an 8(a) Program participant or VOSB. As such, SBA created a rule on November 2, 2020 that implemented this new law. As a result, Puerto Rican small businesses were added to the list of companies that could receive federal surplus property. However, this did not extend to America’s other territories. As a result, when preparing the National Defense Authorization Act for Fiscal Year 2021 about a month after this new rule was issued, Congress included a provision in Section 866 that “covered territory businesses” would receive priority for surplus property transfers for four years starting on January 1, 2021. The provision defined “covered territory businesses” as small business concerns with their principal offices located in either the U.S. Virgin Islands, American Samoa, Guam, or the Northern Marianas Islands. With that, SBA immediately had to go back to the drawing board to implement these new rules. The new rule extends the surplus personal property preference to the other permanently inhabited U.S. territories. In other words, small businesses with a principal place of business in these territories are now able to access the surplus property program even if they aren’t 8(a) participants or VOSBs. And note, that’s “small businesses with a principal place of business,” not just businesses registered in one of those territories. Therefore, even if the small business is registered in Delaware, so long as its principal place of business is in one of Puerto Rico, the Northern Marianas Islands, Guam, American Samoa, or the U.S. Virgin Islands, the surplus property preference applies. Mentor-Protégé Program At the same time, the new rule also extends certain advantages Puerto Rican businesses have with regards to the mentor-protégé program to these territories. When the mentor-protégé program was consolidated in October 2020, the rule that implemented that consolidation also made three changes to benefit Puerto Rican businesses: First, the first two mentor-protégé relationships between a specific mentor and a small business that has its principal office located in the Commonwealth of Puerto Rico, will not count against the limit of three protégés that a mentor can have at one time. In other words, if a mentor has two protégés that are Puerto Rican small businesses, it can still have three other protégés for a total of five. Second, the rule provides contracting incentives to mentors that subcontract to Puerto Rican protégés by giving positive consideration for the mentor’s past performance evaluation. Third, the rule provides contracting incentives to mentors that subcontract to Puerto Rican protégés by applying costs incurred in training those proteges towards subcontracting goals. Now, mentors will be treated similarly with regards to protégés with their principal place of business in the Northern Marianas Islands, Guam, American Samoa, and the U.S. Virgin Islands. And, again, note that is “protégés with their principal place of business” in one of those territories, not just protégés registered in one of those territories. This rule change only makes sense as the government is continuing to show more interest in the nation’s territories outside of the 50 states, something that frankly has been long overdue. And, with a significant number of federal contracts in places like Guam, this rule change could really benefit a lot of small businesses and their mentors. Questions about this post? Email us. Legal assistance needed for a federal government contracting issue? Call us at 785-200-8919 Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Small Businesses in U.S. Territories Eligible for Preferential Treatment Under New SBA Rule first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers. I hope this has been a productive week for you. We have been very busy here at SmallGovCon moving into the fall season. Living in a college town always brings a sense of energy and excitement as the students return for the fall semester. The SBA made announcements this week about a new webinar series they are launching concerning the challenges of inflation on small businesses as well as a new program addressing cybersecurity infrastructure. You can read more about that, as well as other federal government news, in the articles we have included below. Have a great weekend! SBA Administrator Guzman to Announce Return of Government Contracting Education Initiative for Women Entrepreneurs, ‘ChallengeHer’ [FNCP]Contractors say this latest labor proposal aims to fix a non-existent problem [FedNewsNet]Labor Department to Unveil Online Tool for Construction Contract Award Notifications [ExecGov]U.S. Small Business Administration, Small Business Majority Announce New Collaboration & Webinar Series to Help the Small Business Community Navigate Today’s Economic Challenges [SBA]SBA Administrator Guzman Announces Grant Awardees for New Pilot Program to Bolster Cybersecurity Infrastructure for Emerging Small Businesses [SBA]President’s NSTAC advisory committee proposes real-time monitoring of operational technology across federal agencies [FedScoop]National Weather Service seeks IT expertise to develop next-gen water prediction capabilities [FedScoop]‘Stay vigilant:’ Agencies issue warnings, take new steps to combat wave of threats against feds [FCW]How federal agencies, contractors can effectively consolidate contracts [FedNewsNet]CEO Closes $28 Million Government Contract — ‘It’s The Way to Go For Black Entrepreneurs [BLKENT]How government procurement creates a snowball effect for corporate climate action [GrnBiz] The post SmallGovCon Week in Review: August 22-26, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

President Biden signed two bills aimed at preventing fraud by participants within the Small Business Association on August 2, 2022. H.R. 7334 is titled the COVID-19 EIDL Fraud Statute of Limitations Act of 2022 (EIDL Act). H.R. 7352 is titled the PPP and Bank Fraud Enforcement Harmonization Act of 2022 (PPP Act). Both Acts establish a ten-year statute of limitations for fraud by borrowers under their respective programs. The head of the U.S. Small Business Administration, Administrator Isabella Casillas Guzman credited the Acts with a renewed ability to investigate and prosecute borrowers who committed fraud in SBA lending programs created to assist small businesses during the height of the COVID-19 pandemic. For both programs, the main purpose is to put in place a a ten-year statute of limitations for fraud. The EIDL Act, found at 15 U.S.C. § 636(b)(16), was created to help small businesses stay afloat during the worst of the COVID-19 pandemic. This program offered loans directly from the SBA that were low-interest, fixed-rate, and long-term. Loans under the EIDL Act are required to be repaid, but borrowers were permitted up to 30 years to do so. Loans from the EIDL act were to be used for business expenses such as payroll, utilities, and more. The EIDL Act began taking applications from small businesses in need of financial assistance due to the COVID-19 pandemic in March of 2020. SBA extended the deferment period to 24 months on September 2, 2021. As of January 1, 2022, the program ceased taking applications. Much like the EIDL Act, the PPP Act, found at 15 U.S.C. § 636(b)(35), was also created to help small businesses during the height of the pandemic. However, PPP loans were available to a smaller pool of applicants due to size restrictions. Unlike EIDL loans, PPP loans were eligible for forgiveness if certain criteria for the use of the loans were met. Focusing more on keeping employees paid, PPP loans were eligible for forgiveness if employee compensation levels were maintained, the loan was used on payroll or other eligible expenses, and at least 60% of the loan was spent on payroll costs. Unfortunately, along with the much-needed relief for small businesses that was offered by the EIDL Act and the PPP Act came the unscrupulous actions of some. All you must do is Google “EIDL fraud cases” or “PPP fraud cases,” and you can find any number of cases exhibiting fraudulently obtained loans, or loans used for non-allowable expenses (one case even included the purchase of a yacht). Seeing a need to combat fraudulently obtained or improperly applied EIDL or PPP loan funds, Congress took decisive action to establish a ten-year statute of limitations for both programs, and that is the primary effect of both laws. For instance, the EIDL law reads: “Notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to the use of an advance received under this subsection shall be filed not later than 10 years after the offense was committed.” Updates to the EIDL Act and PPP Act are aimed at fraud committed by recipients of loans under both programs, with House Report 117-327 stating, “this legislation gives prosecutors more time to bring pandemic fraudsters to justice.” In the House Report, the United States Inspector General, Hannibal “Mike” Ware stated he believes that investigating fraud related to both Acts “will be a decades-long effort” due to many of the EIDLs coming due near the end of fiscal year 2024. The potential for fraud reaches into the billions. Now, there is at least a timeline for both borrowers, and the government, to go after potential fraud cases. That provides a clear line in the sand for all concerned. Questions about this post? Email us. Legal assistance needed for a federal government contracting issue? Call us 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 Congress Directs SBA to Take Stab at COVID-19 Loan Fraud first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

One of the biggest gamechangers among Federal Contracting programs is the SBA’s Mentor Protégé Program. It provides an avenue for small businesses and large businesses to work together where they otherwise may not have been able to previously, helps federal contractors develop their companies, and can provide protection from affiliation. However, in order for businesses to take advantage of this program, the relationship between the mentor and protégé businesses must meet certain requirements. This entry in SmallGovCon’s Back to Basics series will provide a quick overview of some of the requirements and important areas for contractors to remember if they are considering participating in the SBA’s Mentor-Protégé Program. Before we dive into some of the points of the SBA’s Mentor-Protégé Program, we presume you are like us and really enjoy learning about the SBA’ Mentor-Protégé Program. Well, if you are reading this prior to August 30, 2022, you are in luck because SmallGovCon’s own Shane McCall and Nicole Pottroff will be hosting a webinar on August 30, 2022, discussing in detail various updates to the SBA’s Mentor-Protégé Program. Registration for their webinar through Govology can be found here. Now lets dive in to some of the points of the SBA’s Mentor-Protégé Program. What is the SBA’s Mentor-Protégé Program? The Mentor-Protégé Program through the SBA is a program in which an “other-than-small” (read “large”) business can provide a small business access to its resources, experience and assistance, and in turn the large business can join with the small business to perform small business set-aside contracts. While it is typical that a large business is the mentor, that’s not a requirement–a small business can serve as a mentor. There are a couple things contractors should keep in mind when diving into the SBA’s Mentor-Protégé Program regulations and guidance: First, in the past there was an 8(a) Mentor-Protégé Program run by the SBA, as well as an All Small Mentor-Protégé Program through the SBA. These two were consolidated into the singular SBA Mentor-Protégé Program in 2020. Second, agencies may have their own mentor-protégé programs, such as the long-running Department of Defense Mentor-Protégé Program. These are not the same as the SBA’s Mentor-Protégé Program and have their own unique requirements. We will only be looking at the widely used SBA Mentor-Protégé Program in this Back to Basics. How do businesses qualify and gain entry into the SBA’s Mentor-Protégé Program? First things first, the protégé must be a for-profit small business with some experience in their relevant industry, but hoping to grow its abilities with the assistance of another business. Next, the protégé needs to find a mentor. The SBA makes it very clear that they are not a matchmaking operation. So, the protégé needs to find a mentor on their own. To qualify as a mentor, a business must be for-profit, be able to provide assistance to a mentor, possess “good character”, not be debarred or suspended, and be able to impart wisdom to the protégé from their experience in contracting. Additionally, the mentor and protégé cannot be affiliated under SBA’s size affiliation rules found here. Once a protégé finds its mentor, it must show that the relationship will not be used simply as a “pass through” for the mentor to perform small business contracts without any assistance to the small business. This is shown by crafting a robust Mentor-Protégé Agreement that lays out the responsibilities of the mentor and protégé, including what assistance the mentor will provide, and other items that discuss how the parties will interact to achieve the aims of their relationship Once drafted, the Mentor-Protégé Agreement is submitted to the SBA at certify.sba.gov along with any other required documentation such as SBA training certificates, registrations etc. The SBA will then review the agreement, and the parties themselves, eventually either denying or approving of the agreement. Once approved, a mentor and protégé can start conducting the anticipated assistance and avail themselves of the benefits of the program. What are the Benefits of the SBA’s Mentor-Protégé Program? As alluded to earlier, there are some great benefits to participating in the SBA’s Mentor-Protégé Program. Through an established and approved Mentor Protégé Relationship, a Protégé can gain business development assistance from a Large Business Mentor in the following areas: Internal Business Processes, such as accounting, and marketingFinancial AssistanceNavigating Federal Contracts and the Contracting ProcessInternational TradeBusiness Development related to Government Contracting, such as building processes to identify contracting opportunitiesGeneral and Administrative Assistance, such as helping develop business oversight processes or human resource departments The activities undertaken by the mentor and protégé for the specific areas of assistance they identify in their approved mentor-protégé agreement are generally protected from leading to affiliation for size purposes. This allows the protégé to take full advantage of any assistance from a mentor, without fear of affiliation causing the protégé to take on the mentor’s size status. However, the benefits are not solely limited to the protégé. In return for all the assistance and education given to the protégé, the mentor has the ability to utilize the mentor-protégé relationship to help the protégé work on contracts that would be restricted to small businesses, or set-aside for SBA socioeconomic programs (such as 8(a), HUBZone etc.). This avenue is available if the mentor and protégé enter into a joint venture, and then use that joint venture to bid and perform on set-aside contracts that the protégé qualifies for. What are some important things to remember for the SBA’s Mentor-Protégé Agreements? An approved mentor-protégé relationship cannot last more than 6 years.There are restrictions on how many mentor-protégé relationships businesses may be in at the same time. And a protégé can generally only have two mentors total throughout the company’s lifetime.A mentor-protégé relationship is annually evaluated by the SBA for effectiveness, and there are many reporting standards that must be followed so that the SBA can keep track of the relationship. As you can tell, the SBA’s Mentor-Protégé Program has quite a few regulatory hurdles to overcome, and this Back to Basics only hits on the most general points of the program. However, if contractors can find a business to run the mentor-protégé race together with and reach the finish line of getting an approved mentor-protégé agreement, then they can avail themselves of some great benefits. If you are considering a mentor-protégé relationship and have some questions, please feel free to reach out to us. Questions about this post? Email us. Legal assistance needed for a federal government contracting issue? Call us 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 Back to Basics: SBA’s Mentor-Protégé Program first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We’re back with another edition of looking for interesting tidbits from SBA’s semiannual regulatory agenda. SBA (along with other agencies) provide a guide to upcoming regulations. This schedule can help contractors determine when SBA is likely to update certain rules. Here are a few key updates. Here are some of the key rules on SBA’s agenda, and what stage they are at. What’s interesting to note is there are not that many big rules on the horizon in the procurement space. Most of these are updates to size standards. While important, they are regularly planned updates, rather than a whole new set of rules. That’s not to say that SBA has not been busy. Rather, the regulatory agenda only captures certain rules. For instance, the new SDVOSB rules that SBA is implementing are included in the agenda. We discuss those changes here. Lower Tier Subcontracting SBA is updating its rules in connection with the National Defense Authorization Act of 2020, Credit for Lower Tier Subcontracting and Other Amendments. The NDAA required SBA to update SBA the method and means of accounting for lower tier small business subcontracting. More specifically, if a subcontractor’s “subcontracting goals pertain only to a single contract with a Federal agency, the prime contractor may elect to receive credit for small business concerns performing as first tier subcontractors or subcontractors at any tier.” Conversely, for subcontracting plans that cover multiple contracts, the “prime contractor may only receive credit for first tier subcontractors that are small business concerns.” This rule is still in the planning stages and a proposed rule is expected in January 2023. 2022 NAICS Codes SBA will be updating its Small Business Size Standards: Adoption of 2022 North American Industry Classification System for Size Standards. We wrote about this pending rule here, and noted that most of the changes mostly concern industries that rarely engage in federal contract work. Still, it’s something to keep on top of. The final rule is scheduled for October 2022. Size Standards SBA has updated size standards for the following industry categories and for inflation: Small Business Size Standards: Manufacturing and Industries With Employee Based Size Standards in Other Sectors Except Wholesale Trade and Retail Trade. We discussed this here. The final rule is expected in December 2022. Small Business Size Standards: Wholesale Trade and Retail Trade. See our post. The final rule is expected in September 2022. Small Business Size Standards: Adjustment of Monetary Based Size Standards for Inflation. This proposed rule came out in 2019, and adjusted all monetary based industry size standards for inflation. However a final rule is expected in December 2022. These rules are all in the final stage. Other Updates The SBA plans to update its rules in a few other areas. Because these may have less bearing on contractors, I won’t go into detail on them. Small Business Development Center Program RevisionsSmall Business Size Standards; Alternative Size Standard for 7(a), 504, and Disaster Loan ProgramsSmall Business Lending Company (SBLC) Moratorium Rescission and Change of Ownership UpdatesSmall Business Timber Set-Aside Program If you have questions about any of these other updates, be sure to review the agenda. Stay tuned to SmallGovCon to keep track of these updated SBA rules, as they could have an important impact on small business federal contracting. Questions about this post? Email us. Legal assistance needed for a federal government contracting issue? Call us 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 Reading the Tea Leaves from SBA’s Regulatory Agenda first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers. I wanted to send another thank you to Carter Merkle, Berbon Hamilton, and all the other folks who made the ICBS Show 2022 such a great experience. There were some informative speakers and a great opportunity for networking. I was very pleased to be able to speak about local opportunities related to the infrastructure law. Hope you have a nice weekend and enjoy the Week In Review. This week saw some interesting federal contracting stories, including new deadlines for GSA MACs, working with agency small business offices, and a spotlight on OCIs. Task force eases COVID-19 screening guidance at federal facilities [FedNewsNet]OMB looking for budgets that are data driven [FedNewsNet]US Department of Labor Offers Prevailing Wage Compliance Seminars for Federal Contractors, Contracting Agencies, Unions, Workers [DoL]GSA, DHS Extend Bid Submission Deadlines for 2 Small Biz IT Contract Vehicles [GovConWire]SBA Gives Government an ‘A’ in Meeting Contracting Goals [FedWeek]Three reasons why organizational conflict of interest is back in the spotlight [FedNewsNet]Warren Stokes Debate Over Who Wields Federal Contract Bans [BBLaw]GSA Administrator Statement Following Signing of the Inflation Reduction Act [GSA]Key procurement trends at GSA [FedNewsNet]GSA’s Zvenyach leaving federal service [FedNewsNet]US State Department creates one-stop shop for supporting veterans [FedTimes]GSA Increases Ceiling for Alliant 2 Contract – Alliant 3 in the Works [GSA]Inflation Reduction Act Becomes Law [GovConWire]How to Prepare for a Small Business Office Visit: Mark Amtower [BBGov] The post SmallGovCon Week in Review: August 15-19, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Koprince McCall Pottroff LLC will be presenting a webinar hosted by Govology, on the U.S. Small Business Administration’s Small Mentor-Protégé Program that will be on August 30 at 1:00pm EST. In this webinar, government contracts attorneys Shane McCall and Nicole Pottroff will explain the ins-and-outs of the recently consolidated MPP, covering the program’s eligibility requirements, its potent benefits (including the ability to form special mentor-protege joint ventures), the application process, and common misconceptions and pitfalls. If you’d like to join us for this webinar you can sign up for registration here. The post Webinar Event: Still a Game Changer: The SBA Mentor-Protégé Program (2022 Update) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Koprince McCall Pottroff LLC will be presenting a webinar hosted by Nebraska Business Development Center, Teaming and Partnering Strategies will be on August 23 at 10:00am CDT. In this webinar, government contracts attorneys Nicole Pottroff and John Holtz will break down the types of teaming agreements available for federal government contractors. If you are interested in learning more about teaming strategies and the pros/cons and best practices associated with each type, you won’t want to miss out on this webinar. If you’d like to join us for this webinar you can sign up for registration here. The post Webinar Event: Teaming and Partnering Strategies – with Koprince McCall Pottroff, August 23, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

To honor the sacrifice made by our country’s veterans, the federal government has made it a priority to set aside federal contracting opportunities for Service-Disabled Veteran-Owned Small Businesses (SDVOSB). To qualify for these opportunities, businesses must meet certain specifications in ownership and control. Let’s take a quick look at some the general qualifications needed to qualify as an SDVOSB and bid on SDVOSB set-aside contracts. What is an SDVOSB? An SDVOSB is exactly what is says in its name, a Service-Disabled Veteran Owned Small Business. There is also the category of Veteran-Owned Small-Business (VOSB), which is very similar, the main differences being that the veteran owner does not have to be service-disabled. VOSBs receive preferences when contracting with the VA and for purposes of small business subcontracting plans. Why does SDVOSB designation matter? The federal government has set small business contracting goals that agencies should meet. Among the small businesses that government agencies should be setting aside contracts for and contracting with are SDVOSBs. Having your business qualify as an SDVOSB will allow you to bid on and compete with other SDVOSBs for contracts designated as set aside for SDVOSBs, in addition to competing for small business set-aside contracts. As noted, SDVOSB and VOSB status is also used to meet goals under subcontracting plans. How does a business qualify as an SDVOSB? To qualify as an SDVOSB, the business must be unconditionally owned and controlled by a service-disabled veteran, and be a small business under its NAICS code. For certain contracts, the business must first submit documentation certifying their SDVOSB status. The regulations dictating the qualifications and certification process for a business to become an SDVOSB are found at 13 C.F.R. § 125 and 38 C.F.R. § 74. Importantly, the separate process for SDVOSB verification through the VA, found at 38 C.F.R. § 74, will be going away after December 31, 2022 with a one-year grace period, as we discussed here. Who qualifies as a service-disabled veteran? A veteran who possesses a disability due to a disease or injury incurred or aggravated in the line of duty is typically seen as a “service-disabled veteran” for purposes of SDVOSBs. This is generally shown through a disability rating letter from the VA or a Disability Determination from the Department of the Defense. How is a business “unconditionally owned” by a service-disabled veteran for purposes of SDVOSB certification? A service-disabled veteran (or multiple together) must have at least 51% unconditional and direct ownership of the business. This ownership must be held directly, meaning that the ownership interest is held by the veteran themselves, not a holding company or other company, even if the service-disabled veteran owns those businesses. How this ownership takes shape depends on which form of business the company has chosen: Partnerships: Service-disabled veteran must own at least 51% of the aggregate voting interestLLCs: Service-disabled veteran must own at least 51% of each class of member interestCorporation: Service-disabled veteran must own at least 51% of the aggregate of all stock outstanding and at least 51% of each class of voting stock outstanding. These ownership interests must also be held “unconditionally”. This means that there are no ways for non-service-disabled veteran individuals to reduce or restrict transfer on the service-disabled veteran’s ownership without the service-disabled veteran’s consent. One example may be unexercised stock options that are held by non-service-disabled veteran owners, or terms within the operating agreement of the company that allow for certain owners to obtain greater ownership interest without the service-disabled veteran’s consent. In addition to this, the service-disabled veteran owner must receive appropriate compensation or dividends. Under SDVOSB requirements, the service-disabled veteran must be entitled to recieve: At least 51% of the annual distribution of profits paid to the owners;100% of the value of each share of stock owned by them in the event any ownership interest is sold; At least 51% of the retained earnings of the company and 100% of the unencumbered value of each stock in the event the company is dissolved; andProfits commensurate with their ownership interest in the company. If a company meets all the above requirements, they may be seen as being “unconditionally owned” by a service-disabled veteran. How is a company controlled by a service-disabled veteran for purposes of SDVOSB certification? To be seen as an SDVOSB, the business must be controlled by one or more service-disabled veterans. In general this means that both the day-to-day decision making and long-term decision making are done by the service-disabled veteran. Similar to ownership, this is exhibited in different ways depending on the formation of the company: For a partnership, one or more service-disabled veterans must serve as general partner, with control over all partnership decisionsFor an LLC, one or more service-disabled veterans must serve as a managing member with control over all decisions of the limited liability company. For a corporation, one or more service-disabled veterans must control the Board of DirectorsThis could be shown by the service-disabled veteran owning 100% of all voting stock of the business, or owning 51% of all voting stock while sitting on the board and having no supermajority voting requirements for corporate decisions, among many other ways. In addition to this, the government will review how the company is organized and the duties held by non-service-disabled veteran owners. Some red flags for the government may be a non-service-disabled veteran being a former employer of the service-disabled veteran, the SDVOSB sharing space with another business controlled by a non-service-disabled veteran owner, or a non-service-disabled veteran owner receiving the highest compensation, among other factors. The rules set up a rebuttable presumption that, if one of these factual situations is present, the government will presume the veteran does not control, but will allow the veteran to prove control. Typically, super-majority voting requirements will be seen by the government as preventing proper control as well. On top of the above requirements, the service-disabled veteran must also hold the highest officer position in the SDVOSB and the service-disabled veteran must have managerial experience with the extent and complexity needed to run the SDVOSB. Where and how do I submit documentation to be certified as an SDVOSB? Currently, to certify as a SDVOSB, there are two routes a business can take: To bid on VA contracts set aside for SDVOSBs, a company must submit documentation to the VA’s Center for Verification and Evaluation (CVE) Vets First Program. This is done through vetbiz.va.gov VIP Program. The VA CVE will review the business to ensure it is small, and unconditionally owned and controlled by a service-disabled veteran. If a business passes this process, they may hold themselves out as an SDVOSB for VA set-asides, and use VA’s SDVOSB certification seal. For non-VA contracts, the contractor may self-identify as an SDVOSB on sam.gov if it meets all the requirements of an SDVOSB. However, it bears repeating that, starting January 2023, the SBA will be verifying companies for SDVOSB status rather than the VA. Self-certification will go away at that time as well. For information on that change, check out this SmallGovCon blog post. Also, certification is not a one time thing. SDVOSBs must continue to remain eligible, and occasionally recertify. To be qualified as an SDVOSB, there are many intricacies in the formation and operation of the company that must be met and are beyond the scope of this post. If a company is able to meet those requirements, it can open up a world of potential set-aside contracting opportunities. The requirements discussed in this blog post are the general qualifications of an SDVOSB and each SDVOSB verification is extremely fact specific. So, if you find yourself wanting to pursue SDVOSB (or VOSB) certification, or looking at a possible recertification, feel free to reach out to us. Questions about this post? Email us Need legal assistance for a federal government contracting matter, 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 Back to Basics: Veteran-Owned Businesses and SDVOSB Eligibility first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

It’s Friday, and that means its time for another round of SmallGovCon updates as you ease on into your weekend. I’m excited to be heading to Norman, Oklahoma next week for the ICBS 2022 show. I’ll be speaking about local opportunities related to the Infrastructure Act. Hope to see you there! https://www.icbsshow.com/. Have a great one and enjoy these last few weekends of summer! Multiyear Procurement: Navy Should Provide Congress More Complete Information on Budget Request Decisions [GAO]Capitol Hill is anything but slow this summer season [FedNewsNet]Pentagon advisers want DoD to build out agreements between small and large defense businesses [FedNewsNet]GSA Events [GSA]VA set to grow its health care workforce with new pay incentives after Biden signs PACT Act [FedNewsNet]How the Navy deals with all that data; State of cloud acquisition in government [FedScoop]5 things every first-time bidder for federal contracts should know [FedTimes]GSA extends Polaris GWAC due date again [Sam]Veterans Affairs makes a single front door for contractors and would-be innovators [FedNewsNet]Does the government need a FOIA enforcer? [FedNewsNet]Representatives are Too Invested in Defense Contractors [POGO] The post SmallGovCon Week in Review: August 8-12, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article