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To qualify as a small business under most set-aside or sole-source contracts seeking manufactured products or supplies, SBA’s regulations require an offeror to be the item’s manufacturer or, alternatively, comply with the nonmanufacturer rule. In this post, we’ll discuss qualifying under the nonmanufacturer rule. 1. Do I need to qualify under the nonmanufacturer rule? That depends on the type of procurement you’re bidding on. Again, the nonmanufacturer rule comes into play for solicitations seeking manufactured items or supplies, and only if the offeror doesn’t qualify as the manufacturer itself. Keep in mind, too, that under the SBA’s regulations, acquisitions set-aside for small businesses under the simplified acquisition threshold are not subject to the nonmanufacturer rule. The FAR currently has a simplified acquisition threshold of $250,000. This exemption doesn’t apply, however, to any other socio-economic designation—for example, if it’s an SDVOSB set-aside under the simplified acquisition threshold, the offeror will have to either be the item’s manufacturer or qualify under the nonmanufacturer rule. 2. How do I qualify as the nonmanufacturer? To qualify under the nonmanufacturer rule, an offeror generally must meet four requirements: The offeror cannot exceed 500 employees;The offeror must be primarily engaged in the retail or wholesale trade and normally sell the type of item supplied;The offeror must take ownership or possession of the item being supplied with its own personnel, equipment, or facilities (in a manner consistent with industry practice); andThe item must be manufactured or produced by a small business in the United States (unless this requirement has been waived). Though they might sound straightforward, each of these requirements presents its own separate analysis. For example, the SBA will consider sales of similar items—not the exact item procured—to determine compliance with the second factor. It might also be difficult to know whether the domestic production requirement has been waived. And in the case of a joint venture supplying a manufactured item, compliance might be even more confusing. All told, these four requirements make complying with the nonmanufacturer rule one of the most confusing aspects of working with the federal government as a small business manufacturer. 3. What if I assemble multiple manufactured items into a single kit? Small businesses that assemble several different manufactured items as part of an acquisition must also comply with the nonmanufacturer rule. In the case of a kit assembler, an eligible offeror must be smaller than 500 employees; moreover, at least half the assembled kit (measured by total value) must be manufactured domestically by small businesses. 4. Does the nonmanufacturer rule apply to multiple item procurements? Yep. But again, compliance can be tricky: For acquisitions under which less than half of the contract value is for items manufactured by small businesses, then the items will comply with the nonmanufacturer rule.If more than half a contract (measured by total value) is for items manufactured by large businesses, the offeror will need a waiver from the SBA in order to qualify as a small business under the procurement. 5. Can a competitor protest my compliance? Yes. An offeror can protest a small business’s compliance with the nonmanufacturer rule as part of a size protest (to the SBA) or a bid protest (to GAO or the Court of Federal Claims). A size protest might be a more viable option, as GAO will generally only sustain a protest challenging compliance with the nonmanufacturer rule (or any other limitation on subcontracting) if the proposal, on its face, shows noncompliance. The SBA, however, will dig into the issue to confirm compliance. Challenging an awardee’s compliance with the nonmanufacturer rule is an important way to ensure the integrity of the acquisition process. Keep in mind, too, that if a competitor can protest your compliance in the event you win an award, so too can you protest that competitor’s compliance in the event your competitor wins. *** Complying with the SBA’s requirements for manufactured items can be very tricky—if not done properly, you might end up losing an award. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: The Nonmanufacturer Rule first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello, readers and happy Friday! The trees are starting to bloom here in the Midwest and they are beautiful but they have many of us sneezing. A small price to pay for warmer weather and a beautiful spring landscape. Am I right? This week in the federal government landscape world saw a hearing on the federal contractor vaccine mandate, greener IT contracts, and a new GSA contracting vehicle. Former Federal Official Sentenced To Prison For Contract Bribery Conspiracy And Tax Fraud [DoJ]Appeals court sees high bar to restoring federal contractor vaccine mandate [FedNewsNet]State Dept lets federal employees renew their passports online ahead of public launch [FedNewsNet]After six years, OPM has a permanent inspector general [FedNewsNet]Former State Department Employee Sentenced To Prison For Honest Services Fraud [DoJ]Former DHS official convicted of stealing government data, software to create commercial version [FedScoop]OPM Issues More Guidance to Encourage Collective Bargaining at Agencies [GovExec]GSA Adds Sustainability Criteria to Push For Greener IT Contracts [GovExec]How sherpas guide startups through government contracting terrain [Spacenews]A new look at how agencies use contractors in the act of rulemaking [FedNewsNet]Three Florida Men Indicted for Rigging Bids and Defrauding the U.S. Military [DoJ]GSA rises to the occasion with ASCEND, its new cloud acquisition vehicle [FedNewsNet]Star Woman Pleads Guilty to False Statement in Case Involving More Than $11 Million in Government Contracts [DoJ]Former U.S. Department of Homeland Security Official Agrees to Pay $10,000 to Resolve Conflict-of-Interest and False Claims Act Allegations [DoJ]Statement by SBA Administrator Guzman on Agency’s New Equity Action Plan [SBA] The post SmallGovCon Week in Review: April 11-15, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Please join this informative Q & A session hosted by Nick Bernardo, the president and founder of MyWatchGov.com, as he speaks with Koprince McCall Pottroff LLC’s equity partner, Nicole Pottroff, on April 20, 2022 at 1:00pm EDT. Nick has extensive experience helping “companies of all sizes figure out how to find, compete for, and actually win government contracts.” Nick’s program, MyGovWatch Live: The B2G Roundtable, is “a casual, talk-show style, interactive monthly online forum for anyone to join and learn more about how to win government contracts at all levels.” This month, the expert joining in on the roundtable is our own Nicole Pottroff, who will be answering questions on the legal side of government contracting. You can register for the event here. Hope to see you there! The post MyGovWatch Live: The B2G Roundtable with Federal Contracts Attorney Nicole Pottroff: April 20, 2022 @ 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

GSA recently released new solicitations for the Small Business Pool and the Women Owned Small Business Pool. The Q&A has some additional details on the Polaris solicitation. As we’ve written about, the purpose of the Polaris solicitation is to provide federal agencies with information technology services from qualified small businesses. I’ll mention some of the highlights from both the solicitations and the update, which includes some more information on the timing for the solicitation, other small business pools, and other items. Also, GSA will be extending the due date for proposals. Here are a few key items from the solicitation and the Q&A. Extension On April 6, GSA issued a notice stating it was examining how joint ventures would be handled: After receiving feedback related to the evaluation of joint ventures under Polaris, GSA is currently assessing whether any changes are necessary for the RFPs. While completing this assessment, GSA is temporarily pausing the RFPs until further notice. A subsequent amendment will establish a new closing date. So, the proposal due date will be extended after some deliberation by GSA. Small Business and WOSB Solicitations The solicitations appear to be quite similar, just covering different set-aside designations. Task orders will cover a wide variety of IT services, such as cloud computing and cybersecurity and many more. Basics: There will be an optional pre-proposal conference released online to provide an overview of the Polaris RFP.Polaris will use a Polaris Submission Portal (PSP), which will open for registration no earlier than April 5, 2022. Offerors must submit all questions regarding the solicitation via the PSP or they won’t be answered.“Individual task orders may require facility security clearances.”“When the rerepresentation identifies other than a small business, the novation will not be deemed to be in the Government’s best interest.” If there is a a merger or acquisition without novation and the company is no longer small, the contract will be terminated for convenience and task orders may continue at discretion of the CO. CTAs The Polaris solicitation has the following definition of CTAs at section , which matches the definition under FAR 9.601. L.5.1.3 Contractor Teaming Arrangements, if applicable Contractor teaming arrangement (CTA) means an arrangement in which – Two or more companies form a joint venture to act as a potential prime contractor; or A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program. Section, L.5.1.3.1 Joint Venture, has a number of requirements for joint ventures. Be sure to pay close attention. For instance, As noted within L.5.2.1, projects submitted as Primary Relevant Experience Projects or Emerging Technology Relevant Experience Projects may not be used in more than one proposal for this Pool. Separate members of a joint venture may submit their unique projects from the same joint venture contract or order; however, the same project may not be used in more than one proposal for this Pool. Projects used in more than one proposal for this Pool will be removed from all proposals and will not be evaluated as part of any Offeror’s proposal. That language appears to require joint venture members to split up their work done as part of a joint venture for purposes of experience. As for subcontractors, the solicitation has fewer details and requirements. It does state that “The Offeror and all proposed subcontractors must represent as small businesses for North American Industry Classification System (NAICS) 541512 within SAM.gov.” This is interesting as it would appear to not allow large business subcontractors. “The Offeror must submit a Subcontractor Letter of Commitment for each proposed subcontractor.” In addition, there is a requirement for subcontract reporting. Here are some of the key updates from the recent Q&A. Nuts and Bolts Timeline. GSA said that the RFPs for HUBZone and SDVOSB RFPS are expected in the fourth quarter of 2022.Submission method. GSA wants companies to use the Symphony Polaris Submission Portal, with details to come later. Other Items There are detailed requirements for claiming experience, so be sure to review those closely. For instance, note that “Non-federal Contracts are not eligible to receive points for elements L.5.2.2.3, L.5.2.2.4, L.5.2.2.5, or L.5.2.2.6.” That makes sense because these sections all deal with federal contracts, but it does mean that higher point totals would likely go to offerors with federal experience. Points will now be awarded for CPA certified accounting systems, whereas before points were only available for DCAA or DCMA certified systems. The CPA certified systems are worth less than government certified systems. There are, of course, detailed rules relating to the self-scoring system, that any offeror must review thoroughly. Those are a few of the highlights from the Polaris solicitation. But GSA is already going back to the drawing board on joint ventures. So stay tuned for more updates. The post Polaris: GSA Releases Solicitations, New Q&A first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In a recent post, we discussed the basics of SBA’s 8(a) Business Development Program, including general information, benefits, program terms, and how to apply. This follow-up post focuses on the basics of SBA’s 8(a) eligibility requirements, discussing those in greater detail. To qualify for the 8(a) Program, a firm must be a small business that is unconditionally owned and controlled by one or more socially- and economically-disadvantaged individuals who are of good character and citizens of the United States and that demonstrates potential for success. But what does this really mean? We have unpacked each of these aspects of 8(a) Program eligibility below. But don’t worry, even though this post is all about “the basics,” I have included links throughout to more detailed posts on the topics covered herein. Is your business small enough to become an 8(a) Participant? The 8(a) Program is only open to businesses that are small under the size standard corresponding to their primary NAICS codes. And remember: SBA will not only consider your company’s size, but will also add to it the size of any affiliates. If there’s a question as to your business’s size during the 8(a) application process, SBA may go so far as to request a formal size determination. What is your primary NAICS code? While businesses have some leeway to select the code that fits best, the SBA may push back if the NAICS code you choose doesn’t seem to be the one in which your company does the most work. Before applying, it may be useful to review the SBA’s definition of “primary industry” at 13 C.F.R. 121.107. And don’t forget that SBA now uses the five-year lookback period in calculating the average annual receipts, since its full implementation of the Runway Extension Act. One final note: some IRS tax returns already provide a spot for a primary NAICS code. For example, Form 1065, which is completed by many LLCs, asks for a primary NAICS in box A, “principal business activity.” Oftentimes, our clients are surprised to notice that an accountant or bookkeeper has identified a primary NAICS code on a tax return. Be aware that the SBA will ask for an explanation if that primary NAICS code isn’t the one the company has selected for 8(a) purposes. What is social disadvantage? It’s not enough to be a small business to qualify for the 8(a) Program. The business’s owner also must demonstrate suffering from social disadvantage—or, as SBA defines it, “racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities.” Members of certain racial or ethnic groups are presumed by SBA to have suffered social disadvantage, including Black Americans, Hispanic Americans, Native Americans, and some Asian Americans. This presumption is not absolute (as it may be rebutted by credible evidence demonstrating the lack of social disadvantage) or controversy (as its constitutionality has been challenged, but was upheld). For a full list of groups presumed socially disadvantaged, take a look at 13 C.F.R. 124.103(b). But participation in the 8(a) Program isn’t limited to only the groups listed in the regulations. Any individual can try to establish social disadvantage by presenting evidence showing chronic disadvantage based on a characteristic or circumstance beyond that person’s control, which has impacted that person’s education, employment, or business histories. For example (and not by way of limitation), our firm has assisted companies owned by Caucasian women and disabled veterans in obtaining 8(a) certification. What is economic disadvantage? In addition to social disadvantage, you still must show economic disadvantage to be eligible for the 8(a) Program. An economically-disadvantaged individual is one whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to other non-socially disadvantaged persons (in the same or similar line of business). SBA will take a detailed look at an individual’s financial history to determine his or her economic disadvantage. Though there are caveats and exceptions to these requirements, here are a few numbers to keep in mind: Net worth: For initial eligibility, the adjusted net worth of the person claiming economic disadvantage must be less than $750,000. The adjustment typically excludes: (1) funds invested in an IRA, 401(k), or other official retirement account; (2) income received from an S corporation, LLC or partnership, if that income was reinvested in the company or used to pay company taxes, (3) the equity interest in the applicant company, and (4) equity in the individual’s primary residence. Fair market value of all assets: Notwithstanding a person’s net worth or personal income, an individual will not be considered economically-disadvantaged if the fair market value of his/her assets (including the value of the applicant company and the person’s primary residence) exceeds $6 million. But even this calculation excludes funds in traditional retirement accounts. Personal income: If an individual’s adjusted gross income for the three years prior to the 8(a) application exceeds $350,000, there is a rebuttable presumption the individual isn’t economically disadvantaged. Income from an S Corporation or LLC will be excluded when the funds were reinvested in the company or used to pay company taxes. What is potential for success? The company must also demonstrate that it has potential for success. This assessment generally requires a holistic view of the company: not only must it have been generating revenues in its primary industry for at least two years, but SBA will also consider every aspect of its business operations (including access to capital and financing, technical and managerial experience of the company’s managers, its past performance, and licensing requirements) to determine if the company is likely to succeed in the 8(a) Program. Are there any other requirements? Yes. Again, socially- and economically-disadvantaged individuals have to unconditionally own and control the company. This means disadvantaged individuals must directly own at least 51% of the company and oversee its strategic policy and day-to-day management and administration. Additionally, the individual must manage the company on a full-time basis while holding its highest officer position. The company and its principals must have good character. For example, if the business owner has recently been convicted of a felony or any crime involving business integrity, the SBA may decline the application. The SBA will also examine federal financial obligations: unpaid back taxes and defaults on SBA business loans, for example, may lead to a rejection. It’s important to note that while these are some of the most important requirements, it’s not an exhaustive list. 8(a) Program eligibility is rather complex and decided by SBA on a case-by-case basis. Do you have to maintain compliance with these eligibility requirements throughout your participation in the 8(a) Program? Yes. Demonstrating eligibility isn’t a one-time thing; once a company is admitted to the 8(a) Program, SBA will review its eligibility compliance on an annual basis. And SBA imposes additional requirements on 8(a) Participants to remain eligible, such as limiting the number of withdrawals an individual can take from a Participant and restricting the number of 8(a) awards a Participant may receive. *** If these eligibility requirements sound a bit ominous, it’s for good reason: they can be. But that’s not to scare you away from considering the 8(a) Program—as we mentioned in our initial post, the benefits to participating can be tremendous. Questions about this post or your own 8(a) Program eligibility? Or need help with a government contracting legal issue? 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 Back to Basics: 8(a) Program Eligibility first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! Our hometown Kansas Jayhawks won the NCAA National Basketball Championship and it’s an understatement to say that we are very excited about it here in Lawrence, Kansas. Thousands of people took to the streets in downtown Lawrence on Saturday night to celebrate the win and the energy was incredible! What a fun ride! There were several announcements by the SBA this week concerning adding more industries that are eligible for the Women-Owned Business Federal Contract Program as well as expanding the standards to increase eligibility for federal contracting and loan programs. You can read more about that along with other news in the article below. Have a great weekend! FAR Council finalizes more stringent procurement rules under Buy American Act [FedNewsNet]SBA Adds More Industries Eligible for Women-Owned Business Federal Contract Program [SmBizTrends]Air Force Notifies Industry of $999M Follow-On Range Support Contract Vehicle [GovConWire]What the 2023 fiscal budget will look like for contractors [FedNewsNet]Inland Empire Man Agrees to Plead Guilty in Bid-Rigging Scheme to Obtain Contracts to Provide Food to Federal Prison Facilities [DoJ]U.S. Cyber Command providing cyber expertise and intelligence in Ukraine’s fight against Russia [FedScoop]DoD’s budget inflation story is more complicated than you think [FedNewsNet]Eight Individuals Facing Federal Indictment for a $3 Million Scheme to Defraud Walter Reed National Military Medical Center and the Defense Health Agency [DoJ]Government Contractor vs. Subcontractor: What’s The Difference? [ExecGov]Federal Contractors Could Soon Have to Disentangle Themselves Completely From Russia [GovExec]Top Government Contracting Events for 2022 [ExecGov]SBA expands standards to increase eligibility for federal contracting, loan programs [OCGNews] and read our extended post here.PF 2022-29 Acquisition Guide Chapter 19.2 Revision, Small Business Program [EnergyGov] The post SmallGovCon Week in Review: April 4-8, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

These days it often seems like both sides of the congressional aisle cannot agree on anything and bipartisan support is in short supply. However, one thing that Congress can agree on is the fact that organizational conflicts, which can lead to unfair advantages, have no place in Federal contracting. On March 23, 2022, Michigan Senator Gary Peters, with support of three other senators, introduced S. 3905, the Preventing Organizational Conflicts in Federal Acquisition Act (the Act). The bill aims to identify and prevent organizational conflicts of interest (OCI) that have been slipping through the cracks, stating that “[p]rotecting against conflicts of interest in Federal acquisition is vital to the integrity of Government operations.” The FAR’s current OCI regulation is found at FAR 1352.209-74, but recent reports and Comptroller General bid protest decisions have uncovered failures in both identification and mitigation of OCIs. A press release issued by Senator Peters included information on some recently identified OCIs that had gone unnoticed and stressed the importance of identification from the outset of the contracting process. According to Senator Peters, the enactment of the Act would “ensure tax dollars are being used to hire contractors that are focused on working in the best interest of the American people.” The Act would require federal contractors to disclose business relationships that conflict with the work an agency has hired them to do. Additionally, private companies currently under contract with the U.S. Government would be required to disclose new potential business that opposes the work being done for an agency. Finally, the Act would ensure federal contractors understand disclosure requirements and know how working with agencies could potentially affect other parts of their business. Federal agencies would be required to assess and update their procedures for determining whether there is an OCI. The bill is currently in the hands of the Committee on Homeland Security and Governmental Affairs. If the bill goes all the way, the Federal Acquisition Regulatory Council will be required to identify the contracting methods, types, and services that raise concerns for potential OCIs that are not already identified in the FAR and revise the FAR to include methods to identify and mitigate OCIs. Please visit congress.gov to view the full language of the bill, and to stay up to date on any forthcoming amendments. Senator Peter’s press release may be viewed here. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post New Senate Bill Takes Aim at Organizational Conflicts of Interest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you’re a small business owner interested in government contracts, you’ve probably heard about the SBA’s 8(a) Business Development Program. The 8(a) Program itself is complex, and its eligibility rules are some of stricter rules out there; but its potential benefits are tremendous. In this Back to Basics post, I’ll break down some of the very basics about the 8(a) Program. But don’t worry, not only will I follow this post up with another to unpack more of the complexities, I have also included links throughout this post to other posts doing the same. What is the 8(a) Program? Like SBA’s other contracting programs, the 8(a) Program is a business development program—its purpose is to assist eligible disadvantaged small businesses compete in the American economy through business development. What are the benefits to participating? Participating in the 8(a) Program opens several doors to success. Each year, the federal government’s goal is to award at least 5% of all prime contracts to small disadvantaged businesses, which include 8(a) Program participants. To meet this goal, the government issues billions of dollars of awards annually to 8(a) Program participants through sole-source awards and set-asides. Participants are also allowed to join in mentor/protégé and joint venture relationships to further increase their ability to participate in the American economy. Additionally, the SBA provides targeted business development counseling to 8(a) participants. Is your business eligible to participate? Given these incentives, the desire to participate in the 8(a) Program is obvious. But can your business participate? That is the real question. SBA has laid out detailed eligibility requirements, and has recently updated some of those rules too. A future post will discuss them in greater detail but, in general, a business typically must be small under its primary NAICS code, and be unconditionally owned and controlled by one or more socially– and economically-disadvantaged individuals who are of good character. (There are some separate requirements for businesses owned by Indian Tribes, Alaska Native Corporations, Native Hawaiian Organizations, and Community Development Corporations.) The business, moreover, must maintain its eligibility throughout the course of its participation. One more thing: 8(a) Program participation is a one-time thing. So if your business has previously participated in the 8(a) Program, or if you’re a disadvantaged individual that has already participated, the SBA won’t allow you to participate again—although Tribes, ANCs, NHOs and CDCs have some different rules. How long can your business participate in the 8(a) Program? The presumptive term is 9 years. But this term can be shortened by the participant or the SBA—if, for example, the concern is successful enough to graduate from the Program or fails to maintain its eligibility. The term cannot be lengthened, although it can be temporarily suspended in rare instances. In early 2021, SBA also issued a rule providing a limited one-year 8(a) term extension for certain 8(a) Program participants affected by the COVID-19 pandemic. How can your business apply? Applications must be submitted electronically to the SBA and must include any supporting information requested by the SBA (like corporate organization documents and personal and business tax returns). Your local SBA office should be able to provide a list of all required documents. *** Participating in the 8(a) Program can be a great way to grow your small business. Look for additional Back to Basics posts discussing its requirements and benefits in greater detail. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: SBA’s 8(a) Business Development Program first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Our attorneys will be presenting a Government Contracts Legal Update 2022 in cooperation with The University of Texas at San Antonio Institute for Economic Development PTAC. We will provide a comprehensive update on the most important government contracting legal changes of late 2021 and the first months of 2022. This free event will take place on April 14 from 10:00 AM – 11:30 AM (CDT). Be sure to check out the registration link if you are interested! The post Event: Government Contracts Update with UTSA PTAC first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy April 1st, everyone! In honor of April Fools’ Day, here are some noteworthy pranks over the years. In 1957, the BBC reported that Swiss farmers were experiencing a record spaghetti crop and showed footage of people harvesting noodles from trees. In 1985, Sports Illustrated writer George Plimpton tricked many readers when he ran a made-up article about a rookie pitcher named Sidd Finch who could throw a fastball over 168 miles per hour. And in 1996, Taco Bell, the fast-food restaurant chain, duped people when it announced it had agreed to purchase Philadelphia’s Liberty Bell and intended to rename it the Taco Liberty Bell. So be careful out there, readers, and don’t be fooled! But it’s no joke that there have been some important federal contracting updates this week, including a bipartisan bill introduced in Congress that would tighten contractor oversight related to conflicts of interest and increasing use of large sole-source 8(a) awards. Have a great weekend! DOD Small Business Contracting: Use of Sole-Source 8(a) Contracts over $22 Million Has Increased [GAO]Lawmakers aim to strengthen transparency in the lucrative — and murky — federal contracting process [ABCNews]GSA Administrator Statement on the President’s Fiscal Year 2023 Budget [GSA]Senators look to root out contractor conflicts of interest [FSW]The Hiring Surges in Biden’s 2023 Budget Proposal [GovExec]Administrator Guzman Announces Expansion of the Women’s Business Center Network to All 50 States [SBA]Federal contractor launches pre-award challenge over $15B Polaris solicitation [FedScoop]Pentagon expects to award up to $9 billion in cloud contracts in December [CNBC]On April 4, say goodbye to DUNS and hello to UEI [FedNewsNet]Postal inspectors’ digital intelligence team sometimes acted outside of legal authorities, report says [FedNewsNet] DOD Acquisition Officers Will Learn to Better Acquire and Transition Commercial Technologies [DoD]Fayetteville Woman Sentenced to Nine Years in Prison for Multi-Million Dollar Contract Fraud Schemes [DoJ]Texas Man Sentenced for Selling Chinese-Made Military Helmets and Body Armor to Federal Agencies [DoJ]Former NGO Procurement Official Pleads Guilty to Bribery [DoJ]DOE unveils new efficiency standards for federal buildings [ConstDive]OD’s JWCC enterprise cloud award delayed until December [FedScoop]Inspection Report: DOE-OIG-22-28 [OIG]​DOD Acquisition Officers Will Learn to Better Acquire and Transition Commercial Technologies [DoD]Preventing Organizational Conflicts of Interest in Federal Acquisition Act [Congress] The post SmallGovCon Week in Review: March 28-April 1, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA has issued final rules updating some of its size standards. Below are highlights from the recent size changes. Be sure to review the particular NAICS code on any upcoming solicitations to see if one of these increased size standards applies. SBA has issued final rules updating size standards in the categories summarized below. The new size standards will become effective April 30, 2022. Agriculture, Forestry, Fishing and Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; Construction. (Final Rule) SBA is increasing size standards for 68 industries in those sectors. This includes categories such as agriculture, where many size standards (which were already quite low) increased modestly. While SBA considered reducing size standards in the construction industry, it left most of those the same to avoid negative impacts on construction businesses. Education Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; Other Services. (Final Rule) “SBA is increasing the size standards for 70 industries in those sectors, including 14 industries in NAICS Sector 61 (Education Services), 18 industries in Sector 62 (Health Care and Social Assistance), 11 industries in Sector 71 (Arts, Entertainment and Recreation), four industries in Sector 72 (Accommodation and Food Services), and 23 industries in Sector 81 (Other Services).” One example is NAICS code 811213, Communication Equipment Repair and Maintenance, going from $12.0 up to $19.5 million. Professional, Scientific and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services. (Final Rule) “SBA is increasing the size standards for 46 industries in those sectors, including 27 industries in NAICS Sector 54 (Professional, Scientific and Technical Services), two industries in Sector 55 (Management of Companies and Enterprises), and 17 industries in Sector 56 (Administrative and Support and Waste Management and Remediation Services).” Within these categories, here are a few common NAICS codes that will see increases: NAICS 541310 (Architectural Services) from $8 million to $11 millionNAICS 541330 (Engineering Services) from $16.5 million to $22.5 millionNAICS 541611 (Administrative Management and General Management Consulting Services) from $16.5 million to $21.5 NAICS 541990 (All Other Professional, Scientific and Technical Services) from $16.5 million to $17 million Transportation and Warehousing; Information; Finance and Insurance; Real Estate and Rental and Leasing. (Final Rule) “SBA is increasing the size standards for 45 industries in those sectors, including 18 industries in NAICS Sector 48-49 (Transportation and Warehousing), eight industries in NAICS Sector 51 (Information), ten industries in NAICS Sector 52 (Finance and Insurance), and nine industries in NAICS Sector 53 (Real Estate and Rental and Leasing).” One example in these categories was NAICS 531210 (Offices of Real Estate Agents and Brokers), increasing from $8 million to $13 million. Be sure to check the particular size standards related to your company and industry. While many are staying the same, quite a few are increasing and could allow small businesses to stay small for a longer period of time. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Issues Final Rule Increasing Some Size Standards first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We at SmallGovCon try to stay cognizant of the fact that there are new contractors every day, as well as seasoned contractors venturing into the federal government contracting realm every day. As such, we are proudly introducing our new Back to Basics series of posts that will (yes, you guessed it) take you back through some of the basics of various federal government contracting programs, regulations, and procedures. If you are new to federal government contracting, new to specific programs (i.e. 8(a), WOSB, SDVOSB, etc.), a first time protester, or simply looking for a refresher on some of the basics, this series is for you! You can use the category bar on our blog website to find all posts in the Back to Basics series, but also, keep an eye out for new ones! The post Introducing: SmallGovCon’s “Back to Basics” Posts Series first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Many of our readers are familiar with a number of the nuances of joint ventures. In fact, in the past few years, many of you have utilized this nifty little concept! That said, for those of you newer to the government contracting business (and as a refresher for those who have been in this for a while), here is a short rundown of the basics of joint ventures in government contracting. What is a joint venture? Generally, it is an association between two or more businesses to act in concert for some common purpose. In the world of SBA regulations, it is that, but more. For small-business set asides, the joint venture is a separate, unpopulated legal entity (by “unpopulated,” we mean, it lacks its own employees that will perform the contract, although SBA allows such entities to have employees who perform purely administrative functions). Considering this, joint ventures must be registered in SAM before the bid submission deadline for any contracts for which businesses wish to bid on together. Can I form a joint venture? Whether you can form a joint venture that is eligible for small-business set-asides will turn on whether your business, and the business you wish to partner with, are small businesses with regards to the solicitation you are applying for, under the SBA’s standards. However, if two companies are party to an approved mentor-protégé agreement, then the mentor can be a large business and still form a joint venture with a small-business protege. The rules for joint ventures (with regards to small business set asides) can be found at 13 C.F.R. § 125.8. One aspect of joint ventures worth noting here is that, per the language of section (a) of that regulation just cited, while each business must be small under the applicable solicitation’s size standard, their receipts are not combined for the purpose of said size standards. Therefore, for a solicitation with a $10 million size standard, if two businesses with average annual receipts of $8 million each form a joint venture, that is fine to the SBA. This is important as, absent the small business joint venture rule, two businesses that have a joint venture together are treated as affiliated (13 C.F.R. 121.103(h)). Are there specific requirements for forming a joint venture? As you might have already gathered, for joint ventures to qualify for small-business set asides (either under the mentor-protégé exception or to qualify for a socioeconomic set-aside), the joint venture agreement forming them must include certain provisions, some of which are highlighted below (check the appropriate SBA regulation for the entire list): Explaining the purpose of the joint venture;Stating the small business (or 8(a), SDVOSB, WOSB, or HUBZone entity, as the case may be) must own at least 51% of the joint venture, serve as its managing member, and designate one of its employees as the joint venture’s responsible manager (Use the phrase “Responsible Manager” not “project manager”);Stating the joint venture’s profits be split to commensurate with the work that each party performs—not according to the parties’ ownership percentages;Stating the joint venture establish a separate bank account, in its name, into which all payments owed to the joint venture be deposited and from which all payments be made. The account must also require the signature of both members for any withdrawal;Stating the joint venture agreement to itemize the major equipment, facilities, and resources (and the value of each) that each member will provide to the joint venture, where practical;Stating the joint venture agreement to specify the responsibilities of the members regarding contract negotiation, source of labor, and contract performance (including a discussion on how the joint venture will meet the performance of work requirement);Stating that each member be obligated to complete the joint venture’s performance, even if the other member withdraws; andStating that the joint venture establish compliant record keeping and reporting processes. It is worth noting that there are special requirements when it comes to joint ventures seeking set-asides for one of the socio-economic programs (such as WOSB or 8(a)) and these can be found here: 8(a): 13 C.F.R. § 124.513 WOSB/EDWOSB: 13 C.F.R. § 127.506 SDVOSB: 13 C.F.R. § 125.18 HUBZone: 13 C.F.R. § 126.616 Why form a joint venture? Joint ventures, in the small-business set aside context, basically allow businesses to combine their attributes, experience, and capabilities while retaining their small status. Agencies have to consider not only the joint venture’s past performance when conducting an evaluation, but the past performance of each business that is a member of the joint venture. This means that two businesses that, by themselves, lack the past performance for a contact can join together and potentially meet the requirement jointly. It also allows businesses to access their partners’ capabilities (to the extent the businesses agree to, of course). Of course, check the specific solicitation requirements if you wish to bid as a joint venture. Anything else? There are other things. Joint ventures do not require pre-approval by any federal agency EXCEPT if the contract being sought is an 8(a) Program sole-source award or if it is an SDVOSB or VOSB set-aside through the VA. Small business joint ventures can perform as many contracts as they are able to acquire without the members being considered affiliated, but only for a two-year period beginning on the date the joint venture receives its first award; after that the parties can form an additional joint venture arrangement. There are also certain performance of work requirements for the joint venture, and, if it is a joint venture that utilizes one business’ socio-economic status (such as SDVOSB or HUBZone), that member has certain performance requirements of their own. Additionally, if you’re not a small business, you can’t gain the exemption from affiliation by entering a joint venture with a small business, EXCEPT if you have a mentor-protégé agreement with that small business. Conclusion Joint ventures can be powerful tools. This post has a summary of the main considerations and rules for joint ventures, but there are additional wrinkles. Please be sure to review the joint venture regulations and the particular solicitation closely to ensure to meet the various requirements. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: Joint Ventures first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers. It’s been an exciting March Madness so far and we are looking forward to our hometown Kansas Jayhawks basketball game later today. There have been some major upsets and we are hoping the Jayhawks can hang in there on the road to the championship. Fingers and toes are crossed. This week in federal contracting there were several announcements such as the Senate passing a 2022 Federal spending bill and the Department of Labor Announcing a Proposed Rule for Modifying Procedures to Identify, Remedy Discrimination in Federal Contracting. You can read more about these announcements and a few other noteworthy articles below. Have a great weekend! Lancaster Company Agrees to Pay $820,000 for Improper Billing of Defense Intelligence Agency [DoJ]Senate passes 2022 federal spending bill, sends to Biden’s desk [FedNewsNet]2022 spending bill fills holes in DoD’s long-underfunded facility maintenance budgets [FedNewsNet]Maryland legislators ask for investigation into potential discrimination within its National Guard [FedNewsNet]Women Entrepreneurs Are Critical to America’s Economic Recovery [Inc]Becoming a Government Contractor: Tips to Success [ExecGov]US Department of Labor Announces Proposed Rule for Modifying Procedures to Identify, Remedy Discrimination in Federal Contracting [DoL]GSA Launches Modernized Federal IT Dashboard to Enhance Transparency and Accountability in Federal IT Modernization [GSA]Defense Federal Acquisition Regulation Supplement: Post-award Debriefings (DFARS Case 2018-D009) [FedReg]Chairwoman Maloney Introduces Legislation to Prohibit the U.S. Government from Conducting Business with Companies Operating in Russia [Oversight]Defense Bid protest could lead to ‘protracted fight’ over $11B DISA contract award [FedScoop]Contractors ponder the short fiscal year and the new money for Ukraine [FedNewsNet]Agencies look to streamline payment data collection in contracting [FCW]Requirement for NASA Recipients of Financial Assistance Awards To Obtain a Quotation From Small and/or Minority Businesses, Women’s Business Enterprises and Labor Surplus Area Firms [FedReg]UPS to Pay $5.3 Million to Settle False Claims Act Allegations for Falsely Reporting Delivery Times of U.S. Mail Carried Internationally [DoJ]All-Black Female WWII Unit to Receive Congressional Gold Medal [DoD]GSA wants to cast wider net for federal building architects [FedNewsNet]Man Sentenced to 99 Months in Prison for Committing Mail Fraud while Serving Federal Sentence for Previous Fraud [DoJ]GovCon Expert Emily Murphy: Debunking SBIR Program Myths[GovConWire] The post SmallGovCon Week in Review: March 21-25, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Congratulations! Your woman-owned small business (WOSB), Sun Corp, has just been awarded a contract. This particular contract was set aside for WOSBs, meaning only WOSBs may be considered for award. Small Corp is a relatively new company, and you have determined that you will need some help to successfully complete performance of the contract. As luck would have it, you are acquainted with the owner of Moon Corp, and Moon Corp is in the business of doing the exact type of work that Sun Corp needs help with. While diligently reading through the contract prior to its execution, you notice the following language: Performance of this contract must comply with the subcontracting limitations set forth in FAR 19.505 and 13 C.F.R. § 125.6. What do you do? Being the responsible business owner you are, you contact your attorney to see what those provisions are all about. After a few questions, your attorney informs you that Moon Corp is considered “other than small.” As such, the provision limits the how much work Sun Corp, as prime contractor, is permitted to outsource to Moon Corp, as subcontractor, while remaining in compliance with the terms of the contract. This is a situation that is very familiar to federal government contractors. Many businesses that participate in federal government contracting are small businesses and, additionally, often fall under one of a handful of socioeconomic categories recognized by the Small Business Administration (SBA). Small business contractors and contractors within those socioeconomic categories often compete against other similarly situated businesses for federal government contracts that are fully or partially set aside, both broadly, for small businesses in general, and on a more limited basis, for one of the recognized categories. SBA awards these set-asides to small businesses and the various socioeconomic categories to fulfill its goal of bolstering and promoting the economy by providing assistance to small businesses. Frequently, these small businesses also need assistance from other contractors, creating a prime-sub arrangement. In exchange for preferential treatment, small businesses and those in the recognized socioeconomic categories must abide by SBA rules and the FAR, including how much the prime contractor can subcontract. (Please note that this post does not include the exclusion of certain costs or mixed contracts, which will be covered in a later post). The Categories You may be asking “what are the socioeconomic categories” and “how much can Sun Corp subcontract and remain compliant?” Well, I’m here to help you with answers to these two questions, beginning with the easy question first. There are 4 socioeconomic categories recognized by the SBA, along with the general category of small business. Women owned small business (WOSB) (such as Sun Corp) and economically disadvantaged women owned small business;Service disabled veteran owned small business;Historically Underutilized Business Zone (HUBZone) small business; and8(a) Program. However, for today’s purposes, the more important question is, “how much can Sun Corp subcontract to Moon Corp?” Thankfully, even though there are 4 different socio-economic categories and the general small business category, all are subject to the same general limitations, and those limitations are found at FAR 19.505 and 13 C.F.R. § 125.6. The Limits The first thing that is needed to figure out how much Sun Corp can subcontract to Moon Corp is what type of contract Sun Corp has with Agency. There are 4 types of contracts: services, supplies or products, general construction, and special trades. Prime contractors providing services, not including construction, cannot pay more than 50% of the amount paid by the government to firms that are not similarly situated. 13 C.F.R. § 125.6(a)(1). Prime contractors providing supplies or products are also limited to 50%. 13 C.F.R. § 125.6(a)(2)(i). Prime contractors providing general construction services cannot pay more than 85% of the amount paid by the government to firms that are not similarly situated. 13 C.F.R. § 125.6(a)(3). Prime contractors that are special trade contractors are limited to 75% paid to contractors. 13 C.F.R. § 125.6(a)(4). So what is this “similarly situated” you speak of? I’m glad you asked! A similarly situated entity is a subcontractor that is the same socio-economic designation as the prime contractor. 13 C.F.R. § 125.1. That means, in our example if Moon Corp was also a WOSB, it would be a similarly situated entity for subcontracting purposes. This is important to know because subcontracting to similarly situated entity does not count towards the subcontracting limits outlined above. 13 C.F.R. § 125.6(c). However, any work that the subcontractor further subcontracts will count towards those limits. Below are a couple hypotheticals for illustration, assuming the services being provided are not construction, and therefore fall under a services category of contract. The Application Example 1: Sun Corp, a WOSB, enters into an agreement with Moon Corp, an “other than small” business for Moon Corp to provide IT services. Sun Corp cannot pay Moon Corp more than 50% of the amount paid by the government. Example 2: Sun Corp, a WOSB, enters into an agreement with Moon Corp, also a WOSB, to provide IT services. Sun Corp does not have to limit the amount paid to Moon Corp because they are similarly situated entities. Example 3: Sun Corp, a WOSB, enters into a subcontract with Moon Corp, also a WOSB, to provide IT services. Moon Corp then subcontracts with Star Corp, an “other than small” business, for Star Corp to develop the platform Moon Corp will use in performing its IT services for Sun Corp. Sun Corp does not have to limit the amount paid to Moon Corp, because they are similarly situated entities, but Star Corp cannot be paid more than 50% of the amount paid by the government to the prime. Example 4: Sun Corp, a WOSB, enters into an agreement with Moon Corp, also a WOSB, to provide IT services. Moon Corp then subcontracts with Star Corp, also a WOSB, for Star Corp to develop the platform Moon Corp will use in performing its IT services for Sun Corp. Sun Corp does not have to limit the amount paid to Moon Corp, because they are similarly situated entities, but Star Corp still cannot be paid more than 50% of the amount paid by the government because any work that the subcontractor further subcontracts counts towards the limit. The same method can be used for contracts providing supplies or products, general construction, and special trade contractors by using the applicable percentage. It is important to note that the above information does not apply to partial set asides or mixed contracts that include any combination of services, supplies, or construction, and there are also exclusions from these calculations. I’ll save those for my next post. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Limitations on Subcontracting Part 1: What They Are and How They Apply first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Join me at the UTSA SBDC Government Contracting Conference – Building Business in Government Markets. I’ll be discussing how federal contractors can avoid common legal mistakes. The event is March 30, 2022 from 9:00 AM – 3:30 PM central, and there are lots of interesting topics, all for free. I’ll be presenting at 2 pm central. Registration is here. Mark your calendars! The post Webinar Event: UTSA SBDC – Top 10 Common Legal Mistakes for Federal Contractors first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The Department of Defense (DoD) has proposed to revise the Defense Federal Acquisition Regulations (DFARS) to reauthorize and improve the DoD Mentor-Protégé Program (MPP). The primary purpose of the proposed rule (Proposed Rule) is to reauthorize the DoD MPP, provide incentives to large DoD contractors to serve as mentors to small businesses, and extend opportunities for small businesses to participate in the MPP. In addition, the proposed rule removes restrictions on the eligibility of small businesses by aligning the size of the small business with the size standard associated with its primary NAICS code. The Proposed Rule is here. Reauthorization of the DoD MPP The Proposed Rule basically reauthorizes the DoD MPP program by resetting many of the dates under the current rules. Specifically: – The date for entering into a mentor-protégé agreement will be extended to September 30, 2024 (Appendix I-103); – The date for mentor reimbursements to be paid for developmental assistance costs incurred under the Program will be extended to September 30, 2026 (DFARS 219.7104(b); – The date for a mentor to receive credit toward attainment of the subcontracting goals in its small business subcontracting plan for developmental assistance costs incurred under the Program will be extended to September 30, 2026 (DFARS 219.7104(d)); – The maximum length of participation in the MPP is reduced from three to two years—unless approval is otherwise obtained for an additional period not to exceed three years (Appendix I-107). Expands Maximum Size Standards The Proposed Rule aligns the size of the small business with the size standard associated with its primary North American Industry Classification System (NAICS) code. Currently, to be eligible for the MPP a business must be less than half the size standard for its primary NAICS code. For eligibility under the Proposed Rule, a business just must not exceed its primary NAICS size standard. The change in the rule benefits small businesses by expanding the number of small businesses that will be eligible to participate in the MPP. The Proposed rule is also expected to benefit large businesses and the government, as well, by expanding the defense industrial base. Other Changes The Proposed rule also: – Adds as a component included in the MPP, a preliminary assessment of the protégé firm’s cybersecurity readiness. The DoD Office of Small Business Program (OSBP ) will provide the assessment; and – Adds a provision in the Policies and Procedures for the MPP that the DoD is authorized to terminate the mentor-protégé agreement for the convenience of the Government. This rule does not create any new solicitation provisions or contract clauses. Also, it does not impact any existing provisions or clauses or their applicability to contracts at or below the simplified acquisition threshold, acquisitions of commercial products including commercially available off-the-shelf items, and acquisitions of commercial services. While the changes aren’t revolutionary, they should make the DoD MPP program work more smoothly. The goal of the changes in the Proposed Rule is to expand opportunities for small businesses to participate in the MPP and encourage large businesses to provide assistance to small businesses. These goals support the overall objective of the MPP of enhancing the capabilities of small businesses, and increasing the participation of small businesses to perform as subcontractors and suppliers under DoD, Federal Government, and commercial contracts. The DoD invites comments from small businesses and other interested parties should review the Proposed Rule and consider providing comments by the April 29, 2022, deadline. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Department of Defense Proposes Rule to Reauthorize and Improve the Mentor-Protégé Program first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! We hope you were able to get out an enjoy the St. Patrick’s Day festivities this week and the start of March Madness. As the hometown of the #1 seeded Kansas Jayhawks, we are especially excited about the NCAA tournament. We have our brackets locked in and are hoping for another fun ride! It was also a big week in Federal Government contracting! For one, the Whitehouse and SBA released statements on advancing economy, efficiency, and effectiveness in Federal contracting by promoting pay equity and transparency. Also, a major DoD IT contract award is facing a bid protest. You can read those articles and more below. Have a great weekend! ICYMI: On Equal Pay Day, See What Americans Are Saying About SBA Efforts to Empower Women Entrepreneurs [SBA]OTAs and beyond: Scaling innovation in Defense contracting [FedNewsNet]Army Seeks Proposals for $99M Construction Services Multiple Award Task Order Contract [GovConWire]US Department of Labor Will Offer Prevailing Wage Compliance Seminars for Federal Contractors, Contracting Agencies, Unions, Workers [DoL]GSA Announces New Director for Presidential Innovation Fellows and Director of Public Engagement for Office of Strategic Communication [GSA]White House launches data initiative to help ease supply chain logjams [FedScoop]Space Development Agency about to issue solicitation for new missile tracking satellites [FedScoop]Sherman: Pentagon’s new CDAO office needs to create ‘decision advantage’ [FedScoop]Executive Order on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency [WH]Is the GSA throwing sand in the gears of the multiple award schedule machinery? [FedNewsNet]Major DoD IT contract award unsurprisingly faces bid protest [FedNewsNet]FACT SHEET: Biden Harris Administration Announces Commitments to Advance Pay Equity and Support Women’s Economic Security [WH]Grant fosters innovative technology to adapt disabled veterans’ homes [FedNewsNet]Don’t underestimate the power of relationships in the federal market [FedNewsNet]U.S. Small Business Administration and Public Private Strategies Institute Announce Launch of New Engagement Series, Building a Better America: A Small Business Resource Community [SBA]Statement by SBA Administrator Guzman Observing Equal Pay Day 2022 [SBA] The post SmallGovCon Week in Review: March 14-18, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Over the years, SBA size regulations have included the general rule that the size status of a business generally relates back the time of initial offer on a contract. Therefore, a small business generally stays small for the duration of a federal contract, with some exceptions. However, there was also language in the rule that required small businesses to recertify their size status after being acquired or going through similar transactions. The effect of this recertification requirement was always a little unclear. If you recertify as large, does that have any effect on your small business status for orders under contracts awarded when the business was small? Now, OHA has answered that concern. In Odyssey Sys. Consulting Grp., Ltd., SBA No. SIZ-6135, 2021 (Dec. 23, 2021), OHA considered an appeal of size protest by Odyssey for two GSA OASIS contract task order awards to Millennium Engineering and Integration LLC (MEI) for technical and engineering support services under the small business pool. The task order solicitation “did not include any express language requesting or requiring that an OASIS prime contractor must certify or recertify its size for this task order.” The OASIS contract included requirements for a contractor to notify GSA if certain events occurred related to the ownership or identity of the contractor, including mergers, acquisitions, ovations, and name changes. In that case, the contractor had to notify the contracting officer. The contract also included FAR 52.219-28, Post-Award Small Business Program Re-Representation, which required the contractor to notify the CO within 30 days if there was a novation, merger, or acquisition. The contract also provided for offramping if the contractor became a large business after the novation, merger, or acquisition: After the execution of a novation agreement or, after a merger or acquisition that does not require a novation, if the Contractor’s size standard changes from a small business concern to other than a small business concern and the Contractor has active task orders, including the exercise of options and modifications at the task order level, the Contractor shall be placed in Dormant Status immediately in accordance with Section H.16. After all the active task orders are closed out, the Contractor shall be Off-Ramped in accordance with Section H.17. The protester argued that the recertification requirements at 13 C.F.R. § 121.404(g)(2) (requiring recertification after a merger, sale, or acquisition) meant that the agency was requesting size recertification in connection with the task order awards. The provision at 13 C.F.R. § 121.404(g)(2) states: (g) Effect of size certification and recertification. A concern that represents itself as a small business and qualifies as small at the time it submits its initial offer (or other formal response to a solicitation) which includes price is generally considered to be a small business throughout the life of that contract. Similarly, a concern that represents itself as a small business and qualifies as small after a required recertification under paragraph (g)(1), (2), or (3) of this section is generally considered to be a small business[] throughout the life of that contract. Where a concern grows to be other than small, the procuring agency may exercise options and still count the award as an award to a small business, except that a required recertification as other than small under paragraph (g)(1), (2), or (3) of this section changes the firm’s status for future options and orders. The following exceptions apply to this paragraph (g): … (2)(i) In the case of a merger, sale, or acquisition, where contract novation is not required, the contractor must, within 30 days of the transaction becoming final, recertify its small business size status to the procuring agency, or inform the procuring agency that it is other than small. If the contractor is other than small, the agency can no longer count the options or orders issued pursuant to the contract, from that point forward, towards its small business goals. The agency and the contractor must immediately revise all applicable Federal contract databases to reflect the new size status. … (iii) If the merger, sale or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award. If the merger, sale or acquisition (including agreements in principal) occurs within 180 days of the date of an offer and the offeror is unable to recertify as small, it will not be eligible as a small business to receive the award of the contract. If the merger, sale or acquisition (including agreements in principal) occurs more than 180 days after the date of an offer, award can be made, but it will not count as an award to small business. The protester argued that this SBA rule requires recertification at the time of the the acquisition of the small business. The Area Office determined that the SBA’s rules at 13 C.F.R. § 121.404(g)(2) do not change timeliness rules for size protests, so the protester’s size protest was untimely. Odyssey then appealed to SBA Office of Hearings and Appeals, arguing in part that the SBA rule at 13 C.F.R. § 121.404(g)(2)(iii) mean that a “request for recertification must occur by operation of law in every solicitation.” The SBA provided commentary on the appeal, arguing that the “regulatory requirement to recertify size following a merger, sale, or acquisition is not a CO request for size certification in connection with an individual order.” OHA denied the appeal, holding that the size protest was not timely. OHA wrote: I agree with SBA and MEI that the most reasonable interpretation of § 121.404(g)(4) is that, when, as here, the underlying MAC itself was set aside for small businesses, the consequence of a merger or acquisition involving a prime contractor is not that the prime contractor becomes ineligible for award of pending or future task orders, but rather that the procuring agency cannot claim goaling credit for those orders. OHA has clarified any ambiguity with respect to the requirement for recertification after a merger or acquisition. The sole effect is that the agency can no longer count the award as a small business award for goaling purposes. But it has no effect on the small business status for a contractor for future task orders. This is an important clarification of the language in the size regulations. It’s likely the same interpretation would apply to similar recertification requirements under other socioeconomic set-asides, for instance the SDVOSB rules in 13 CFR § 125.18(e)(1)(ii). 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Confirms that Size Status Relates Back to Time of Offer, Even After Sale of Small Business first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Koprince McCall Potroff LLC is presenting a 3-part series focused on teaming agreements, joint venture agreements and subcontracts which can be essential to winning and successfully performing federal government contracts. Shane McCall and Nicole Pottroff explain how to develop, negotiate and administer agreements that are both compliant and effective for both small and large contractors. The presentations will cover both the key rules (such as flow-downs and ostensible subcontractor affiliation) and best practices for agreements that go beyond the bare minimum legal requirements. If you are interested in this informative webinar, March 22-24, 12:00-1:30pm CDT, we invite you to register here. The post Event: Compliant and Effective Teaming Agreements, Joint Ventures & Subcontracts – 3-Part Series (2022 Update), March 22-24, Hosted by Govology first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Ah, the Federal Acquisition Regulations, or FAR. Quite numerous and complex, yes, but they provide a standardized set of rules and procedures that govern federal government procurements. Regardless of what contract you’re dealing with (other than a few exceptions such as the FAA, which is not subject to the FAR), you can be sure that the rules of the FAR govern it. Unfortunately, that last statement is not true. Since 1989, the Department of Defense (and as time has passed, more and more other agencies) has held an interesting form of contracting authority. One that is not subject to the FAR or other such federal regulations. This unusual authority is referred to quite simply as “Other Transaction Authority” (OTA), and any government contractor that encounters it needs to understand that OTA procurements are a whole different beast from regular federal procurements. Background As noted above, OTA isn’t necessarily new, it has been around for over 30 years. But its usage has increased greatly since then, particularly in recent years. Initially limited to use by the DoD, it is now used by agencies such as the Department of Energy, the Department of Health and Human Services, the Department of Homeland Security, NASA, the FAA, and even the Department of Transportation. OTA is primarily used by these agencies for research work, although the DoD, NASA, and the Department of Homeland Security use it for prototype development as well. For this post, we’re going to focus on the DoD’s use of OTA as they use it the most and have the most expansive authority to use it. DoD’s authority here specifically comes from 10 U.S.C. § 4002 and 4003. These statutes note that the DoD and military may use OTA for research projects and for “prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel” (in other words, weapons). So? Federal law treats DoD research projects and prototype development as distinct from federal procurements that most government contractors are used to. In fact, they are not even considered “procurements” by the COFC, as SpaceX learned the hard way in 2019 in Space Exploration Technologies, Corp. v. United States, 144 Fed. Cl. 433 (Aug. 26, 2019). In one case, GAO explained: “GAO’s audit reports to the Congress have repeatedly reported that ‘other transactions’ are ‘other than contracts, grants, or cooperative agreements that generally are not subject to federal laws and regulations applicable to procurement contracts.’” MorphoTrust USA, LLC, B-412711 (Comp. Gen. May 16, 2016). This is expressly stated in 32 C.F.R. § 3.2, in fact. Wait, wait, wait…”generally are not subject to federal laws and regulations?” Yes, you read that correctly. OTA-based agreements are not subject to the FAR, in addition to many other federal rules that don’t apply. Additionally, this lack of status as a “contract” means that OTA transactions are not subject to Court of Federal Claims or GAO jurisdiction, except where it would impact the award of a contract that is subject to such jurisdiction. See Space Exploration Technologies, Corp. Additionally, offerors can challenge the use of OTA where such authority is improper if the protest is made before bids are submitted. Blade Strategies, LLC, B-416752 (Comp. Gen. Sept. 24, 2018). Limitations on Use Well, this is certainly concerning for research contractors that work with the DoD. (Although if you are on the receiving end of an OTA award, you may appreciate that the award is difficult to protest.) If agencies can use OTA for such work and OTA isn’t governed by most federal law or hearable in the COFC or GAO, what’s to stop DoD from using it indiscriminately to get around the rules? If you perform research work for the DoD or military, it would appear the answer is “nothing.” 10 U.S.C. § 4002, which authorizes the use of OTA for research projects, does not appear to contain any limitations on the use of that authority, besides that it must only be used for research projects and that OTA cannot be used if similar research is being conducted under existing DoD programs. For those who develop actual weapons systems and such for the DoD, fortunately, there are some substantial limitations on the use of OTA. OTA for prototype work is authorized by 10 U.S.C. 4003. This statute notes that OTA can only be used for such prototypes if one of the following conditions exists: At least one nontraditional defense contractor or nonprofit research institution is participating significantly in the project. Here, nontraditional defense contractor means “an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to the full coverage under the cost accounting standards prescribed pursuant to Section 1502 of title 41 and the regulations implementing such section,”All significant participants in the transaction are small businesses or nontraditional defense contractors,At least one third of the total cost of the project is being provided by sources outside the federal government, orThe senior procurement executive for the agency finds exceptional circumstances justify the use. Furthermore, OTA may only be used for projects that, combined with any follow-on production contract, is at least $100 million in expected cost. As you may have noticed, these sorts of arrangements allow for award of follow-on production contracts, which do not have to utilize competitive procedures if competitive procedures were used for the prototype award and the awardee successfully completed the project. In any event, at least with prototype projects, OTA authority is somewhat limited. That said, the last potential condition “exceptional circumstances” is obviously quite vague. Concerns In recent years, the use of OTA has expanded greatly. The Center for Strategic & International Studies noted in 2020 that the Army’s use of OTA has increased by 416 percent since 2016. As the Center observes: “The evidence suggests that there is a paradigm shift ongoing in DoD as OTAs have become a core element in DoD’s approach to technology acquisition over the last five years. This is clearly seen in the mid-to-late stages of the development pipeline for major weapon systems where OTAs are increasingly replacing contracts. Between FY 2015 and FY 2019, OTAs rose from just 3 percent of DoD’s total R&D portfolio to 18 percent of DoD’s R&D portfolio.” While the need for flexibility with these sorts of projects is understandable, we, as well as other observers, are concerned with the increased use of OTA. Indeed, DoD internal oversight has noticed that contracting personnel utilizing OTAs have often not properly tracked awards through such a system or consistently awarded using OTA in accordance with applicable laws. The fact that DoD has made such observations gives us hope, however, that the government is recognizing that the balance between flexibility and oversight may have shifted a bit too much towards flexibility, and needed oversight may be coming soon. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Other Transaction Authority? What Other Transaction Authority? – A Look at OTA first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If March is supposed to come in like a lion and leave like a lamb, we are certainly still in the lion stage this week, with another winter snow storm that arrived here yesterday. No worries, however, because next week the lamb arrives with 70 degree weather and we are ready for it. Hopefully, this will be winter’s last gasp as warmer temperatures are sure to follow and we spring forward into daylight savings time. There was a lot happening in federal government contracting news this week, such as the new Buy American Act final rule and updates on more cybersecurity requirements being considered for government agencies. We have included those and some additional articles that we hope you will find informative. Have a great weekend! Ready or not, here comes the new buy-American procurement rule [FedNewsNet]Contractors need agencies to help them “whip inflation now!”[FedNewsNet]International Women’s Day and small business: What’s changed in the past 30 years? [USAToday]Class Waiver of the Nonmanufacturer Rule [FedReg]Two small agencies win awards from Technology Modernization Fund board [FedNewsNet]Spurred on by Russia, Senate bill carries slew of cyber requirements for agencies, industry [FedNewsNet]Agencies continue to struggle with data center optimization [FedScoop]White House Reminds Agencies to Adopt NIST’s Software Supply Chain Security Framework [GovExec]Biden Executive Order Takes Major Steps Toward Regulating Cryptocurrencies [NextGov]VA Acquisition Regulation: Acquisition Planning; Required Sources of Supplies and Services; Market Research; and Small Business Programs [FedReg]The New Limitations on Subcontracting: New Rules, New Uncertainties[WifCon]Contractor Pays $930,000 to Settle False Claims Act Allegations Relating to Medical Services Contracts at State Department and Air Force Facilities in Iraq and Afghanistan [DoJ]DOD Wants to Shepherd Small Business Innovators [DoD]DHS Annual Assessment: Most Acquisition Programs Are Meeting Goals Even with Some Management Issues and COVID-19 Delays [GAO]Federal jury convicts two Texas men on federal fraud and false statements charges [DoJ]MOX Services Agrees to Pay $10 Million to Resolve Allegations of Knowingly Presenting False Claims to Department of Energy for Non-Existent Construction Materials [DoJ] The post SmallGovCon Week in Review: March 7-11, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA’s Paycheck Protection Program went into effect March 27, 2020. At that time many business owners faced confusion in trying to navigate the affiliation rules to determine their company’s eligibility for the program. Fast forward nearly two years and many businesses that received Paycheck Protection Loans have submitted applications for forgiveness of those loans. Some of those businesses are now having to consider potential affiliation issues that they may have initially overlooked in response to inquiries from SBA in its review of their loan forgiveness application. We thought this would be a good time to revisit the basics of SBA’s affiliation rules for the Paycheck Protection Program. Which affiliation rules apply? If you are familiar with small business size standards and affiliation issues (which we discuss a lot on this blog), you are probably also familiar with SBA’s rules at 13 C.F.R. § 121.103. But these rules are not the standards applicable to Paycheck Protection Program applicants. Instead, it’s actually the rules found at 13 C.F.R. § 121.301 that apply. “For applicants in SBA’s Business Loan, Disaster Loan, and Surety Bond Guarantee Programs, the size standards and bases for affiliation are set forth in § 121.301.” 13 C.F.R. § 121.103(a)(8). The SBA also confirmed that “applicants in SBA’s Business Loan Programs (which include the PPP) are subject to the affiliation rule contained in 13 CFR 121.301” in its PPP Affiliation Interim Final Rule. What are the affiliation standards under 13 C.F.R. § 121.301 and how are they different from § 121.103? Under § 121.301’s affiliation standards, “[c]oncerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both.” In addition,”[i]t does not matter whether control is exercised, so long as the power to control exists.” As under the affiliation rules at § 121.103, control is key. Section 121.301(f) highlights six general bases for finding affiliation: common ownership; potential control under stock options, convertible securities, or agreements to merge; common management; identity of interest; the newly organized concern rule; and totality of the circumstances. Many of these bases for affiliation are similar to the affiliation rules under § 121.103. But, overall, an affiliation finding under § 121.301 may be less likely for a few reasons. For one, there is a smaller risk that a minority owner could lead to an affiliation finding under § 121.301. Under § 121.103(c), where there is no majority owner and two or more minority owners are equal or approximately equal in size, and combined the minority owners are large as compared with any other stock holding, SBA presumes that each such minority owner controls the concern whose size is at issue. A similar rule would apply if there is one owner with less than 50% who owns substantially more than the next highest owner. By contrast, under § 121.301, if no one “individual, concern, or entity . . . owns or has the power to control more than 50 percent of the concern’s voting equity,” the SBA “will deem the Board of Directors or President or Chief Executive Officer (CEO) (or other officers, managing members, or partners who control the management of the concern) to be in control of the concern.” Minority shareholders, in contrast to the rule at 121.103, may only be found to control where they can “prevent a quorum or otherwise block action by the board of directors or shareholders.” In addition, § 121.301 has distinctly different rules for affiliation based on the newly organized concern rule. As we discussed here, SBA may find affiliation under the § 121.103 version of the newly organized concern rule for a number of reasons. The § 121.301 version of the rule, however, is much narrower. For instance, affiliation can only arise where “there are direct monetary benefits flowing from the new concern to the original concern”–language not found in § 121.103. This is not a complete list of differences between the two affiliation standards, but it covers two of the major ones. There is also one major similarity to note: both standards apply to the affiliation exceptions found at 13 C.F.R. § 121.103(b). Are there any exceptions to applying 13 C.F.R. § 121.301? Yes! There are three general groups to which 13 C.F.R. § 121.103 and 13 C.F.R. § 121.301 don’t apply. Because the CARES Act enacted a waiver of § 121.103 for these three groups, § 121.301 does not apply to them either. They are: “[A]ny business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a North American Industry Classification System code beginning with 72.” NAICS codes starting with 72 are applicable to “Accommodation and Food Services” including businesses like hotels, restaurants, bars, caterers, and related services.“[A]ny business concern operating as a franchise that is assigned a franchise identifier code by the [Small Business] Administration.”“[A]ny business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681).” Note that the interim final rule for Second Draw PPP Loans modified the exception for a business that is assigned a NAICS code beginning with 72. For Second Draw PPP Loans, these businesses may have no more than 300 employees per physical location and other eligibility criteria must be met. Though not exempt from affiliation considerations under the CARES Act waiver, faith-based organizations might not be affiliated with one another “if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion” or “where the application of the affiliation rules would substantially burden those organizations’ religious exercise.” For more information about this exception, check out the SBA’s Faith-Based Organizations FAQs here. *** In the end, affiliation concerns in any form can get very complicated. If you need specific legal guidance related to your business and any potential affiliates, reach out to us. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA’s Paycheck Protection Program: Affiliation Still Matters first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We at SmallGovCon just wanted to take a minute to wish all the amazing women out there a Happy International Women’s Day! And we would like to send an extra-special shout-out to all of our WOSBs and EDWOSBs while we are at it! It’s been a big year for you all with SBA’s implementation of its new WOSB/EDWOSB certification program. Here’s to commemorating women’s history of achievement and celebrating the bright future to come! Questions about SBA’s new WOSB/EDWOSB certification program or WOSB/EDWOSB eligibility? Or need help with a WOSB/EDWOSB contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Happy International Women’s Day From All of Us at SmallGovCon! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA is currently considering terminating some class waivers for its small business Nonmanufacturer Rule, as it has received information to established the existence of small business manufacturers of the subject products. As SBA explains, the Nonmanufacturer Rule is the “requirement that recipients of Federal supply contracts issued as a small business” or other socioeconomic set-asides (8(a) Program, HUBZone, WOSB/EDWOSB, or VOSB/SDVOSB) “provide the product of a small business manufacturer or processor if the recipient is other than the actual manufacturer or processor of the product” (you can learn more about the specifics of the Nonmanufacturer Rule here). SBA is authorized to waive the Nonmanufacturer Rule for a “class of products” when “there are no small business manufacturers or processors available to participate in the Federal market.” These waivers can be found on SBA’s List of Class Waivers. But SBA will periodically review this list “to determine whether small business manufacturers or processors have become available to participate in the Federal market.” And “[u]pon receipt of information that such a small business manufacturer or processor exists, the SBA will announce its intent to terminate the NMR waiver for a class of products[,]” which is what SBA has just done here. As explained in SBA’s first announcement (Fed. Reg. Doc. 2022-03201), SBA is considering terminating the Nonmanufacturer Rule class waiver for: Furniture Frames and Parts, Metal, Manufacturing under NAICS code 337215 and PSC 7195; Furniture Frames, Wood, Manufacturing under NAICS code 337215 and PSC 7195; Furniture Parts, Finished Plastics, Manufacturing under NAICS code 33725 and PSC 7195; Furniture, Factory-type (e.g. cabinets, stools, tool stands, work benches), Manufacturing under NAICS code 337127 and PSC 7110;Furniture, Hospital (e.g. hospital beds, operating room furniture) Manufacturing under NAICS code 339113 and PSC 7195; and Furniture, Laboratory-type (e.g. benches, cabinets, stools, tables) Manufacturing under NAICS code 339113 and PSC 7195. And per the second announcement (Fed. Reg. Doc. 2022-03202), SBA is also considering terminating the Nonmanufacturer class waiver for the following, under NAICS code 334517 and PSC 6525: irradiation apparatus manufacturing, computerized axial tomography (CT/CAT) scanners manufacturing; CT/CAT (computerized axial tomography) scanners manufacturing; fluoroscopes manufacturing; fluoroscopic X-ray apparatus and tubes manufacturing; generators, X-ray, manufacturing; irradiation equipment manufacturing; X-ray generators manufacturing; and X-ray irradiation equipment manufacturing. As the SBA explained: On October 6, 2019, SBA received a request to terminate the current class waiver of the NMR for the products identified above. According to the request, there are small business manufacturers available to participate in the Federal marketplace for these products. According to the information the requester provided to the SBA, several small manufacturers have provided these products to the Federal agencies within the past 24 months. Based on this information, the SBA is now seeking comment on all of the potential waiver terminations detailed in these announcements. And unless public comment reveals that there are no small businesses available for these classes of products, SBA will publish its “Final Notice of Termination in the Federal Register” for these class waivers. *** Complying with SBA’s Nonmanufacturer Rule requirements for can be pretty tricky. And failure to comply can result in the loss of an award, contract terminations, and other unfortunate consequences. So it is important to keep up on which products are covered by these class waivers. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Proposes to Eliminate Some Nonmanufacturer Rule Class Waivers first appeared on SmallGovCon - Government Contracts Law Blog.View the full article