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  1. 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
  2. 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
  3. 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
  4. 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
  5. 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
  6. 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
  7. 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
  8. 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
  9. 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
  10. 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
  11. 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
  12. 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
  13. 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
  14. 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
  15. 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
  16. 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
  17. This is a the second article of two taking you back to the basics of affiliation. The first, giving you a general overview of affiliation, can be found here. This follow-on article goes through the different bases for affiliation, as set forth in SBA’s affiliation regulations. Keep in mind though, this is still affiliation “basics” and does not go into a detailed analysis of each type of affiliation, as that would be a novel–not a blog. 1. Common ownership. Common ownership affiliation arises when two companies have shared ownership. Specifically, it arises when one company owns or controls, or has the power to control, 50% or more of another company’s voting stock, or a block of voting stock which is large compared to other outstanding blocks of voting stock. For example, if one individual owns the majority share in two companies, those companies are affiliated on this basis. But it is important to note, majority ownership is not always necessary under this rule. For example, if a company has five owners–three with 25% each of the voting stock, one with 15%, and one with 10%–the three 25% owners will each be presumed to control the company because their minority holdings are large, compared with any other stock holding. Additionally, SBA can find that a minority owner controls a company if she or he has “negative control,” or the abiliity to block ordinary actions essential to operating the company–and that entity will be affiliated with other firms the minority owner has control over. 2. Stock options, convertible securities, and agreements to merge. Affiliation may also arise under stock options, convertible securities, and agreements to merge. Basically, the SBA will treat these types of agreements as though they are already effective, the so-called “present effect” rule. So, for example, when a company agrees to merge with another company, SBA will consider the merger as already having happened. Now, the SBA’s OHA has said it will not apply this present effect rule if the agreement (1) is subject to a condition precedent that is “unusual, incapable of fulfillment, speculative, or conjectural,” or (2) there is a low probability that the transaction would be effectuated, or the rights exercised. 3. Common management. Affiliation based on common management may arise when two firms share management. Specifically, it arises “where one or more officers, directors, managing members, or partners who control the board of directors and/or management of one concern also control the board of directors or management of one or more other concerns.” According to SBA’s OHA, this “control” does not “require that individual manager(s) exercise total control of a concern, just that they possess critical influence or the ability to exercise substantive control over a concern’s operations.” Keep in mind, this is a different basis that common ownership and does not require majority ownership. For example, if two companies have the same president, those companies may be affiliates, regardless of whether the president is the majority owner of either company. 4. Identity of interest. Affiliation based on identity of interest arises when two companies “have identical or substantially identical business or economic interests (such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships)[,]” and such companies “may be treated as one party with such interests aggregated.” Under this rule, there are three types of identity of interest affiliation: familial relationships, common investments, and economic dependence. Familial Affiliation is presumed where firms are owned or controlled by spouses, parents, children, and siblings, and those firms conduct business with each other. Common investment affiliation may be presumed where SBA finds that enough common business interests cause the parties to act in unison for their common benefit (but the rules don’t elaborate on how many common interests that is). And economic dependence affiliation is presumed “if the concern in question derived 70% or more of its receipts from another concern over the previous three fiscal years.” Importantly, this basis for affiliation (including each of its sub-bases) does not automatically lead to affiliation. It leads to a presumption of affiliation which may be rebutted by showing that the companies’ interests are in fact separate. 5. Newly-organized concern. Affiliation under the newly-organized-concern rule is used by SBA to prevent the use of “spin-off firms” posing as small, independent firms, which are really large firms’ affiliates. It requires four factors: (1) former officers, directors, principal stockholders, managing members, or key employees of one company organize a new company; (2) the new company and old company are in the same or related industry or field of operation; (3) the former officers, etc. serve as officers, directors, principal stockholders, managing members or key employees of the new company; and (4) the old company provides assistance to the new company in the form of contracts, financial assistance, technical assistance, facilities and so on. 6. Joint ventures and ostensible subcontractor. This affiliation rule explains, subject to exceptions for joint ventures meeting certain SBA requirements, the members of a joint venture are affiliated when the two companies form the joint venture for the purposes of seeking a contract; but, they are affiliated for the purposes of that contract alone. It also provides that a prime contractor may be affiliated with its subcontractor for purposes of the procurement at issue if the subcontractor will perform the primary and vital portions of the work and/or the prime contractor is unusually reliant upon the subcontractor, which is called the “ostensible subcontractor rule.” And a prime contractor and its ostensible subcontractor are treated as joint venturers in determining their size for a particular contract. 7. Franchise and license agreements. A franchise or license agreement will only result in affiliation based on the restraints in the agreement, or other means, such as common ownership or management. The franchise may place restraints on the franchisee or licensee related to standardized quality, advertising, accounting format and other similar provisions, but excessive restrictions upon the sale of the franchise interest may result in affiliation. 8. Totality of the circumstances. Great! We made it through the list! If you are a small contractor trying to avoid affiliation and you got through all of those grounds for affiliation without a scratch, you are good, right? Eh, not quite yet. SBA’s affiliation regulations add in a fun little catch-all. They say, “In determining whether affiliation exists, SBA will consider the totality of the circumstances, and may find affiliation even though no single factor is sufficient to constitute affiliation.” Under this totality of the circumstances affiliation, SBA will simply decide if it finds two companies’ interactions to be so suggestive of reliance that affiliation can be found. And if so, it won’t matter how many “no” boxes for affiliation your companies’ already checked. * * * This is an extremely surface-level swim through the various grounds of affiliation in SBA’s rules. Affiliation is a highly-complex and ever-evolving concept in small business government contracting. So, don’t be afraid to reach out for help in analyzing potential affiliation for your company. Questions about affiliation? 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 Back to Basics: Types of Affiliation first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  18. Happy Friday, Readers. We hope you had a great week. Shane McCall, our usual Week in Review contributor, is enjoying a much deserved vacation with this family and I have the delightful privilege of filling in for him. Can you believe it’s August already and school will soon be starting? The Summer is flying right by! Here are some highlights in federal government contracting this week. Enjoy and have a great weekend! Moderna to Supply New COVID-19 Vaccine Booster Under $1.74B Contract With US Government [GovConWire]The state of governmentwide contracting [FedNewsNet]Senate passes bill to root out conflicts of interest in federal contracting [FCW]Industry Needs to Speak Up About Contracting Rules: Larry Allen [BGov]Lawmakers push Biden for an order to root out dark money from federal contractors [FCW]Pentagon Releases Inflation Guidance to Industry [NatDefMag]SA to set baseline requirements for cloud providers through Ascend [FedScoop]GSA expanding use of COMET blanket purchase agreement: CIO Shive [FedScoop]US Department of Labor, Esri Agree to Resolve Alleged Pay Discrimination at California Headquarters; Company to Pay $2.3M to 176 Female Workers [DoL]Monmouth County Company Agrees to $7.6 Million Judgment for Violating False Claims Act; Owners and Related Company to Pay $375,000 [DoJ]US Department of Labor Finds Honolulu Contractor Failed to Pay Correct Wages, Fringe Benefits to 46 Employees on Federally Funded Projects [DoL]Cross-agency group explores where government should go next with identity verification [FCW] The post SmallGovCon Week in Review: August 1-5, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  19. Back in April 2022, we looked at how data rights are handled by the Department of Defense in the DFARS (Defense Acquisition Regulation Systems), and prior to that, we explored many of the regulations regarding data rights and similar intellectual property. This is all well and good, but many of you probably wonder what this might look like when it is applied in the real world. For this, we turn to a recent case in front of the Court of Federal Claims (COFC) involving Raytheon concerning what exactly is “technical data.” Since 2009, the United States Army and Raytheon have been in a series of contracts with each other in which Raytheon helped engineer the Patriot weapons system. Each one of these contracts expressly incorporated DFARS 252.227-7013, “Rights in Technical Data,” as well as another DFARS clause, DFARS 252.227-7037, “Validation of Restrictive Markings on Technical Data.” We discussed the former in that April 2022 post. As for the latter clause, it provides for how contracting officers verify that a contractor’s use of restrictive markings to protect its rights in data is justified. One of Raytheon’s contracts was modified to include an item requiring Raytheon to provide “vendor lists” to the Army in one of the Contract Data Requirement List (“CDRL”) items. It is worth noting that according to DoD protocol, when drafting a CDRL, a contracting agency may reduce the scope of information that is required for data acquisition but may not add to the scope. In this case, the item in question was a form, DI-MGMT-80894, which stated that the reason for the requirement of the vendor lists was “to identify a complete listing of all sources used … in procuring any subcontracted item,” and to provide “a means for the government to track parts selection, qualification, and identification of parts.” The vendor lists were to include the part number of components purchased, the manufacturer’s name and address, the supplier’s CAGE code, whether the part was specification controlled, and whether the part was source controlled. This information was to come from contractor invoices and orders, not existing government documentation. Raytheon did provide vendor lists. However, the first two it provided bore restrictive markings that did not comply with the requirements for restrictive markings on technical data. Raytheon maintained the position that the information in the vendor lists was not “technical data” under DFARS 252.227-7013, and so were not subject to that clause or related regulations. Raytheon claimed that the vendor lists were “management” data. The Army rejected this characterization, stating that the data was technical data. Eventually, this dispute wound up in the COFC. The COFC, of course, first looked specifically to the language of DFARS 252.227-7013 for the definition of “technical data.” The clause provides that “[t]echnical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.” This definition unfortunately did not define what information is of a technical nature. Quoting a Federal Circuit case, the COFC observed, “[w]hen terms [in a regulation] are undefined, the court may consider the [dictionary] definitions of those terms in order to determine their meaning.” The dictionary, in turn, defined “technical” to mean “of or pertaining to the mechanical arts and applied sciences generally.” The information in the vendor lists was comprised of names of companies, addresses, and various identification numbers and codes. The COFC concluded this information was not of a technical nature. For one, the court noted, “the vendor lists are just what their name implies—lists of the vendors from which Raytheon purchased parts used in the missile system.” Additionally, “the lists do not include information about the technical aspects of the parts Raytheon purchased. They do not, for example, reveal the physical, functional, or performance requirements of the components listed.” Nor did the lists include any information on the design, manufacture, or assembly of the parts, the COFC remarked. In fact, there were parts not even on the lists at all due to lack of recent purchase history. None of the information on the lists was derived from technical sources or prepared by technical experts either. Although the government made a last-ditch effort by arguing the information was technical as it would be used by persons with technical expertise to accomplish technical tasks, the COFC rejected this as unpersuasive. The COFC also looked at the DI-MGMT-80894 form to determine whether the information was technical in nature but found it irrelevant to the analysis. The language was part of the contract, but it did not impose an obligation on the Army to limit the use of the lists to identifying “a complete listing of all sources used … in procuring any subcontracted item” and providing “a means for the government to track parts selection, qualification, and identification of parts.” After considering prior regulations which gave a description of technical data as “research and engineering data, engineering drawings and associated lists, specifications, standards, process sheets, manuals, technical reports, catalog item identifications” and the objectives of the DFARS rules on technical data, the COFC sided with Raytheon. This case provides, in addition to a little clarity on what is “technical data,” keen insight on the fact-specific nature of these intellectual property matters. The contractor should notice how easily these cases can turn on the smallest things, and so pay extra attention to intellectual property issues when entering agreements with the federal government. If you are uncertain what rights might apply to your intellectual property, do not simply roll the dice in the hopes that it will work out. Talk with an attorney that specializes in either intellectual property, government contracts, or both to see what is best for you. Questions about this post? Email us. 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 DFARS Data Rights Provisions in Action first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  20. The SBA recently released the Government Wide Small Business Procurement Scorecard for fiscal year 2021. This annual scorecard details information on the various categories of small businesses recognized by the SBA, including whether SBA met its goals related to small business federal contractors. Specifically, the scorecard is used to assess “how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals,” to “provide accurate and transparent contracting data,” and “report agency-specific progress.” SBA met or exceeded its goals in the majority of categories despite the fact that the overall number of small businesses decreased. Below, we take a look at the process, the numbers, and discuss which groups are, and which are not, receiving the greatest benefits. Read more First, a little background on the scorecard (just in case this is your first time hearing about this). Congress sets annual goals for federal agencies to meet when awarding contracts and subcontracts to small businesses. These goals include governmentwide goals, as well as agency specific goals, which are determined pursuant to 15 U.S.C. § 644(g). To determine these goals, each included agency submits proposed goals based on SBA’s review of agency year-to-date performance prior to the beginning of the fiscal year. SBA then evaluates each agency’s proposal, and either notifies the agency that its proposal is acceptable, or negotiates with the agency to reach a goal that is acceptable. In total, there are 24 agencies total. You can find a list of all included agencies as well as more detailed information on how the process works here. Following each fiscal year, SBA reviews information from the various agencies to determine whether goals were met and assigns each agency a “grade” based on how well it performed. So, where were the most federal contracting dollars spent? Overall, there was $154.2 billion directed toward small business Prime Contractors in general. This represented 27.23% of total federal contracting dollars spent and exceeded its goal of 23%. The largest sub-category was small disadvantaged businesses, including those in the 8(a) Program, which received $62.4 billion, or 11.01% of all federal contracting dollars. That is over twice as much as its 5% goal for the year. Service Disabled Veteran Owned small businesses (SDVOSB) also exceeded its 3% goal for the year with $25 billion, or 4.41% of all federal contracting dollars. Unfortunately, women owned small businesses (WOSB) and HUBZone businesses, in what appears to be a trend throughout the last decade, fell short of their goals. WOSB’s goal for fiscal year 2021 came in at $26.2 billion, or 4.63%, while its goal had been 5%. This means that agencies, as a whole, did not reach their WOSB goal for the ninth time in the past decade. However, WOSB performance is marginally better than HUBZone business’s, which came in at $14.3 billion, or 2.53% in fiscal year 2021. This means the 3% goal for HUBZone contracts has not been met a single time in the past ten years. Additionally, the overall number of small businesses decreased 5.85% from 2020. The category with the largest decrease was, once again, WOSB, with a 6.8% decrease. Despite HUBZone receiving the smallest percentage of small business contracting dollars, it was the category with the largest gain in terms of prime contractors, with 3.8% growth from 2020 to 2021. The agency-specific score cards show that overall agency performance is strong and that agencies are overall performing better than in the 2020 fiscal year. While not specifically mentioned in the scorecards, this increase could be due to both agencies and contractors adjusting to changes brought on by Covid-19. Nonetheless, there are a few agencies that fall short. The Department of Health and Human Services and the Department of Treasury were both assigned a “B”, but the worst offender is the Department of Housing and Urban Development (HUD) which received a “C”. This makes the second year in a row that HUD was the lowest-rated agency. Taken as a whole, more agencies met their goals in the 2021 fiscal year than in 2020, even though the number of contracts being awarded to small businesses generally decreased. More federal contracting dollars were directed towards small businesses as well. Nonetheless, there is still work that needs to be done to increase the number of contracts being awarded to both WOSBs and HUBZones if they are going to meet their goals. Questions about this post? Email us. 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 2021 Small Business Scorecard, Small Businesses Contracting Over $154 Billion! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  21. We’ve been enjoying summer out here in Lawrence and many of our SmallGovCon professionals are taking a little time to themselves for summer vacation. We hope our readers are able to do the same thing! Whether you’re getting back from a vacation or working regular hours, here’s our weekly roundup of news from the federal government contracting to keep you updated on what’s been happening lately. This week in the federal government contracting world, there is some interesting news, including the small business procurement scorecard from the SBA, which exceeded its contracting goal and the White House announced initiatives to ensure equity in federal procurement. Enjoy the weekend! Biden-Harris Administration Awards Record-Breaking $154.2 Billion in Contracting to Small Businesses [PRNewsWire]Small business contract awards hit record $154B [FCW]How the Pentagon is messing up a crucial contract finance study three years in the making [FedNewsNet]GSA Hires New Climate Adviser, Names Permanent Strategic Communications Chief [POC]CISA Official Warns Smaller Critical Infrastructure Companies of Cyber Threats [POC]After a 5-year wait, VA gets a new top medical leader [FedTimes]HUBZone awards keep missing federal contract goals a quarter-century after creation [FedTimes]House advances some key agency spending provisions for 2023 [FedNewsNet]US Department of Labor Finds Virginia Tech, Engineering Contractor Underpaid 63 Workers $268K in Pay, Benefits on Government-Funded Project [DoL]Tampa Man Arrested For Fraudulently Using Federal GSA Smartpay Account Numbers [DoJ]Small business procurement scorecard overview [SBA]Department of Defense Small Business Subcontracting Requirements [DoD]Bill to streamline federal agency tech acquisition introduced in Senate [FedScoop]SBA: Federal Agencies Awarded 27% of Fiscal 2021 Contracting Dollars to Small Businesses [ExecBiz]White House Announces Initiatives to Ensure Equity in Federal Procurement [ExecGov] The post SmallGovCon Week in Review: July 25-29, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  22. SBA has issued a final rule that should help small businesses demonstrate their past performance more easily. Perhaps most importantly, the rule will allow for a small business to receive a written performance record, similar to CPARS, showing its performance as a subcontractor to a large business prime. The new rule will also allow a small business to better utilize its past performance that it carried out as a member of a joint venture. Both of these new rules are rooted in the 2021 National Defense Authorization Act. The final rule will be effective August 22, 2022 and will create a new section 13 CFR 125.11. Here are some of the key aspects of these new rules and how SBA responded to comments on the proposed rule. Subcontractor Past Performance The rule will allow small businesses to more easily utilize its past performance as a subcontractor to large business prime contractors. The main aspects of the new subcontractor past performance procedure are: A small business can request and obtain a past performance rating where the small business performed as a first-tier subcontractor on a large business prime contract that included a subcontracting plan. The subcontractor must request the rating “30 calendar days after completion of the period of performance for the prime contractor’s contract with the government.” So, small businesses must not wait to request these performance reviews. It may be good to simply include that request as part of a subcontract, rather than having to make a separate request for each performance period.A prime contractor is required to provide a rating of the small business past performance within 15 calendar days of the request. The small business can then submit the rating report to an agency, and an agency must consider that past performance rating when evaluating the small business’ offer on a prime contract. There is no timeliness restriction on using past performance, although that had been in the proposed rule. This means, if a solicitation allows it, a small business past performance has no expiration date. Some commenters were concerned about enforcement if the prime contractor does not provide a rating. To this, SBA pointed to the various penalties built in to the subcontracting plan regulation, including termination for default; a lower past performance rating; liquidated damages; and even debarment if the failure is willful or repeated. However, SBA also added to the rule that “that subcontractors should notify the contracting officer in the event that the prime contractor fails to submit the requested rating within the rule’s prescribed timeframe.” As far as the rating format itself, it must follow the the CPARS evaluation factors and include the the five-scale rating system at FAR 42.1503(b)(4): Exceptional, Very Good, Satisfactory, Marginal, and Unsatisfactory. Some commenters asked about rebuttal of the prime contractor’s rating–but the rule doesn’t provide one. SBA noted: “This final rule does not adopt a rebuttal procedure as none is provided or required by the statute. However, subcontractors may be able to negotiate a rebuttal procedure as part of their subcontract.” While it’s not stated in the regulation, “SBA believes that, in most cases, the subcontractor past performance rating should be treated as equivalent to a prime’s past performance rating.” Finally, a small business member of a joint venture that was a subcontractor to a large prime could also request a past performance rating from the prime contractor for a contract for which the joint venture served as a subcontractor if the prime contract included a subcontracting plan. This rule should provide an additional avenue to smooth the way for small businesses to enhance their past performance record, and be evaluated for that past performance, even where the small business served as a subcontractor. Joint Ventures The new rule will enhance past performance ratings where a small business performed as part of a joint venture. It creates a new requirement to address the circumstance upon which an agency is required to consider past performance of small businesses that have been members of certain joint venture or first-tier subcontractors. Here are the key components: To receive past performance credit, a small business must: (a) identify the joint venture (b) list the contracts of the joint venture the small business wants to use; and (c) tell the agency what duties and responsibilities the company performed within the joint venture. No credit is given for work the small business did not perform.An agency must “consider the past performance of the joint venture when evaluating the past performance of the small business concern, giving due consideration to the information submitted about the duties and responsibilities that the small business carried out.” The SBA provides a helpful example for how this could work in a solicitation: For example, a solicitation might require three past performance examples. This final rule authorizes the small business offeror to submit two examples from performance in its own name and one example from performance of a joint venture of which it was a member if the small business cannot independently provide the third example of past performance on its own. This final rule provides that the joint venture’s past performance may supplement the relevant past performance of the small business when the small business cannot independently demonstrate the past performance on its own. Note that the agency must simply “consider” the past performance example. It doesn’t guaranty that the past performance example will be evaluated positively or result in a high past performance score. But at minimum an agency cannot ignore the joint venture past performance example, provided all the data points are submitted to an agency. This rule will make it easier for a small business to utilize joint venture past performance as part of its evaluation for a particular solicitation. It’s nice to see these rules come out that will help small businesses utilize their past performance from various arrangements. Good on Congress and SBA for implementing these new rules. Questions about this post? Email us. Need legal assistance with a government contracting legal issue? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post FAR Final Rule Eases Use of Small Business Joint Venture and Subcontractor Past Performance first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  23. The Office of Hearings and Appeals, more commonly referred to as OHA, is tasked with deciding size determination appeals that arise under the Small Business Act of 1958, as well as 13 C.F.R. parts 121 and 134. When an unsuccessful offeror raises a question, via a size protest, regarding an Awardee’s size under the North American Industry Classification System (NAICS) code on any given solicitation, the SBA Area Office will review the protest and issue a size determination. Then, a losing party can appeal the size determination to OHA. Affiliation is a common topic that OHA addresses. In a recent decision, OHA looked at the question of how nonprofits fit into the affiliation rules. Since a small business has to be a for-profit entity, can a small business be affiliated with a nonprofit parent company? In a recent size appeal, the unsuccessful offeror ACS Ventures raised an issue with ACTFL Professional Services’ (the Awardee) size due to its affiliation with what ACS Ventures deemed a nonprofit parent company. ACS Ventures, LLC, SBA No. SIZ-6160, 2022 (June 21, 2022). According to ACS Ventures, the non-profit parent company “control[led] the activities of [Awardee] and [Awardee] benefit[ted] from the pass-through taxation for income.” Additionally, [ACS Ventures] claimed that the non-profit parent company, as the owner of Awardee, held Awardee’s assets and directed its activities.” ACS Ventures also claimed that Awardee was a disregarded entity per IRS standards, and as such, Awardee’s “income is not subject to unrelated business income tax.” For the above reasons, ACS Ventures claimed that the Awardee is actually the non-profit parent company, and that the award conflicts with SBA’s intent to award the contract as a 100% small business set-aside. OHA dismissed the initial protest due to the unsuccessful offeror’s alleged untimely protest submission, which then led to the Appeal, but we will come back to the timeliness issue in a moment. On appeal, ACS Ventures again asserted that Awardee was affiliated with the non-profit parent company. Further, ACS Ventures claimed that the parent company’s non-profit status rendered Awardee ineligible for award per 13 C.F.R. 121.105(a)(1), which requires that a small business concern must be “organized for profit” in order to be eligible for SBA assistance. Finally, ACS Ventures claimed that Awardee’s relationship with its non-profit parent company gave it an unfair advantage when competing with other for-profit concerns. Despite ACS Ventures’ claims, OHA precedent holds that “mere affiliation with a non-profit organization does not render a small business ineligible for small business set-aside contracts.” Accordingly, Awardee’s affiliation with the non-profit parent company did not make Awardee an “other than small” business and did not, in turn, make Awardee ineligible for award. So, what this means is that, in order to be an eligible small business, a company must be organized for profit. A nonprofit business does not qualify as a small business under SBA’s rules. But the parent company of small business can be a nonprofit company. What matters is whether the actual government contractor representing itself as a small business is organized for profit, not its parent company. Remember that initial dismissal? In the appeal, OHA reiterated that the size protest was untimely because a size protest in a negotiated procurement must be received by the Contracting Officer no later than close of business on the fifth day following notice of award. 13 C.F.R. 121.1004(a)(2). Appellant claimed that the email was, in and of itself, the protest in an attempt to overcome the strict filing deadline. However, OHA disagreed with Appellant’s claim that the email was the protest, stating that it did not contain the specificity required by 13 C.F.R. § 121.1007(b), meaning Appellant’s email did not “provide a reasonable notice of the grounds upon which the protested concern’s size is challenged.” In summary, a small business can have a nonprofit subsidiary, as long as the contractor itself is organized for profit. Protesters should be sure to include specific facts to support the allegations on which they are protesting. An email expressing intent to file a protest is not sufficient. For a deeper dive into the relationship between non-profit companies that are affiliated with other for-profit small businesses, check out this blog. Questions about this post? Email us. Need legal assistance with a government contracting issue? Call 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 Nonprofit Parent Companies do not Automatically Cause Affiliation for SBA Size Determinations first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  24. Happy Friday, Readers! I hope you are all staying cool. It seems the whole country is under a heat advisory and we are not the exception here at SmallGovCon, with temperatures hovering around 100 degrees. Whew…who’s ready for Fall? There was a lot of news in the federal government contracting world this week and we’ve included some articles that we hope you will find informative. Have a great weekend and enjoy the AC or a cool pool to lounge in. US senators push for stronger conflict of interest rules for federal contractors [Consulting]HUBZone awards keep missing federal contract goals a quarter-century after creation [FedTimes]3 Government Tech Trends Shaping The Federal Market [GovConWire]DLA’s case for small business waiver [FedNewsNet]Federal Research Centers: Revising DOD Oversight Policy Could Assure Access to Performance and Effectiveness Information [GAO]Priority recommendations to OPM; White House contracting goals; CMMC questions remain for DIB [FedScoop]Senate leader Schumer met with Microsoft President Brad Smith to discuss tech antitrust bills [Fedscoop]Senate wants tighter cyber-electronic warfare integration, clarity on organizations for cyber ops [FedScoop]EEOC: Women still lag far behind men in the government’s STEM workforce [FCW]Bipartisan group seeks to limit who federal agencies can contract with [FCW]SBA Announces Funding Opportunity to Provide Entrepreneurship Training to Service-Disabled Veterans [SBA]Five LinkedIn Actions for Business Development: Mark Amtower [BGov]GSA Tells Bidders to Expect Last Two Polaris Pools in September [BLaw]For small businesses, crisis presents opportunity: Louis DeCuzzi [Cleveland] The post SmallGovCon Week in Review: July 18-22, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  25. Once again, the incumbent service worker rule has had its pendulum swing back to the hiring of incumbent workers, reflecting a “general policy of the Federal Government that service contracts which succeed contracts for the same or similar services, and solicitations for such contracts, shall include a non-displacement clause.” This proposed rule would insert a contract clause requiring contractors who are awarded a service contract with an incumbent on it, to offer employment to the incumbent contractor employees, for performance of the contract. This is of course quite the shift from current regulations, but it also places many new contract compliance requirements on contractors awarded a new contract as they try and stand up performance. As you may recall, this rule is not new and in 2020, this rule was actually repealed. We blogged about the repeal here at SmallGovCon. Since then, President Biden has issued an Executive Order to reimplement the rule, and on July 15, 2022, a proposed rule was released to follow through on the aims of President Biden’s Executive Order. This proposed rule will generally require that federal contracts include a “non-displacement clause [that] requires the contractor and its subcontractors to offer qualified employees employed under the predecessor contract a right of first refusal of employment under the successor contract.” Comments on this rule closes August 15, 2022. We of course highly encourage contractors to read this proposed rule as it will impact contractors who are awarded contracts with incumbents, and if necessary, submit your comments to the proposed rule. However, we will still review some of the highlights of the proposed rule here. Key Provisions This proposed rule will be reflected in Subpart 9 of the Federal Acquisition Regulations. According to the Department of Labor, this proposed rule reinforces President Biden’s Executive Order aims, stating that a “carryover workforce minimizes disruption in the delivery of services during a period of transition” and “provides the Federal Government the benefit of an experienced and well-trained workforce that is familiar with the Federal Government’s personnel, facilities, and requirements.” To achieve this, the propose rule will require contracts to include a “non-displacement clause” and as previously mentioned, contractors who are awarded a contract with that clause present and an incumbent currently performing, must give the incumbent prime contractor employees right of first refusal to “suitable employment under the contract”. This requirement would be applicable to any contract over the simplified acquisition threshold, and in which performance calls for the “same or similar” work to what the incumbent contractor is currently performing. When determining if something is “same or similar” the proposed rule states it would be a fact specific determination, but provided the following examples: A contract for food service at a location that was previously a food service location with similar job descriptions would be “same or similar work”, but having a contract for dry cleaning services at a location that used to be a food service location is not “same or similar work”. So, it appears it would first be quite obvious, but may depend on if certain requirements of performance were changed. Under this rule, a contractor generally cannot fill any open positions until offering bona fide employment opportunities to incumbent contractor employees who are qualified for the positions offered, and would have their positions terminated by the awarding of a new contract. It does not have to be for the same job title, or pay, so long as it is for a job the employee is qualified, and the offer is not so low or made in a way that would discourage the employee from accepting the offer. The offer also needs to be more than an invitation to apply for a job. It must be a legitimate job offer, and the terms of the offer must be in a language for each employee to understand. Note, this rule doesn’t apply to certain types of management employees, as it “does not extend to contracts for services to be performed exclusively by persons who are not service employees, i.e., persons who qualify as bona fide executive, administrative, or professional employees as defined in the Fair Labor Standards Act’s (FLSA) regulations at 29 CFR part 541.” It is expected that there would be a certified list of employees of the incumbent who are currently performing the contract given to the new awardee contractor, but this is not the only way for contractors to determine if someone was an employee of the incumbent and thus meets the requirements of the proposed rule. A contractor can also accept other, “reliable evidence of an employee’s entitlement to a job offer”, such as a paystub. Once proven as employees of the incumbent, these employees may be offered jobs, in pursuance of this proposed rule. Once the offer of employment is given to the incumbent contractor’s employee, the new contractor can explicitly require the employee respond to the offer of employment in a certain amount of days, but cannot have the deadline for response be less than ten days. The new contractor must continue to offer employment to the incumbent contractor’s employees until they have all rejected or accepted the offers. Also, If someone quits a position under the new contractor within ninety days of the start of performance, the open position must be offered to an incumbent prior to offering it to someone else. This rule does tie in to small business affiliation principles. Under SBA precedent, where this incumbent worker rule is in effect, “the hiring of incumbent non-managerial personnel cannot be considered strong evidence of unusual reliance” because FAR 52.222-17 “specifically encourages contractors to offer a right of first refusal to qualified incumbent non-managerial employees.” Human Learning Servs., SBA No. SIZ-5785 (2016). When this rule is not in effect, hiring all of the incumbent’s employees may show over reliance on an incumbent subcontractor. But when the incumbent worker rule is in effect, hiring those same service employees does not indicate reliance. While this proposed rule doesn’t represent a new concept in the world of federal contracting, it does present contractors with many requirements for employees that they currently do not face, as the rule was repealed in 2020. It is important to remember that this is a proposed rule, so there is still room for comments and changes based on any comments submitted. After this proposed rule receives comments, the rule will be published again with the answers to public comments and explanation of any changes. That publication should give contractors more context as to the proposed changes and implementation of the rule. Therefore, contractors should keep their eyes on the federal register for any updates, submit comments to the rule if they feel it is necessary, and of course, we here at SmallGovCon will continue to keep an eye on how this rule progresses, with updates posted here as needed. Questions about this post? Or need help with a 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 FAR Proposed Rule: Incumbent Service Workers Need to be Hired first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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