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Koprince Law LLC

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  1. Koprince Law LLC
    Readers of this blog will know that the GAO interprets its protest timeliness rules quite strictly. A recent GAO case provides us with an opportunity to review a nuanced piece of those timeliness rules. Specifically, how withdrawal of an agency-level protest affects the deadline to file a GAO protest, and what counts as a withdrawal of an agency-level protest versus an “initial adverse agency action.”
    In this case, the protester lost its GAO protest rights by trying to pursue its agency-level protest with an inspector general’s office rather than with the contracting officer.

    The GAO’s decision in Aurora Storage Products, Inc., B-415628 (Comp. Gen. Dec 1, 2017) involved a DOJ solicitation for high density file systems. The solicitation was issued as a competitive task order RFQ open to holders of a certain GSA Schedule.
    Mid-Atlantic Filing Distributors submitted a quotation. The DOJ rejected it because Mid-Atlantic did not hold the underlying GSA Schedule contract.  However, according to Mid-Atlantic, it was the “authorized GSA dealer” for Aurora Storage Products, Inc.–which did hold the correct GSA Schedule. Aurora said that Mid-Atlantic had submitted the quotation on Aurora’s behalf.
    Aurora was informed of the award to another company on October 10. Aurora filed a timely agency-level protest with the contracting officer on October 13.  (All the dates mentioned were in 2017). The CO acknowledged the protest on October 17. At this point, things were going alright, at least procedurally.
    Then Aurora made a mistake. In response to the CO’s acknowledgment of the agency-level protest, Aurora sent an email stating “[t]hank you for your acknowledgment but I have forwarded basically the same request to the [Office of the Inspector General (OIG)].” The email responses also explained that Aurora was not withdrawing its protest, but rather that “[w]e are protesting through the Department of Justice OIG.  We do not expect a review from you personally but rather from your OIG.”
    The CO wrote back to Aurora on October 24 to clarify that “OIG does not typically review and handle protests,” OIG “may decline to consider your allegations at all, and may or may not inform you of this decision,” and to “[p]lease confirm that you nevertheless still do not want a written decision from me but instead wish to pursue this through the OIG.” Aurora responded on October 25:  “we do not wish to withdraw our protest,” but also stated that “a review by the [c]ontracting [o]fficer, while advisable internally would be of little use to those protesting.  More directly, it is your actions and decisions that we are protesting.”
    The GAO doesn’t mention what happened over the next few days, but apparently Aurora decided to file a formal bid protest while awaiting a potential response from the OIG. Aurora filed its GAO protest on October 30.
    GAO timeliness rules mandate that
    GAO wrote, as it often does, that its bid protest regulations “contain strict rules for the timely submission of protests.”  In this respect, the GAO’s rules “reflect the dual requirements of giving parties a fair opportunity to present their cases and resolving protests expeditiously without unduly disrupting or delaying the procurement process.”
    GAO held that, since the protest was filed on October 30, it was untimely because this was 20 days after the protester knew of the award decision on October 10, well past the 10-day deadline.
    But what of the agency-level protest Aurora filed? Normally, filing of an agency-level protest would stop the clock on the GAO protest deadlines until the “knowledge of initial adverse agency action,” as mentioned above.
    Here, however, GAO held that Aurora had effectively “disavowed its protest by repeatedly stating that it was not seeking a decision from the contracting officer and instead wanted the OIG to review its allegations.  These statements clearly indicate that Aurora did not wish the agency to decide its protest in accordance with the procedures set forth in FAR § 33.103,” which indicates agency-level protests are handled by the contracting officer. “In our view,” GAO continued, “these disavowals constituted a constructive withdrawal of Aurora’s agency-level protest since the protester indicated it no longer wished for a decision under the auspices of FAR § 33.103.”
    Furthermore, “the OIG’s review of, and investigation into, the allegations raised by Aurora is not a ‘protest’ as that term is understood under FAR § 33.103 and our Bid Protest Regulations. Thus, the ultimate action taken by the OIG, whether adverse to Aurora or not, will be separate and apart from the DOJ’s handling of Aurora’s agency-level protest.”
    Finally, a withdrawal of an agency-level protest is not an adverse agency action because a withdrawal “is an action taken by the protester, not the agency, and therefore, even if the result is ultimately prejudicial to the protester’s position, it does not constitute an adverse agency action.”
    Because there was no “adverse agency action,” Aurora never got its additional 10-day clock to file a GAO protest that would normally start running after the conclusion of the agency-level protest. Therefore, the 10-day clock started running from notice of the award, and Aurora missed this deadline.
    GAO dismissed the protest as untimely.
    As I mentioned earlier, my colleagues have discussed the GAO’s strict timeliness rules in a number of contexts, including when an electronic proposal is received by a government server, where an offeror failed to request a pre-award debriefing, and in determining when the 5:30 pm filing deadline actually ends. While a few of these decisions go the protester’s way, most do not. When the GAO says its timeliness rules are “strict,” it isn’t kidding.
    This decision is another important twist on GAO timeliness rules, here in the context of a GAO protest filed after an agency-level protest. As Aurora Storage Products demonstrates, an agency-level protest is a protest filed with the contracting officer under the provisions of FAR 33.103, not a complaint filed with an inspector general, ombudsman, or some other official. There is no exception to the strict GAO timeliness rules based on complaints made to inspectors general and the like.
    Further, when an agency-level protest is filed, if a bidder takes an action that seems like it is withdrawing the agency-level protest (even without explicitly using the word “withdraw”), the bidder can lose the additional window to file the GAO protest that normally runs after receiving an adverse agency action on the agency-level protest. Here, Aurora even explicitly stated that it didn’t wish to withdraw its protest–but contradicted itself by also stating that it didn’t want the contracting officer to issue a decision. That was enough to constitute a “deemed withdrawal.”
    The GAO’s bid protest timeliness rules are complex and strict. Bidders should be aware of the interplay of the timing rules for agency-level and GAO protests and adhere to them closely.

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  2. Koprince Law LLC
    The Section 809 Panel has recommended that Congress eliminate most small business set-asides for DoD acquisitions. The Panel would replace the longstanding set-aside system with a meager five percent small business price preference.
    For small government contractors, this recommendation is the policy equivalent of a five-alarm fire. Small contractors may need to fight hard to save the set-aside system.
    Get ready for a battle.
    The Government’s Longstanding Small Business Policy
    The United States Government has long supported small contractors. Policymakers wisely understand that providing contracting opportunities to small businesses isn’t just good for those businesses, but benefits the nation as a whole. Here’s how that longstanding policy is described in the Small Business Act itself, at 15 U.S.C. 631:
    For more than 30 years, this vital policy has been implemented in the FAR by way of the “rule of two,” which requires Contracting Officers to set aside competitions for small businesses (or socioecononmic subcategories of small businesses, like SDVOSBs) under certain circumstances.
    In its current form, the rule of two under FAR 19.502-2 has two components, which are rather similar.
    There is a strong policy of set-asides for purchases (except micro-purchases) under the simplified acquisition threshold. For those procurements, the FAR says:
    A slightly different standard applies to acquisitions over the threshold. In those cases, the Contracting Officer generally is required to use a set-aside when there is a “reasonable expectation” of receiving offers from “two responsible small business concerns” and “award will be made at fair and reasonable prices.”
    Responsibility, of course, is the question of whether an offeror is capable of performing a contract. As set forth in FAR Part 9, responsibility encompasses things such as whether the offeror has adequate financial resources, experience, operational controls, technical skill, facilities, and equipment. Because the rule of two only applies when two responsible offerors are likely to submit bids, Contracting Officers need not issue set-asides when they aren’t comfortable that they’ll receive at least two reasonably-priced offers from small businesses meeting these standards.
    Contracting Officers have a great deal of latitude when it comes to applying the FAR rule of two. As the GAO has written, a set-aside determination “is basically a business judgment within the broad discretion of the contracting officer.”
    Contracting Officers also have ways of avoiding the rule of two entirely. For instance, while small business set-asides are allowed under GSA Schedules, they aren’t required. Unlike the VA’s separate SDVOSB rule of two, which was the subject of the Supreme Court’s famous Kingdomware case, a Contracting Officer need not apply the FAR’s small business rule of two before buying off the Schedule. Additionally, the GAO has held that Contracting Officers need not apply the rule of two when soliciting orders under unrestricted multiple-award contracts, like the Air Force’s large NETCENTS-2 vehicle.
    The bottom line? Under the FAR, small business set-asides are preferred no matter the dollar value, but Contracting Officers have a great deal of flexibility. If a particular Contracting Officer isn’t satisfied with the potential pool of small business offerors, he or she is unlikely to be forced to issue a set-aside solicitation.
    The Section 809 Panel’s Shocking Proposal
    That brings us back to the Section 809 Panel’s shocking proposal.
    When I first heard of the Section 809 Panel, my immediate reaction was “uh-oh.” After all, the Panel touts its mission as “identifying ways to streamline and improve the defense acquisition system,” among other things.
    To me, “streamline” is one of those loaded terms (like “strategic sourcing,” “consolidation,” and “category management”) that never seem to work out too well for small businesses. If an organization views its mission as streamlining, there’s a pretty good chance that it will see a policy like the rule of two as red tape, rather than a fundamental building block of a broad and robust industrial base.
    Through its first two reports, the Section 809 Panel didn’t seem to be doing too badly when it came to small business recommendations. I was starting to hope that small contractors might make it through the Panel’s process without too much trouble.
    Then came Volume III.
    The third and final volume clocks in at a whopping 1,120 pages, not including a separate “Summary of Recommendations.” (I continue to be mildly amused by the irony of a “streamlining” panel putting out Tolstoy-length reports).
    The Section 809 Panel summarizes the FAR small business set-aside rules this way:
    Then, the Section 809 Panel claims that small business set-asides actually hurt small businesses:
    As evidence of the “extraordinary efforts,” the Section 809 Panel cites . . . its own Volume I Report! That’s like me claiming to be the best-looking government contracts lawyer in the country, and citing an email I wrote to myself as proof.
    Anyway, getting back to Volume III, the Panel proposes that, for most DoD acquisitions (those classified as “readily available” or “readily available with customization”), small business set-asides would be replaced with a five percent small business price preference. The Panel says:
    Oh goody! A whopping five percent price preference! I’m sure that will make all the difference when I’m competing directly against Microsoft for that IT staffing project.
    The Problems with the Section 809 Panel’s Shocking Proposal
    If you’re something of an astute reader, you may have picked up on the fact that I’m not particularly wild about the proposal to replace small business set-asides with a five percent price preference. And by “not particularly wild,” I mean that this may be the single worst government contracting idea I’ve ever seen.
    Why, you ask? (It’s so nice of you to ask! Next, please send me an email saying I’m the country’s best-looking government contracts lawyer!)
    Let’s discuss.
    First, the Section 809 Panel begins by misstating the current small business set-aside rules. No, Panel, not “all procurements” under the simplified acquisition threshold are 100% set-aside for small businesses. Likewise, the rule of two doesn’t apply to all procurements over the SAT.
    What about fair pricing? Responsibility? GSA Schedule contracts? Unrestricted IDIQs? Contracting Officer discretion? Nope, nope, nope, nope and nope. The Panel doesn’t mention any of it.
    The Section 809 Panel is composed of many smart, experienced people. They must know that the small business set-aside rules are nuanced. But instead of mentioning that nuance in the report, the Panel gives readers the impression that big, bad FAR 19.502-2 is grim and unyielding, regularly forcing beleaguered DoD Contracting Officers into ill-advised set-asides.
    Members of Congress are, by necessity, jacks of all trades. They don’t necessarily have the depth of knowledge about federal contracting to understand that the Panel’s statement of the set-aside law is incomplete at best. It’s quite possible that policymakers will read Volume III and come away thinking, “wow, every single procurement under the simplified acquisition threshold goes to small businesses, no matter what? That seems excessive!” And they’d be right, were that actually the way it worked. But it’s not.
    Second, the Section 809 Panel says that businesses make “extraordinary efforts” to remain small, and that offering set-asides doesn’t encourage growth beyond certain size standards.
    Now, there’s a nugget of truth here: while many contractors (including many of our firm’s clients) embrace growth above their small business size standards, some businesses do, indeed, choose to remain small rather than try their luck competing against Lockheed, Boeing and their ilk. But most of those businesses wouldn’t have grown close to the size standard in the first place were it not for set-asides.
    Sure, an IT company could run into trouble competing against Microsoft and Google, even after the IT company has exceeded the $27.5 million size standard under NAICS codes like 541511 (Custom Computer Programming Services). A company in that position might choose to remain small, or it might embrace its growth and prepare to compete against the big boys. But how would that company have fared against Google when the company was a $1 million or $2 million entity?
    It seems crazy that I have to say it, but set-asides help small businesses, by creating a special pool where those companies can grow and develop while avoiding direct competition against multi-billion dollar behemoths. If we eliminate set-asides, why would a $1 million company even attempt to enter the Government market?
    Notably, the Section 809 Panel doesn’t seem to have asked any actual small businesses or small business advocates about its plan. Are small businesses really clamoring for the elimination of those pesky set-asides? Do small businesses, or small business advocates like the SBA, really think that set-asides hurt small businesses? I can’t help but wonder if the reason the Section 809 Panel doesn’t seem to have asked is because the Panel already knows the answer.
    It’s unfortunate when businesses outgrow their size standards and can no longer compete for re-competes of contracts they’ve successfully performed, but eliminating set-asides isn’t the answer. Doing so will simply ensure that many businesses never get to this tipping point in the first place.
    Third, the proposal to replace set-asides with a five percent price preference is woefully inadequate to ensure that small businesses continue to receive a fair proportion of government contracts.
    To understand whether price preferences are sufficient to ensure that DoD meets its small business goals, we can simply look at the HUBZone Program. For years, HUBZone firms have been entitled to a 10 percent price preference when they compete against large firms.
    The HUBZone price preference works by requiring the Contracting Officer to pretend, for evaluation purposes, that the prices offered by large businesses are 10 percent higher. For example, if a large business proposes a price of $10 million, the agency would pretend that the price was $11 million. But if the agency awards the contract to the large business, the agency pays the “real” price: $10 million.
    In a lowest-price, technically-acceptable evaluation, the HUBZone price preference can make a difference. In the example above, if the solicitation was issued on an LPTA basis, and a technically acceptable HUBZone firm proposed a price of, say, $10.5 million, the HUBZone company would get the contract.
    In recent years, though, Congress has dramatically curtailed the use of lowest-price technically acceptable evaluation schemes, meaning that price is rarely going to be the sole deciding factor in a DoD acquisition. And in the context of a best value procurement, I can’t recall a single instance in my career in which the HUBZone price preference determined the outcome.
    Contracting Officers are human beings, after all. And it takes a special human being to say, “yep, I know the large business was a little better technically, has more past performance, and proposed the lower ‘real’ price, but to heck with it–I’m going with the HUBZone based on the pretend price, even though the Government will actually pay more.”
    Further, although many Contracting Officers support small businesses as a general principal, Contracting Officers (unsurprisingly) tend to care most about getting a project done right. Faced with a choice between, say, Google, on the one hand, and a smart, creative, tenacious, up-and-coming HUBZone firm on the other, how many Contracting Officers will simply opt for the “safe” choice and go with the brand name?
    Then there’s the math. If the HUBZone price preference was truly effective at ensuring that DoD met its HUBZone goals, one would expect that that the numbers would show it. But, like the Government as a whole, DoD has fallen way short. In Fiscal Year 2017, the DoD “achieved” just 1.56% for HUBZones, versus a 3% goal.
    Keep in mind that the 1.56% “achievement” occurred even though the FAR includes a 10 percent HUBZone price preference plus provisions allowing for HUBZone set-asides and sole source contracts. If DoD can barely reach half of its HUBZone goal given these tools, why on earth would anyone think that a five percent price preference, with no set-asides, would be enough to ensure achievement of the small business goals?
    Fourth, speaking of goals, the Section 809 Panel is wrong to say that “requiring DoD to continue to meet the overarching small business use goal established by SBA will ensure the same amount of DoD dollars are invested in small business.”
    No agency, including DoD, is “required” to meet SBA goaling requirements. The goals are just that: goals. If an agency doesn’t meet its goals, the agency might get a slightly lower grade on the SBA’s annual report card, but that’s it. (And even the lower grade is unlikely given the SBA’s tendency toward grade inflation: DoD got an “A” for Fiscal Year 2017 despite missing its WOSB and aforementioned HUBZone goals.)
    By the way, DoD exceeded its 22% small business goal in FY 2017, but not by much, at 23.26%. More than three-quarters of DoD’s prime contracting dollars already go to large businesses. These numbers don’t exactly suggest that DoD Contracting Officers are struggling with the rule of two.
    And if DoD can only muster 23.26% now, is it really going to continue meeting its small business goal if we eliminate set-asides? Count me as skeptical.
    Bold–or Bold and Stupid?
    The Section 809 Panel says that its proposal is for “bold changes, which will not be welcomed by those who benefit from the idiosyncrasies of the existing system and those who view this proposed approach as an abandonment of socioeconomic and domestic preference programs.”
    This sort of self-congratulatory rhetoric permeates the Volume III Report. The Section 809 Panel repeatedly casts itself as bold and revolutionary, and tries to preemptively tar anyone who dares to disagree as a behind-the-times proponent of “idiosyncrasies.”
    Don’t be fooled.
    Riding a jetski over Niagra Falls is bold, but stupid. Same with trying to take selfies with wild elephants, or driving on a state highway in a golf cart towed by a garden hose. The Section 809 Panel’s ideas on small business set-asides may be bold, but that doesn’t make them good ideas.
    The Panel says, “these recommendations would achieve the goal of allowing DoD to behave the way buyers in the private sector behave.” But the Government isn’t the private sector. Unlike the private sector, which is narrowly responsible to its investors and customers, the Government has much broader obligations to the taxpayers and nation as a whole.
    Do we really want the Government to behave like a private company? A private company isn’t worried about growing a broad industrial base. A private company isn’t concerned about supporting the broader economy, expanding competition, or promoting any of the other important social and public policies that are part of the fabric of the nation. A private company isn’t subject to the same ethics rules: it may be perfectly fine, at a private company, if the CEO decides to award a subcontract to his golf buddy, or if a customer takes the entire Board of Directors on an Aspen ski trip to try to close the deal.
    Government should be different: different in its societal role, different in its priorities, different in the ethical standards to which it holds itself and its employees. While there’s nothing wrong with looking to the private sector for procurement ideas, there’s everything wrong with treating private industry as the gold standard, and Government as though it’s just another private buyer.
    Sorry, Panel, but the longstanding small business preferences set forth in the FAR aren’t “idiosyncrasies.” They’re the essential underpinning of a procurement system that is designed to do much more than merely copy the habits of for-profit businesses, regardless of whether those habits make sense when the buyer is the Government.
    The Section 809 Panel was convened by Congress, so there’s little doubt that the Panel’s recommendations will be taken seriously–and little doubt that many large contractors will seize the opportunity to push for, as the Panel puts it, “abandonment” of the small business programs.
    Small businesses better gear up for a fight.

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  3. Koprince Law LLC
    One might think that when an electronic proposal is received by a government server before the solicitation’s deadline, the proposal isn’t late. A government server is under government control, so the proposal is timely, right?
    Not necessarily, at least the way the GAO sees it. As one contractor recently learned, waiting until the last minute to submit a proposal electronically carries significant risk that the proposal will not be considered timely, even if the proposal reaches the government server in time.
    Peers Health, B-413557.3 (March 16, 2017) involved a Navy RFQ for occupational health disability and treatment guidelines. Quotations were to be submitted no later than 12:00 p.m. EST on November 28, 2016. The RFQ stated that quotations were to be submitted via email to a certain point of contact, and at an email address identified in the solicitation. Alternatively, offerors could submit their proposals by regular or overnight mail.
    The Solicitation incorporated FAR 52.212-1 (Instructions to Offerors – Commercial Items), which provides, among other things, that proposals not timely received will not be considered for award. Notably, FAR 52.212-1 provides the following exceptions under which the government may accept late proposals:
    (A) If [the proposal] was transmitted through an electronic commerce method authorized by the solicitation, it was received at the initial point of entry to the Government infrastructure not later than 5:00 p.m. one working day prior to the date specified for receipt of offers; or
    (B) There is acceptable evidence to establish that it was received at the Government installation designated for receipt of offers and was under the Government’s control prior to the time set for receipt of offers. . . .
    FAR 52.212-1(f)(2)(i). As the regulation explains, proposals received after the deadline for proposal submission will be considered timely if they are submitted electronically the day before the submission deadline, or if the government received the proposal and was in control of it prior to the submission deadline.
    Peers submitted its quotation by email at 11:59 a.m. on November 28, 2016—one minute before the deadline. While the government server received the submission at 11:59 a.m., Peers’ email did not reach its final destination (the point of contact identified in the RFQ)  until 3:49 p.m. GAO did not explain what caused the lengthy delay in transmission from the server to the Navy point of contact.
    The Navy eliminated Peers from the competition, stating that Peers’ quotation was untimely. After Peers learned of the Navy’s decision, it filed a GAO bid protest.
    Peers argued that under FAR 52.212-1(f)(2)(i)(B), its proposal was timely because the email was received by the government’s server at 11:59 a.m. As such, Peers contended, its proposal was eligible for the timeliness exemption under FAR 52.212-1(f)(2)(i)(B) because it was “received at the government installation designated for receipt of offers and was under the Government’s control prior to the time set for receipt of offers . . . .”
    GAO was not convinced. GAO explained that in an earlier case, Sea Box, Inc., B-291056, 202 CPD ¶ 181 (Comp. Gen. Oct. 31, 2002), GAO had ruled that only FAR 52.212-1(f)(2)(i)(A) applied to electronically submitted proposals because it spoke directly to the issue of electronic submission. GAO concluded that applying the broader government control exception found in FAR 52.212(f)(2)(i)(B) to electronic submission would make the specific day prior requirements for electronic submission redundant. To the dismay of Sea Box, GAO concluded the government control exception does not apply to electronic submissions.
    Applying its reasoning from Sea Box, GAO concluded Peers’ proposal submission was untimely because it was neither received by the intended recipient prior to the closing date for proposal submission, nor received before 5:00 p.m. the working day prior to proposals being due. As such, Peers’ proposal was properly eliminated from competition as untimely, even though it had reached a government server before the deadline.
    Interestingly, the Court of Federal Claims disagrees with the GAO’s reasoning in Sea Box (and, presumably, in Peers Health, as well).  In Watterson Construction Company v. United States, 98 Fed. Cl. 84 (2012), the Court carefully analyzed the regulatory history of the exceptions, and concluded that the “government control” exception does apply to emailed proposals. The Court has since confirmed its ruling, most recently in Federal Acquisition Services Team, LLC v. United States, No. 15-78C (Feb. 16, 2016).
    In our view here at SmallGovCon, the Court has the better position: and not just because arguing with a federal judge isn’t usually a good idea. The regulation states that a late proposal may be accepted where the electronic commerce “or” the government control exception applies. The plain language of the regulation (and the Court’s careful study of the underlying history) suggest to us that Peers should have won its protest.
    As we’ve discussed on this blog before, it’s bad news when the GAO and Court disagree about an important matter of government contracting. True, the GAO isn’t required to follow the Court’s rules. However, a bid protest shouldn’t turn on which forum the protester selects. My colleagues and I hope that the GAO reconsiders its position in future protests.
    Perhaps Peers will take its case to the Court and obtain a different result. For now, contractors should be aware that under the GAO’s current precedent, the only way to ensure that an electronic proposal submission is timely received is to file before 5:00 p.m. the day before proposals are due. If the proposal is submitted later, and gets stuck on the government’s server, a potential protester should make plans to skip the GAO and head directly to the Court of Federal Claims.

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  4. Koprince Law LLC
    An agency may modify a contract without running afoul of the Competition in Contracting Act, so long as the the modification is deemed “in scope.” An “out of scope” modification, on the other hand, is improper–and may be protested at GAO.
    In a recent bid protest decision, GAO denied a protest challenging an agency’s modification of a contract where the modification was within scope and of a nature that competitors could have reasonably anticipated at the time of award. In its decision, GAO explained the difference between an in scope and out of scope modification, including the factors GAO will use to determine whether the modification is permissible.

    The GAO’s decision in Zodiac of North America, Inc., B-414260 (Mar. 28, 2017), involved a U.S. Army Contracting Command solicitation for a contractor to produce a seven-person inflatable combat raiding craft (I-CRC) and a 15-person inflatable combat assault craft (I-CAC). The Army initially issued the solicitation in February 2013.
    The solicitation included purchase descriptions, which set forth the product requirements for the boats and motors. Specifically, the submersible outboard motors for the I-CRC and I-CAC required “they propel a fully-loaded craft (2,120 pounds and 4,000 pounds, respectively) at 16 knots during sea state 1 (calm water) within two minutes.” As part of the solicitation, offerors were also informed that they were required to provide two units of each the I-CRC and I-CAC for article testing in accordance with FAR 52.209-4. If the government disapproved the first article, upon the government’s request, the contractor was required to make any necessary changes, modifications, or repairs to the first article or select another first article for testing.
    The Army evaluated proposals and awarded the contract. Zodiac, an unsuccessful offeror, protested the award to GAO arguing that the Army should have found the awardee’s proposal technically unacceptable because the awardee’s proposed boats were insufficient to meet the speed requirements detailed by the solicitation. GAO denied the protest in Zodiac of North America, B-409084 et al. (Jan. 17, 2014) finding that Zodiac had proposed the same motors as the awardee, and the Army had reasonably relied on the awardee’s test reports demonstrating the product’s compliance with the solicitation’s speed requirements.
    Likely unsatisfied with GAO’s decision, Zodiac subsequently filed a Freedom of Information Act request in October 2016. Through this request, Zodiac learned the Army had modified the contract requirements after the awardee twice failed product testing. The modification revised both the purchase description for the boats and the motors. It resulted in a 10 percent reduction in the propeller weight of the motors, a three-inch dimensional increase in the hard deck floor and storage bag, and removal of the airborne transportability requirement. Believing these revisions of the contract terms amounted to an improper sole source award contract, Zodiac protested again.
    GAO explained that the Competition in Contracting Act ordinarily requires “the use of competitive procedures” to award government work. However, “[o]nce a contract is awarded…[it] will generally not review modifications to the contract because such matters are related to contract administration and are beyond the scope of [its] bid protest function.”
    While a modification that changes the contract’s scope of work is an exception to this rule, such a modification is only objectionable where there is a “material difference” between the modified contract and the original contract. A material difference exists when “a contract is so substantially changed by the modification that the original and modified contracts are essentially and materially different.” A material difference typically arises when an agency enlarges a contract’s scope of work, the relaxation of contract requirements post-award (as alleged by Zodiac) can also be a material difference.
    In assessing whether there is a material difference, GAO will look to:
    “[T]he extent of any changes in the type of work, performance period, and costs between the modification and the original contract, as well as whether the original solicitation adequately advised offerors of the potential for the change or whether the change was the type that reasonably could have been anticipated, and whether the modification materially changed the field of competition for the requirement.”
    In this case, considering these factors, GAO found that the modification did not substantially change the scope of the original contract, competitors for the initial solicitation could have reasonably anticipated the changes to the contract, and the changes to the contract would not have had a substantial impact on the field of competition for the original contract award. Importantly, the deliverables still functioned as seven-person I-CRCs and 15-person I-CACs, and the awardee remained subject to the same performance period. GAO held that there was not a material difference, and denied Zodiac’s protest.
    Zodiac of North America is a useful primer on when a modification crosses the line into an improper sole source award. As demonstrated in Zodiac, the key is whether there is a material difference between the modified contract and the awarded contract.

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  5. Koprince Law LLC
    With the ongoing rise of technology in the workplace, safe email practices are increasingly important. In particular, many in the cybersecurity community are concerned about email attachments and spam. Even so, in Information Unlimited, Inc., B-415716.40 (Oct. 4, 2019), GAO warned protesters not to delay in opening email attachments provided by the government.
    Information Unlimited Inc. (IUI) submitted a bid on an RFP for the Air Force’s Small Business Enterprise Application Solutions (SBEAS) IDIQ in 2018. Generally, the SBEAS IDIQ is dedicated to procuring IT services. After preliminary review of the proposals it received, the Air Force emailed IUI on December 21, 2018. Attached to the email was a notification, informing IUI that its proposal had been removed from the competition because it was deemed technically unacceptable. The attached notice also stated that the company could request a debriefing, as required under FAR Part 15. As we have discussed before on this blog, though debriefing under FAR Part 15 is mandatory, it is not automatic, and bidders must act quickly to ensure that they receive a debriefing.
    Here, the Air Force attachment informed IUI that it must request a debriefing in writing within three days of receiving the email, as explained in FAR 15.506. IUI read the notice attachment and did as required and requested its debriefing on the day it received the email. In response, the Air Force provided IUI’s debriefing as two attachments to another email less than three hours later. Unfortunately, the attachments were left unopened.
    A few months later, in February 2019, IUI informed the Air Force that it hadn’t yet received the debriefing and asked when the debriefing would be. Likely perplexed, the Air Force responded that it had sent the debriefing as email attachments back in December. IUI was silent for more than six months, but on August 23, sent the Air Force another email asking for its debriefing, indicating once again that it had never been received. While the decision doesn’t make clear exactly what had happened to the “missing” (or uponed) attachments, after much back and forth, an Air Force official called IUI to explain how to open the debriefing email attachments on August 30.
    On September 9, IUI filed a protest contesting the Air Force’s technical evaluation of its proposal. In particular, it argued that the protest was timely because it had not been able to access the debriefing until August 30. Unfortunately for IUI, GAO was not sympathetic to its argument.   
    GAO scolded IUI for failing to contact the Air Force about its failure to receive, or inability to open, the emailed debrief attachments, within a reasonable period of time. “A protester may not passively await information providing a basis for protest,” explained GAO. Instead, “a protester has an obligation to diligently pursue such information.”
    Here, GAO summarized that “the protester waited over 7 months to receive its debriefing.” GAO noted that while “IUI responded promptly to the emails it did receive . . . the fact remains that a protester has an affirmative obligation to diligently pursue information providing a basis for its protest.” All in all, GAO dismissed the protest as untimely.
    There are two essential takeaways from this decision:
    First, it is incredibly important for potential protesters to stay on the ball when it comes to requesting, and receiving, their FAR Part 15 debriefings. Though it may feel annoying to continually pester contracting officers, its also important to confirm when you should expect your mandatory debriefing. Upon receipt, the 10-day protest timeclock starts ticking, so time is of the essence.
    Second, keep checking that spam folder, especially when you are expecting emails from an agency! While protesters may encounter issues opening or receiving email attachments, this is no defense at GAO. As we have previously discussed a number of times (here, here, here, here, and here, for example), GAO won’t give you a pass if an agency email gets trapped in email No Man’s Land or goes unopened.
    After opening Government emails, contact Koprince Law if you think you might have grounds to protest! We’re here to help.

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  6. Koprince Law LLC
    A “similarly situated entity” cannot be an ostensible subcontractor under the SBA’s affiliation rules.
    In a recent size appeal decision, the SBA Office of Hearings and Appeals confirmed that changes made to the SBA’s size regulations in 2016 exempt similarly situated entities from ostensible subcontractor affiliation.

    OHA’s decision in Size Appeal of The Frontline Group, SBA No. SIZ-5860 (2017) involved an Air Force solicitation for the alteration and fitting of uniforms.  The solicitation was issued as a small business set-aside under NAICS code 811490 (Other Personal and Household Goods Repair and Maintenance), with a corresponding $7.5 million size standard.
    After evaluating proposals, the Air Force announced that DAK Resources, Inc. was the apparent successful offeror.  An unsuccessful competitor, The Frontline Group, then filed a size protest.  Frontline contended that DAK was affiliated with its subcontractor, Tech Systems Inc., under the SBA’s ostensible subcontractor affiliation rule.
    The ostensible subcontractor affiliation rule provides that a prime contractor is affiliated with its subcontractor where the subcontractor is performing the “primary and vital” portions of the work, or where the prime is “unusually reliant” on the subcontractor.  However, in June 2016, the SBA amended the ostensible subcontractor regulation, 13 C.F.R. 121.103(h)(4), to specify that “[a]n ostensible subcontractor is a subcontractor that is not a similarly situated entity,” as that term is defined in 13 C.F.R. 125.1.
    The SBA Area Office determined that the subcontractor, TSI, was a small business under NAICS code 811490.  Accordingly, the SBA Area Office found that TSI was a similarly situated entity, and exempt from being considered an ostensible subcontractor.  The SBA Area Office issued a size determination finding DAK to be an eligible small business.
    Frontline filed a size appeal with OHA, challenging the SBA Area Office’s determination.
    OHA noted that the SBA had amended the ostensible subcontractor affiliation rule in 2016 to exempt similarly situated entities.  OHA then wrote that “there is no dispute that DAK, the prime contractor, is small, and no dispute that the subject procurement was set aside for small businesses.”  Further, “DAK and TSI will perform the same type of work on this procurement, and no party contends that the subcontract would be governed by a different NAICS code or size standard than the prime contract.”
    OHA determined that the SBA Area Office had correctly found TSI to be a similarly situated entity, exempt from consideration as an ostensible subcontractor.  OHA denied Frontline’s size appeal.
    The Frontline Group confirms that the SBA’s regulatory exemption for similarly situated entities is now in effect.  When a subcontractor qualifies as a similarly situated entity, it is not an ostensible subcontractor.

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  7. Koprince Law LLC
    Contrary to a common misconception, an offeror is not automatically entitled to “use” the past performance of parent companies, sister companies or other corporate affiliates. So when can an offeror rely on the past performance of an affiliate in submitting a proposal?
    A recent GAO opinion sheds some light on that question. Not meeting the GAO’s guidelines for describing the detailed involvement of the affiliate can have a harsh result—a sustained protest if award was made based on the affiliate’s past performance.

    In Language Select LLP, B-415097.2 (Nov 14, 2017), GAO considered the Social Security Administration’s issuance of a Federal Supply Schedule blanket purchase agreement to Cyracom International, Inc. for worldwide telephone interpreter services. The underlying Solicitation was based on best value, considering the factors of corporate experience (the most important factor), past performance, and evaluated price.
    Under corporate experience, vendors were to provide a “complete and full description” of three contracts demonstrating the firm’s relevant experience and how these contracts were “similar in size, scope, and complexity to the RFQ requirement.”
    Past performance ratings would be based on having each client from the three corporate experience contracts submit a completed past performance questionnaire form to SSA. SSA could contract the references and obtain past performance information from other sources. SSA would base its evaluation “‘in part’ by assessing the firm’s quality of service, its timeliness of performance, its management of personnel, and its business relations.”
    About a month before the evaluation was finalized, SSA contacted Cyracom for an explanation of the relationship between it and another entity (the name was redacted in the opinion but was referred to as Cyracom Affiliate), because Cyracom had listed the Cyracom Affiliate’s name on the past performance contracts. 
    Cyracom responded that Cyracom Affiliate was a wholly-owned subsidiary of Cyracom, that “its services are provided and managed by the parent company,” and that Cyracom “uses its divisions ‘[Cyracom Affiliate]’ and ‘CyraCom’ for marketing to different industries.”
    In evaluating the proposal of Language Select LLP, which was the incumbent contractor, SSA rated its corporate experience as “good.” For Language Select’s past performance, SSA reviewed FAPIIS/PPIRS information, past performance questionnaires, and SSA reports on incumbent performance. SSA identified one termination for cause from FEMA, and weighing this termination for cause against the multiple strengths, it assigned a “very good” rating for past performance.
    For Cyracom, SSA assigned a “satisfactory” rating for the corporate experience factor, taking into account the similarities of the contracts submitted in terms of scope and complexity. However, SSA found weaknesses because the contracts were smaller than SSA’s requirement. For Cyracom’s past performance, SSA noted that each prior contract was identified as performed by Cyracom Affiliate, rather than Cyracom. SSA noted that Cyracom Affiliate was a wholly-owned subsidiary of Cyracom and that its services were “provided and managed by the parent company.” There was one termination for cause in Cyracom’s past performance record, which the evaluation panel deemed a “minor problem.”
    The summary of the adjectival ratings and prices were;
    Language Select: Corporate Experience – Good, Past Performance – Very Good, Price $34.7 million. Cyracom: Corporate Experience – Satisfactory, Past Performance – Very Good, Price $29.9 million. Noting that the price difference of 13.65 percent outweighed the minimal risk of awarding to Cyracom, the contracting officer awarded the contract to Cyracom.
    Language Select protested the award, arguing that the SSA engaged in unequal discussions when it asked Cyracom for its relationship to the Cyracom Affiliate. SSA argued that the question to Cyracom was just a clarification, as it had already deduced that the Cyracom Affiliate was affiliated with Cyracom based on “the fact that CII’s quotation was printed on stationery that depicted an affiliation, and that information available online did also.” 
    GAO noted, with respect to affiliation, that
    GAO concluded that, when SSA sought an explanation of the role of the Cyracom Affiliate, it constituted discussions. Since Language Select did not receive an equivalent opportunity, SSA did not conduct discussions fairly and equally. 
    Language Select also challenged the reasonableness of SSA’s past performance and experience evaluation, arguing that it was improper for SSA to attribute the Cyracom Affiliate’s experience to Cyracom. SSA argued that it is sufficient that an affiliate “shares management with the offeror” or where “the parent company manages the entire corporate family.” GAO disagreed, noting that “[a]bsent a factual basis to conclude that the awardee had a commitment of resources from other separate corporate subsidiaries, we found the attribution of those affiliates’ past performance and experience to the awardee to be improper.”
    GAO held that the stationary and online information showing the affiliate relationship and the statement by Cyracom that the Cyracom Affiliate “was a wholly-owned subsidiary and that its services were ‘provided and managed by'” Cyracom was not enough to demonstrate the factual basis.
    This decision is important because it sets guidelines for evaluating past performance based on affiliates. Generally, in preparing a proposal that uses affiliate past performance, the offeror must clearly demonstrate the factual basis for how the affiliate will be involved in performance and how the affiliate will share resources with the offeror. Merely noting the affiliation between the offeror and the affiliate is not sufficient for use of an affiliate’s past performance.

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  8. Koprince Law LLC
    Contrary to a common misconception, an offeror is not automatically entitled to “use” the past performance of parent companies, sister companies or other corporate affiliates. So when can an offeror rely on the past performance of an affiliate in submitting a proposal?
    A recent GAO opinion sheds some light on that question. Not meeting the GAO’s guidelines for describing the detailed involvement of the affiliate can have a harsh result—a sustained protest if award was made based on the affiliate’s past performance.

    In Language Select LLP, B-415097.2 (Nov 14, 2017), GAO considered the Social Security Administration’s issuance of a Federal Supply Schedule blanket purchase agreement to Cyracom International, Inc. for worldwide telephone interpreter services. The underlying Solicitation was based on best value, considering the factors of corporate experience (the most important factor), past performance, and evaluated price.
    Under corporate experience, vendors were to provide a “complete and full description” of three contracts demonstrating the firm’s relevant experience and how these contracts were “similar in size, scope, and complexity to the RFQ requirement.”
    Past performance ratings would be based on having each client from the three corporate experience contracts submit a completed past performance questionnaire form to SSA. SSA could contract the references and obtain past performance information from other sources. SSA would base its evaluation “‘in part’ by assessing the firm’s quality of service, its timeliness of performance, its management of personnel, and its business relations.”
    About a month before the evaluation was finalized, SSA contacted Cyracom for an explanation of the relationship between it and another entity (the name was redacted in the opinion but was referred to as Cyracom Affiliate), because Cyracom had listed the Cyracom Affiliate’s name on the past performance contracts. 
    Cyracom responded that Cyracom Affiliate was a wholly-owned subsidiary of Cyracom, that “its services are provided and managed by the parent company,” and that Cyracom “uses its divisions ‘[Cyracom Affiliate]’ and ‘CyraCom’ for marketing to different industries.”
    In evaluating the proposal of Language Select LLP, which was the incumbent contractor, SSA rated its corporate experience as “good.” For Language Select’s past performance, SSA reviewed FAPIIS/PPIRS information, past performance questionnaires, and SSA reports on incumbent performance. SSA identified one termination for cause from FEMA, and weighing this termination for cause against the multiple strengths, it assigned a “very good” rating for past performance.
    For Cyracom, SSA assigned a “satisfactory” rating for the corporate experience factor, taking into account the similarities of the contracts submitted in terms of scope and complexity. However, SSA found weaknesses because the contracts were smaller than SSA’s requirement. For Cyracom’s past performance, SSA noted that each prior contract was identified as performed by Cyracom Affiliate, rather than Cyracom. SSA noted that Cyracom Affiliate was a wholly-owned subsidiary of Cyracom and that its services were “provided and managed by the parent company.” There was one termination for cause in Cyracom’s past performance record, which the evaluation panel deemed a “minor problem.”
    The summary of the adjectival ratings and prices were;
    Language Select: Corporate Experience – Good, Past Performance – Very Good, Price $34.7 million. Cyracom: Corporate Experience – Satisfactory, Past Performance – Very Good, Price $29.9 million. Noting that the price difference of 13.65 percent outweighed the minimal risk of awarding to Cyracom, the contracting officer awarded the contract to Cyracom.
    Language Select protested the award, arguing that the SSA engaged in unequal discussions when it asked Cyracom for its relationship to the Cyracom Affiliate. SSA argued that the question to Cyracom was just a clarification, as it had already deduced that the Cyracom Affiliate was affiliated with Cyracom based on “the fact that CII’s quotation was printed on stationery that depicted an affiliation, and that information available online did also.” 
    GAO noted, with respect to affiliation, that
    GAO concluded that, when SSA sought an explanation of the role of the Cyracom Affiliate, it constituted discussions. Since Language Select did not receive an equivalent opportunity, SSA did not conduct discussions fairly and equally. 
    Language Select also challenged the reasonableness of SSA’s past performance and experience evaluation, arguing that it was improper for SSA to attribute the Cyracom Affiliate’s experience to Cyracom. SSA argued that it is sufficient that an affiliate “shares management with the offeror” or where “the parent company manages the entire corporate family.” GAO disagreed, noting that “[a]bsent a factual basis to conclude that the awardee had a commitment of resources from other separate corporate subsidiaries, we found the attribution of those affiliates’ past performance and experience to the awardee to be improper.”
    GAO held that the stationary and online information showing the affiliate relationship and the statement by Cyracom that the Cyracom Affiliate “was a wholly-owned subsidiary and that its services were ‘provided and managed by'” Cyracom was not enough to demonstrate the factual basis.
    This decision is important because it sets guidelines for evaluating past performance based on affiliates. Generally, in preparing a proposal that uses affiliate past performance, the offeror must clearly demonstrate the factual basis for how the affiliate will be involved in performance and how the affiliate will share resources with the offeror. Merely noting the affiliation between the offeror and the affiliate is not sufficient for use of an affiliate’s past performance.

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  9. Koprince Law LLC
    The first step in competing for a federal contract is knowing that an opportunity exists in the first place. In a recent protest, a contractor argued it was not able to find an opportunity despite routinely searching the appropriate federal procurement opportunity system, e-Buy. Thus, according to the protesting company, the procurement was not properly publicized and the award was improper. GAO did not agree.
    CC&C Management Services, LLC, B-417594 (Comp. Gen. Aug. 28, 2019), involved a VA procurement for furniture storage, moving, and installation services. The resulting contract would have a one-year base period with 3 one-year option periods.
    The solicitation was competed among GSA Federal Supply Schedule (FSS) contract holders. The FSS is a federal procurement program administered by the GSA that is designed to simplify acquisitions for common commercial items and services. Contractors are awarded contracts for specific schedules corresponding to specified types of goods and services. Federal executive agencies may compete orders among schedule contract holders for specified goods and services.
    Importantly, competitive FSS contact opportunities are posted to the e-Buy system, which is an online procurement opportunity tool much like FedBizOpps.gov. Unique opportunities are posted to the system, and offerors holding the required schedule and meeting any socioeconomic set-aside designation can submit bids.
    As relevant here, the VA issued the Solicitation on e-Buy to holders of Schedule 48 contracts. Shortly after issuing the Solicitation, however, a GSA representative notified the VA contracting officer that GSA Schedule 48 was slated to expire before the proposal submission deadline.
    In light of the expiration of Schedule 48, the VA cancelled the solicitation, and reissued it under two different FSS schedules: Schedule 71 II K, and Schedule 00CORP. The listing for both Schedule 71 II K and Schedule 00CORP were posted to e-Buy.
    The VA received two proposals in response to the Solicitation. CC&C submitted a proposal under the Schedule 00CORP listing. A competitor, B&M Construction, Inc., submitted a separate proposal under the Schedule 71 II K listing. The VA awarded the contract to B&M under its Schedule 71 II K contract.
    CC&C subsequently protested the award to B&M. While CC&C raised issues with the technical evaluation, its principal challenge was that the VA awarded the contract under an FSS schedule that it did not compete the work under. To support this allegation, a CC&C employee attested that “[d]uring the relevant time period in June-July 2018, CC&C had two managers monitoring the [e-Buy] portal for [Schedule 71 II K] daily, and the [RFQ] did not appear under that Schedule.”
    According to CC&C, the VA’s posting failed to comply with the material terms of FAR 8.405-2(c)(3)(iii)(A), which requires contracting officers to “[p]ost the RFQ on e-Buy to afford all schedule contractors offering the required services under the appropriate multiple-award schedule(s) an opportunity to submit a quote[.]” CC&C alleged the VA either didn’t post the Schedule 71 II K listing to e-Buy, or failed to ensure that eligible offerors like CC&C could view the listing. In either instance, argued CC&C, the VA’s actions (or inaction) posting the RFQ violated FAR FAR 8.405-2(c)(3)(iii)(A).
    In response, the VA produced screen captures of the Schedule 71 II K listing on e-Buy. It also provided sworn statements of the contracting officer describing the other efforts undertaken to distribute the Schedule 71 II K listing, which included sending a notification of the posting to all eligible offerors under the Schedule.
    Ultimately, GAO concluded that the VA had complied with the publication requirements of FAR 8.405-2(c)(3)(iii)(A). To reach this conclusion, GAO first dispensed with CC&C’s argument that the Schedule 71 II K listing was never posted to e-Buy:
    GAO then turned to the allegation that the VA was nevertheless responsible for ensuring CC&C had knowledge of the posting, and it was similarly unpersuaded. GAO began by noting that FAR 8.405-2(c)(3)(iii)(A) merely requires contracting officers to post opportunities. The web captures the VA provided confirmed such publication happened. GAO then explained that the VA had no duty to ensure CC&C was aware of the opportunity.
    Consequently, GAO denied the protest. GAO’s decision in CC&C highlights that one of the biggest challenges facing government contractors is identifying opportunities in the first place. Unfortunately, GAO’s decision placed the onus of finding specific contract opportunities squarely on the shoulders of contractors.

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  10. Koprince Law LLC
    Most federal contracts are structured with a base period with a number of option periods that can be exercised at the agency’s discretion. But what happens if an option year goes unexercised? Recently, a disappointed contractor attempted to challenge the agency’s decision not to exercise an option before GAO. Unfortunately, GAO was not receptive.
    Arch Systems, LLC, B-417567 et al. (July 2, 2019), involved a task order procurement conducted by the Department of Health and Human Services (“HHS”) for continuous testing services of its major software systems. The base performance period of the task order was from July 2, 2018, through July 1. 2019. The task order also included 4 one-year option periods.
    Arch was named the awardee of the task order and undertook performance. Unfortunately, Arch encountered performance difficulties. As a result, HHS elected not to exercise any of the option periods under Arch’s task order. Arch later learned HHS anticipated awarding a short-term contract to an 8(a) contractor while it prepared a competitive procurement to resolicit the services.
    Arch subsequently protested both HHS’s decision not to exercise the options under its contract and the award of the short-term contract to the 8(a) participant. 
    In response, HHS requested the protest be dismissed because it involved a matter of contract administration. HHS’s position for requesting dismissal was a strong one. GAO’s bid protest regulations allow it to consider challenges of “an award or proposed award of . . . a contract[.]” 4 C.F.R. § 21.1(a). Its bid protest regulations further clarify that “[t]he administration of an existing contract is within the discretion of the agency[]” and not subject to review by GAO. 4 C.F.R. § 21.5(a). 
    Given this regulatory backdrop, GAO has consistently understood its authority to be limited to issues surrounding award, not matters of contract administration after performance has begun. As GAO explained, “we generally do not review matters of contract administration, which are within the discretion of the contracting agency and for review by a cognizant board of contract appeals or court.”
    Despite the strong basis for dismissal presented by the agency, Arch attempted to argue that its protest should nevertheless be heard. To build its argument, Arch cited to an earlier GAO decision, Mine Safety Appliances Co. B-238597 et al. (July 5, 1990). That case involved a procurement for prototype production. Two contractors were awarded contracts for prototype production, and both contracts included option quantities for initial production. After evaluating the prototypes, the agency exercised only one contractor’s option period. The other contractor protested and GAO took jurisdiction over the issue because—according to GAO—the procuring agency was actually conducting a limited procurement for production between the two prototype producers. 
    Arch argued the present situation was analogous to Mine Safety Appliances, and GAO had jurisdiction to hear its challenge. GAO was not convinced. As GAO explained, “the agency is not conducting a limited competition; instead the agency is acting within its broad discretion to administer its existing contract with Arch.” Consequently, GAO concluded that “[Arch’s] circumstances are not factually or legally similar to those addressed in Mine Safety Appliances, and related decisions.” Arch’s protest regarding its option period was thus denied.
    Given all of the indications that a GAO protest would not be heard, why did Arch pursue a challenge before GAO? It may be because challenging the decision not to exercise an option at the Boards of Contract Appeals is an exceedingly difficult proposition. A contractor must either show an abuse of discretion or bad faith on behalf of the agency. Proving either of these is exceedingly difficult to do. As such, pursuing a claim appeal before one of the boards of contract appeals may have been an even worse option.
    Regardless, GAO’s decision in Arch makes it clear that no matter how adverse the law may be at the boards of contract appeals, GAO is still not going to consider protests of options because they are matters of contract administration outside of its jurisdiction.

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  11. Koprince Law LLC
    Beginning January 30, 2022, all prime contractors and subcontractors doing work on a government contract will be required to pay workers at least $15 per hour, based on a recent executive order.
    The executive order does not stop there, beginning in 2023 the wage will go up annually. When can we expect formal guidance to come out, and what other items are found in the text?
    The executive order itself takes effect immediately, but don’t expect to hear any specifics until later this year. The Secretary of Labor shall issue regulations by November 24, 2021, giving a framework for implementing these new wage rules. Within 60 days after that, the FAR will be amended to include these new regulations.
    It is unclear whether the public will get a comment period regarding the proposed regulations, but my suspicion is that comments will be noted, and the regulation will take full effect as planned.
    A big question I had going in, “is this executive order retroactive?” I think the headache of trying to sort out and enforce this across all existing contracts was a bridge too far, and would be a regulatory nightmare. New contracts entered into on or after January 30, 2022 are subject to the order, as well as option years on existing contracts.
    The $15 number is only a beginning. Each year on January 1, that amount may go up. By how much? The Secretary of Labor will determine the amount, rounded to the nearest nickel. The order states that the wage will be, “increased from such amount by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (United States city average, all items, not seasonally adjusted), or its successor publication, as determined by the Bureau of Labor Statistics.” The new amount will come out at least 90 days prior to taking effect. I would put a calendar reminder to start looking at the end of September 2022.          
    Here is where things get interesting, how will this executive order be enforced? Well, the order states that it creates no rights under the Contract Disputes Act, 41 U.S.C. 7101 et seq. The executive order does give the Secretary of Labor the authority to enforce this order under the regulations. This means that any disputes regarding whether the wages have been paid, will be decided based exclusively by the framework laid out in the regulations.
    As I discussed earlier, the regulations have yet to come out, and we will have approximately 60 days to digest the proposed enforcement mechanisms. While I suspect there will be some form of payment withholding structure built into contracts, unfortunately we will not know until November. Bookmark this blog, and we will see if I was right come Thanksgiving time. Until then, be aware that the government knows this means labor costs will go up on its’ procurements. How this is factored into coefficients, expected costs, price reasonableness, price realism, and other price-related matters developed by the agencies will be trial and error. I expect the bid protest landscape around pricing could be active once this order takes full effect. 2022 promises to be active, stay tuned for updates.
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    The post $15 Minimum Wage Coming to Federal Contracting in 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  12. Koprince Law LLC
    The SBA published its annual Government Wide Small Business Procurement Scorecard for fiscal year 2022, and it appears that nearly every type of small business set-aside by the SBA, with the continued exception for Woman-Owned Small Businesses and HUBZone businesses, either met or exceeded their goal. Overall, agencies exceeded their goals for the year, earning an overall score of “A” due to meeting the small business contracting goals with 104.05% of the total goal.
    In case you have never heard of these scorecards in the past, the annual scorecard details information on the various categories of small businesses recognized by the SBA. 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.” 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 $162.9 billion of federal contracting dollars directed toward small business prime contractors. This represented 26.5% of federal contracting dollars spent in 2022, whether small or other, and 69.13% of the $305.3 billion federal contracting dollars spent on small business prime contractors of all categories, and exceeded the goal of 23%. Notably, even though this exceeded the small business contracting goal of 23% set for 2022, it fell short of 2021 numbers by .73%.
    The next-largest grouping was once again small disadvantaged businesses, including those in the 8(a) Program, which received $69.9 billion, or 11.38% of all federal contracting dollars, surpassing its goal of 11%.
    In third place came service-disabled veteran owned small businesses (SDVOSB), which also exceeded its 3% goal for the year with $28.1 billion, or 4.57% of all federal contracting dollars.
    Unfortunately, women owned small businesses (WOSB) and HUBZone businesses, in a continuing trend over the past decade, fell short of their goals. WOSB’s goal for fiscal year 2022 came in at $28.1 billion, or 4.57%, a small percentage short of its 2021 achievement, and nearly half a percentage under its 5% goal. This means that agencies, as a whole, did not reach their WOSB goal for the tenth year in a row.
    Finally, HUBZone businesses, though not meeting their goal, was closer to meeting its goal than WOSBs, coming in at $16.3 billion, or 2.65% in fiscal year 2021. This is the 11th year in a row that HUBZone goals have not been achieved.
    The overall number of small businesses continued to decrease as well. Small businesses that do not fit into another category, which decreased 5.85% in 2021, fell another 4.22% in 2022. The category with the largest decrease was, surprisingly, SDVOSBs, which despite their historical trend of gains, sustained a 2.52% decrease. HUBZone decreased by 2.07%, and WOSBs decreased by 2.43%. The only increase was in the small disadvantaged business category, which increased by a measly .09%.
    Overall, the agency-specific score cards show that general agency performance is strong and, despite small decreases to the number of contractors in all but one category, agencies are overall performing on target with the small business contracting goals. While 2021 had increases in nearly all categories, potentially due to an economy recovering from the COVID-19 pandemic, it is possible that this is an indicator of a market coming into equilibrium after the roller coaster of an economy felt globally over the past three years. However, there are still a few outliers, both on the good side and the bad. The Department of Veterans Affairs was the lowest scoring agency, with a score of 79.88%, followed by the Department of Health and Human Services, which received a score of 87.83%. Interestingly, the worst offender in 2021 became the highest-scoring agency in 2022. The Department of Housing and Urban Development (HUD) which received a “C” in 2021, received an “A+” in 2022, with a score of 152.3%.
    Taken as a whole, more agencies met their goals in the 2022 fiscal year than in 2021. More federal contracting dollars were directed towards small businesses as well, demonstrating a generally positive overall outlook.
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    The post $162B in Small Business Contracts: SBA Releases Small Business Scorecards for FY 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  13. Koprince Law LLC
    Whether you are a small, medium or even a large contractor seeking to team with small businesses, this course will discuss the different regulations you must follow, the different small business programs set up by the SBA, the advantages and disadvantages of the JV & Mentor Protégé programs, plus other topics of interest. This live virtual event will be hosted by Larry Allen and Nicole Pottroff and Stephanie Ellis will be joining Larry for the afternoon session. We hope you will consider attending this informative event! Register here.
    The post 1 Day Virtual Event! The Essentials for Small Business Government Contracting, February 29, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  14. Koprince Law LLC
    This is it: the 1,000th SmallGovCon post.  And if you’re reading this, you are a big reason why we’ve hit such a major milestone in less than five years.
    Thank you, SmallGovCon readers.

    Before I launched SmallGovCon, I thought it would be a good idea to read a bunch of other legal blogs, just to get a sense of how others were doing it.  A few hours in, and I was ready to beat my head against the nearest wall.  While, in fairness, a few of the blogs were quite good, most of them were pretty darn rough.  These not-so-great blogs proved quite inspirational, however: I figured out what annoyed me about them, and resolved to do the exact opposite.
    First things first: most of these legal blogs were chock full of unnecessary legalese, arcane Latin phrases, cumbersome in-text citations, and the like.  Sure, we lawyers spend three years in law school learning to read this stuff, but to a regular person, there’s not a whole lot of difference between Legalese and Klingon.  I decided that, because SmallGovCon‘s intended audience was smart government contractors and acquisition professionals–not Ruth Bader Ginsburg–I would write SmallGovCon in plain English.  (And if you are into random jargon, well, there are other websites for that).
    The next thing I noticed was that most of these blogs suffered from a serious lack of personality.  Were the authors actual human beings, or jargon-spouting lawyer robots?  Sometimes, it was hard to tell.  I happen to own this shirt, which expresses an important fact about lawyers: we’re people!  Seriously!  In honor of my membership in the human race, I decided that I occasionally would subject SmallGovCon‘s readers to random musings about things near and dear to my heart, like my kids and the Chicago Cubs.  But beyond that, I decided that SmallGovCon wouldn’t be afraid to express a point of view, like we did throughout our coverage of the Kingdomware saga.
    During my “blog due diligence,” it also quickly became clear that many of these blogs were updated about as often as the Cleveland Browns make the playoffs.  That is to say, infrequently.  It’s hard to imagine becoming a go-to website in any field–much less a rapidly-changing field like government contracts law–without publishing often.  Would you visit a website with a tagline like “Your Seasonal Guide to a Few Random Things Happening in Government Contracts”?  Yeah, me neither.  So I decided to publish frequently.
    Due diligence complete, I launched the blog in late May 2012.  One big question remained: would anyone read it?  Was there an audience for a niche blog on government contracts law?
    Hundreds of thousands of page views later, I’ve got my answer.  But the feedback that matters most isn’t from Google Analytics.  It’s from the readers I meet at industry events across the country, who approach me–completely unsolicited–to say how much they enjoy the blog and our free electronic newsletter.  It’s from the readers who take the time to email me to thank me for a particular post, or ask a follow-up question.  It’s from my many LinkedIn connections, who frequently comment on blog posts and spark insightful discussions.  Thanks to you, dear readers, I know that SmallGovCon serves an important role in the procurement community–and that’s what matters most to me.
    Of course, SmallGovCon has grown and changed throughout the last several years, too.  My fantastic colleagues at Koprince Law LLC have become co-authors, which has allowed us to broaden our coverage.  We added our “Week In Review” feature to help update readers on important government contracting news.  We recently kicked off our GovCon Voices series to offer perspectives from non-attorney thought leaders.  I’m proud of SmallGovCon, but we’re not resting on our laurels.  My colleagues and I will continue to work to make the site even better.
    The first 1,000 posts have come quickly.  Thank you very much for reading.  I hope you’ll stick with us for the next 1,000.

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  15. Koprince Law LLC
    In August, I wrote about a highly unusual case in which a company–which had filed 150 protests in the current fiscal year–was suspended from filing GAO bid protests for one year. I recently spoke with Tom Temin on his radio show Federal Drive to talk about GAO’s  decision.
    If you missed the live conversation, you can click here to listen to the recorded audio from Federal News Radio. And be sure to tune in to Federal Drive with Tom Temin, which airs from 6-10 a.m EST on 1500 AM in the Washington, DC region and online everywhere.

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  16. Koprince Law LLC
    Citing an abuse of the protest process, the GAO has suspended a company’s right to file bid protests for a period of one year.
    The GAO’s unusual action was taken after the contractor in question filed 150 bid protests in the ongoing fiscal year alone, most of which have been dismissed for technical reasons.  The GAO’s decision also cites “baseless accusations” made by the protester, including accusing GAO officials of being “white collar criminals” and asserting that “various federal officials have engaged in treason.”

    The GAO’s decision in Latvian Connection LLC, B-413442 (Aug. 18, 2016) arose under a task order issued by DISA to ManTech Advanced Information Systems, Inc. for engineering services.  The task order in question was issued in 2013, and ManTech completed full performance on January 31, 2016.
    After ManTech had completed full performance, Latvian Connection LLC filed a bid protest challenging the task order award.  Latvian Connection alleged that DISA had erred by failing to issue the task order solicitation as a small business set-aside and by failing to publish the solicitation on the FedBizOpps website.
    Apparently, this particular protest was the proverbial straw that broke the camel’s back.  While the GAO’s decision addressed the particular task order in question, the GAO focused in large part on Latvian Connection’s widespread use of the protest process.
    The GAO started by explaining that “our records show that, thus far this fiscal year, Latvian Connection has filed 150 protests with our Office.”  Of those protests, 131 have been decided: one was denied on the merits, and “[t]he remaining protests were dismissed, the most common reason being that Latvian Connection was not an interested party.”  Further, “[a] number of Latvian Connection’s most recent protests, like the instant protest, have been attempts to challenge acquisitions where the contract in question was awarded years ago.”
    But it wasn’t just the number and nature of Latvian Connection’s many protests that drew the GAO’s ire; the GAO also found the content of those protests troubling.  The GAO wrote that “Latvian Connection’s protests are typically a collection of excerpts cut and pasted from a wide range of documents having varying degrees of relevance to the procurements at issue, interspersed with remarks from the protester.  The tone of the filings is derogatory and abusive towards both agency officials and GAO attorneys.”  The GAO continued:
    While its protests typically revolve around the two central issues noted above, Latvian Connection also routinely makes baseless accusations.  In recent months, Latvian Connection has claimed that agency and GAO officials are white collar criminals; that the actions of agency procurement officials have violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968; that various federal agency officials have engaged in treason; that GAO has violated the Equal Access to Justice Act, 5 U.S.C.§ 504; and that agency and GAO officials have engaged in activities that amount either to engaging in, or covering up, human trafficking and slavery.
    The GAO dismissed the protest against the ManTech contract award both for lack of standing and lack of jurisdiction.  The GAO then turned again to Latvian Connection’s protest history.  The GAO noted that, although Latvian Connection had protested hundreds of acquisitions under which the government has sought a wide variety of goods and services, “[p]ublicly available information provides no evidence that Latvian Connection has successfully performed even a single government contract, and there is no evidence in the many cases presented to our Office to suggest that Latvian Connection engages in any government business activity whatsoever beyond the filing of protests.”  The GAO then stated:
    The wasted effort related to Latvian Connection’s filings is highlighted by its latest series of protests (including the current protest) challenging acquisitions that were conducted years ago, where performance is complete and there is no possible remedy available. These protests have placed a burden on GAO, the agencies whose procurements have been challenged, and the taxpayers, who ultimately bear the costs of the government’s protest-related activities.  When presented with evidence, as here, that Latvian Connection does not hold the umbrella ID/IQ contract under which the order was issued, or that the order involves an amount lower than the statutory threshold for GAO’s task order jurisdiction, Latvian repeatedly fails to engage with the issues.  Instead, the company simply files a lengthy, often unrelated, harangue that does not address the threshold issues that must be answered by any forum as part of its review. 
    We conclude that the above-described litigation practices by Latvian Connection constitute an abuse of our process, and we dismiss the protest on this basis.  Although dismissal for abuse of process or other improper behavior before our Office should be employed only in the rarest of cases, it is appropriate here where we find that Latvian Connection’s abusive litigation practices undermine the integrity and effectiveness of our process.
    In addition, the GAO wrote, “because of these abusive litigation practices, and to protect the integrity of our bid protest forum and provide for the orderly and expedited resolution of protests, we are suspending Latvian Connection from protesting to our Office for a period of one year as of the date of this decision.”  The GAO remarked that it does “not take these actions lightly,” but “[n]onetheless, on balance, suspending for one year Latvian Connection’s eligibility to file protests with our Office may incentivize the firm to focus on pursuing legitimate grievances in connection with acquisitions for which there is evidence that Latvian Connection actually is interested in competing.”
    The GAO concluded:
    Our bid protest process does not provide, and was never intended to provide, a platform for the complaints of businesses or individuals that, to all outward appearances, have no actual interest in, or capability to perform, the government contracting opportunities to which they have objected.  Nor, as a forum for the expeditious and inexpensive resolution of bid protests, are we required to endure baseless and abusive accusations.
    A reader of the GAO’s decision might conclude that all of Latvian Connection’s protests have been frivolous.  Not so.  SmallGovCon readers will recall that last year, the GAO actually sustained two of Latvian Connection’s protests, involving FedBid reverse auctions and these decisions established (at least in my eyes) important precedent concerning agencies’ responsibilities when using FedBid.  The GAO also sustained a third Latvian Connection protest in a case confirming that offerors are not presumed to be “on notice” of agency postings on websites other than FedBizOpps.
    In fairness to Latvian Connection, then, it is clear that at least a handful of its many protests have been meritorious.  That said, I can’t begin to imagine why a single company would feel the need to file 150 protests in the span of one not-yet-completed fiscal year.  And while I haven’t had the opportunity to review the contents of Latvian Connection’s protest filings myself, I believe that the protest system works best where the litigants (even though adversarial) treat each other with basic norms of courtesy and respect.  If Latvian Connection failed to meet this standard–as suggested by the various “baseless accusations” referenced in the GAO decision–then that failure alone is detrimental to the protest process.
    The Latvian Connection case may become known for the effect it will have on a single company, but I think it’s broader than that: the GAO knows that allowing abuse of the protest system harms those who use the system in the way it was intended, and risks political intervention that might harm all contractors’ ability to file good faith protests.  And in a world where 45% of GAO protests result in a favorable outcome for the protester, there can be little doubt that the good faith use of the protest system serves an important public purpose.  Contractors can ill afford a Congressional rollback of their protest rights.  As the Latvian Connection case demonstrates, the GAO itself possesses the inherent authority to sanction what it believes to be abuse of the protest system, and will exercise that authority in an appropriate (and rare) case.

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  17. Koprince Law LLC
    Good news for small business looking to break into Department of Defense contracting: the 2017 NDAA establishes a new prototyping pilot program for small businesses and nontraditional defense contractors to develop new and innovative technologies.
    The DoD is putting its money where its mouth is: the new pilot program is funded with $250 million from the rapid prototyping fund established by last year’s NDAA.

    The new pilot program is officially called the “Nontraditional and Small Contractor Innovation Prototyping Program.” Under the program, the authorized funds are to be used to “design, develop, and demonstrate innovative prototype military platforms of significant scope for the purpose of demonstrating new capabilities that could provide alternatives to existing acquisition programs and assets.”
    Congress is relying on the DoD to develop many of the program’s parameters. The 2017 NDAA calls for the Secretary of Defense to submit, with its budget request for Fiscal Year 2018, “a plan to fund and carry out the pilot program in future years.”
    In the meantime, Congress has authorized $50 million to be made available for the following projects in FY 2017:
    (1) Swarming of multiple unmanned air vehicles.
    (2) Unmanned, modular fixed-wing aircraft that can be rapidly adapted to multiple missions and serve as a fifth generation weapons augmentation platform.
    (3) Vertical takeoff and landing tiltrotor aircraft.
    (4) Integration of a directed energy weapon on an air, sea, or ground platform.
    (5) Swarming of multiple unmanned underwater vehicles.
    (6) Commercial small synthetic aperture radar (SAR) satellites with on-board machine learning for automated, real-time feature extraction and predictive analytics.
    (7) Active protection system to defend against rocket-propelled grenades and anti-tank missiles.
    (8) Defense against hypersonic weapons, including sensors.
    (9) Other systems as designated by the Secretary.
    In addition to sounding like something out of a science fiction movie, these categories provide insight into some of Congress’s (and DoD’s) prototyping priorities–particularly those in which small and nontraditional contractors are expected to be able to play an important role.
    The 2017 NDAA authorizes the prototyping program through September 30, 2026. As the Secretary of Defense will not submit its implementation plan for the pilot program until its next budget request, it may take some time before the program hits full stride. In the interim, interested contractors can start positioning themselves to take advantage of this new opportunity.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 appears poised beneath the president’s pen for signing. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next few days, SmallGovCon will delve into the minutia to provide context and analysis so that you do not have to. Visit smallgovcon.com for the latest on the government contracting provisions of the 2017 NDAA. 

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  18. Koprince Law LLC
    The 2017 National Defense Authorization Act gives certain small subcontractors a new tool to request past performance ratings from the government,
    If the pilot program works as intended, it may ultimately improve those subcontractors’ competitiveness for prime contract bids, for which a documented history of past performance is often critical.

    For small contractors looking to break into the federal marketplace, a lack of past performance ratings can be a major problem. Without government past performance ratings, it can be difficult to prevail in a “best value” competition. Sure, FAR 15.305 provides that the government can consider past projects performed for non-governmental entities, and the same FAR section states than an offeror without a record of relevant past performance should receive a “neutral” rating. But ask most contractors, and they’ll tell you that their perception–for better or for worse–is that an offeror without government past performance references can be at a significant competitive disadvantage.
    Perhaps Congress agrees. Section 1822 of the 2017 NDAA creates a pilot program that will allow a “first tier” subcontractor performing on a government contract, which required the prime contractor to develop a subcontracting plan, to submit an application to the appropriate official (agencies will designate a recipient) requesting a past performance rating. Interestingly, the subcontractor will be able to include a suggested rating, but will have to support the suggestion with written evidence, almost as if the subcontractor will have to plead its case. The application will then go to both the agency Office of Small and Disadvantaged Business Utilization and the prime contractor for review. Each will submit an official response within 30 days.
    If the OSDBU and prime contractor agree with the suggested rating, the official simply will enter the rating into the government’s past performance system, and the subcontractor will be able to use the rating “to establish its past performance for a prime contract.”
    However, if they disagree with the subcontractor’s suggested rating, the disagreeing party will submit a notice contesting the application, the official will provide the subcontractor with the notice, and the subcontractor will have 14 days to submit comments, rebuttals, and additional information. But, interestingly, the review will stop there. No decider will determine whether the subcontractor’s proposed rating was “right” or “wrong.” Instead, the official with then enter a neutral rating into the system along with the original application and any responses.
    This pilot program may turn out to be a valuable tool for companies with excellent performance at the subcontract level but little or no prime contract experience. The program’s timing may be fortuitous, as well: it could dovetail nicely with the SBA’s new “All Small” mentor-protege program, as well as the existing SBA 8(a) and DoD mentor-protege programs. As a part of a mentor-protege agreement, a large mentor could subcontract work to the protege, then help the protege apply for (and hopefully receive) an excellent past performance rating for its work.
    However, in practice, there would seem to be a few areas where things may go awry. First, since subcontractors are responsible for suggesting their own ratings, this introduces the obvious potential that a subcontractor could attempt to inflate its score–and put its prime contractor in the difficult position of disagreeing with its teaming partner. Also, on the flip side, the procedure allows for the prime contractor to potentially derail a future competitor by disagreeing with a reasonable suggested rating, and thereby ensure through simple disagreement, at best, a neutral rating. Because there is no adjudicative procedure, the subcontractor seems to have no recourse if the prime contractor doesn’t provide a fair response.
    Then there is the question of why OSDBUs are expected to weigh in on the specific past performance scores assigned to small subcontractors. Agency OSDBUs are advocates for small businesses, and are involved in various ways throughout the acquisition cycle. That said, it seems unlikely that an OSDBU will, in the typical case, have sufficient knowledge of a particular small subcontractor’s quality of performance to pass independent judgment on what past performance score that subcontractor should receive. Involving agency OSDBUs ordinarily is a good thing, but requiring them to pass judgment on a subcontractor’s past performance might not be the best way to go about it.
    Finally, there is the question of just what sort of weight the typical contracting officer will afford to these ratings. Although the rating comes from the contracting agency, the rating itself is established by the subcontractor, prime contractor, and OSDBU. It’s possible that some contracting officers will see these ratings as less persuasive than “ordinary” prime contractor ratings developed by government contracting officials.
    Fortunately, Congress seems to have anticipated that the pilot program might need to be improved. The 2017 NDAA requires the GAO to assess the program one year after it is established and report various findings back to Congress, including “any suggestions or recommendation the Comptroller General has to improve the operation of the pilot program.”
    The statute calls for the SBA to establish the pilot program, but doesn’t provide a specific deadline for the SBA to do so. Once the program is up and running, it will last for three years,, beginning on “the date on which the first applicant small business concern receives a past performance rating for performance as a first tier subcontractor.” At that point, it will be up to Congress whether to continue the pilot program.

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  19. Koprince Law LLC
    The 2017 National Defense Authorization Act establishes a preference for the DoD to use fixed-price contracts, and will require executive approval of cost reimbursement procedures for certain high-dollar procurements.

    Section 829 of the 2017 NDAA is titled, quite simply, “Preference for Fixed-Price Contracts.” Section 829 specifies that, within 180 days after the 2017 NDAA is enacted, the DFARS are to be revised to establish a preference for fixed-price contracts (including fixed-price incentive fee contracts) when a DoD determines which contract type to use for a particular acquisition.
    It isn’t clear whether Congress intends the DFARS to ultimately include a stronger fixed-price preference than already exists in the FAR. At present, FAR 16.301-2 and FAR 16.301-3 place important limitations on a Contracting Officer’s ability to select a cost reimbursement contract type, including, under FAR 16.301-2, where “[c]ircumstances do not allow the agency to define its requirements sufficiently to allow for a fixed-price type contract.”
    The 2017 NDAA’s preference for DoD fixed-price contracts does go beyond the FAR in one important respect. Starting on October 1, 2018, a DoD contracting officer will not be permitted to enter into a cost reimbursement contract in excess of $50 million unless the contract is approved by “the service acquisition executive of the military department concerned, the commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition, Technology, and Logistics (as applicable).” The threshold for approval will fall further to $25 million on October 1, 2019.
    Given the existing FAR restrictions on cost reimbursement contracts, it remains to be seen whether Section 829 will represent a significant shift in DoD procurement policy. DoD’s proposed DFARS amendments, which should be published by mid-2017, will shed some light.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 appears poised beneath the president’s pen for signing. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next few days, SmallGovCon will delve into the minutia to provide context and analysis so that you do not have to.

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  20. Koprince Law LLC
    Coming as welcome news for collaborative R&D, the 2017 NDAA will extend the life of the Small Business Innovation Research and Small Business Technology Transfer programs.
    The conference version of the bill, which seems likely to be on the President’s desk in short order, contains provisions extending both programs for five years.

    SBIR and STTR are unique research, development, and commercialization programs overseen by the SBA. Each program calls for a three-phase process. In the first two phases, R&D is funded by the government; the third phase of each program involves commercialization. Although the programs have many similarities, there are also important differences. For example, in the SBIR program, a small business may collaborate with a non-profit research institution; in the SBIR program, such collaboration is required.
    Both programs were scheduled to expire on September 30, 2017. The 2017 NDAA extends the lifespan of the programs through September 30, 2022. This extension will allow small businesses to continue their collaboration with research institutions to develop new technologies for a variety of applications—good news for businesses and universities doing research in cutting edge fields.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 appears poised beneath the President’s pen for signing. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next several days, SmallGovCon will delve into the minutia to provide context and analysis so that you do not have to. Visit smallgovcon.com for the latest on the government contracting provisions of the 2017 NDAA.

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  21. Koprince Law LLC
    The 2017 National Defense Authorization Act will increase the DoD’s micro-purchase threshold to $5,000.
    Under the conference bill recently approved by both House and Senate, the DoD’s micro-purchase threshold will be $1,500 greater than the standard micro-purchase threshold applicable to civilian agencies.

    A micro-purchase is an acquisition by the government of supplies or services that, because the aggregate is below a certain price, allows the government to use simplified acquisition procedures without having to hold a competition, conduct market research, or set aside the procurement for small businesses. In other words, if the price is low enough, the agency can buy it at Wal-Mart using a government credit card, without running afoul of the law.
    Although there are many different thresholds, the FAR puts the general micro-purchase threshold at $3,500. But Section 821 of the proposed 2017 NDAA will add a new section to chapter 137 of title 10 of the United States Code giving the DoD its own micro-purchase threshold of $5,000.
    It may not sound like much, but that’s nearly a 43% increase from the current micro-purchase threshold (and the threshold that will remain applicable to most agencies). Although DoD procurement officials will undoubtedly enjoy their new flexibility, some small contractors may not be so pleased–after all, once the micro-purchase threshold applies, there is no mandate that the government use (or even consider) small businesses.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 has been approved by both House and Senate, and will likely be signed into law soon. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next few days, SmallGovCon will delve into the minutia to provide context and analysis so that you do not have to. Visit smallgovcon.com for the latest on the government contracting provisions of the 2017 NDAA. 

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  22. Koprince Law LLC
    Under the Competition in Contracting Act, the Government Accountability Office is required to issue an annual report to Congress that summarizes the “most prevalent grounds” of sustained protests, identifies the instances in which GAO was not able to decide a protest within its 100-day deadline, and list any protest where the agency did not follow GAO’s recommendations.
    The 2017 National Defense Authorization Act doubles down on this first requirement: it mandates that GAO provide Congress with a list of the most common grounds for sustaining protests. This only begs the question: why would Congress require GAO to do something it’s already required to do (and that it’s already doing)?

    One possible explanation is that Congress is not getting the information it wants. That is, Congress might want more detail than GAO currently provides. For instance, in its Fiscal Year 2016 Annual Report, the GAO’s list of common grounds for sustained protests included only four items: “(1) unreasonable technical evaluation; (2) unreasonable past performance evaluation; (3) unreasonable cost or price evaluation; and (4) flawed selection decision.”
    Broad categories like these don’t offer much in the way of helpful information for agencies to improve the acquisition process. If GAO were able to provide additional detail,  it might enable new rules or procedures that improve the procurement process.
    In fairness to GAO, though, its ability to provide anything beyond broad generalizations is very limited. Each protest relates to a different solicitation, issued by a different agency, with different technical requirements, different evaluation criteria, and different source selection procedures. GAO can probably do better than “unreasonable technical evaluation,” such as (for example) something like “use of unstated evaluation criteria in technical evaluation.” But beyond that, the differences between each solicitation and evaluation would make summarizing the similarities between sustained protests nearly impossible.
    The 2017 NDAA was signed into law on December 23, 2016. Now that the 2017 NDAA is the law of the land, it will be interesting to see what additional information—if any—is included in GAO’s FY 2017 Annual Report.

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  23. Koprince Law LLC
    A small but interesting change in the 2017 National Defense Authorization Act will require the DoD to obtain an appropriate justification and approval (“J&A”) before restricting any competition to a particular brand name, or imposing similar restrictions.
    In adopting this change, Congress doesn’t mince words, using the term “Anti-competitive Specifications” to refer to instances in which competitions are restricted to particular brand names without appropriate justification.

    Section 888 of the 2017 NDAA states that the Secretary of Defense “shall ensure that competition in Department of Defense contracts is  not limited through the use of specifying brand names or brand-name or equivalent specifications, or proprietary specifications or standards, in solicitations unless a justification for such specification is provided and approved” in accordance with statutory authority.
    FAR 11.105 already imposes restrictions regarding “brand name only” requirements, but the 2017 NDAA seems to go a step beyond FAR 11.105 by including “brand-name or equivalent descriptions” and “proprietary specifications or standards” in its scope. The 2017 NDAA would, however, retain certain exceptions to the justification requirement set forth in the DoD’s acquisition statutes at 10 U.S.C. 2304(f).
    In addition to imposing the J&A requirement, the 2017 NDAA provides that within 180 days of enactment, the DoD “shall conduct a review of the policy, guidance, regulations and training related to specifications included in information technology acquisitions to ensure current policies eliminate the unjustified use of potentially anti-competitive specifications.”  The DoD is to brief Congress on its review within 270 days of enactment. Within one year, the DoD is to “revise policies, guidance and training” to reflect any recommendations stemming from its review.
    It seems clear from Section 888 that Congress is concerned about the potential overuse of brand name (and similar) requirements. We’ll be keeping our eyes peeled around this time next year to see how DoD adjusts its acquisition policies in response.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 has been approved by both House and Senate, and will likely be signed into law soon. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next few days, SmallGovCon will delve into the minutia to provide context and analysis so that you do not have to. Visit smallgovcon.com for the latest on the government contracting provisions of the 2017 NDAA. 

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  24. Koprince Law LLC
    The 2017 National Defense Authorization Act will require the GAO to issue a report about the number and types of contracts the Department of Defense awarded to minority-owned and women-owned businesses during fiscal years 2010 to 2015.
    If the 2017 NDAA is signed into law, the GAO would be required to submit its report within one year of the statute’s enactment.

    The 2017 NDAA requires the GAO to identify minority-owned and women-owned businesses using the categories identified in the Federal Procurement Database System. While this study will not look exclusively at minority-owned and women-owned small businesses, it is worth noting that the Small Business Act establishes a goal that federal executive agencies, including the DoD, award 5 percent of the total value of its prime contracts to women-owned small business, and 5 percent to Small Disadvantaged Businesses, which include many minority-owned firms. The results of GAO’s study under the 2017 NDAA may have the potential of impacting these set-aside goals as well.
    If the President signs the NDAA in the coming weeks, the GAO’s report may be issued around this time next year. It will be interesting to see what changes, if any, await minority-owned and women-owned businesses based on the GAO’s findings.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 has been approved by both House and Senate, and will likely be signed into law soon. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next few days, SmallGovCon will delve into the minutia to provide context and analysis so that you do not have to. Visit smallgovcon.com for the latest on the government contracting provisions of the 2017 NDAA.

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  25. Koprince Law LLC
    We’ve been covering many of the important changes to federal contracting promised as a result of the 2017 National Defense Authorization Act. But among the most consequential might be a provision that requires DoD to compile a report that analyzes the impacts of the current bid protest system on DoD acquistions. This report could ultimately form the basis for potential significant changes to the protest system in future years.

    As it was originally working through Congress, some versions of the 2017 NDAA included significant revisions to the bid protest system. Among these revisions were attempts to limit protests filed by incumbent contractors. But rather than adopting these significant changes now, Congress has taken a more measured approach: it is instead requiring DoD to study the bid protest system to determine its efficacy going forward.
    Section 885 of the 2017 NDAA requires DoD to contract with a not-for-profit entity or a federally funded research and development center “to carry out a comprehensive study on the prevalence and impact of bid protests on Department of Defense acquisitions, including protests filed with contracting agencies, the Government Accountability Office, and the Court of Federal Claims.” This report, moreover, is to be detailed—the 2017 NDAA includes fourteen elements that must be included, ranging from DoD’s perceptions of the bid protest system and its effects on the structure of solicitations, to impacts on a potential offeror’s thought processes when it comes to bidding on a solicitation.
    Rather than transcribing all fourteen elements in detail (they’re available here, just search for “Sec. 885”), this post will briefly discuss two of note.
    First, the report must analyze bid protests filed by incumbent contractors, to include “the rate at which such protesters are awarded bridge contracts or contract extensions over the period that the protest remains unresolved,” and an assessment on the cost and schedule of acquisitions caused by protests filed by incumbent contractors. Congress apparently is concerned that incumbent contractors may be filing protests as a means to obtain extensions on their performance and, in doing so, needlessly delaying the acquisition process. Much like early versions of the 2017 NDAA, this provision clearly hints that limitations on protests by incumbent contractors may be coming in the near future.
    Second, the report must address “the effect of the quantity and quality of debriefings on the frequency of bid protests.” This provision makes sense. In an effort to avoid providing unsuccessful offerors with ammunition for protests, agencies can sometimes limit the information disclosed in an unsuccessful offeror’s debriefing so as to make the debriefing itself almost useless. But this can backfire: in response, frustrated offerors can resort to the protest process primarily as a means to learn more about the evaluation. By more thoroughly explaining their evaluations in debriefings, agencies might actually limit the number of protests filed. Perhaps this report will spur Congress to augment the requirements for agency debriefings.
    The report is due no later than one year within the enactment of the 2017 NDAA. It promises to be a fascinating look at the impact of the bid protest process on DoD procurements. And because DoD is the single largest procuring agency, any recommendations that follow from this report are likely to impact bid protest procedures across every agency.
    2017 NDAA: The National Defense Authorization Act for Fiscal Year 2017 has been approved by both House and Senate, and will likely be signed into law soon. It includes some massive changes as well as some small but nevertheless significant tweaks sure to impact Federal procurements in the coming year. For the next few days, SmallGovCon will delve into the minutia to provide context and analysis so that you don’t have to. Visit smallgovcon.com for the latest on the government contracting provisions of the 2017 NDAA. 

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