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Koprince Law LLC

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  1. Koprince Law LLC
    A common misconception in government contracting is that to be eligible under a particular solicitation, a small business must have the solicitation’s assigned NAICS code listed under its SBA System for Award Management (“SAM”) profile.
    Not so. GAO, in a recent decision, affirmed this misconception to be false—it found that an awardee’s failure to list the assigned NAICS code under its SAM profile did not make its proposal technically unacceptable.

    Veterans Electric, LLC, B-413198 (Aug. 26, 2016) involved a VA solicitation seeking electrical upgrades at the Wood National Cemetery. The solicitation was set-aside for service-disabled veteran-owned small businesses. The VA issued the solicitation under NAICS code 238210 (Electrical Contractors and Other Wiring Installation Contractors), which carries a size standard of $15 million.
    Before getting to the merits of the protest, a brief primer on NAICS codes might be helpful. NAICS codes—short for North American Industry Classification System codes—are simply industry classification codes assigned by the procuring agency for the purpose of collecting, analyzing, and publishing statistical data relating to government contracts. A contracting officer is required to assign the NAICS code that “best describes the principal nature of the product or service being acquired,” and identify and specify the operative size standard for the procurement. FAR 19.102(b). The SBA, moreover, assigns pertinent size standards (either in terms of annual receipts or number of employees) for the different NAICS codes, on an industry-by-industry basis. The codes, then, are particularly relevant in small business set-aside solicitations: if a company exceeds the corresponding size standard, it is “other than small,” and not an eligible offeror.
    In Veterans Electric, two offerors—Veterans Electric and Architectural Consulting Group (“ASG”)—submitted offers. After evaluating proposals, the VA awarded the contract to ASG.
    Veterans Electric protested the award, challenging ASG’s technical acceptability on two related grounds: first, that ASG’s failure to include NAICS code 238210 in its SAM profile demonstrated that it lacked the requisite technical experience and, second, that ASG’s failure to certify that it met the relevant size standard rendered its proposal unawardable.
    GAO rejected Veterans Electric’s arguments. Taking Veterans Electric’s second allegation first, GAO acknowledged that ASG’s proposal and its SAM profile did not list NAICS code 238210. But GAO found convincing the contracting officer’s determination that, because ASG listed several other NAICS codes at or below the relevant the $15 million size standard, ASG obviously certified that it complied with the size standard for this procurement. Veterans Electric did not present any evidence to show otherwise. The contracting officer’s determination was therefore reasonable.
    This finding also compelled GAO to deny Veterans Electric’s first allegation. A technical evaluation is within the agency’s discretion, and GAO found no basis to question ASG’s level of technical experience simply because it did not identify the primary NAICS code in its proposal or its SAM profile. GAO wrote:
    So long as a company meets the applicable size standard, we are aware of no statutory or regulatory requirement that it have the particular NAICS code identified in the solicitation as its primary code.
    GAO denied Veterans Electric’s protest.
    Small business contractors are allowed to identify in their SAM profiles their areas of experience, by NAICS codes. And as a matter of practice, companies often list all codes in which they hope to perform work. But as Veterans Electric confirms, whether a small business lists any particular NAICS code under its SAM profile is not conclusive evidence as to its technical experience or acceptability—that evaluation is instead made by the procuring agency after its review of the offeror’s proposal as a whole. So long as that evaluation was reasonable, GAO will not sustain a protest challenging the awardee’s failure to list a NAICS code.

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  2. Koprince Law LLC
    Federal contractors frequently find themselves in the position of needing to establish their past performance credentials to secure future contracts – the government’s form of a reference check. The government often performs these reference checks by requesting completed past performance questionnaires, or PPQs, which the government uses as an indicator of the offeror’s ability to perform a future contract.
    But what happens when a contractor’s government point of contact fails to return a completed PPQ? As a recent GAO decision demonstrates, if the solicitation requires offerors to return completed PPQs, the agency need not independently reach out to government officials who fail to complete those PPQs.

    By way of background, FAR 15.304(c)(3)(i) requires a procuring agency to evaluate past performance in all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold. The government has many means at its disposal to gather past performance information, such as by considering information provided by the offeror in its proposal, and checking the Contractor Performance Assessment Reports System, commonly known as CPARS.
    PPQs are one popular means of obtaining past performance information. A PPQ is a form given to a contracting officer or other official familiar with a particular offeror’s performance on a prior project. The official in question is supposed to complete the PPQ and return it–either to the offeror (for inclusion in the proposal) or directly to the procuring agency. Among other advantages, completed PPQs can allow the agency to solicit candid feedback on aspects of the offeror’s performance that may not be covered in CPARS.
    But the potential downside of PPQs is striking: the FAR contains no requirement that a contracting official respond to an offeror’s request for completion of a PPQ or similar document within a specific period (or at all). Contracting officials are busy people, and PPQ requests can easily fall to the bottom of a particular official’s “to-do” list. And procuring agencies sometimes contribute to the problem by developing lengthy PPQs that can be quite time-consuming to complete. For example, in a Google search for “past performance questionnaire,” the first result (as of the date of this blog post) is a NASA PPQ clocking in at 45 questions over 11 pages. A lengthy, complex PPQ like that one almost begs the busy recipient to ignore it.
    That brings us to the recent GAO bid protest, Genesis Design and Development, Inc., B-414254 (Feb. 28, 2017). In Genesis Design, GAO denied a protest challenging the rejection of an offeror’s proposal where the offeror failed to adhere to the terms of the solicitation requiring offerors to submit three PPQs completed by previous customers.
    The protest involved the National Park Service’s request for the design and construction of an accessible parking area and ramp at the Alamo Canyon Campground in Ajo, Arizona. The solicitation required offerors to provide three completed PPQs from previous customers to demonstrate that the offerors had successfully completed all tasks related to the solicitation requirements. The solicitation provided the Park Service with discretion to eliminate proposals lacking sufficient information for a meaningful review. The Park Service was to award the contract to the lowest-priced, technically acceptable offeror.
    Genesis Design and Development, Inc. submitted a proposal. However, the PPQs Genesis provided with its proposal had not been completed by Genesis’ prior customers. Instead, the PPQs merely provided the contact information of the prior customers, so that the Park Service could contact those customers directly.
    The Park Service found Genesis’ proposal was technically unacceptable, because Genesis failed to include completed PPQs. The Park Service eliminated Genesis from the competition and awarded the contract to a competitor.
    Genesis filed a GAO bid protest challenging its elimination. Genesis conceded that the PPQs had not been completed by its past customers, but stated that it “reasonably anticipated that the agency would seek the required information directly from its clients.” Genesis contended that it “is often difficult to obtain such information from its clients because they are often too busy to respond in the absence of an inquiry directly from the acquiring activity.”
    GAO wrote that “an offeror is responsible for submitting an adequately written proposal and bears the risk that the agency will find its proposal unacceptable where it fails to demonstrate compliance with all of a solicitation’s requirements.” Here, “the RFP specifically required offerors to submit completed PPQs,” but “Genesis did not comply with the solicitation’s express requirements.” Accordingly, “the agency reasonably rejected Genesis’ proposal.” GAO denied Genesis’ protest.
    GAO’s decision in Genesis Design should serve as an important warning for offerors: where the terms of a solicitation require an offeror to return completed PPQs from its previous customers, the offeror cannot assume the procuring agency will contact the customers on the offeror’s behalf. Instead, it is up to the offeror to obtain completed PPQs.
    In our view here at SmallGovCon, the Genesis Design decision, and other cases like it, reflect a need for a FAR update. After all, Genesis was exactly right: contracting officers are sometimes too busy to prioritize responding to PPQs. It doesn’t make good policy sense for the results of a competitive acquisition to hinge on whether a particular offeror is lucky enough to have its customers return its PPQs, instead of on the merits of that offeror’s underlying past performance.
    Policymakers could address this problem in several ways, such as by imposing a regulatory requirement for contracting officials to respond to PPQ requests in a timely fashion, or by prohibiting procuring officials from requiring that offerors be responsible for obtaining completed PPQs. Hopefully cases like Genesis Design will spur a regulatory change sometime down the road. For now, offerors bidding on solicitations requiring the completion of PPQs must live with the uncertainty of whether the government will reject the offeror’s proposal as technically unacceptable due to the government’s failure to complete a PPQ in a timely manner.

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  3. Koprince Law LLC
    You’ve hit send on that electronic proposal, hours before the deadline and now you can sit back and feel confident that you’ve done everything in your power – at least it won’t be rejected as untimely – right?
    Not so fast. If an electronically submitted proposal gets delayed, the proposal may be rejected–even if the delay could have been caused by malfunctioning government equipment. In a recent bid protest decision, the GAO continued a recent pattern of ruling against protesters whose electronic proposals are delayed. And in this case, the GAO ruled against the protester even though the protester contended that an agency server malfunction had caused the delay.

    Western Star Hospital Authority, B-414216.2 (May 18, 2017) involved an Army RFP for emergency medical services.  The RFP required that proposals be submitted no later than 4:00 pm., EST on January 30, 2017, to the Contracting Officer’s email address.
    The RFP incorporated FAR 52.212-1 (Instructions to Offerors-Commercial Items).  Paragraph (f)(2) of that clause provides that any “offer, modification, revision, or withdrawal of an offer received at the Government office designated in the solicitation after the exact time specified for receipt of offers is ‘late’ and will not be considered.”
    On the date the proposals were due, Western Star emailed four proposal documents to the CO’s email address. The emails were sent at 2:43 p.m., 2:57 p.m., 3:01 p.m. and 3:06 p.m., well before the 4:00 p.m. deadline. For reasons unknown, the emails did not arrive at the initial point of entry to the Government infrastructure until after 6:00 p.m., well after the deadline. The Army rejected the proposal as late.
    Western filed a GAO bid protest challenging the Army’s decision. Western argued that it was “guilty of no fault” and that it was “completely unfair and unreasonable to reject its bid because of factors beyond its control.”
    Western argued that the agency’s servers were “not accessible,” and furnished a mail log from its service provider supporting its position. The Army disputed Western’s position. The Army provided a statement from its Information Assurance Manager, who said that the emails were “delayed by the protester’s servers” and that the delay “was not the fault or responsibility of the Government, which has no control over commercial providers used by the Protester.”
    The GAO declined to resolve the question of whose servers had malfunctioned. Instead, the GAO indicated that Western’s proposal would be considered late regardless of whose equipment had malfunctioned. Citing its own prior authority, the GAO wrote, “[w] have repeatedly found that it is an offeror’s responsibility to ensure that an electronically submitted proposal is received by–not just submitted to–the appropriate agency email address prior to the time set for closing.” Because Western’s proposal “was not received at the agency’s servers until after the deadline for receipt of proposals,” the proposal was late.
    The GAO also cited FAR 52.212-1(f)(2)(i)(A), which states that a late proposal, received before award, may be accepted if it was transmitted electronically and received at the initial point of entry to the Government infrastructure no later than 5:00 p.m. one working day prior to the due date. But Western did not submit its proposal by 5:00 one working day prior to the due date, so it could not avail itself of that exception.
    The GAO declined to discuss any of the other exceptions to FAR 52.212-1(f)(2), such as the important “government control” exception, stating that the exceptions were “not pertinent” to the issue in Western. As we’ve written before, the Court of Federal Claims disagrees with the GAO when it comes to the question of whether these exceptions apply to electronic proposals, and we think the Court has the better position.
    For now, though, Western Star Hospital Authority stands as an important warning to contractors who submit proposals electronically. Under the GAO’s current precedent, a late-submitted electronic proposal is late–even if the lateness was due to malfunctioning government equipment. The only exception recognized by the GAO under FAR 52.212-1 is the “5:00 p.m. one working day prior” exception, and contractors would be wise to take that into account when determining when to submit electronic proposals.

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  4. Koprince Law LLC
    Generally speaking, government contractors know that part of the cost of doing business with the federal government is some loss of autonomy. The government writes the rules. It is the 500 lb. gorilla. What it says usually goes.
    When contractors try to do things their own way–even in an relatively informal medium such as email–they can sometimes get into trouble, as evidenced by a recent GAO protest decision: Bluehorse Corp., B-414809 (Aug. 18, 2017).

    The protest involved a procurement for diesel fuel as part of a highway construction project near Polacca, Arizona, by the Department of Interior, Bureau of Indian Affairs.
    The solicitation said that the fuel would be delivered as needed by the construction project. During a question-and-answer session, the contracting officer said that BIA had two 5,000 gallon tanks for storage, and that the agency “typically” orders 4,000 gallons at a time.
    Bluehorse Corp., a Reno, Nevada, Indian Small Business Economic Enterprise, provided a quotation that said it had the ability to supply 7,500 gallons per delivery.
    The contracting officer selected Bluehorse for award. On June 13, it sent it a purchase order which specified that each delivery would be 4,000 gallons. The purchase order incorrectly stated that the capacity of the tanks was 4,000 gallons each.
    In response, Bluehorse and the contracting officer spent the day emailing each other back and forth about the parameters of the deal. Bluehorse was insistent that it should be allowed to deliver 7,500 gallons at a time. The emails escalated in fervor from a polite request that the government clarify the capacity of its tanks to a threat that “f you don’t amend we will simply protest.” Importantly, in one of the emails, Bluehorse said “our offer was made on the ability to make a 7500 [gallon] drop . . . .”
    The contracting officer responded that Bluehorse was attempting to provide its own terms by “determining the amount you want to deliver and not what the government is requesting[.]”
    When Bluehorse did not respond, the contracting officer rescinded the offer. In the span of a day, the deal had completely fallen apart. Bluehorse protested, saying that the agency relied on unstated evaluation criteria and “inexplicably” limited deliveries to 4,000 gallons.
    GAO sided with the 500 lb. gorilla. It said that although the offer initially conformed to the terms of the solicitation (because the initial reference to 7,500 gallon deliveries was a “statement of capability”) when Bluehorse told the contracting officer in its email that the offer was dependent on the ability to deliver 7,500 gallons at a time, Bluehorse had placed a condition on the acceptance of its quotation.
    GAO said, “the record supports the agency’s conclusion the protester subsequently conditioned its quotation upon the ability to deliver a minimum of 7,500 gallons of fuel at a time.”
    In other words, the contractor tried to change the rules. It did not matter whether the government had the capacity to hold the amount Bluehorse wanted to provide. All that mattered was that the government wanted one thing, and Bluehorse insisted on providing another.
    GAO denied the protest.
    The government may have been throwing its weight around. But it can. Whether it is diesel fuel, destroyers, or donuts, when the government says it wants X, the contractor typically has to provide X.

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  5. Koprince Law LLC
    Your company has submitted a proposal for a Lowest-Priced, Technically Acceptable acquisition. To your surprise, you find out another company has submitted a technically acceptable offer with the same price. Equally surprising, the solicitation does not contain any provisions instructing the agency on how to pick from otherwise equal bids. So what is the contracting officer to do – issue an order for a standoff, a la the O.K. Corral? (For the record, we do not advise this as a viable method of conflict resolution.)
    Fortunately, GAO encourages a less drastic solution–use of the contracting officer’s reasonable discretion.
    This very scenario occurred recently in AVIS Jordan, B-417248 (Comp. Gen. Apr. 23, 2019).
    The Department of State issued RFQ No. S-J010-19-Q-0005 for rental vehicles. Offerors were to provide four full-size V-8 SUV 4×4’s for one year at the US Embassy in Amman, Jordan.
    Aside from the “full-size V-8 SUV 4×4” description, the following represents the entirety of the vehicle quality description:
    While there is no reference to an evaluation methodology within the RFQ, GAO recognized that “the contracting officer stated that award under the RFQ was to be made on a lowest-priced, technically acceptable basis.”
    AVIS Jordan and Masafat Car Rental were two of the vendors that submitted quotations. They “each provid[ed] the same lowest price.” The only difference is that AVIS Jordan’s proposed vehicles were 2017 Chevrolet Tahoes while Masafat Car Rental proposed use of 2019 Chevrolet Tahoes.
    The agency issued the purchase order to Masafat Car Rental for $122,033.90.
    AVIS Jordan protested this award because “the solicitation did not permit the agency to consider the model year of the quoted vehicles in order to resolve the tie with regard to price.” The agency’s responded that absent any tie-breaking procedures in FAR parts 12 or 13 as well as a lack of tie-breaking protocol in the RFQ, “the agency reasonably exercised its discretion to consider vehicle model year to resolve the tie[.]” The agency also claimed that it was “clearly in the best interest of the government to rent newer model vehicles[.]”
    In evaluating the agency’s reasoning for this award, GAO recognized that “when awarding contracts using simplified acquisition procedures, contracting officers are instructed to use innovative approaches to the maximum extent practicable. FAR § 13.003(h)(4).”
    Here, GAO found the agency’s use of model years was “not per se prohibited by the solicitation, or any procurement law or regulation.” None of these sources “established tie-breaking procedures in the event that two vendors quoted the same price.” Further, AVIS Jordan offered “no argument or evidence to dispute the superiority of the 2019 Chevrolet Tahoe to the 2017 model.” Given this lack of regulatory guidance and no argument against the 2019 model year, GAO found the agency’s model year comparison reasonable “under the circumstances.”
    In a nutshell, in the absence of a prescribed tie-breaking procedure or any evidence showing the agency’s award was unreasonable, GAO allowed the agency to use its reasonable discretion in making the award.

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  6. Koprince Law LLC
    Have you ever felt like you were screaming into the void when submitting your comments to a proposed rule in the Federal Register? That your well thought out comments were being drowned out by a mass of other comments on a proposed rule or attributed to someone else? Have you wondered what agencies do with all that information you send them when you submit a comment on a proposed rule? Well, GAO seems to have the same questions and concerns regarding the proposed rule comments process and has taken time these past few months to examine how agencies wade through comments on proposed rules, publish them, and clearly attribute identities to them.
    One foundation of federal contracting is agency regulations that set the limits for the contracting landscape. These regulations are governed by the Administrative Procedure Act (APA) rule making process consisting of basically three phases: (1) initiation of rule making; (2) developing proposed rule making actions through Notices of Proposed Rule making (NPRM); and (3) developing final rule making actions. Included in this process are opportunities for deliberations and public comments. According to GAO, about 3,700 NPRMs are published a year, many of which impact federal procurement. Consequently, federal contractors will frequently see proposed rules they may want to comment on.
    GAO decided to discuss the public comments process in a June 2019 report, and at the end of this October released a follow-up testimony focusing on how agencies determining and publish the identities of commenters in the rule making process.
    In its testimony, GAO made a point of examining rules that produce voluminous amounts of comments (e.g. the comment campaign against the FCC’s “Restoring Internet Freedom”) and how agencies could effectively publish these large amounts of comments and commenter identities for public review. Revealing commenter names would presumably help the public determine whether the comments were meaningfully made by an interested party or simply submitted to flood the commenting system, thus making comments a more useful part of the rule making process for the public at large.
    GAO focused its testimony on four topics:
    Identity information selected agencies collect through regulations.gov and agency-specific comment websites. The internal guidance of selected agencies addressing the identity of commenters. How selected agencies treat identity information collected during the public comment process. The extent to which selected agencies clearly communicate their practices associated with posting identity information collected during the public comment process. GAO selected 10 agencies to examine. The APA doesn’t require agencies to authenticate the identity of any comment-makers, and the ISP information (IP address, time submitted etc.) tied to comments submitted online cannot be linked to specific comments. Consequently, agencies must rely on those who self-report identity information.
    Agencies vary on how they store comments and identity information, but in general they will either maintain all submitted comments within the comment system itself, or they maintain some duplicate comment records outside the comment system.
    GAO found that the majority of agencies do have some sort of internal guidance associated with the identity of commenters, but the guidance varies. This leads to vastly different forms of storing and presenting identity information.
    In one instance, almost 18,000 duplicate comments were included in attachments to a proposed rule and all 18,000 were presented under one individual’s name in the comment title. None of the individual identity information attributed to those 18,000 comments could be easily found without manually opening and searching all the attachments, most of which contained approximately 2,000 comments. In another instance, it was the agency’s policy to post all the comments submitted separately. This scattered approach by agencies leads to inconsistent comment presentation to the public.
    GAO testified that although the APA allows discretion in how agencies post comments, agencies do not clearly communicate their comment publishing practices, including publishing commenter identity. This lack of publication leaves the public in the dark and “could affect their ability to use and make informed decisions about the comment data and effectively participate in the rule making process themselves.” GAO testified that there is simply not enough information posted to help the public determine whether all the identity information supplied during the comments phase is actually posted or not.
    GAO found that the inconsistent agency guidance, information storage/treatment, and communication of publishing practices needs to be remedied. In its June 2019 report, GAO suggested that five of the ten agencies examined establish a policy for posting comments, and eight of the ten agencies take action to more clearly communicate their policies for posting of comments. The eight agencies agreed with these recommendations, and identified actions they could take. However, since the June 2019 report, only one agency has taken action, clearly posting a disclaimer about collection and publishing of identity information. Without remedying these inconsistencies, GAO worries that “public users of the comment websites could reach inaccurate conclusions about who submitted a particular comment, or how many individuals commented on an issue.”
    For federal contractors, this issue can hit rather close to home. Any change to the FAR, DFARS, or other regulations that can directly affect your contracting will likely go through the APA rule making process. Your chance to voice issues or questions with these proposed rules is by submitting a comment to the proposed rule.
    If agencies consistently collected and published identity information along with comments made on rules that affect federal contracting, federal contractors could easily find what your peers in the contracting community think about an upcoming regulatory change, and determine whether they should lend their voice to the discussion. However, as GAO noted, without consistency across agencies, you may find yourself wading through attachments with thousands of names and comments to see what has already been said.
    Hopefully, the report and testimony by GAO leads more agencies to update their commenting procedures, so that becoming involved in the rule making process is less discouraging. In the meantime, don’t be surprised if you start to see more agencies asking for identity information when you submit a comment on a proposed rule, and be prepared to see varying forms of comment publishing by agencies.

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  7. Koprince Law LLC
    SBA’s regulations for service-disabled veteran-owned small businesses create a rebuttable presumption that a service-disabled veteran doesn’t control the company if the veteran is unable to work normal business hours in the company’s industry.
    The rule sounds reasonable at first blush, but as a recent SBA Office of Hearings and Appeals case demonstrates, the SBA may apply the presumption even to a one-person start-up with no contracts. Not many people can afford to quit their day jobs before their businesses truly get off the ground–creating a real conundrum for SDVOSB start-ups.
    For the sake of fairness, the SBA’s Normal Business Hours rule needs fixing, pronto. Here’s how to do it.
    SBA OHA’s decision in CVE Protest of Hamhed, LLC, SBA No. CVE-180-P (2021) involved a VA SDVOSB set-aside RFQ seeking food service workers for the VA Montana Health Care System. After evaluating quotations, the VA identified YUFS, Inc. as the apparent awardee.
    YUFS was, apparently, a start-up with no contracts. It had only one employee, its owner and President, Dr. Akubum Yufanyiabonge. Dr. Yufanyiabonge, a service-disabled veteran, held a full-time job outside YUFS.
    Dr. Yufanyiabonge’s full-time job was with the U.S. Army, and FAR 3.6 prohibits Contracting Officers from knowingly awarding contracts to companies controlled by government employees. Dr. Yufanyiabonge’s bidding on government contracts while employed by the government might have been unwise–but as we’ll see, OHA’s decision did not turn on where he was employed, but when he worked for that employer.
    A competitor, Hamhed, LLC, filed a CVE status protest with OHA, challenging YUFS’ SDVOSB eligibility. Hamhed alleged that YUFS would be unusually reliant on its subcontractor to perform the contract.
    During OHA’s evaluation of the protest, OHA noticed that Dr. Yufanyiabonge appeared to hold employment outside YUFS. So OHA, on its own volition, asked YUFS to explain how it complied with SBA’s “Normal Business Hours” rule, 13 C.F.R. 125.13(k). That rule states:
    YUFS “did not file a substantive response to OHA’s Order.” But information from the case file, submitted during YUFS’ CVE application, showed that Dr. Yufanyiabonge “works for YUFS Monday through Thursday from 5:00 p.m. until midnight, and on Fridays and Saturdays from 6:00 a.m. to 5:00 p.m.” During the CVE application, “YUFS did not attempt to persuade CVE that such hours are typical of businesses in YUFS’s industry.”
    YUFS’ failure to substantively address OHA’s question was fatal: OHA held that YUFS “has not rebutted the presumption at 13 C.F.R. § 125.13(k).” OHA sustained the protest and held that YUFS was ineligible to qualify as an SDVOSB.
    Perhaps if YUFS had explained that, for example, Dr. Yufanyiabonge could not afford to simply quit his day job to work full-time for a start-up, OHA would have been sympathetic. (Note: I have no information regarding Dr. Yufanyiabonge’s finances–that’s just an example of the sort of statement that many service-disabled veterans likely would make in a similar situation).
    But perhaps OHA wouldn’t have been so understanding. While there’s no way to no for sure, one very important thing is clear from the Hamhed decision: the SBA will, in fact, apply the “Normal Business Hours” rule even to a one-person start-up with no contracts, in which the service-disabled veteran is the only owner, officer and employee.
    In my experience, most service-disabled veterans cannot afford to simply give up their salary and employment benefits to work full-time for a start-up business, at least not until that business starts generating revenues. It’s often said that it can take 18 months for a company to win its first government contract. That’s a loooong time to go without a paycheck.
    It seems pretty clear to me that the Normal Business Hours rule needs to be adjusted to make it fairer to start-ups. But how?
    One way might be to adopt a looser rule for start-ups, such as firms in their first eighteen months. But a one-size-fits all cutoff would still cause problems–not every new contractor succeeds at the same pace.
    I think a better approach would be to focus on the concept underlying all of 13 C.F.R. 125.13–control. The point of 13 C.F.R. 125.13 shouldn’t to impose ticky-tack requirements, but to ensure that the benefits of SDVOSB status flow only to companies controlled by service-disabled veterans. If no non-veteran can plausibly be said to control the company, who cares if the veteran doesn’t work normal hours?
    This is essentially the approach OHA took in a case called ProSphere Tek, Inc., which my colleague Shane McCall blogged about a few months ago. In ProSphere Tek, OHA held that the CVE had erred by denying a company’s SDVOSB application because the CVE “did not identify any non-service-disabled veteran persons or entities that have any involvement in [the applicant’s] operations, and did not describe any mechanism through which non-service-disabled veteran persons or entities could potentially control [the applicant].”
    It’s no surprise that OHA didn’t follow the same approach in Hahmed because the regulation at issue in ProSphere Tek specifically discusses non-veteran control, while the Normal Business Hours rule doesn’t. But from a policy perspective, it seems clear to me that the Normal Business Hours presumption also should be rebutted when there is no reason to believe that the veteran’s inability to work normal hours doesn’t allow for non-veteran control.
    I hope SBA will think twice about how the Normal Business Hours rule is applied, and amend the rule to be fairer to start-ups. The policy underpinning OHA’s ProSphere Tek decision would be a great place to start.
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    The post SBA’s SDVOSB “Normal Business Hours” Rule Needs Fixing–Here’s How first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. Koprince Law LLC
    If a contracting officer determines that a small business offeror is not qualified to perform under a solicitation, that usually means the offeror’s proposal will be rejected. In some instances, however, the offeror gets a second chance through the SBA’s Certificate of Competency (“COC”) program.
    Here are five things you should know about the COC program.
    1. What rules govern the COC program?
    The Small Business Act, specifically 15 U.S.C. § 637(b)(7), introduces us to the COC program. Under the Small Business Act, contracting officers are required to provide small business concerns with reasoning for why they are denied award of a contract. The contracting officer must also refer small business concerns to the SBA if the concern is denied award due to their “capability, competency, capacity, credit, integrity, perseverance, [or] tenacity[.]”
    13 C.F.R. § 125.5 establishes the regulatory framework for the SBA’s application of the COC program. The regulation addresses, among other things, an offeror’s eligibility for a COC, review of a COC application, appeals of a COC, and effect of a COC. Many of the regulatory topics will be addressed below.
    FAR 9.1 instructs the contracting officer to make “an affirmative determination of responsibility” prior to any purchase or award. The subparts of FAR 9.1 set forth the FAR standards for determining responsibility which include a review of, among other things, past performance, financial resources, and organizational skills. In the event a purchase or award involves a small business, the contracting officer and small business must also comply with FAR 19.6. FAR 19.6 largely mirrors, and in fact defers to, the SBA’s method of managing the COC program.
    2. Who is eligible for a COC review?
    The first line to cross in determining eligibility is that you must be an offeror to be eligible for COC review. The offeror must also “qualify as a small business under the applicable size standard in accordance with” 13 C.F.R. § 121. If applicable, the offeror must also “have agreed to comply with the applicable limitations on subcontracting and the nonmanufacturer rule.”
    If these steps are satisfied, the SBA will then review the concern, and its principals, to see if any appear in the “Parties Excluded From Federal Procurement Programs[” list, as administered by the General Services Administration. Inclusion on this list does not mean you are immediately ineligible for a COC review, but instead the SBA will make its eligibility determination “on a case-by-case basis.”
    3. How does a COC review start?
    A contracting officer is required to start the COC process under three circumstances. First, if the contracting officer denies an apparent successful small business offeror award on the basis of responsibility. Second, if the contracting officer refuses to consider a small business concern for award after evaluating the concern’s offer on a non-comparative basis under one or more responsibility type evaluation factor. Third, if the contracting officer refuses to consider a small business concern for award because it failed to meet a definitive responsibility criterion of the solicitation.
    If one of these circumstances is present, the contracting officer must refer its nonresponsibility determination to the SBA. The referral must include the solicitation, the offer at issue, an abstract of all bids, any pre-award survey, the contracting officers written determination of nonresponsibility, the technical data package, and any other justification for its determination. With these items in hand, the SBA then conducts the COC review.
    4. What are the offeror’s responsibilities during the COC review?
    When the SBA receives referral from the contracting officer, it then notifies the offeror of the contracting officer’s determination and ask the offeror whether it wishes to apply for a COC. If the offeror wishes to apply for a COC, it must show the SBA that it is competent. While each case is different, the SBA generally requires the following documents from the offeror: SBA Form 1531 – Application for Certificate of Competency, SBA Form 355 – Application for Small Business Size Determination, SBA Form 74B – Monthly cash flow, and any other specific forms identified by the SBA.
    As part of its review the SBA may, among other things, visit an offeror’s sites or contact an offeror’s suppliers, financial institutions, or other third parties directly to verify any part of the contracting officers determination of nonresponsibility.
    Throughout the process, the offeror should respond to any communications from the SBA in a timely fashion. Failure to do so may result in the SBA closing its investigation and denying the COC.
    5. What if SBA approves or denies a COC?
    If the SBA issues a COC, the next steps are determined based on the value of the contract at issue.
    For contracts valued at $100,000 or less, the SBA Area Director’s decision to approve or deny a COC is final. There are no rights to appeal.
    For contracts valued between $100,000 and $25 million, the Area Director’s decision to deny a COC is final. There are no rights to appeal. If the Area Director approves a COC, the contracting officer has a few options. First, the contracting officer may accept the decision to issue the COC and award the contract to the concern. Second, the contracting officer may ask the Area Director to suspend the case to allow for a review period or so the contracting officer may appeal the decision. Third, the contracting officer may appeal the decision to SBA Headquarters.
    For contracts valued at more than $25 million, the Area Director’s decision to deny a COC is final. There are no rights to appeal. If the Area Director wishes to approve the COC, it must first refer its recommendation to SBA Headquarters. SBA Headquarters then does its own due diligence by contacting the contracting agency at the secretariat level and allowing them to review the case file or submit additional evidence. After the contracting agency responds, the SBA’s Associate Administrator for Government Contracting will make a final determination. Regardless of the outcome, the final determination is just that – final.
    As you can see, there are a lot of moving parts in the COC process.
    If you are directly or indirectly impacted by a COC determination, and have any questions, give us a call.

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  9. Koprince Law LLC
    The breadth and depth of protests heard by GAO may lead even a seasoned government contractor to overlook the limitations of GAO’s jurisdiction.
    As one contractor recently found, the GAO generally will not consider protests based on an allegation that the agency should not have referred an adverse responsibility determination to the SBA for a certificate of competency review.
    We must lay the foundation for the Certificate of Competency (“COC”) procedure before adequately analyzing the case before us. COCs are authorized and regulated by 15 U.S.C. § 637(b)(7), 13 C.F.R. § 125.5, and FAR 19.6. While they each address COCs in their own language, the core idea is that “[a] COC is a written instrument issued by SBA to a Government contracting officer, certifying that one or more named small business concerns possess the responsibility to perform a specific Government procurement contract[.]”
    A contracting officer is obligated to refer a small business concern to SBA for possible COC when the contracting officer determines that a small business is not responsible, and that determination would preclude the small business from receiving an award. When the SBA issues a COC, as in the circumstances presented in the case before us, it effectively overturns the non-responsibility determination.
    With that background, let us refocus on the case at issue – Lawson Envtl. Servs. LLC, B-416892.
    The EPA named Eagle Eye-Enviroworks Joint Venture awardee under RFP No. 68HE0718R0009. Eagle Eye was one of ten offerors who submitted a proposal. Eagle Eye, however, was the only offeror referred to the SBA for a COC. The contracting officer was concerned that “Eagle Eye did not meet the minimum corporate experience requirements, and that its project manager and site superintendent did not meet the minimum key personnel experience requirements.”
    In its review, “the SBA found that Eagle Eye’s COC application included information demonstrating that the offeror met the RFP’s corporate experience and key personnel requirements.” The SBA granted Eagle Eye a COC.
    Following this SBA action, the EPA awarded the contract to Eagle Eye. Lawson Environmental Services LLC, an offeror and interested party, protested the award. Lawson argued that the EPA erred by referring Eagle Eye to the SBA for a COC in the first place.
    GAO spent some time reaffirming the core concepts we set forth in our foundation earlier. Mainly that the EPA “must refer to the SBA a determination that a small business is not responsible if that determination would preclude the small business from receiving an award.” GAO also stated that regulations require a contracting officer to refer a concern to the SBA for a COC determination when the contracting officer refused to consider a concern for award “after evaluating the concern’s offer on a non-comparative basis . . . such as experience of the company or key personnel or past performance[.]”
    While the text of the solicitation is not provided, we can infer that reviewing experience and past performance on a “non-comparative basis” equates to offerors receiving a pass/fail in these areas. Had experience and past performance been evaluated on a comparative basis, Eagle Eye would not have been eligible for a COC review, and the GAO would not have seen this case.
    The regulations and GAO statements so far would lead one to believe that the GAO would allow the protest to proceed and evaluate the merits of the protest. GAO’s next statement, however, is key to this protest.
    GAO dismissed the protest because “15 U.S.C. §637(b)(7) gives the SBA, not [the GAO], the conclusive authority to review a contracting officer’s determination that a small business concern is not responsible.” GAO goes further to specifically state that Bid Protest Regulations mandate that “a [COC] under [15 U.S.C. § 637(b)(7)] will generally not be reviewed by GAO.” The only exceptions are if the protests can show “possible bad faith on the part of the government,” that “SBA failed to follow its own regulations,” or that SBA “failed to consider vital information bearing on the firm’s responsibility.”
    GAO found that “Lawson raises none of the exceptions that would allow [GAO] to review the contracting agency’s action.” In a footnote, GAO acknowledged that Lawson tried to differentiate between responsiveness of a proposal and the responsibility of that same proposal. However, this argument was a non-starter as GAO stated that “both corporate experience and key personnel, when evaluated on a non-comparative basis, are matters of responsibility.” Because Lawson failed to claim any of the exceptions, GAO lacked jurisdiction.
    Keep this case in mind if you are considering protesting an award that involves a COC. At the same time, remember that each solicitation and award may have any number of errors which give rise to a valid protest. Our office is always happy to help you evaluate the merits of an award or possible protest.

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  10. Koprince Law LLC
    As we have previously noted on the blog, a substantial number of protests filed before GAO end in voluntary corrective action taken by the protested agency. In recent decision, GAO addressed just how much discretion agencies have in designing corrective actions.
    Spoiler alert: it’s a lot.
    RTW Management, B-416786.2 (Comp. Gen. Dec. 17, 2018) involved a VA procurement for shuttle transportation services around its healthcare facilities in Maryland. As relevant here, the solicitation provided two different award methodologies. On one hand, the solicitation instructed offerors that award would be made on a best value basis. On the other hand, the solicitation also stated: “award will be made to the responsible offeror who submits an acceptable proposal, as determined by a technical evaluation, and has [the] lowest price for satisfactory completion of all contract requirements.” The solicitation did not clarify how these two competing evaluation methodologies could coexist.
    Proposals were due on August 22, 2018. Six days later, on August 28, an offeror, Taylor Made Transportation Services, Inc., filed an agency-level protest with the VA challenging the evaluation terms of the solicitation. The VA subsequently denied Taylor Made’s protest.
    While Taylor Made’s protest was being considered, the VA moved forward with the procurement and named RTW Management as the awardee.
    After having its agency-level protest denied, Taylor Made took its challenge of the solicitation’s terms to GAO. In response, the VA elected to take voluntary corrective action, which included wiping out the award to RTW Management, and re-issuing the solicitation with clarification as to its intended evaluation scheme. GAO subsequently dismissed Taylor Made’s protest as academic.
    With its award cancelled, RTW protested the VA’s proposed corrective action. According to RTW, the VA’s corrective action was unreasonable because Taylor Made’s original agency-level protest was untimely. Consequently, RTW argued, the VA’s decision to take corrective action was not necessary, and was designed to benefit Taylor Made. Alternatively, RTW argued that even if there were an ambiguity in the Solicitation, it was not prejudicial because multiple offers were able to submit competitive proposals. For this reason, RTW said, there was no basis to sustain Taylor Made’s protest (and thus no reason to take corrective action).
    In response, the VA argued that it had broad discretion to take any corrective action it believed necessary. The VA explained its reasoning as follows: “amending and re-posting the solicitation, in this instance, is reasonable and within its broad discretion to ensure fair and impartial competition, as it is designed to ensure that the solicitation includes a clearly defined method of evaluation.”
    GAO agreed with the VA that its corrective action was reasonable. GAO began its analysis by noting that agencies have broad discretion to take corrective action as they see fit. GAO then addressed the specific challenges raised by RTW:
    Given the clear ambiguity in the solicitation’s evaluation criteria, GAO concluded the VA’s proposed corrective action was reasonable.
    RTW Management demonstrates the extreme deference GAO gives to agencies to undertake and design corrective action. Despite a potentially fatal protest error, GAO nevertheless condoned the VA’s proposed corrective action. In so doing, GAO reaffirmed the tough climb protesters face to challenge the terms of a corrective action before GAO.

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  11. Koprince Law LLC
    Under FAR Part 15 negotiated procurements, an agency must give notice and an opportunity to request a debriefing to offerors eliminated from the competitive range. But the notice requirement does not apply for task and delivery order procurements under FAR Part 16 where FAR Part 15 is inapplicable.
    A recent GAO decision highlights this distinction.

    The Department of Education issued multiple solicitations to meet IT requirements. One RFQ, the PIVOT H solicitation, was for hosting of applications, data, and IT systems services. The PIVOT H solicitation was issued for a task order pursuant to a multiple-award, IDIQ contract program.
    Under PIVOT H, NTT DATA Services Federal Government, Inc. protested issuance of a task order to IBM, and GAO considered this protest in NTT DATA Services Federal Government, Inc., B-416123 (Comp. Gen.  2018). The RFQ was a best-value tradeoff, considering price and several non-price evaluation factors. The evaluation factors, in descending order of importance, were:  technical approach, past performance, and price and subcontracting goals.
    NTT argued that the agency engaged  in improper additional rounds of discussions with IBM and Offeror A, but not with it. The agency erred, according to NTT, because it never made a formal competitive range announcement.
    GAO rejected this argument, noting that the requirement to notify firms of the competitive range is a FAR Part 15 requirement, which was inapplicable to this RFQ because it was conducted under FAR Part 16. The RFQ stated:
    Furthermore, “FAR § 16.505(b) states, among other things, that the requirements of FAR subpart 15.3 are inapplicable to task order competitions such as the instant acquisition.” GAO noted that “the record shows that the agency effectively established a competitive range comprised of the firms the agency determined had a reasonable chance for award.” The agency’s documentation stated that
    Based on this evaluation, GAO determined that eliminating NTT from the competitive range was reasonable. The notice requirements for the competitive range were inapplicable:
    Under FAR 16.505, then, an agency can effectively establish a competitive range without notifying an offeror or allowing the opportunity for a debriefing, because those are requirements found only under FAR Part 15.  As task and delivery order procurements become increasingly popular, offerors should remember that their notification and debriefing rights may be different than expected.

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  12. Koprince Law LLC
    I am back in Lawrence after a great trip to Huntsville, Alabama, where I spoke at the Redstone Edge Conference.  My presentation focused on the recent major developments in small business contracting, including the changes to the limitations on subcontracting and the new universal mentor-protege program.
    Many thanks to Courtney Edmonson, Scott Butler, Michael Steen, and the rest of the team at Redstone Government Consulting for putting together this impressive event and inviting me to participate.  A big “thank you” as well to everyone who attended the presentation, asked great questions, and followed up after the event.
    Next on my travel agenda, I’ll be in Wichita this Friday for a comprehensive half-day session on joint venturing and teaming for federal government contracts, sponsored by the Kansas PTAC.  Hope to see you there!

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  13. Koprince Law LLC
    The government can terminate a contract when the Department of Labor has made a preliminary finding of non-compliance with the Service Contract Act, even if the contractor has not exhausted its remedies fighting or appealing the finding.
    The 3-0 (unanimous) decision by the Armed Services Board of Contract Appeals in Puget Sound Environmental Corp., ASBCA No. 58828 (July 12, 2016) is troubling because it could result in other contractors losing their contracts based on preliminary DOL findings–perhaps even if those preliminary findings are later overturned.

    The Puget Sound decision involved two contracts under which Puget Sound Environmental Corporation was to provide qualified personnel to accomplish general labor tasks aboard Navy vessels or at naval shore leave facilities. Both contracts included the FAR’s Service Contract Act clauses.
    Under that first contract, PSE ran into SCA issues. DOL investigated and PSE entered into a payment plan to remedy the alleged violations.
    The Navy, knowing about the payment plan, nevertheless entered into another contract with PSE to provide similar services. The second contract, like the first, was subject to the SCA.
    Early into the performance of the second contract (referred to as Task Order 9) during the summer of 2011, DOL began a new investigation into PSE. DOL’s investigation ultimately concluded that PSE owed its workers over $1.4 million on both contracts for failure to pay prevailing wage rates, and failing to provide appropriate health and welfare benefits and holidays to its covered employees. DOL made some harsh claims, including that PSE had classified skilled maintenance and environmental technicians as laborers and had issued health insurance cards to employees who were stuck with large medical bills after they found the cards were not valid.
    During the investigation, on September 1, 2011, DOL wrote to the Navy contracting officer and informed the contracting officer of DOL’s preliminary findings. A week later, the contracting officer emailed PSE and told it that the Navy “no longer has need for the firewatch/laborer services provided under task order” 9, and that the Navy was terminating the contract for convenience. That same day, as would eventually come out in discovery, the contracting officer had written an internal email stating that he was concerned about awarding PSE another task order because of the supposed likelihood that PSE would “commit Fraud against [its] employees[.]”
    Five days later, PSE agreed to allow the Navy to transfer funds due on Task Order 9 to DOL to be disbursed as back wages. Shortly thereafter, on September 15, PSE and the Navy mutually agreed to terminate the contract for convenience. The Navy issued no further task orders, but awarded a bridge contract for the same services to another contractor in October of that year.
    Just under two years later, on May 17, 2013, PSE submitted a certified claim under the Contract Disputes Act, claiming lost revenue of $82.4 million (based on five years worth of revenue on the contract) and asked for 4% of that number, or $3.3 million in damages. The contracting officer never issued a final decision on the claim, so PSE treated this as a deemed denial and on August 9, 2013, appealed the decision to the ASBCA.
    On May 12, 2014, DOL’s Office of Administrative Law Judges reviewed the findings of the DOL investigation and concluded that DOL was right to assess the $1.4 million in back pay. The Office of Administrative Law Judges determined that PSE should be debarred for three years. PSE appealed the decision to the Administrative Review Board, which affirmed the ALJ. PSE indicated that it would appeal the ruling in federal court, although it had not done so by the time the ASBCA ruled on PSE’s appeal.
    At the ASBCA, both PSE and the Navy moved for summary judgment. PSE primarily argued that the Navy terminated the contract in bad faith. PSE said that the contracting officer rushed to judgment and that the termination for convenience was effectively a termination for default, relying on the use of the word “fraud” in the contracting officer’s internal email as evidence of animus.
    The ASBCA said: “Whether fraud was the best word choice is not the issue before us; the undisputed facts show that the contracting officer had a good faith basis for concluding that PSE failed to pay its employees in accordance with the contracts and that it had deceived those employees by leading them to believe that they had health insurance when, in fact, they did not.” The ASBCA denied PSE’s motion for summary judgment, and granted the Navy’s motion.
    While the facts of the case are interesting, they’re not all that unique; DOL investigates and prosecutes alleged SCA violations with some frequency. What’s troubling about the Puget Sound case is that the Navy unceremoniously terminated a contractor well before any of the new allegations were fully adjudicated and before PSE had the opportunity to contest DOL’s preliminary findings.
    Although PSE could still prevail in federal court, the preliminary findings were confirmed by DOL’s ALJ and Administrative Review Board. But preliminary findings are just that–preliminary–and sometimes are overturned. The ASBCA’s decision therefore begs the question: what if a future contractor is terminated based on a preliminary DOL finding that is later overturned? Does Puget Sound Environmental mean that that contractor would have no remedy?
    It’s certainly a possibility. That said, some there may be ways for other contractors to distinguish Puget Sound Environmental.
    For one thing, PSE had already agreed to pay back wages on an earlier contract, of which the contracting officer was aware. That earlier settlement likely influenced the contracting officer’s decision; had the DOL’s preliminary findings on task order 9 stood in a vacuum, the contracting officer might have allowed things to play out.
    Additionally, in reaching its conclusion, the ASBCA wrote that “PSE has not provided us with any evidence that DOL is wrong (and that the contracting officer’s reliance on DOL is actionable.” For example, the ASBCA said, “with respect to the allegation that PSE failed to pay health and welfare benefits, if DOL was wrong and PSE had paid for those benefits, it would have been relatively simple to establish this. But, PSE has failed to provide any such evidence.” In a case where DOL’s preliminary findings were overturned, the contractor would have strong evidence that those preliminary findings were wrong–and hopefully, that it was unreasonable for the contracting officer to rely on those findings.
    There is an old legal adage that “hard cases make bad law,” which means that when judges allow themselves to be persuaded by sympathy, they make bad decisions. The same can be true when the parties involved elicit little sympathy, as may have been the case here–by not providing evidence that it had actually complied with the SCA, PSE wasn’t likely to win many points with the ASBCA’s judges.
    That said, the next appellant who comes before the ASBCA with a similar issue may be able to demonstrate that it did, in fact, comply with the SCA, and that DOL’s preliminary findings were wrong. If so, it remains to be seen how the ASBCA will view the termination of that appellant’s contract.

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  14. Koprince Law LLC
    Picture this scenario: the government hires your company to do a job; you assign one of your best employees to lead the effort. He or she does such a good job that the government hires your employee away. The government then drags its feet on approving your proposed replacement and refuses to pay you for the time when the position was not staffed–even though the contract was fixed-price.
    The scenario is exactly what happened to a company called Financial & Realty Services (FRS), and according to the Civilian Board of Contract Appeals, FRS wasn’t entitled to its entire fixed-price contract amount.
    In Financial & Realty Services, LLC, CBCA No. 5354, 16-1 BCP ¶ 36472 (Aug. 18, 2016), FRS held a GSA Schedule contract for facilities maintenance and management services. The underlying Schedule contract included FAR 52.212-4 (Instructions to Offerors–Commercial Items).
    In 2013, as part of that contract, GSA awarded FRS a task order to manage some federal buildings in the Dallas/Fort Worth [Texas] Service Center, Fort Worth Field Office. The task order, at its most basic, called for FRS to provide a property manager.
    The task order was priced in firm fixed annual amounts, and GSA agreed that FRS could invoice in fixed monthly amounts.
    Important to later events, the task order required that the property manager to be able to obtain a National Agency Check with Inquiries (NACI) clearance within three months of award and maintain it through the life of the contract. For the first year or so of performance, a FRS employee served in the property manager position. Then, in October 2014, the government solicited and hired the employee away, to do basically the same job he was doing for FRS.
    A month later, FRS submitted a potential replacement to GSA, but that candidate took another job in the intervening time before the government gave FRS word that it had approved his/her NACI clearance. FRS then offered a second and a third option in January and February 2015. Finally, in March, the third potential replacement became the property manager.
    FRS later submitted invoices for $49,280, seeking payment for the time between October 2014 and March 2015. GSA refused to pay, so FRS filed a claim with the contracting officer seeking payment of the disputed amount. The contracting officer denied the claim, so FRS appealed the denial to the CBCA, alleging that GSA “breached its contract with FRS by thwarting or precluding FRS' performance of the contract and by failing to pay the full contract price.”
    GSA moved for the case to be dismissed. In its motion to dismiss, GSA argued there was no factual basis to determine that GSA had acted improperly.
    FRS conceded that it did not actually provide a property manager during the relevant time frame. As one might expect, however, FRS argued that the task order was fixed-price (meaning, FRS said, that the government agreed to pay regardless of whether the position was staffed), and that the government actively prevented FRS from performing.
    The CBCA disagreed. It pointed out that FAR 52.212-4(i) states that “[p]ayment shall be made for items accepted by the ordering activity that have been delivered to the delivery destinations set forth in this contract.” The CBCA continued:
    Notwithstanding the task order’s “fixed price,” GSA was obligated to pay only for services that were delivered and accepted.  Whether GSA could “supervise” the FRS employees who performed the services is immaterial.  In light of the complaint’s allegations that FRS did not staff the task order during the months in dispute, the allegation that GSA “fail[ed] to pay the full Contract price” for that same period . . . does not state a claim on which the Board could grant relief.
    As for the fact that the GSA hired FRS’s property manager, the CBCA wrote that FRS “identifies no factual basis to suspect that GSA did anything inconsistent with the normal federal hiring process.” The CBCA determined, “we do not see how an otherwise lawful recruiting or hiring action that an agency was not contractually barred from taking–which is all that has been plausibly alleged–could constitute undue interference entitling a contractor to be paid for work it did not perform.”
    Finally, the Board held that GSA had not breached the contract by failing to timely approve a replacement property manager. The CBCA noted that the contract did not include “a contractual duty on GSA’s part to clear job candidates within a specified time . . . .” Under the circumstances, the CBCA found the delays in clearance to be reasonable.
    The CBCA dismissed the appeal.
    As an impartial observer, it is easy to have sympathy for FRS. It did nothing wrong. In fact, it seemingly did everything right. It staffed the position with someone so good that the government poached the worker away within a year. It suggested multiple replacements, at least one of which took a different job while the government was still in the process of authorizing clearance. It certainly would seem like FRS had reason to be upset, especially since the task order was fixed-price.
    But let’s be real here. Fixed-price or not, the government isn’t too keen to pay for something it doesn’t receive from a contractor. As Financial & Realty Services demonstrates, that policy may apply even when the government itself causes the contractor to be unable to deliver.
     
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  15. Koprince Law LLC
    President Obama signed the 2017 National Defense Authorization Act into law on December 23, 2016.  As is often the case, the NDAA included many changes affecting government contractors.
    Here at SmallGovCon, my colleagues and I have been following the 2017 NDAA closely.  Here’s a roundup of all 16 posts we’ve written about the government contracting provisions of the 2017 NDAA.

    SDVOSB Programs: 2017 NDAA Sharply Curtails VA’s Authority. (Dec. 5, 2016). 2017 NDAA Restricts DoD’s Use of LPTA Procedures. (Dec. 7, 2016). 2017 NDAA Extends SBIR & STTR Programs For Five Years. (Dec. 8, 2016). 2017 NDAA Authorizes $250 Million For New Small Business Prototyping Program. (Dec. 8, 2016). 2017 NDAA Increases DoD’s Micro-Purchase Threshold To $5,000. (Dec. 9, 2016). SDVOSB Programs: 2017 NDAA Modifies Ownership & Control Criteria. (Dec. 12, 2016). 2017 NDAA Strengthens Subcontracting Plan Enforcement. (Dec. 13, 2016). 2017 NDAA Requires GAO Report On Minority And WOSB Contract Awards. (Dec. 13, 2016). 2017 NDAA Requires Report On Bid Protest Impact At DoD. (Dec. 14, 2016). 2017 NDAA Restores GAO’s Task Order Jurisdiction – But Ups DoD Threshold. (Dec. 14, 2016). 2017 NDAA Requires “Brand Name Or Equivalent” Justifications. (Dec. 19, 2016). 2017 NDAA Establishes Preference For DoD Fixed-Price Contracts. (Dec. 21, 2016). 2017 NDAA Creates Pilot Program For Subcontractors To Receive Past Performance Ratings. (Dec. 21, 2016). 2017 NDAA Reiterates GAO Bid Protest Reporting Requirements. (Dec. 30, 2016). 2017 NDAA Requires Report on Indefinite Delivery Contracts. (Jan. 4, 2017). That’s a wrap of our coverage for now, but we’ll keep you posted as various provisions of the 2017 NDAA begin to be implemented.  And of course, it won’t be long until we start covering the upcoming 2018 NDAA.
    Happy New Year!

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  16. Koprince Law LLC
    The SBA is processing the typical “All Small” Mentor-Protege Program application in a lightning-fast eight days.
    Speaking at the National 8(a) Association 2017 Small Business Conference, John Klein, the SBA’s Associate General  Counsel for Procurement Law, confirmed that All Small mentor-protege agreements are being processed very quickly.  I was in the audience this morning for Mr. Klein’s comments, which also included many other interesting nuggets on the SBA’s new All Small Mentor-Protege Program.

    Mr. Klein’s comments included the following:
    Specificity of Mentor-Protege Agreements. When it comes to processing All Small mentor-protege agreements, the SBA is looking for specificity in terms of the assistance that the mentor will provide the protege.  The SBA wants to see the sort of detail that can be tracked and evaluated to determine whether it was actually provided (and, if so, whether it was successful).  Mr. Klein provided an example: a mentor committing to perform a certain type of training for a specific number of hours. Focus on Protege.  The mentor-protege agreement should focus on the benefits that the arrangement will provide to the protege.  The SBA knows that joint venturing is an important reason why mentors and proteges alike pursue mentor-protege arrangements (and joint venturing should be mentioned in the agreement if the parties will pursue it), but joint venturing can’t be the primary focus of a successful mentor-protege agreement. Equity Interest in Protege.  Mr. Klein acknowledged that the regulations allow the mentor to obtain up to a 40% interest in the protege, but he cautioned small businesses to think carefully before giving up a large equity stake in the company.  If the parties do agree to allow the mentor to take an equity interest, the mentor-protege agreement must demonstrate that doing so was beneficial to the protege.  The equity interest cannot appear to primarily benefit the mentor.  Although the mentor is not required to divest its equity interest upon the expiration of the mentor-protege agreement, the parties should be very careful that the equity interest doesn’t result in an affiliation once the mentor-protege agreement expires. Secondary NAICS Codes.  Mr. Klein confirmed that a company looking to be mentored in a second NAICS code must demonstrate that it has previously done work in that NAICS code.  The All Small Mentor-Protege Program allows a company to receive mentoring in a secondary NAICS code, but is not intended for a company that has outgrown its primary NAICS code and is merely search for any NAICS code in which it is still small. Second Protege.  If a mentor wants a second (or third) concurrent protege, it is up to the mentor and protege–in the second or third application, if possible–to demonstrate that the additional protege is not a competitor of the first.  Mr. Klein suggested that there are various ways to do this, such as showing that the second protege is in a different geographic area, industry, or niche than the first. The All Small Mentor-Protege Program continues to draw a great deal of interest from large and small contractors alike.  It’s very helpful to hear from SBA officials like Mr. Klein exactly what the SBA is looking for when it processes applications.  And of course, it’s wonderful that processing is currently going so quickly.  Here’s hoping that’s one contracting trend that continues.

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  17. Koprince Law LLC
    The VA cannot buy products or services using the AbilityOne List without first applying the “rule of two” and determining whether qualified SDVOSBs and VOSBs are available to bid.
    Today’s decision of the U.S. Court of Federal Claims in PDS Consultants, Inc. v. United States, No. 16-1063C (2017) resolves–in favor of veteran-owned businesses–an important question that has been lingering since Kingdomware was decided nearly one year ago.  The Court’s decision in PDS Consultants makes clear that at VA, SDVOSBs and VOSBs trump AbilityOne.

    The Court’s decision involved an apparent conflict between two statutes: the Javits-Wagner-O’Day Act, or JWOD, and the Veterans Benefits, Health Care, and Information Technology Act of 2006, or VBA.
    As SmallGovCon readers know, the VBA states that (with very limited exceptions), the VA must procure goods and services from SDVOSBs and VOSBs when the Contracting Officer has a reasonable expectation of receiving offers from two or more qualified veteran-owned companies at fair market prices.  Last year, the Supreme Court unanimously confirmed, in Kingdomware, that the statutory rule of two broadly applies.
    The JWOD predates the VBA.  It provides that government agencies, including the VA, must purpose certain products and services from designated non-profits that employ blond and otherwise severely disabled people.  The products and services subject to the JWOD’s requirements appear on a list known as the “AbilityOne List.”  An entity called the “AbilityOne Commission” is responsible for placing goods and services on the AbilityOne list.
    But which preference takes priority at VA? In other words, when a product or service is on the AbilityOne list, does the rule of two still apply?  That’s where PDS Consultants, Inc. enters the picture.
    The AbilityOne Commission added certain eyewear products and services for four Veterans Integrated Service Networks to the AbilityOne List.  VISNs 2 and 7 had been added to the AbilityOne List before 2010.  VISNs 2 and 8 were added to the AbilityOne list more recently.
    PDS filed a bid protest at the Court, arguing that it was improper for the VA to obtain eyewear in all four VISNs without first applying the rule of two.  The VA initially defended the protest by arguing that AbilityOne was a “mandatory source,” and that when items were on the AbilityOne List, the VA could (and should) buy them from AbilityOne non-profits instead of SDVOSBs and VOSBs.
    But in February 2017, just two days before oral argument was to be held at the Court, the VA switched its position.  The VA now stated that it would apply the rule of two before procuring an item from the AbilityOne list “if the item was added to the List on or after January 7, 2010,” the date the VA issued its initial regulations implementing the VBA.  For items added to the AbilityOne List beforehand, however, no rule of two analysis would be performed.
    (As an aside–the VA seems to be making a habit of switching its positions in these major cases).
    The parties agreed that the VA’s new position mooted PDS’s challenges to VISNs 6 and 8, which would now be subject to the rule of two.  But what about VISNs 2 and 7?  PDS pushed forward, challenging the VA’s position that it could issue new contracts in those VISNs without performing a rule of two analysis.  PDS argued, in effect, that nothing in the VBA allowed products added to the AbilityOne List before 2010 to somehow be “grandfathered” around the rule of two.
    Judge Nancy Firestone agreed with PDS:
    The court finds that the VBA requires the VA 19 to perform the Rule of Two analysis for all new procurements for eyewear, whether or not the product or service appears on the AbilityOne List, because the preference for veterans is the VA’s first priority. If the Rule of Two analysis does not demonstrate that there are two qualified veteran-owned small businesses willing to perform the contract, the VA is then required to use the AbilityOne List as a mandatory source.
    Judge Firestone pointed out that under the VBA, “the VA must perform a Rule of Two inquiry that favors veteran-owned small businesses and service-disabled veteran-owned small businesses ‘in all contracting before using competitive procedures’ and limit competition to veteran-owned small businesses when the Rule of Two is satisfied.”  Citing Kingdomware, Judge Firestone wrote that “like the [GSA Schedule], the VBA also does not contain an exception for obtaining goods and services under the AbilityOne program.”  Judge Firestone concluded:
    [T]he VA has a legal obligation to perform a Rule of Two analysis under the VBA when it seeks to procure eyewear in 2017 for VISNs 2 and 7 that have not gone through such analysis – even though the items were placed on the AbilityOne List before enactment of the VBA. The VA’s position that items added to the List prior to 2010 are forever excepted from the VBA’s requirements is contrary to the VBA statute no matter how many contracts are issued or renewed.
    Judge Firestone granted PDS’s motion for judgment and ordered the VA not to enter into any new contracts for eyewear in VISNs 2 and 7 from the AbilityOne List “unless it first performs a Rule of Two analysis and determines that there are not two or more qualified veteran-owned small businesses capable of performing the contracts at a fair price.”
    The apparent conflict between JWOD, on the one hand, and the VBA, on the other, was one of the major legal issues left unresolved by Kingdomware.  Now, as we approach the one-year anniversary of that landmark decision, the Court of Federal Claims has delivered another big win for SDVOSBs and VOSBs.

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  18. Koprince Law LLC
    A contractor was awarded more than $31,000 in attorneys’ fees and costs after a government agency unjustifiably refused to pay the contractor’s $6,000 claim–forcing the contractor to go through lengthy legal processes to get reimbursed.
    A recent decision of the Civilian Board of Contract Appeals is a cautionary tale for government contracting officials, a few of whom seem inclined to play hardball with low-dollar claims, even when those claims are entirely justified.

    The CBCA’s decision in Kirk Ringgold, CBCA 5772-C (2017) involved a contract between Kirk Ringgold, an individual, and the USDA.  Under the contract, the agency rented Mr. Ringgold’s property to use as a helipad during a forest fire.  Afterward, the agency “refused, for two weeks, to take responsibility for restoring the Ringgolds’ property to its original condition.”
    Mr. Ringgold submitted an invoice for 15 days of holdover rent, in the amount of $6,000.  The USDA refused to pay.  Mr. Ringgold eventually filed an appeal with the CBCA.
    The USDA initially filed briefs defending the appeal.  But finally, about 11 months after the dispute arose (and three months after Mr. Ringgold filed his appeal), the USDA agreed to settle for the full amount claimed–$6,000.
    Mr. Ringgold then filed a request for attorneys’ fees and expenses under the Equal Access to Justice Act.  Mr. Ringgold sought fees for more than 200 hours of work performed by his four attorneys, as well as legal work performed by a summer law clerk.
    The CBCA wrote that the initial denial of Mr. Ringgold’s invoice was “unreasonable and unjustified.”  Further, once the appeal was filed, the USDA made “substantially unjustified objections to jurisdiction and liability,” thereby “forc[ing] Mr. Ringgold’s lawyers to brief these points.”  Although the USDA ultimately agreed to settle for the full amount, this didn’t eliminate the costs Mr. Ringgold had already incurred because of the agency’s unreasonable conduct.
    The CBCA noted that “the specific purpose of the EAJA is to eliminate for the average person the financial disincentive to challenge unreasonable governmental actions of this kind.”  The CBCA granted Mr. Ringgold’s request and awarded him $31,230.35 in attorneys’ fees and costs.
    In my experience, most government officials go out of their way to treat contractors fairly.  Every now and then, though, my colleagues and I run into a contracting official who seems to have an unfortunate mindset when it comes to a small-dollar claim: “this one will be too expensive for the contractor to litigate–so let’s just see if they’ll eat it.”
    As the Kirk Ringgold case shows, this can be a risky way for the government to do business.  Under EAJA, a contractor may be entitled to recover its attorneys’ fees and costs, even if those fees and costs far outstrip the value of the original claim.  Here, the USDA’s unjustified failure to simply pay Mr. Ringgold’s invoice ultimately cost the agency more than five times the value of that invoice.  Contracting officials, take note.

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  19. Koprince Law LLC
    The 2018 National Defense Authorization Act (NDAA) has generated lots of headlines regarding the so-called “Amazon amendment” and the Act’s prohibition on the Russian IT company Kaspersky Labs products. But gone under reported is a huge change to how the government makes small purchases.
    The 2018 NDAA, signed by President Donald Trump on December 12, increases the standard micro-purchase threshold applicable to civilian agencies from $3,000 to $10,000. Last year, the NDAA increased the Department of Defense (DoD) micro-purchase threshold to $5,000. This larger jump for civilian agencies is likely to have large impact on government purchasing.

    A micro-purchase is one for goods or services that, due to its relatively low value, does not require the government to abide by many of its ordinary competitive procedures, including small business set asides. Because the contract is, theoretically, such a low amount, the contracting officer can pick virtually whatever company and product he or she wants to satisfy the procurement, so long as the price is reasonable.
    Now the civilian micro-purchase threshold is increasing—a lot.
    Specifically, Section 806 of the NDAA, titled “Requirements Related to the Micro-Purchase Threshold” states the following: “INCREASE IN THRESHOLD.—Section 1902(a)(1) of title 41, United States Code, is amended by striking ‘$3,000’ and inserting ‘$10,000’.”
    Title 41 of the Code generally refers to public contracts between Federal civilian agencies such as the Department of Agriculture, the Department of Education, the Department of State, the Department of Labor, and so on. Title 10, on the other hand, generally refers to the Department of Defense components, such as the Army, Navy, and Air Force, but also a number of smaller components such as the Defense Logistics Agency and the Missile Defense Agency.
    Following the change, Section 1902(a)(1) shall read: “Definition.–(1) Except as provided in sections 2338 and 2339 of title 10 . . . for purposes of this section, the micro-purchase threshold is $10,000.”
    The NDAA therefore, specifically exempts (or at least does not change) the sections of Title 10 relating to the DoD micro-purchase threshold (sections 2338 and 2339) which will therefore hold steady at $5,000—for 2018 at least (more on that later).
    Section 1902 specifies in paragraph (f) that the section shall be implemented by the FAR. The NDAA changes the U.S. Code, but it does not change the FAR. The FAR, meanwhile, currently sets the civilian micro-purchase threshold at $3,500, because it is occasionally adjusted to keep pace with inflation. Although the law has now officially been changed, it’s not clear that civilian contracting officers will begin using the new authority until the corresponding FAR provisions are amended.
    Our guess is that, in practice, this change will take some time to implement. We believe most contracting officers will stick to what the FAR says until they are told otherwise. It is just a guess, but it is logical because unlike the U.S. Code, procurement officials rely on the FAR every day. Congress may have said that civilian procurement officials have the authority to treat anything below $10,000 as a micro-purchase, but contracting officers often wait until the FAR Council implements statutory authority before using that authority. As such, until the FAR, or the specific agency the procurement officials work for, recognize the change, our guess is that most COs will follow the FAR until it catches up with the U.S. Code.
    Nevertheless, whether it happens today or a year from now, this change is likely to have a big impact on some federal procurements. The 233% increase in the threshold for civilian agencies (a 186% increase if you count from $3,500) will open the door for many more products to be purchased without competition: FAR 13.203 specifies that “[m]icro-purchases may be awarded without soliciting competitive quotations” so long as the contracting officer (or similar authority) considers the price to be reasonable. Just think about the different types of things you can buy with $10,000 as opposed to $3,000, or $3,500.
    This change to the micro-purchase threshold, plus the “Amazon amendment” which sets up an online marketplace for sellers, and the fact that the FAR encourages the use of a Governmentwide commercial purchase card to make micro-purchases (FAR 13.301) means that procurement officials will simply be able to swipe, or click for relatively significant buys. Altogether, it could be bad news for some small businesses, particularly those that engage in a lot of “rule of two” set-aside simplified acquisitions under FAR 19.502-2(a). When this change is implemented, and presuming FAR Part 19 is updated accordingly, a chunk of those simplified acquisitions will no longer be reserved for small businesses.
    With this change to the civilian threshold, it is hard not to wonder whether the DoD threshold will soon grow to meet it. DoD procurement officials sometimes enjoy greater freedom in purchasing than their civilian counterparts. It would not be shocking to hear DoD voices begin lobbying for the same change on their end soon.

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  20. Koprince Law LLC
    The Air Force’s large NETCENTS-2 IDIQ vehicle did not require orders to be set-aside under the small business pool, except for orders valued between the micro-purchase threshold and simplified acquisition threshold.
    In a recent decision, the GAO held that although the NETCENTS-2 contract in question says that Contracting Officers “should” perform a “rule of two” small business set-aside analysis for orders valued over the simplified acquisition threshold, it does not require that such an analysis be performed–meaning that Contracting Officers can validly award such orders to large businesses, even if two or more small business NETCENTS-2 holders exist.

    Like many large IDIQs, the NETCENTS-2 IDIQ has dedicated small business pools.  The NETCENTS-2 contract for NetOps and Infrastructure gives the following instructions to Contracting Officers regarding use of the small business pool:
    a.  Each acquisition of services that has an anticipated dollar value exceeding the micro-purchase threshold, but not over the simplified acquisition threshold shall be competed in the NetOps Small Business Companion Contracts pool of awardees . . . .
    b.  For orders exceeding the simplified acquisition threshold the task order Contracting Officer should conduct market research to determine whether or not there is a reasonable expectation of receiving offers from at least two small business companion contractors.  If market research reveals that at least two small businesses in the Small Business Companion contract are capable of performing the work, the task order should be competed in the NetOps Small Business Companion contract pool of awardees.  If a task order is competed in the NetOps Small Business Companion contract pool of awardees and the task order contracting officer receives no offers, or no acceptable offers from a small business companion contract ID/IQ awardee, the RFP shall be withdrawn and the requirement, if still valid, shall be resolicited in the NetOps full and open pool of ID/IQ contracts awardees.
    That brings us to the GAO’s decision in Technica Corporation, B-416542, B-416542.2 (Oct. 5, 2018).  The case involved a NETCENTS-2 task order issued on a sole source basis to Leidos Innovations Corporation, a large business.  Under the task order, Leidos was to provide various IT network services under a program known as the Air Force National Capital Region Information Technology requirement.
    Technica Corporation, a small business, was the incumbent contractor and a NETCENTS-2 contract holder.  Technica filed a GAO bid protest challenging the sole source award to Leidos.  Among its allegations, Technica contended that the Air Force was required to set aside the order for small businesses.
    The GAO wrote that FAR 16.5, which generally governs the award of task orders, says that agencies “may, at their discretion,” set aside orders for small businesses.  According to the GAO, this provision, as well as the underlying statutory authority, “make clear that agencies are not required to set aside an order for small businesses, absent specific contractual language obligating the agency to do so.”
    Turning to the NETCENTS-2 contact itself, the GAO noted that “the contract states that for orders exceeding the simplified acquisition threshold, agencies ‘should’ conduct market research regarding small business vendors, and ‘should’ set aside task orders for small business vendors if there is a reasonable expectation of receiving proposals from two or more such firms.”  The GAO contrasted the use of the term “should” in this sentence with the use of the word “shall” in the paragraph discussing orders between the micro-purchase threshold and simplified acquisition threshold.  The GAO wrote:
    We conclude that for orders valued above the simplified acquisition threshold, the use of the term “should” in the NETCENTS-2 contract does not require the agency to assess whether to conduct market research for the purpose of determining whether to set aside an order for small businesses, nor does the contract require the agency to set aside an order if market research shows that two or more small businesses are capable of performing the work.  Instead, these set-aside actions for orders above the simplified acquisition threshold are discretionary on the part of the agency.
    The GAO denied the protest.
    For small business NETCENTS-2 contract holders, the GAO’s decision in Technica Corporation is disappointing.  Even though the Air Force “should” prioritize small businesses, “should” is not the same as “shall,” and the Air Force need not conduct a rule of two analysis for orders valued over the simplified acquisition threshold.

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  21. Koprince Law LLC
    Everyone involved with government contracting knows, or should know, a little bit about registration in SAM.gov. Registration is now required for ALL federal contractors at the time they submit bids.
    This blog post provides you with 5 things you should know about registering in SAM.gov.
    1. Your Username is Permanent; your Password is not.
    Like diamonds, your SAM.gov Username is forever. In other words, your Username cannot be changed or duplicated by anyone else ever (even if your Username is deactivated). The government recommends not using your email as your Username. In contrast with your Username, SAM.gov requires you to change your Password at least every 180 days. If you lose track of your Password, you will be able to change it. It should go without saying, but don’t share your password, even with the SAM Help Desk or anyone from the SAM Program Office.
    2. What you need before you register.
    There are a number of pieces of information you should have on hand before you register, including the following:
    • Your DUNS number. DUNS Numbers (parts of Dun & Bradstreet’s Data Universal Numbering System) are nine digit identification numbers associated with each physical location of your business. Acquiring a DUNS number is free online via this link. While the site indicates that you may acquire a DUNS number “within 1 business day,” its wise to allow for a few days to process.
    • If you are a US tax paying entity, you need your Tax Id Number (TIN) and Taxpayer Name. Your TIN can be either an Employer ID Number (EIN) or Social Security Number (SSN) based on your business structure. You can apply for your federal TIN or EIN through the IRS here. Also note: your Taxpayer Name may be different from your legal business name! Make sure you verify the Taxpayer Name on your entity’s 1099, W-2, or W-4 forms.
    • Your CAGE or NCAGE Number, if you already have one. You can check your CAGE/NCAGE number, or request a new one, here. If you don’t have one yet, no worries! You will be automatically assigned one after you register in SAM.gov.
    • Your Electronic Funds Transfer (EFT) Information. You want to get paid! To do so, you need to provide your bank routing and account numbers.
    3. Providing one or more NAICS codes.
    We’ve discussed NAICS codes previously on this blog and on our YouTube Channel. When you are registering in SAM, you must supply at least one NAICS code associated with your business, but you can include as many as are applicable to you. You must mark only one as your Primary NAICS code however. Still, keep in mind that you can add, remove, or change NAICS codes whenever as your business grows or adapts.
    4. TELL THE TRUTH!
    While this one should be obvious, we cannot stress it enough! When filling out Core Data, you may be required to provide “proceedings data”; Specifically, you must disclose whether the business you are registering (or any of its principals) have been subject to a number of types of legal proceedings related to performance of a Federal contract in the last 5 years.
    These proceedings include Federal or State (1) Criminal proceedings resulting in a conviction or other acknowledgement of fault; (2) Civil proceeding resulting in a finding of fault with a monetary fine, penalty, reimbursement, restitution, and/or damages greater than $5000, or other acknowledgement of fault; and/or (3) Administrative proceedings resulting in findings of faults with either a monetary fine or penalty greater than $5,000 or reimbursement, restitution, or damages greater than $100,000, or other acknowledgments of fault.
    If you answer yes to any of these, you will be asked to provide additional, detailed information. This information will be made public through FAPIIS. In any case, however, it is best to disclose any relevant information! If you have any question about whether or not disclosure is required, its generally best to disclose. For specific questions on how to appropriately disclose information, you can also talk to a lawyer, like the ones here at Koprince Law.
    In addition to the Core Data section, under the Representations and Certifications portion of your SAM.gov registration, the Government has created a “questionnaire” related to specific FAR and DFARS provisions contractors may have to comply with.
    Questions 8 and 9 in particular, but other questions as well, require you to disclose whether “in the past three years, your entity, or any of its principals, has been convicted or had a civil judgment rendered against it for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (federal, state, or local) contract or subcontract; violation of federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal criminal tax laws, or receiving stolen property.”
    Your answers will be public here as well, but again, do not try to cover things up! Misrepresenting anything means your pants are likely to set on fire or, in any case, you are subject to facing serious consequences.
    5. Finally, SAM.gov will be changing its format soon!
    SAM.gov is scheduled to transition into what is currently beta.SAM.gov by late 2019. The new government website is intended to “merge ten ‘legacy’ award sites into one system,” to (hopefully!) make government contracting processes easier.
    Currently, registration and updates should still be done via SAM.gov, but the government welcomes use of beta.SAM.gov and feedback on the system. When changes do roll around, however, the government has clarified that if you have a current SAM.gov registration “you will not need to re-register your entity, but you will need to create a new beta.SAM.gov user account. Your entity data will migrate to the new site. You will be able to claim your legacy SAM.gov roles using your new beta.SAM.gov account.” Keep your eyes peeled for updates on the modified system!
    If you want additional information on registering for SAM.gov, the government has put together a pretty thorough handbook, available online along with a number of descriptive videos, or you can contact the Federal Service Desk for additional assistance.

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  22. Koprince Law LLC
    For most Americans, tax season is happily behind them and Memorial Day festivities signaled the start of summer. A recent GAO report, however, may give cause for some federal contractors to revisit their tax policies before lighting up the grill next weekend.
    Contracting Officers are required to take in a wealth of information prior to awarding a contract. One piece of information each contracting officer is supposed to review is the tax status of offerors. If an offeror is delinquent in paying taxes, the contracting officer has several subsequent review steps to take. But contracting officers do not not always conduct this review, so Congress asked GAO to review the impact of these missing steps.
    In the report, GAO reviewed the actions of five agencies (Army, Navy, DOE, HHS, and VA) to determine their consideration of a contractor’s federal tax debts before awarding contracts. You read that right: in addition to focusing on teaming agreements, CPARS, and your next deliverable, you also need to make sure you are current on your tax payments or risk losing out on a contract or even worse penalties. In fact, the report says that “[a]s part of the responsibility determination, the contracting officer must also access, review, and document the prospective contractor’s applicable representations and certifications, including qualifying federal tax debt reported under § 52.209-11 and § 52.209-5.”
    FAR 52.209-5 and 52.209-11 contain the various certifications all offerors must make regarding their responsibility to perform a contract. Under FAR 52.209-5, non-corporate offerors certify whether they have “been notified of any delinquent Federal taxes in an amount that exceeds $3,500.” Under FAR 52.209-11, corporations cannot have any delinquent taxes unless a series of additional elements are present, which we will not analyze here. FAR 9.406-2(b)(1)(v) allows a debarring official to debar contractors who have “delinquent Federal taxes in an amount that exceeds $3,500.”
    Returning to the GAO Report, each of the agencies “examined have established control activities to varying degrees to help contracting officers” identify offerors with delinquent taxes. The Army, Navy, DOE, HHS, and VA each have class deviations that “generally required contracting officers to include an alternative provision in solicitations and, if a contractor reported having qualifying tax debt, to not award the contract without a written suspension and debarment determination from” the agency’s Suspension and Debarment Official (SDO). The contracting officers may make an award if the SDO determined that “suspension or debarment is not necessary to protect the interests of the government[.]”
    Even with this procedure, and others, in place GAO found that the Army, Navy, DOE, HHS, and VA cumulatively “awarded 1,849 contracts to contractors that reported qualifying federal tax debts[.]” While the report did not analyze the dollar value associated with these 1,849 contracts, it did find that over 4,600 federal contractors “had unpaid taxes at the time they received a contract award in 2015 and 2016.” These 4,600 “contractors received about $17 billion in contract awards and owed $1.8 billion in unpaid taxes[.]”
    When the GAO discussed the 1,849 contracts with the five agencies at issue, the agencies “were unable to explain whether or why their control activities did not operate effectively to ensure compliance” with laws and regulations. These agencies told GAO, “in response to [GAO’s] review, they plan to take actions to improve control activities to identify contractors’ federal tax debts” under the applicable regulations.
    GAO’s recommendations were for each of the identified agencies to “review the contracts [GAO] identified.” While the recommendations do not call for a system-wide review, this report will likely bring a focus on identifying delinquent taxpayers and precluding them from potential awards.
    Now that the three-day weekend is behind us all, it may be wise to make sure your firm is compliant with the applicable FAR tax provisions first thing. Because based on this report, federal agencies are also putting tax compliance on the front burner.

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  23. Koprince Law LLC
    In the classic 1993 movie Gettysburg, Colonel Joshua Chamberlain, a great American hero (played by Jeff Daniels), commented on the power wielded by military commanders, particularly generals: “Generals can do anything. Nothing quite so much like God on Earth as a general on a battlefield.”
    It turns out that this this power extends to actions that might affect your Government contract. For instance, a base commander can revoke a contractor’s access to the base; if that happens, and the contract required the contractor to maintain base access eligibility, the Government can rightly terminate the contract for default.
    This fact scenario recently played out in Sang Kash Company, ASBCA 60532 (June 11, 2019). There, US Central Command maintained, with a contractor, a requirements contract for bulk concrete at Bagram Airfield, Afghanistan. The contract simply required the contractor to supply the concrete requested by the Government; but it did not guarantee the contractor a minimum quantity. Of particular importance here, the contract required the prime subcontractor, and all subcontractors, to remain eligible for access to U.S. military installations during the entire period of performance.
    During performance, the Bagram Airfield Commander, by letter, revoked the contractor’s access to the base. The letter was short on details and didn’t spell out the reasons for the revocation. It did, however, give the contractor a 10-day window to remove all personnel and equipment from the base.
    Because the contractor lost base access, the contracting officer terminated the contract for default citing the contractor’s violation of the base access clause in the contract.
    The contractor appealed. It essentially argued that the contract required the Government to order thousands of cubic yards of concrete, and revocation of the base access was a clever way for the Government to get out of its contractual obligation. The contractor also alleged that it was denied due process and had a right to know why its base access had been revoked.
    In its analysis, ASBCA held that the contractor’s theory–i.e., revocation of its base access was the Government’s way get out of “guaranteed” concrete orders–had no support in the record.
    ASBCA further explained that “nstallation access decisions are military command decisions” and “t is well established that the commanding officer of a military base has wide discretion as to whom he or she can exclude from the base.” Given this very broad authority, ASBCA held that it would not question a military commander’s revocation of base access, except in limited circumstances. Specifically, it held:
    If you’re a contractor performing on a military installation, keep this case tucked in the back of your mind. The base commander, essentially alone, decides who comes onto the installation. And if, for whatever reason, your access is revoked and you can no longer perform, the Government may be able to terminate your contract for default.

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  24. Koprince Law LLC
    No, the government isn’t trying to figure out how it can bundle home and auto coverage to save on its insurance premiums. Instead, “consolidation” in the federal government contract context refers to the action of collecting requirements being performed under discrete small business set-aside contracts into a single procurement. Before an agency may consolidate contracts, it must consider the impacts the proposed consolidation will have on small business participation. Recently, however, GAO was asked to determine whether consolidation analyses are required for Blanket Purchase Order (“BPA”) procurements, and its decision did not adopt the SBA’s position.
    Coast to Coast Computer Products, Inc., B-417500 et al.(Comp. Gen. July 29, 2019), involved a General Services Administration (“GSA”) procurement for information technology equipment, software, and associated services. Competition was restricted to holders of GSA Schedule 70 contract holders.
    The procurement was structured as a BPA, which GSA referred to as the “second generation information technology (“2GIT”)” BPA. The goal of the 2GIT BPA was to provide a “one-stop-shop in the Information Technology market to meet the needs of the Air Force, Department of Defense (DOD) agencies, and other federal, state, local, regional, and tribal governments.” Given the broad scope of services GSA sought, the 2GIT procurement was not set-aside for small businesses. Instead, small business participation was incorporated as an evaluation factor, and individual orders could be set-aside exclusively for small businesses. The estimated value of the BPAs was $5.5 billion.
    As a prospective small business offeror, Coast to Coast filed a protest challenging the terms of the 2GIT BPA solicitation. Among other things, Coast to Coast alleged that the GSA had improperly consolidated contracts without first determining the impact on small businesses.
    As alluded to above, bundling is technically defined as “consolidating 2 or more procurement requirements for goods or services previously performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business.” 15 U.S.C. § 632(o). While consolidation means “[the] use of a solicitation to obtain offers for a single contract or a multiple award contract . . . to satisfy 2 or more requirements of the Federal agency for goods or services that have been provided to or performed for the Federal agency under 2 or more separate contracts lower in cost than the total cost of the contract for which the offers are solicited[.]” 15 U.S.C. § 657q(a)(2).
    Those are pretty wordy definitions. Stated more succinctly, consolidation is the action of consolidating two or more individual procurement into a single procurement that may make it hard for small businesses to compete for the procurement. While related, consolidation is sightly different from another procurement integration action, “bundling.”
    The concern with consolidation is that it will freeze small business contractors out of federal contracting opportunities because it will both reduce the number of awardees and require the awardee to have greater qualifications than small businesses may otherwise be able to muster. To address this issue, before a procurement exceeding $2 million may be consolidated, the contracting agency must first conduct market research to evaluate the impact on small businesses and investigate potential alternatives to consolidation. 15 U.S.C. § 657q(c)(1). Even if consolidation is found to be necessary, the acquisition strategy must still find ways to incorporate small business participation.
    It was undisputed that GSA did not conduct any type of consolidation analysis before issuing the BPA solicitation. Despite this, GSA defended the structure of its procurement by arguing that a subtle technicality built into the wording of the consolidation statute exempted this procurement from the consolidation analysis. Specifically, GSA argued that because the consolidation statutes referred to contracts, it was not required to conduct a consolidation analysis because, as a legal matter, a BPA is not a “contract.”
    As resolution of the protest would impact small businesses, GAO solicited the input of the SBA before issuing its decision. The SBA responded that it supported the position advanced by Coast to Coast that GSA’s failure to conduct any type of consolidation analysis was improper. GAO summarized the SBA’s position as follows:
    Despite receiving support from the SBA, Coast to Coast failed to convince GAO that GSA failed to conduct a consolidation analysis. The basis for GAO was the same as that advanced by the agency. As GAO explained, “Our review of applicable statutory and regulatory authority reveals that a consolidation analysis is not required prior to establishment of a BPA—which is not a contract, according to the SBA’s definition of a contract—but rather, that the required consolidation analysis is to be performed at the task order level.” While GAO acknowledged this may be administratively burdensome, it nevertheless concluded that BPAs are not subject to consolidation requirements.
    GAO’s decision in Coast to Coastwas a matter of first impression, which is to say that GAO had not previously considered the question of how BPAs would impact consolidation analyses. Now, GAO has spoken, and its decision paves the way for agencies to consolidate more services under BPAs without needing to conduct a consolidation analysis.

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  25. Koprince Law LLC
    As we wrote about, the Section 809 Panel had recommended that Congress eliminate most small business set-asides for DoD acquisitions. The Panel suggested replacing small business set-asides with a five percent small business price preference. It looks like Congress heard our concerns—and those voiced throughout industry—and will reject this suggestion.
    As Steven Koprince wrote, the recommendation was questionable for a number of reasons. For one, it didn’t accurately describe the current state of small business set-asides by giving “the impression that big, bad FAR 19.502-2 is grim and unyielding, regularly forcing beleaguered DoD Contracting Officers into ill-advised set-asides.”
    For another, the Panel stated that small business set-asides actually hurt small businesses, by forcing them to stay under the size limit. But this overlooked the fact that small businesses were able to grow larger because there were restricted procurements where small businesses did not have to compete with huge businesses.
    A third reason was that a 5% price preference was unlikely to ensure small businesses received a fair share of government contracts. Based on the track record with the HUBZone price preference, it’s simply not enough to get contracting officers to award to small businesses.
    Well, we have an update on this recommendation. Thanks to work of WIPP (Women Impacting Public Policy) and others, Congress and DOD have indicated they will reject the Panel’s recommendation to eliminate small business set-asides!
    This decision came after several industry advocates and organizations (including Koprince Law) signed a letter urging both the House and Senate Armed Services Committees to reject this recommendation. We applaud the decision by Congress and DOD to reject this recommendation—not only was its rationale flawed, but its consequences likely would have been disastrous for small businesses.
    While we questioned this recommendation and others from the Panel, there were other recommendations that made a lot of sense. We hope those recommendations are given fair consideration, and the never-ending process of streamlining the federal government’s acquisition process moves forward.
    Check SmallGovCon for more updates on the Panel’s recommendations.

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