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  1. Koprince Law LLC
    A NAICS code appeal can be a powerful tool for altering the competitive landscape of a bid by changing what size of business is allowed to submit a bid and thereby either increasing or decreasing the potential competitor pool. This post explores some of the important reasons for considering filing a NAICS code appeal. While NAICS codes appeals are not that common, they have a fairly high rate of success.
    What is a NAICS Code?
    A NAICS code is a six-digit code that is assigned to various categories of industries under the North American Industry Classification System (NAICS), a standard used in classifying business establishments. The North America part in the name, means these codes are also used in Mexico and Canada, meaning revisions to the codes have to get approval of all three countries. The codes are assigned by the US Census Bureau for “business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.” The NAICS manual lays out the system for assigning NAICS codes. The manual has convenient search form to use to look up the descriptions for each code.
    For our purposes, it’s important that the SBA assigns a different size standard to each NAICS code based on dollar number of receipts or number of employees. SBA publishes a table of all the size standards. Here’s an example.
    NAICS code 541511 is for Custom Computer Programming Services and has a size standard of $34 million per year. The NAICS manual describes this code as follows: “This U.S. industry comprises establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer.”
    So, if an agency assigns 541511 to a solicitation, then only contractors whose average receipts are under $34 million per year can bid on the procurement.
    1. The Solicitation Description of Work Does Not Match the NAICS Code Description
    A contracting officer must assign the proper NAICS code based on what best describes the principal purpose of the product or service being acquired in light of the industry descriptions in the NAICS Manual and the description in the solicitation. The key to having a good NAICS appeal is to show that, based on clear examples from the solicitation’s scope of work and level of effort, the NAICS code assigned doesn’t match the main purpose of what the agency is purchasing. Look at the majority of work under the solicitation, as well as past examples of similar work (or possibly even the incumbent work) being procured under a different NAICS code.
    In one example we blogged about, a solicitation at the time of its posting was assigned NAICS code 561311, Employment Placement Agencies, which carried a $30 Million size standard. In the NAICS manual examples of businesses under that code may include employment registries, babysitting bureaus, and employment agencies. The work, as described, called for at least 8 supervisory medical support assistants, and over 150 full-time employees. These employees would conduct general administrative functions, perform a variety of technical support that will help the work of medical staff, cover general administrative staff on leave, and help cover vacancies, among other duties. 
    The protester argued that the RFQ calls for “100% administrative services” and that there is no requirement for the agency to “purchase the suppliers of the administrative services.” Consequently, the protester proposed that NAICS 56110, Office Administrative Services, would be a better fit for this RFQ. The NAICS manual provides examples of businesses under that code such as, administrative management services, management services, managing offices of physicians and surgeons, and medical office management services. SBA agreed and sustained the appeal.
    2. The Largest Dollar Amounts in the Solicitation Do Not Correspond to the Chosen NAICS Code
    The NAICS code must match the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being acquired. Say that 90% of the dollar value of a contract is for work under a contract that does not match the NAICS code. Based on those dollar amounts, it appears the government may have used the incorrect NAICS code.
    That would be a good candidate for a potential NAICS code challenge.
    3. The NAICS code size standard doesn’t allow you to bid.
    The NAICS code is based on the type of work performed. But it has an important impact on the size of businesses that can bid on a solicitation. Going back to our earlier example, say that a solicitation had a NAICS code 541511 for Custom Computer Programming Services and has a size standard of $34 million per year. If your company has average receipts of $10 million per year, it would be competing with companies potentially more than three times as big.
    In that situation, it might make sense to consider a NAICS code appeal, if there was a reasonable basis for one.
    4. The Agency Recently Updated the NAICS Code in a Solicitation
    These appeals must be filed within 10 calendar days after issuance of the solicitation or amendment to the solicitation affecting the NAICS code. This, of course, differs from the ordinary rule for protesting a defect in a solicitation. At the GAO and Court of Federal Claims, protests of other solicitation defects ordinarily are timely if filed before the due date for initial proposals. So, if you see that a solicitation was recently amended to change the NAICS code, you may want to examine why the agency changed it. Otherwise, however, you must challenge the NAICS code within 10 days of the initial issuance of a solicitation. Many appeals are dismissed for being untimely. Counting just those NAICS code appeals decided on the merits, about 45% were granted, per a GAO report. 
    * * *
    These are reasons why your small business might consider a NAICS code appeal. A NAICS code appeal can be a powerful way to change the competitive nature of a procurement. But you must act fast and have a logical basis for suggesting the agency’s chosen NAICS code does not fit. If both of those are true, a NAICS code appeal can be a good bet.
    Questions about this post? Need help filing or responding to a size protest of your own? Or need additional government contracting legal assistance? Email us.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post Why File: A NAICS Code Appeal first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  2. Koprince Law LLC
    Hello, blog readers and happy Friday. Can you believe it’s already March? In just a few short weeks, spring will (finally) be here!
    We hope that you’re gearing up for a nice weekend. But before you punch out, let’s take a look at the-week that was. In this edition of the Week in Review, Congress passed a short term spending measure to avoid another government shutdown and a report was released citing that federal employee whistleblower complaints have dropped, and Congress is trying to improve small business contracting methods. You can read more about this and other federal government contracting news in the articles below.
    Have a great weekend!
    Federal Acquisition Regulation: Certification of Service-Disabled Veteran-Owned Small Businesses Congress approves short-term extension to avoid shutdown, buy more time for final spending agreement Sen. Ernst hopeful about fixes to small business contracting Federal employee whistleblower complaints to OSC fall by nearly half over 5 years US Government Preparing 3 Key Space Contracts for Launch GovCon Expert Payam Pourkhomami Ventures Into the New Era of DOD Cybersecurity With the Proposed CMMC 2.0 Rule (Part One) DOD, GSA & NASA Release Interim Rule on SDVOSB Certification Advice for contractors when the government really, really could shut down DOD Fraud Risk Management: Enhanced Data Analytics Can Help Manage Fraud Risks DoD calls for more contracting flexibilities in 2025 NDAA Class Deviation—Prohibition on Required Disclosure of Information Relating toGreenhouse Gas Emissions SBA Announces Statutory Increases for Surety Bond Guarantee Program How emerging technologies are changing government contracting The post SmallGovCon Week in Review: Feb 26-March 1, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  3. Koprince Law LLC
    The 2024 NDAA is directing quite a change in past performance evaluations for offerors in Department of Defense acquisitions. Historically, an offeror’s affiliate’s past performance is not automatically considered along with the offeror’s proposal, although an agency could consider it. The 2024 NDAA, though, has actually mandated a change within the DFARS that will up-end this long-held tenet for Department of Defense contracts.
    Some background is probably warranted before discussing the change that the 2024 NDAA will cause for DoD acquisitions. We here at SmallGovCon discuss size and affiliation quite often (keep in mind that “affiliation” for federal contracting is different than “affiliation” in private industry). Of course, we highly recommend you read our blogs on affiliation to learn more, but for purposes of this discussion, what matters most is that in federal contracting, affiliates are deemed to be commonly controlled, and their sizes are combined. Based on that foundation of affiliation, many contractors logically think, “well my affiliate is seen by the SBA as under common control and part of my size, so agencies should consider my affiliate’s past performance along with mine as well.” Unfortunately for those under that impression, it is wrong (for now).
    Agencies must consider joint venture partner experience, and past performance of a small business teaming partner if it meets the factors under those rules. The FAR has also stated that an agency “should” consider the “past performance information regarding predecessor companies, key personnel who have relevant experience, or subcontractors that will perform major or critical aspects.” Noticeably absent from all of these is any sort of requirement or consideration of an offeror’s affiliates.
    Thus, under current rules, a business could be affiliated with a company due to sharing of resources, ownership, management, or other reasons that could directly impact performance, but the agency does not have to look at any of that. An affiliate could have the best past performance possible for a procurement, which could boost an offeror’s performance, but it would all be for naught. This can be frustrating for many contractors who (understandably) think these types of affiliate situations should boost their proposal.
    Well, this will soon be changing for Department of Defense procurements. The 2024 NDAA states in section 865:
    The 2024 NDAA was signed into law in late December 2023. Consequently, this will mean that once the DFARS is updated in line with the NDAA (hopefully by July of this year), Department of Defense acquisitions (and only those for now), will take into account any relevant past performance information of affiliates of a small business offeror. This could provide many small businesses a new ability to leverage past performance that is technically not exactly their own.
    What is unclear from all this is how such a change will be interpreted for entity-owned 8(a) Program participants, such as those owned by Alaska Native Corporations or Native-American entities. As you may know, when determining the size of an entity-owned 8(a) company, SBA does not consider other entities with common ownership to be affiliates. So, under this change to the DFARS, it could be argued that entity-owned 8(a) Program companies cannot automatically utilize their possibly large network of affiliate resources for a proposal advantage in a DoD acquisition, absent a JV or teaming arrangement (although the FAR would allow it at the discretion of the evaluating agency).
    As of the time of this blog post, the subject DFARS provision has not been updated. The NDAA provides a deadline of July 1, 2024, to get such an update complete. Once that update occurs (hopefully by July 1), offerors should be prepared to adjust their DoD proposal approaches to reflect relevant past performance of affiliates, and/or take into account competitors’ affiliates. Make sure to come back and check the link to the specific DFARS above on this blog post through July 1, 2024, to know exactly when this change occurs, and be sure to reach out to your federal contracting attorneys with any questions on the FAR or DFARS.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post 2024 NDAA will Update DFARS to Require Evaluation of Small Business Affiliate Past Performance first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  4. Koprince Law LLC
    Join our attorneys, Nicole Pottroff and John Holtz, on the latest edition of MyGovWatch, now on YouTube. This podcast, hosted by Nick Bernardo, covered a wide variety of current government contracting topics and answered all the right questions. From the migration of the Veteran Small Business Program from the VA to the SBA (and the first appeal reviewing SBA’s SDVOSB “grace period”)–to the most-recently updated size standards and the assignment of (the often incorrect) NAICS codes to federal contracts–all the way to SBA’s 8(a) Program and the effects of the recent federal court decision in Ultima –and everything in between.
    You can watch this informative video here.
    The post MyGovWatch YouTube Video Available Now! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  5. Koprince Law LLC
    Whether you are a small, medium or even a large contractor seeking to team with small businesses, this course will discuss the different regulations you must follow, the different small business programs set up by the SBA, the advantages and disadvantages of the JV & Mentor Protégé programs, plus other topics of interest. This live virtual event will be hosted by Larry Allen and Nicole Pottroff and Stephanie Ellis will be joining Larry for the afternoon session. We hope you will consider attending this informative event! Register here.
    The post 1 Day Virtual Event! The Essentials for Small Business Government Contracting, February 29, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  6. Koprince Law LLC
    Happy final Friday of February! Can you believe that next week is March already? I guess we can start preparing for St. Patrick’s Day because it will be here soon. I think folks are hoping that our spring like weather will hold and that winter is over. Of course, in Kansas, the weather can change on a dime so we won’t count on it! Here’s hoping the weather is nice wherever you are and have a great weekend.
    This week in federal government contracting news included reactions to proposed federal rules on cybersecurity for contractors, and an update on potential expanded whistleblower protections.
    U.S. Attorney Announces $25.5 Million Settlement With Durable Medical Equipment Supplier Lincare Inc. For Fraudulent Billing Practices Pentagon IG not impressed by effectiveness of DoD vendors’ award fees 4 lessons for tech startups expanding into government contracting DoD ready to start implementing multibillion dollar moving contract after solving latest tech hurdle Small and minority-owned businesses see more opportunity than ever Potomac man pleads guilty in federal contracting scheme Defense Innovation Board: Scaling Innovation Forward Contractors on edge because of Pentagon’s proposed buying rules SBA Announces Funding Competition to Organizations Providing Entrepreneurship Training to Women Veterans Oklahoma Man Pleads Guilty to Defrauding Government’s Online Auctions, Purchasing Vehicles and Jewelry for $1 Whistleblower protection legislation stalls amid congressional chaos House leaders announce new, bipartisan AI task force General Services Administration Acquisition Regulation; Updated Guidance for Non-Federal Entities Access to Federal Supply Schedules The post SmallGovCon Week in Review: February 19-23, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  7. Koprince Law LLC
    In Mckenna Brytan Indus. LLC, SBA No. VSBC-334, 2023 (Feb. 8, 2024), the U.S. Small Business Administration (SBA) Office of Hearings and Appeals (OHA) sustained the Service-Disabled Small Business (SDVOSB) status protest of BTNG Enterprises, LLC (BTNG). In its decision, OHA reiterated the two current regulatory options for calling yourself an “SDVOSB” concern: the first, is having your SDVOSB application officially approved by the SBA and your company listed in the SBA’s Veteran Small Business Certification Program (VetCert) data base; and the second, is having submitted your complete application to SBA through VetCert prior to December 31, 2023, and be currently waiting for approval or denial. Here, OHA was unable to conclude that BTNG had done either of those things–despite looking for evidence of eligibility from the SBA and from BTNG itself.
    McKenna Brytan is a significant protest. It is one of the first OHA decisions to discuss enforcement of SBA’s regulatory SDVOSB grace period that began January 1, 2024 (actually it appears it may be the first protest). McKenna Brytan concerned a Defense Logistics Agency (DLA) Request for Quotations (RFQ) for portable dehumidifiers, set aside for SDVOSBs under North American Industry Classification System (NAICS) code 333415, Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing. It had a corresponding size standard of 1,250 employees. The RFQ specifically stated: “[i]f no qualified SDVOSB offers are received, it is possible other small businesses can be considered.” And
    DLA announced the award to BTNG on December 6, 2023. In its proposal, BTNG offered a fixed unit price of $330 per unit and represented to DLA that it was a WOSB concern and an SDVOSB concern.
    McKenna Brytan filed a timely SDVOSB status protest of the awardee with DLA’s Contracting Officer for the RFQ. It alleged: its quotation should have been found superior to BTNG’s; and its quotation would more likely have been awarded if BTNG had not falsely claimed SDVOSB status. As required, the Contracting Officer forwarded the status protest on to OHA requesting: “a formal SDVOSB status determination be accomplished for BTNG.” Along with the referral letter, DLA also told OHA that BTNG was only the lowest quote among those representing SDVOSB status and “was not the lowest quote in relation to the quotes submitted by [non-SDVOSBs].”
    To investigate BTNG’s represented SDVOSB status and eligibility, OHA issued a Notice and Order for the Director of SBA’s Office of Government Contracting (D/GC) to submit a BTNG Case File to OHA. But after “a comprehensive search,” the D/GC told OHA there was no record of BTNG being SDVOSB certified by SBA–and in fact, no record of BTNG even applying for SDVOSB certification with SBA. So, without an SBA case file, OHA issued an Order to BTNG itself to prove its qualification as an SDVOSB, noting: “As the protested firm, BTNG has the burden of proving its eligibility as an SDVOSB by a preponderance of the evidence. 13 C.F.R. § 134.1010.”
    In perhaps one of the most interesting parts of this protest, BTNG’s response to the protest and OHA’s Order openly admitted that BTNG was not 51% owned nor fully controlled by one or more service-disabled veterans. Rather, in OHA’s words:
    OHA’s analysis of this protest rightfully began with an explanation of the relevant date for determining SDVOSB eligibility, noting, “In an SDVOSB status protest pertaining to a procurement, OHA determines the eligibility of the protested concern as of the date of its initial offer or response which includes price. 13 C.F.R. § 134.1003(e)(1).” OHA therefore determined it would analyze BTNG’s eligibility as of the date it submitted its quotation to DLA.
    OHA then turned to the question of BTNG’s SDVOSB eligibility as of the date it submitted its proposal. Because there was no debate that BTNG was not a VetCert registered SDVOSB, OHA focused on SBA’s regulatory option for previously self-certified SDVOSBs to continue to self-certify if they qualify for SBA’s SDVOSB grace period. OHA said:
    OHA then said, although BTNG represented it was an SDVOSB in its quotation, OHA and SBA found no record of BTNG ever applying for SDVOSB certification before December 31, 2023. And as noted above, OHA even gave BTNG the chance to prove its eligibility regardless of this finding. But BTNG didn’t even argue that it was service-disabled veteran owned or run.
    If you’re familiar with the Veteran Certification Programs’ rules–both SBA’s and, previously, the Department of Veterans Affairs (VA) Center for Verification and Evaluation’s (CVE)–you likely know that two of the main requirements are:
    “To qualify as a SDVOSB, one or more service-disabled veterans must unconditionally and directly own at least 51 percent of the concern[,]” (13 C.F.R. § 128.202); and “To be an eligible SDVOSB, the management and daily business operations of the concern must be controlled by one or more service-disabled veterans . . . [which] means that one or more qualifying veterans controls both the long-term decision-making and the day-to-day operations of the Applicant or Participant.”13 C.F.R. § 128.203. But no worries if you are not familiar with the Veteran Certification Program or rules, you can read more about them here.
    So, because BTNG wasn’t officially SDVOSB certified, allowed to self-certify under the grace period, or even eligible under the SDVOSB rules, OHA found:
    Finally, OHA briefly addressed BTNG’s argument that offerors on the RFQ were not required to be SDVOSBs. On that front, OHA said:
    As a result of BTNG’s misrepresentation of SDVOSB eligibility–deemed relevant to DLA’s selection of an awardee for the RFQ, as the RFQ gave clear priority to SDVOSBs over small business offerors–OHA sustained the protest.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    This post updates an earlier post on SmallGovCon.
    The post OHA Sustains Status Protest: Self-Proclaimed SDVOSB Awardee Not Certified by VetCert, Not Eligible For SBA’s Grace Period, And Not Veteran Owned or Controlled first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. Koprince Law LLC
    As federal contracts attorneys, we often get questions about what happens in the event of an acquisition of a small business. Reporting requirements, whether before or after an acquisition, tend to vary from one type of small business socioeconomic program to another. And there are other considerations such as whether the small business in question is the one being acquired or the one acquiring another small business and the timing with regard to proposal submission, contract performance, task orders,  and other variables. Taking those together, and it can be, well, confusing, to say the least. In the case of Forward Slope, Inc., SBA’s Office of Hearings and Appeals (OHA) took a look at some of these variables to determine how an acquisition can affect the size of a concern awarded a multiple award contract.
    Background
    In July 2021, the U.S. Department of the Navy awarded Forward Slope a place on the Seaport-NxG Multiple Award Contract (MAC). For those unfamiliar with Seaport-NxG, it is both a set of Indefinite Delivery Indefinite Quantity (IDIQ) MACs and the platform used by the Navy to solicit, award, and administer task orders under those IDIQ MACs. Once on the MAC, on November 29, 2022, Forward Slope, a self-certified small business, submitted its response to an RFQ for Seaport-NxG. Following Forward Slope’s response to the RFQ, the Navy made an award to Forward Slope on the 100% small business set aside task order.
    Following award, SBA’s Area Office received a protest regarding Forward Slope’s size, alleging that Forward Slope was an “other than small” business. This led to the Area Office issuing a size determination stating that Forward Slope was, in fact, other than small and therefore it was ineligible for award. How did this happen, if Forward Slope was small when it was awarded a place on the MAC?
    One word: acquisition.
    You see, sometime between when Forward Slope was awarded the MAC and when it submitted its offer for the task order, it was acquired by another entity . And 13 C.F.R. § 121.404(g)(2)(i) states:
    Therefore, according to 13 C.F.R. § 121.404(g)(2)(i), the Area Office determined Forward Slope was required to recertify its size status to the procuring agency or inform the procuring agency that it was other than small. Forward Slope did not, it was found to be other than small, and any subsequent options or orders would not count towards the Navy’s small business goals.
    Size Appeal
    Fast forward to July 2023, when Forward Slope filed the appeal at issue here. The underlying MAC stated that it would be competed on the following bases: unrestricted or set-aside for small businesses, service-disabled veteran-owned small businesses (SDVOSB), women-owned small businesses (WOSB), 8(a) participants, or HUBZone participants. In its appeal, Forward Slope asserted that offerors on task orders set-aside for SDVOSBs, WOSBs, 8(a), and HUBZones were required to qualify as small at the time of offer submission, as stated in the MAC. But there was no similar requirement included for small business set-asides, nor was there in the task order solicitation. Therefore, according to Forward Slope, it was not required to recertify its size following its acquisition by the other company. So, who was right?
    Forward Slope, but not for the reason they were arguing.
    It is a longstanding policy (as we discussed here) that a concern that certifies itself as small, at the time it submits its initial offer, remains small for the life of the contract per 13 C.F.R. 121.404(g). However, contracting officers are also permitted to request recertification of size, if desired, at the time of the task order offer. In that case, the size of the offeror at the time of the initial offer, including price for the task order, will be the size that applies.
    In this situation, the contracting officer never requested recertification. In fact, that was even affirmed by the contracting officer during the Area Office’s investigation. However, the Area Office incorrectly applied 13 C.F.R. § 121.404(g) when it determined that Forward Slope’s size was to be determined at the time of its submission in response to the RFQ for the task order. There was no requirement that offerors for small business set-asides recertify at task order bid submission—whether in the MAC or in the task order RFQ—and SBA policy does not require recertification to the procuring agency (here, the Navy) unless the contracting officer requests recertification.
    But wait, there’s more!
    The regulation clearly states that after a merger or acquisition that affects size, the contractor must recertify its size. So how can a contractor be required to recertify, but not have the new size, if other than small, apply to the rest of the contract?
    Well, there is a rule that both parties seemed to overlook. Way down in 13 C.F.R. § 121.404(g)(4), it states,
    The distinguishing point here, and the point that OHA’s decision turned on, was that the requirement to recertify as a result of a merger, sale, or acquisition, per 13 C.F.R. § 121.404(g)(2) is not the same as a contracting officer’s request for size recertification for a task order under a MAC, as discussed in 13 C.F.R. 121.404(g)(4). 13 C.F.R. § 121.404(g)(4) only requires recertification on a MAC when the contracting officer requests. Therefore, because SBA rules allow an awardee to count as small for the first five years following the initial offer for the MAC, Forward Slope was still considered small for award eligibility purposes. This meant that Forward Slope would be eligible for small business awards under the MAC for five years from initial offer. A very interesting—and important—distinction to keep in your back pocket.
    So, what have we learned?
    You can be eligible for small business task order awards on MACs, even when the agency cannot count the contract as one to a small business; and Task orders on MACs will continue to count as awards to small businesses following an acquisition, unless the contracting officer requests a recertification in relation to a task order under the MAC. Questions about this post? Email us. Needing legal assistance? Give us a call at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post Shopping for a New Small Business: How Acquisitions Affect Size Status for Multiple-Award Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  9. Koprince Law LLC
    Under 13 C.F.R. § 124.506, if an 8(a) contract price would exceed a certain threshold ($7 million for manufacturing contracts, $4.5 million for others), in most cases, the agency must compete the set-aside.  13 C.F.R. § 124.506(a)(5) is a provision meant to close up what otherwise would be a loophole in the rules. It states that “[a] proposed 8(a) requirement with an estimated value exceeding the applicable competitive threshold amount may not be divided into several separate procurement actions for lesser amounts in order to use 8(a) sole source procedures to award to a single contractor.” But this rule does not apply in all circumstances. In particular, it does not apply to bridge contracts.
    In Anika Systems, Inc., B-422187 (Feb. 1, 2024), the SEC (the federal one, not the football one), had a two-step acquisition plan for data management services. It would sole source the first part to 8(a) participant Peregrine Advisors Benefit, Inc. (Peregrine) and compete the second part, worth $43 million, for 8(a) participants to bid on. The first part in 2022 went through without issue. But the second part of the acquisition was protested by unsuccessful offerors, resulting in the SEC taking corrective action. The problem was that now, the 2022 contract to Peregrine was about to expire with no successor to take on the data management services. As such, the SEC offered a bridge contract worth $4.2 million to Peregrine to continue the work while the second part of the acquisition was carried out. Anika Systems, Inc. (Anika), one of the competitors for the second part of the acquisition protested this bridge contract.
    Anika had some good points to make on this. Most notably, Anika argued that this bridge contract was basically inseparable from the 2022 contract as both contracts involve provision of the exact same services, and that, combined, the requirements had a value that exceeded the 8(a) sole source dollar limit. The SEC countered that the bridge contract wasn’t an attempt to split its requirement into smaller procurements so it could sole source the work to Peregrine. It argued that the bridge contract was a different requirement since it was issued in light of the protests and corrective action for the second part of the acquisition. The SEC also stated that 13 C.F.R. § 124.506(a)(5) is not meant to stop bridge contract as bridge contracts are a stop-gap measure to be used until an actual competition can take place.
    The SBA (invited to the party by GAO because the matter involved SBA regulations and GAO usually listens to SBA when interpreting SBA rules) filed a brief and agreed with the SEC’s interpretation, noting that the regulation was really meant to stop agencies from using indefinite-delivery, indefinite-quantity (IDIQ) contracts to get around the threshold. It “implemented this regulation to prevent an agency from dividing an IDIQ contract into separate smaller contract actions to make award to a single firm without competition.” Per SBA, it was not meant to stop agencies from using emergency measures like bridge contracts.
    GAO sided with SBA and the SEC. It noted that back in 2000, it in fact had addressed this question and agreed with the government’s view of the matter in Champion Bus. Servs., Inc., B-283927 (Jan. 24, 2000). GAO agreed that “the regulation does not apply to bridge contracts because bridge contracts do not pose any threat to the aims sought to be protected by a competitive procurement.” Going further, it noted its decision in New Tech. Mgmt., Inc., B-287714.2 (Dec. 4, 2001). There it “concluded that the regulation only applied to the award of concurrent contracts.” In other words, the regulation prohibits agencies from taking a single contract for, say, 10 services that would have a value above the threshold, and dividing it out into five separate contracts with covering two services each and each smaller contract being below the threshold.
    Anika also made an argument that the SEC failed to consider the effect the bridge contract would have on the equitable distribution of 8(a) contracts. Under 13 C.F.R. § 124.503(g), “[a] procuring activity contracting officer must submit a new offering letter to SBA where he or she intends to award a follow-on repetitive contract as an 8(a) award.” The SEC had not done this. However, GAO also rejected this argument. 13 C.F.R. § 124.3 notes:
    “The determination of whether a particular requirement or contract is a follow-on includes consideration of whether the scope has changed significantly, requiring meaningful different types of work or different capabilities; whether the magnitude or value of the requirement has changed by at least 25 percent for equivalent periods of performance; and whether the end user of the requirement has changed. As a general guide, if the procurement satisfies at least one of these three conditions, it may be considered a new requirement.”
    The bridge contract only had a base period of one month and was worth only $4.2 million compared to the $43 million original competitive acquisition. As such, it was a new requirement, not a follow-on requirement, so the new offering letter requirement did not apply.
    Thoughts
    GAO’s analysis seems very reasonable concerning bridge contracts, which really aren’t planned ahead of time. After all, how can you divide a requirement after the fact? But we think this protest raises some important questions. What happens when an agency decides that instead of competing a five-year contract to 8(a) companies, it will just sole source five one-year contracts at the sole source dollar threshold to an 8(a) company? Assuming they do this while complying with 13 C.F.R. § 124.503(g) and receiving SBA approval, there’s still an argument to be made that the agency is splitting up a five-year contract into five separate one-year contracts to stay under the threshold limit. 13 C.F.R. § 124.506(a)(5) doesn’t specify that it only applies for concurrent procurements, it says that “[a] proposed requirement may not be divided into several separate procurement actions for lesser amounts in order to use 8(a) sole source procedures to award a single contractor.” In fact, couldn’t this have maybe applied to the 2022 Peregrine contract itself? The agency basically split the procurement into two parts, one large and one small, and sole sourced the small part. It was too late for a GAO protest on the matter, but it is interesting to think about.
    It seems the implication is that the procedures in 13 C.F.R. § 124.503(g) on repetitive contracts will serve to prevent such a situation, and to SBA’s credit, we think that would do a good job of it. But it still opens a potential door, and we think it is something where some clarification in the regulation language itself could be helpful.
    Questions about this post? Email us. Needing legal assistance? Give us a call at 785-200-8919.
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    The post A Bridge (Not) Too Far: Prohibition on Dividing up Contracts to get Under 8(a) Sole Source Dollar Limit Doesn’t Apply to Bridge Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  10. Koprince Law LLC
    If you feel like prices for just about everything are going up, you’re not alone. I recently got my annual property tax bill, and the first thing I did (after recovering from a brief fainting spell) was to start Googling to find out how much I could get for one of my kidneys on the black market.
    I get the feeling that my county tax assessor would consider anything less than a double digit increase to be an embarrassing professional failure. In federal government contracting, however, a contractor may not have the same leeway to raise its prices. In a recent bid protest decision, the GAO held that when an agency sought to procure services using the Federal Supply Schedule, the agency could not agree to pay a price higher than the price set forth in the offeror’s underlying FSS contract.
    The GAO’s decision in Kauffman & Associates, Inc., B-421917.2, B-421917.3 (2024) involved a request for quotations issued by the Centers for Medicare and Medicaid Services seeking in-person and virtual training services. CMS issued the RFQ to five GSA Schedule vendors under the procedures of FAR Subpart 8.4, which governs FSS acquisitions.
    Two of the five vendors submitted quotations. After evaluating the quotations, CMS announced that the order would be awarded to Octane Public Relations. The other vendor, Kauffman and Associates, Inc., then filed a bid protest with the GAO, challenging various aspects of CMS’s evaluation.
    Among its challenges, Kauffman argued that the agency “failed to evaluate discrepancies between the awardee’s proposed pricing and its FSS pricing.” Kauffman pointed out that Octane’s proposed price for the Events Coordinator labor category exceeded Octane’s price for the same category in its underlying FSS contract.
    The GAO explained:
    In this case, the GAO wrote, “[w]e find the agency’s determination that the awardee’s pricing was fair and reasonable to be flawed.” Because Octane proposed a price that was higher than its FSS price, “it would not be proper to issue the order to that vendor.”
    The GAO sustained the protest.
    Contractors often negotiate FSS prices that are higher than they expect to actually charge, knowing that agencies may expect discounts. Per GAO, that tried-and-true strategy is viable. But as the Kauffman and Associates, Inc. case shows, a contractor’s FSS prices may effectively be a ceiling. When bidding on an FSS order, proposing a price higher than the underlying FSS contract price may make it improper for the agency to award the order.
    Oh, one more thing: if you know someone who is looking for a lightly-used kidney, could you let me know? Asking for a friend.
    This article was originally published by Steven Koprince on LinkedIn and is reprinted with permission. Steve is the founder of Koprince McCall Pottroff LLC but has retired from the practice of law to focus on other endeavors. His views do not necessarily represent those of the firm or its attorneys. To read more of Steve’s current government contracting writing, follow him on LinkedIn and subscribe to his LinkedIn newsletter.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
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    The post Agency Could Not Accept Price Above Awardee’s FSS Price, GAO Says first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  11. Koprince Law LLC
    Touted as a “game-changer” when it was first introduced in 2016, the U.S. Small Business Administration’s All Small Mentor-Protégé  Program isn’t new anymore. Known now as simply the “SBA Mentor-Protégé  Program, it is still extremely powerful for large and small contractors alike.
    In this webinar, Gregory Weber and I will explain the ins and out of the SBA Mentor-Protégé  Program, covering the program’s eligibility requirements, its potent benefits (including the ability to form special Mentor-Protégé  Joint Ventures), the application process, and common misconceptions and pitfalls. Target Audience: Small Businesses (SDVOSB, WOSB, HUBZone, 8(a), SDB) and large businesses interest in doing business with the federal government. Please join us and register here. And thanks to Earl King of the DC Department of Small and Local Business Development and Apex Accelerator for organizing this event.
    The post Free Webinar! The SBA Mentor-Protégé Program hosted by Washington DC APEX Accelerators, February 27, 10:30am -12:30 PM EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  12. Koprince Law LLC
    Hello, blog readers. We want to say that our hearts are with the people of Kansas City. Our thoughts and prayers go out to the victims and families of those impacted during the the Super Bowl celebration in Kansas City. We also salute the first responders who acted so quickly.
    Our stories from federal contracting news this week included continued delays for CIO-SP4 and a new initiative on carbon-free electricity.
    GSA & DOD Seek Input on Upcoming Government Procurement of Carbon Pollution-Free Electricity Biden administration preps potential largest ever federal carbon-free electricity purchase How government contractors can harness artificial intelligence FACT SHEET: Biden-⁠Harris Administration Releases Annual Agency Equity Action Plans to Further Advance Racial Equity and Support for Underserved Communities Through the Federal Government How acquisition hinders national security VA sexual harassment investigation recommends firing, recouping bonuses from supervisors NITAAC seeking another 6-month extension for CIO-SP3 GE Aerospace Resolves Alleged Gender-based Hiring Discrimination, Pays $443K in Back Wages to Affected Job Applicants After Compliance Review Defense Federal Acquisition Regulation Supplement: DFARS Buy American Act Requirements (DFARS Case 2022-D019) General Services Administration Acquisition Regulation; Removing Small Disadvantaged Business Program Requirements To Align With the FAR The post SmallGovCon Week in Review: February 12-16, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  13. Koprince Law LLC
    If you’re interested in learning more about the federal government contracting business, our very own, Nicole Pottroff and John Holtz, will be co-hosting with Nick Bernardo at this live podcast event. Sign up now to join this free opportunity to speak with experts, who have actually helped people succeed in govcon and who will be happy to answer your questions. Please register here. For more information on this and other upcoming events visit my MyGovWatch.com.
    The post Event! MyGovWatch Live: The B2G Rountable hosted by Nick Bernardo, February 21, 2024, 12:00pm CST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  14. Koprince Law LLC
    An adverse inference is a penalty that the Small Business Administration (SBA) can enforce as part of a size protest. During a size protest determination, SBA will ask the protested company lots of questions. Sometimes, a protester will not answer those questions, either on purpose or due to oversight. Depending on the circumstances, SBA can apply an adverse inference if a protested company fails to respond to questions. If SBA applies an adverse inference, that means that the SBA Area Office will determine that the information that was not provided would prove that the company is not a small business. A recent decision reminds us about this penalty. If you are in a similar situation, reach out to a firm like ours to help think of a way to respond to SBA.
    In Size Appeal of: Sanford Fed., Inc. Appellant, SBA No. SIZ-6261, 2024 (Jan. 16, 2024), a contractor faced a size protest concerning a VA solicitation for boiler plant safety device testing under North American Industry Classification System (NAICS) code 238290, Other Building Equipment Contractors, and a size standard of $22 million.
    A protester filed a size protest against Sanford Federal, Inc. (Sanford) who was the proposed awardee. During the size protest, the SBA Area Office reached out to Sanford and asked them to provide financial information and a Form 355 (the SBA standard form for size determinations). Sanford failed to respond to multiple emails from SBA advising them of the size protest.
    As a result, the SBA found that Sanford did not qualify as small for the procurement, based on an adverse inference. SBA’s standard for adverse inference requires that three prongs be met:
    “(1) the requested information be relevant to an issue in the size determination;”
    “(2) there be a level of connection between the protested concern and the firm from which the information was requested;”
    “(3) the request for information be specific.”
    After the size determination was issued, Sanford appealed. Sanford argued that the protest did not make sense and was non-specific, basically arguing that the protest referred to contracts in 2023 that would not provide any money to Sanford until well after the period for review. As a side note, a receipts-based size standard looks back five years to calculate the average receipts for a company. 13 C.F.R. § 121.104(c)(1).
    The judge, at SBA’s Office of Hearings and Appeals (OHA), actually agreed that the protest did not appear to be on target and was nonspecific. However, that didn’t matter because Sanford did not respond to the size protest at all. OHA said that the Area Office properly applied the adverse inference rule, holding that Sanford, “could have requested that the Area Office dismiss the protest as nonspecific, or could have produced information showing that [Sanford] was small over the years 2018-2022.” But Sanford, “raised no such arguments to the Area Office, however, and its claim that the protest was nonspecific is therefore not properly before OHA on appeal.”
    Because Sanford “did not respond to the protest and did not produce a completed SBA Form 355 and other requested documents . . . [t]he Area Office therefore appropriately drew an adverse inference.”
    This is a sobering result for all small business federal contractors. If a federal contractor bids on a small business set-aside, it opens up that company to a potential size protest. Don’t respond to the size protest–and you could risk losing an award based on a protest that might not have any actual merit.
    Questions about this post? Email us. Needing legal assistance? Give us a call at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post Adverse Inference, the Wrong Way to Lose a Size Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  15. Koprince Law LLC
    Happy Friday Readers. We hope you all have had a great week. We are enjoying some milder winter weather here in Kansas finally. We still have a bit to go before spring, but it feels like it is right around the corner. We will be following our KC chiefs as they look to defend their Super Bowl title!
    Enjoy the weekend and we also hope you will enjoy reading the articles below, regarding federal government contracting this week. Some highlights include more on the push to increase small business participation, and new legislation that will have an impact on contractors.
    Ex-CIA officer and WikiLeaks source sentenced to 40 years for largest breach in agency history Audit of the U.S. Ability One Commission’s Quality of Products in Support of Meeting Government Requirements PF 2024-17 Increasing Small Business Participation on Multiple-Award Contracts Senate Panel Advances Bills on Contracting, Cyber Competition, Other Matters FACT SHEET: The Biden-⁠Harris Administration Advances Equity and Opportunity for Black Americans and Communities Across the Country Data privacy is a full-time job at OPM. It’ll only get busier in the AI age Hit by OPM’s data breach? Bill offers feds free ID protection for life Contracting Orders legislation passes out of House Small Business Committee White House breaks the rules on rulemaking for contractors Chairman Williams: “Under the Microscope: Reviewing the SBA’s Small Business Size Standards” Space VCs urge startups to pursue government contracts but stay focused on commercial success The promise and peril of AI for federal contractors Study: Women-owned firms generate nearly 6,500 jobs Regulatory Agenda: Semiannual Regulatory Agenda General Services Administration celebrates $62.4 million award for improvements at Whittaker Courthouse in Kansas City as part of President Biden’s Investing in America agenda The post SmallGovCon Week in Review: February 5-9, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  16. Koprince Law LLC
    For our third entry in our “Why File” series, we will be covering one of the two big bid protest routes, a “pre-award” Government Accountability Office (GAO) bid protest. Most contractors are fairly familiar with GAO bid protests that occur after an agency makes their award decision (more on this in a later “Why File” post. But contractors may be less familiar with pre-award bid protests at GAO. We will cover some of the most common reasons pre-award protests are filed at GAO, based primarily on contracting regulations and bid protest cases. As always, please keep in mind, despite the commonalities discussed below, the question of whether to protest is highly fact-specific and demands careful consideration.
    What is a “pre-award” protest?
    First, it is important to establish just what a pre-award protest is. The name sort of gives away its meaning, but a pre-award protest is a bid protest filed at some point prior to the award decision. Note that the term pre-award protest is not found in the GAO rules or the FAR, but it is a helpful way to categorize certain types of protests. However, be careful, that does not mean the bid protest filing deadline at GAO is the award decision date. As discussed below, filing for such a protest could be due prior to a bid submission due date, within 10 days of a competitive range decision, or another date which occurs prior to the award decision. It is, as with all things federal contracting, quite fact specific (for more specifics on pre-award protests, check out our entry on them in our Back to Basics series). Pre-award protests can be filed at more tribunals than just GAO, such as the U.S. Court of Federal Claims, but as GAO is more common for contractors to utilize, we will focus here on GAO. That being said, many of the concepts for why a pre-award protest could be filed are universal. With that out of the way, lets discuss some of the reasons a contractor may file a pre-award protest.
    1. The solicitation’s terms are unclear.
    The most common reason for filing a pre-award protest is that a solicitation’s terms are confusing or don’t make sense. Often contractors will look at a solicitation, interpret a term a certain way, but the agency meant it another way. This can be a fatal flaw to an otherwise superb proposal. To prevent such a thing from occurring, GAO actually provides contractors a way to protest solicitation terms, before finding themselves on the losing end of a proposal due to a misunderstanding.
    GAO in its regulations state that “protests based upon alleged improprieties in a solicitation which are apparent prior to bid opening or the time set for receipt of initial proposals shall be filed prior to bid opening or the time set for receipt of initial proposals.” So, if a contractor sees contradictory terms, or confusing terms within a solicitation, one way to force the agency to address it, is to file a pre-award protest.
    A great example of why such a protest is important is covered in a previous blog here on SmallGovCon. In One Community Auto, LLC, B-419311 (Comp. Gen. Dec. 16, 2020), a contractor–after award decision–raised a concern via post-award protest that the evaluation factors were ambiguous or indefinite. GAO agreed that “the language in the solicitation is internally inconsistent” but because the protest was filed post-award, it was dismissed as untimely. GAO noted that a “protest based upon alleged improprieties in a solicitation that are apparent prior to the closing time for receipt of initial proposals or quotations” must be filed prior to the closing time for proposals. It is very important for contractors to raise solicitation terms often and early, or they may face an unfortunate award decision, with no recourse. When facing solicitation term confusion, there are generally two categories these issues fall into:
    Overly Restrictive Terms or Terms that Do Not Match Industry Norms:
    One category of solicitation terms that will get commonly protested are terms that overly restrict competition, or that are so off base that they don’t match industry norms. A good example of this type of protest at GAO is a recent protest of the CIO-SP4 procurement which we blogged about here. In that protest, the solicitation called for submitting experience, but the amount of experience one could submit varied depending on if they were in a mentor protege relationship or not. This basically overly restricted certain offerors, while giving great leeway to others. Similarly, there can be protests that argue the terms are too restrictive as they don’t meet the subject industry’s norms. This can be a tough protest to win though, as GAO uses a standard of if the agency’s terms were reasonable (we have a blog on this type of case here).
    Ambiguous or Inconsistent Terms:
    This other category of solicitation terms protests is much more apparent on its face. Often contractors will see terms that contradict other portions of the solicitation (making it impossible to satisfy either term), or that just plain don’t make sense. A great example of this, are the terms from the One Community Auto case discussed earlier. While the case was dismissed as untimely, GAO did state the terms were inconsistent (and presumably would have been a successful pre-award protest). One Community Auto highlighted terms that sometimes felt more appropriate to a lowest-price technically acceptable while others were more fitting of a best-value tradeoff (both separate and distinct evaluation methodologies). This type of solicitation concern and confusion is one that would be raised in a pre-award protest as it presents ambiguities, or inconsistencies.
    (PLEASE NOTE: In rare cases, ambiguous solicitation terms can also be protested after award, but this is rarely successful, as the ambiguity of the term must not be apparent at all until after award. GAO often calls this a latent ambiguity)
    2. The Agency will not communicate on Solicitation questions.
    This reason for filing is sort of an extension or outgrowth of reason #1. However, it is a little different than protesting strictly on solicitation terms. Often solicitations will have the ability for Q&As with the agency. Or offerors will reach out to the agency with questions on their own, as there is no restriction on contacting the agency with questions on a solicitation. Sometimes, these Q&As or communications can contain great information for contractors, or resolve solicitation term issues that would have necessitated a pre-award protest. Unfortunately, this is not always the case. Occasionally agencies are not very communicative or responsive to questions. Their responses may be rather lacking, only lend to more confusion, or the agency may not respond at all. This lack of communication leads to more ambiguities with solicitation terms, contradictions with solicitation terms, and confusion among contractors. Contractors may find that the best way to get the response they are looking for, or any formal response to concerns at all, is to file a pre-award protest. The agency then has to directly respond, through the bid protest, to those concerns. Such a protest could also spur a corrective action by the agency in which they correct the terms in the solicitation or finally respond in some fashion to the basis of the communications they previously ignored.
    3. To stay contract award or decision.
    While this is not a technically a basis to file a pre-award protest, it is an added bonus for contractors who feel there are issues in the solicitation and need more time to prepare, want to continue performing the previous contract for a while longer, or are excluded from the competitive range and hope for another shot at the award.
    When a pre-award protest is filed with GAO, the FAR states “a contract may not be awarded unless authorized.” While it is not a guaranteed stay of award, it will at least cause an agency to pause its award decision. That being said, a stay of award decision is the most likely outcome, as unless the agency completes multiple steps outlined in the regulation to overcome the stay, it cannot award the contract until the protest is complete.
    Often, contractors may see solicitation terms or communication issues present in a solicitation, but not think it rises to the level of protesting. However, if that same contractor is the incumbent performing a bridge contract, or is a contractor that needs more time to work on the proposal, they may see this potential stay as a good reason to take a shot at a pre-award protest. Of course, if a contractor finds itself excluded from the competitive range, it may hope that the protest of that decision will result in it getting another chance at award, which is only helped by a stay of award decision. Speaking of which…
    4. Contractor is excluded from competitive range.
    A common way to structure a solicitation is to allow the agency to set a competitive range of offers, thus whittling down the amount of offerors progressively until the final award decision is made. When a contractor doesn’t make that cut, it is called being excluded from the competitive range. A competitive range is typically set to eliminate certain offerors, then have discussions with the remaining offerors. The unlucky offerors who find themselves on the outside looking in sometimes will simply think that they have no way to debate the competitive range decision until after award or that it is not an award decision that can be protested. That is incorrect.
    GAO states that protests other than those based on solicitation terms “shall be filed not later than 10 days after the basis of protest is known or should have been known (whichever is earlier).” If there is a required debriefing (which does sometimes occur with competitive ranges), then the protest “shall not be filed before the debriefing date offered to the protester, but shall be filed not later than 10 days after the date on which the debriefing is held.” There is no designation that such a protest must be “after award” or something along those lines. As exclusions from competitive range occur prior to a final award decision, they stand as a great reason to file a “pre-award” protest. The protest of course will feel similar to a post-award decision, discussing evaluations, etc. but it will still be a pre-award protest.
    Bonus: Debriefing complexities about pre-award protests.
    With all this in mind, it is important to note something that could actually prevent you from protesting a pre-award matter. Our blog on this provides more information, but it is important to keep in mind that if offerors postpone a pre-award debrief until after award decisions are made, then they lose the right to protest based on any information that could have been discovered in the pre-award debriefing. If a contractor finds itself excluded from competitive range, and is offered a debrief, then choosing to postpone that debrief until after award will prevent any possible protest from happening based on viable grounds discovered as part of that delayed debriefing that could have come out in the earlier debriefing.
    Though the reasons for protest represent a wide array of situations, they all contain one common thread—they all are filed prior to an award decision. GAO, through its case law and regulations, has carved out a way for contractors to address things prior to any award decision. These pre-award protests can be filed to help rectify the wrong of an exclusion from competitive range, or be used to help clean up a less than stellar solicitation. As with all protests, it is very fact specific as to why and when a contractor should file a protest. If you find yourself facing a confusing solicitation, excluded from the competitive range, or not getting clear communication back from an agency, don’t hesitate to reach out to a federal government contracts attorney to discuss your possible pre-award protest options.
    Questions about this post? Email us. Needing legal assistance? Give us a call at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post Why File: A GAO Pre-Award Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  17. Koprince Law LLC
    Solicitations for brand name or equal products are commonly used by contracting officers to ensure that the products procured via the contract meet minimum requirements. However, as one agency found, the salient characteristics required to meet the minimum requirements must be explicitly stated in the solicitation. And, evaluating the product on any characteristics that are not included in the solicitation, even if incorporated by reference to the name brand item, can lead to an improper exclusion of offerors from competition.
    In American Material Handling, Inc., the International Boundary and Water Commission excluded the protester, American Material Handling, from award because the product offered by the protester, a Volvo tractor, did not contain salient characteristics that the name brand product, a Caterpillar tractor, had. So, what was the problem? Why was the protest sustained by GAO but not the agency if the Volvo tractor did not contain the salient characteristics of Caterpillar tractor? Well, the answer to that lies in the solicitation.
    The RFQ was for the award of a contract to the offeror that offered the “lowest-price technically acceptable quotation considering price and technical acceptability.” The RFQ included language stating that the tractor “must meet the salient features or specifications of the Caterpillar 980 or exceed the specifications attached.” The specifications were listed in a two-page specification sheet. As the agency argued, the salient characteristics were specified in the solicitation, so what exactly was the problem here?
    It turns out that while the RFQ did contain the two pages of specifications, the six salient characteristics that the protester was excluded from competition on account of, were not included. Rather, GAO found that the contracting officer added salient characteristics after the quotations. The agency claimed that the reference to the Caterpillar 980 meant that any tractor offered must meet or exceed all characteristics of that brand name product, not just those listed in the specifications contained in the RFQ.
    However, as GAO held, a brand name or equal product does not have to meet every specification of the brand name product to be deemed acceptable when those characteristics are not stated in the solicitation. Therefore, the agency improperly determined that the protester’s Volvo tractor was unacceptable because it actually met all of the salient characteristics that were listed in the RFQ.
    As FAR 11.104(b) requires, solicitations must include “a general description of those salient physical, functional, or performance characteristics of the brand name item that an ‘equal’ item must meet to be acceptable for award.” By evaluating proposals on characteristics not listed in the solicitation, the agency did not evaluate the offers solely on the terms in the solicitation. Which, as any federal contracting attorney would know, is prime real estate for a protest to be sustained.
    Questions about this post? Email us Need legal assistance, call 785-200-8919.
    Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post GAO: Brand Name or Equal RFQ Must Explicitly State All Salient Characteristics first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  18. Koprince Law LLC
    Happy February! Our Kansas City Chiefs have once again managed to make it back into the Super Bowl and we couldn’t be happier about it! Whether you’re a Chiefs fan, a 49ers fan or a Swiftie, it’s sure to be a good one! Start gathering those favorite snack recipes and get out the lucky sports gear, folks!
    This week in federal government contracting news had some important updates, including a new GSA schedule catalog platform, a report on savings in software purchases, and a revamped SBA training program from small businesses.
    The SBA Revamps the Federal Contracting Program for Small, Disadvantaged Businesses Procurement Innovation Lab to tackle ‘big A’ acquisition at DHS New FAS Catalog Platform is a “game-changer” for vendors using GSA Advantage Former Federal Employees Sentenced for Conspiracy to Steal Proprietary U.S. Government Software and Databases Agencies are losing out on software savings, GAO finds Government Contractors Agree to Pay $3.9 Million to Resolve Claims of Misrepresenting Women-Owned Small Business Status For contractors, a lot to ponder five months into the fiscal year Department of Labor Announces Seminars for Prospective Federal Contractors on Prevailing Wage Requirements Business Leaders Applaud SBA’s Improved Empower to Grow (E2G) Program Federal government contracting is an opportunity for minority business owners Increasing Small Business Participation on Multiple-Award Contracts The Evolving Landscape of Government Contracting: Why Networking Matters Whistleblower Receives $900,000 for Alleging Army Contracting Fraud Information Collection; Small Business Size Rerepresentation Four Additional Defendants Plead Guilty to Bid Rigging in Michigan Asphalt Industry Project Manager Pleads Guilty to Kickback Scheme to Defraud a U.S. Army Facility The post SmallGovCon Week in Review: Jan. 28-Feb. 2, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  19. Koprince Law LLC
    The second entry in our new “Why File” series covers some of the main reasons unsuccessful offerors file veteran-owned small business (VOSB) and service-disabled veteran owned small businesses (SDVOSB) status protests. Don’t worry if VOSB and SDVOSB are new acronyms to you–or you just need a refresher–we’ve got a Back to Basics blog for that. If you’re a seasoned vet (pun intended), you already know SBA now handles the Veteran Small Business (VSB) Certification Program (VetCert) (which covers VOSBs and SDVOSBs) administration and status protests. So, the following (non-exhaustive) list of some of the most common reasons VSB status is protested is based primarily on SBA regulations and cases. But please keep in mind, despite the commonalities discussed below, the question of whether to protest is highly fact-specific and demands careful consideration.
    1. The qualifying veteran or service-disabled veteran (SDV) owner (Qualifying Veteran) does not appear to be meaningfully involved with the company’s operations.
    This one might seem obvious. But contractors sometimes assume that because a VSB went through SBA’s certification process (or previously, through VA Center for Verification and Evaluation), they must be compliant–even where the Qualifying Veteran is MIA. But that’s not necessarily true. Despite the illegality and major potential (and even criminal) consequences, some VSBs represent (and even certify to) Qualifying Veteran-ownership and -control, while the Qualifying Veteran actually has little to no involvement in the VSB’s operations. And regardless of whether such misrepresentation rises to the level of an indictment or statutory violation, (as you might’ve guessed) it is certainly not compliant with SBA’s VSB eligibility requirements.
    The VSB control rules say, “[t]o be an eligible [VOSB or] SDVOSB, the management and daily business operations of the concern must be controlled by one or more [veterans or] service-disabled veterans[,]” and control here “means that one or more qualifying veterans controls both the long-term decision-making and the day-to-day operations of the Applicant or Participant.” Note my emphasis on the “and” here. The facade of eligibility is often based on the assumption or claim that the Qualifying Veteran is never around the office or worksites because they are too busy making all the big decisions behind some velvet curtain. But as you can see, SBA’s rules speak directly to this. SBA requires the Qualifying Veteran to control the company both at the big picture management/long-term decision-making level and at the day-to-day operations level.
    In fact, there used to be a VSB control rule that essentially required a Qualifying Veteran to live near (within a reasonable commute of) the company office and worksites. SBA’s most recent final rule on VSB eligibility (among other things) did away with the infamous “reasonable commute rule.” But that does not absolve Qualifying Veterans of their required multi-level management and control of company operations and decisions. In fact, there is a specific provision in SBA’s current rules that states:
    So, if the Qualifying Veteran is persistently absent from the office and worksites, a status protest would likely lead to SBA raising and investigating the issue of VSB control. But even if the Qualifying Veteran is around sometimes, just not during normal business hours, a status protest would still likely lead to such SBA compliance review (at a minimum). Even though this rule only says that SBA will assume there are control violations in such case, it is no easy feat to convince SBA of Qualifying Veteran control where the Qualifying Veteran is rarely physically present. Now, we may have seen some leeway provided by the COVID-19 pandemic–leading to assertions that the Qualifying Veteran virtually controls all operations. But SBA has historically been pretty tough on that one (even during the height of the pandemic).
    So, now that most in-office business has resumed, a company would likely need to show SBA documentation of direct support for such long-distance management. And I am not saying it is impossible to run a VSB company from afar. SBA’s VSB control rules are not intended to target instances where such virtual/long-distance control is truly present. Rather, the rules are intended to weed out situations where a Qualifying Veteran is publicly positioned as the “face” of the company, while non-qualifying people or entities (Non-Qualifying Veterans) are really pulling all the strings. Such is often referred to as a “Rent-a-Vet” scheme. The VSB protest process plays a crucial role in detecting such schemes, helping to maintain integrity and fairness in the VSB Program. In fact, our next reason why to protest a VSB status relies on many of these same rules and policies–as well as others.
    2. The Qualifying Veteran has a “side hustle.”
    Even if you focus solely on the rules already discussed above, you can still likely see why a Qualifying Veteran’s “side hustle” or secondary employment could give rise to VSB control concerns. But SBA’s regulations take it one step further. The same rule requiring “full-time management” (covered above) also specifically prohibits the Qualifying Veteran holding the highest officer position in the company from engaging in any outside employment that would “prevent [them] from devoting the time and attention to the concern necessary to control its management and daily business operations.”
    Generally, SBA’s determination whether any such employment “prevents” the required full-time management and control is intensely fact-specific. Sure, some secondary employment obligations can truly and completely be handled outside of normal working hours. Some are not too demanding or time consuming. And some in no way interfere with a Qualifying Veteran’s required control of their VSB company. In fact, there have been a decent number of SBA decisions finding VSB eligibility despite outside employment–but common to many of those decisions is the fact that the Qualifying Veteran can show their outside employment obligations can be met: (a) with less-than-full-time hours; and (b) at any hour of the day or night and/or during weekends. So, naturally, SBA has been less likely to allow it where the outside employment company; (a) operates during the same or similar business hours as the VSB company; and/or (b) requires more involvement than a veteran/SDV (that manages their VSB full-time) can reasonably dedicate.
    As you can see, SBA’s decisions on Qualifying Veteran outside employment are incredibly fact-specific. Obviously, discovering that a Qualifying Veteran appears to be “splitting time” between two or more companies could lead to a reasonable and strong status protest. But a status protest may still be warranted (and even, have a good chance of success) where there are less obvious concerns with SBA’s outside employment rule. An SBA compliance investigation initiated by a status protest has the potential to reveal facts not typically considered public information–nor willingly provided to a VSB’s competitors–that may be relevant to the VSB’s: (1) noncompliance with SBA’s outside employment limitations; and/or (2) noncompliance with other applicable control, ownership, or general eligibility rules. That’s why we selected outside employment as one of our reasons to file a VSB status protest. Our next reason, too, goes to SBA’s control requirements.
    3. A Non-Qualifying Veteran’s history and involvement with a Qualifying Veteran or their VSB company raises control concerns.
    Now, we kept this reason to file a VSB status protest quite broad for a reason; it covers a lot of different provisions and limitations from SBA’s VSB eligibility regulations.
    SBA’s VSB control regulations don’t just detail strict rules and standards a Qualifying Veteran must follow to show the required control. They don’t just discuss the level of involvement and dedication a Qualifying Veteran must demonstrate. Sure, they do all of those things (as we detailed above). But they, again, go one step further.
    SBA’s regulations also place strict limitations on any Non-Qualifying Veterans that have a history with or are involved with the Qualifying Veteran and/or the VSB. Notably, SBA’s rules don’t exclude Non-Qualifying Veterans completely. In fact, SBA’s rules expressly state that a “non-qualifying-veteran may be involved in the management of the concern, and may be a stockholder, partner, limited liability member, officer, and/or director of the concern.” But SBA does have a wide variety of provisions in its control regulations that it enforces to keep any involved Non-Qualifying Veterans “in check,” if you will.
    These various provisions prohibit all Non-Qualifying Veterans from exerting control over a VSB or its business operations. They restrict the financial support a Non-Qualifying Veteran may provide to a VSB and prohibit any financial dependence or influence. And they create certain presumptions or assumptions a VSB must overcome where there is: prior employment history between the Non-Qualifying Veteran and the Qualifying Veteran; or where a Non-Qualifying Veteran receives too much compensation from a VSB.
    SBA’s VSB control rules say that a Non-Qualifying Veteran must not:
    These first four regulatory limitations are pretty self-explanatory–all aiming to prevent any control over a VSB by a Non-Qualifying Veteran and even any power to control a VSB based on financial dependence or influence. SBA’s VSB control regulations go on to say that a Non-Qualifying Veteran may not:
    Notably, the last two provisions don’t just give SBA the right to “raise an eyebrow” where the facts apply. They also set forth the method by which a compliant and eligible VSB can demonstrate to SBA that the required control and pure intentions are still there–specifically, where a Non-Qualifying Veteran (1) used to employ a Qualifying Veteran ready to venture out on their own, or (2) makes more money at the VSB than the Qualifying Veteran because it will truly benefit the company.
    The provisions of SBA’s regulations discussed in this third reason–limiting certain aspects of Non-Qualifying Veteran involvement, rather than requiring certain aspects of Qualifying Veteran involvement–serve the same underlying policies as the control rules discussed in the first two reasons. So, this fourth and final reason to file is no exception.
    4. The VSB has a franchise-type or affiliate agreement with another entity or individual.
    We will keep this last reason to file a VSB status protest brief–especially since you can read all about it here. In a nutshell, consistent with all of the control rules and limitations we discussed above, anytime you discover that a VSB has a franchise-type or affiliate agreement with another person or entity, it could also be worth a status protest. At a minimum, SBA needs to closely review any such agreements to ensure there are not provisions limiting the Qualifying Veteran control–or allowing any Non-Qualifying Veteran control. So, the very existence of such an agreement could lead to a successful SDV status protest: (1) if SBA has not already had the chance to review it; or (2) if an SBA deep-dive into the agreement demonstrates that another entity or individual has control over (or the power to control) certain aspects of the SDV’s operations (e.g., marketing, websites, sales, or other day-to-day operations or long-term decisions).
    * * *
    Though the four reasons to file an SDV protest discussed above cover a wide variety of facts–they all rely on the same underlying goals and policies. Essentially, SBA only wants to certify VSBs and allocate VSB-designated contracting dollars where there is meaningful SDV involvement and sufficient SDV authority. SBA only aims to restrict the involvement of other entities and individuals to prevent anyone from exercising too much authority over a Qualifying Veteran or its VSB. This, again, is vital in preventing the infamous “Rent-a-Vet” schemes you see in the news. And so is the VSB status protests process.
    Questions about this post? Email us. Needing legal assistance? Give us a call at 785-200-8919.
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    The post Why File: A VOSB or SDVOSB Status Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  20. Koprince Law LLC
    The White House has issued a memorandum that calls for specific procedures for Increasing Small Business Participation on Multiple-Award Contracts. To that end, OMB has recommended steps such as increasing small business order set-asides and maximizing small business set-asides across multiple types of contracts. Perhaps most importantly, OMB has directed federal agencies to apply the small business Rule of Two for all orders, which should has the potential of leading to an increase in small business set-asides. Below, we dive into these new recommendations.
    The memorandum, issued through the Office of Management and Budget (OMB), refers to a number of other policy documents. One of those is Executive Order 14091, Further Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. That executive order established a government-wide goal of awarding at least 15 percent of federal contract spending to small disadvantaged businesses in FY 2025.
    The White House, SBA, and the Federal Acquisition Regulatory Council (the FAR Council), had worked together to come up with solutions to “promote a diverse federal supplier base.” These actions will be the subject of future regulations in the FAR and SBA rules. Here are some of these key actions that the memo encourages.
    For Multiple Award Contracts (MACS)
    Work with agency small business specialists early. “Agencies should carefully consider total or partial small business set-asides when planning new multiple-award contracts.” Agencies should review set-aside decisions with the the agency small business specialist and the SBA’s Procurement Center Representatives (PCR). While agencies always consider small business set-asides, this recommendation says that agencies must engage both the SBA and the small business specialist at the agency, to ensure small business advocates are part of the set-aside decision. The agency small business specialist should review the decision to not use a small business set-aside. Use On-Ramps. “Consider on-ramps when developing the acquisition strategy.” This would allow small businesses to be added to MACs on a continuing basis, so that they are not foreclosed from entry just because they did not make the initial cut. Limit Off-Ramps. Agencies should not remove companies from small business MACs “because of a change to its size status, except where size status changes as a result of a merger or acquisition of the business.” Agencies should not actively look to remove small businesses from awards based on off-ramping, unless there is an acquisition of a business. We have seen some solicitations that have pretty strict off-ramping procedures. The OMB memo instructs agencies not to have such strict procedures for small businesses. For Orders under MACS
    We’ve written extensively on when agencies must set aside orders under MACS. For instance, in one COFC decision, the court held that “[t]he Rule of Two unambiguously applies to ‘any’ ‘acquisition,’ FAR 19.502-2, without any loophole for MAIDIQ task orders.” The court noted, “where the FAR intends to make the Rule of Two entirely inapplicable to the selection of a particular procurement vehicle, the FAR knows how to do so,” and it cited FAR subpart 8.4, which expressly exempts FAR Part 8 FSS procurements from the Rule of Two requirements. The indefinite delivery contract regulations in FAR subpart 16.5, however, do no such thing.
    However, GAO has disagreed with the COFC on whether the small business Rule of Two apply to orders under a multiple award contract and said it is discretionary on the part of the agency. GAO noted that it had in the past construed the small business Rule of Two as applicable to any task order delivery order solicitation, but that in 2010 Congress amended the Small Business Act to require rules allowing federal agencies to “set aside orders placed against multiple award contracts for small business concerns” “at their discretion.” Both the FAR and SBA rules echoed the language allowing agencies to have discretion in setting aside orders for small business. In various decisions, GAO had consistently ruled that “set-aside determinations under multiple-award contracts are discretionary, not mandatory.” In keeping with that tradition, GAO reiterated that agencies do not have to use small business set-asides for orders solicited against multiple award contracts.
    Perhaps in part to overcome this split in authority, here are the key actions that the memo recommends:
    “Apply the rule of two to contract orders, with limited exception.” With limited exceptions for things like urgency, “agencies should set aside orders over the micro-purchase threshold (MPT) for small business contract holders when the contracting officer determines there is a reasonable expectation of obtaining offers from two or more small business contract holders under the multiple-award contract that are competitive in terms of market prices, quality, and delivery.” This memo, then, encourages agencies to use small business set-asides for orders, regardless of the split between the COFC and GAO. This should have a positive effect on setting more acquisitions aside for small business. “Maximize orders to small businesses under the simplified acquisition threshold (SAT) to the maximum extent practicable.” Agencies should review data on what percentage of orders are not set aside and take action on those small-dollar orders. Make BICs work for small business. “Best-in-class (BIC) contract vehicles are enterprise multiple-award contracts that meet a rigorous set of criteria, including demonstrated use of category and performance management strategies and small business best practices.” Many of them have been used for awards to SDBs and SDVOSBs. Agencies should prioritize small business and use order set-asides in connection with BICs. This memo shows that the OMB is committed to increasing small business participation. It predicts that new SBA and FAR rules will be coming soon to put these ideas into practice. For now, OMB is relying on voluntary agency effort to carry out these steps. Let’s hope that many agencies follow them, but that new regulations come out soon. Stay tuned to SmallGovCon to see how this develops.
    Questions about this post? Email us or give us a call at 785-200-8919.
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    The post OMB Issues Command to Increase Small Business Participation on MACs first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  21. Koprince Law LLC
    Happy Friday! We hope you had a productive week. We are slowly exiting the deep freeze that we have been enduring the past few weeks, here in the midwest. We’ve had snow, ice, rain and sub degree temperatures! Not fun! We are looking forward to seeing the sun again and warmer days. Hope you are doing well and looking forward to a nice weekend.
    This week in federal government contracting news saw some interesting stories, including a push to streamline contracting and GSA not following procurement rules.
    Contracting Vehicles: Understanding GSA Schedules, IDIQs, and Beyond Bipartisan bill strives for ‘more nimble and meaningful’ federal contracting Federal ‘neurodiversity’ initiatives slowly getting off the ground GSA hosts roundtable with business leaders on advancing equity in federal contracting Can a data environment actually improve federal procurement? Study: Growing Indian middle class on Nebraska reservation defies odds GSA Purchased Chinese-Manufactured Videoconference Cameras and Justified It Using Misleading Market Research DoD’s new memo puts stricter requirements on cloud providers Protests restart over CIO-SP4 It’s time to rethink GovCon pricing to align with post-pandemic reality Technology Modernization Fund announces targeted investments to improve customer service and security United States Files False Claims Act Complaint Against Department of Energy Prime Contractor Alleging Millions of Dollars in Fraudulent Overcharging The post SmallGovCon Week in Review: January 22-26, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  22. Koprince Law LLC
    In 2019, the Department of Defense (DoD) announced the development of the Cybersecurity Maturity Model Certification (CMMC) Program, which was then implemented in 2020 as an interim rule. We blogged about that way back in 2020. This program was designed to give a certification to contractors based on the depth and effectiveness of their cybersecurity systems to help ensure that contractors implement required security measures. As DoD put it, “[t]he CMMC model consists of maturity processes and cybersecurity best practices from multiple cybersecurity standards, frameworks, and other references, as well as inputs from the broader community.” In late December 2023, the DoD issued proposed changes to the CMMC program for “CMMC 2.0,” a plan that DoD began work on back in 2021. In this post, we will take a general look at these proposed changes.
    FCI and CUI
    It might be helpful for context to give an idea of what the CMMC Program protects. After all, many might wonder what there is to protect if the information is unclassified. The CMMC Program aims at protecting two kinds of information: Federal Contract Information (FCI) and Controlled Unclassified Information (CUI). FAR 52.204-21 defines FCI as “information, not intended for public release, that is provided by or generated for the Government under a contract to develop or deliver a product or service to the Government, but not including information provided by the Government to the public (such as on public Web sites) or simple transactional information, such as necessary to process payments.” Essentially, it’s information that comes from a contract that isn’t marked for public release.
    CUI, per 32 C.F.R. § 2002.4, “is information the Government creates or possesses, or that an entity creates or possesses for or on behalf of the Government, that a law, regulation, or Government-wide policy requires or permits an agency to handle using safeguarding or dissemination controls.” Essentially, CUI is information that, while unclassified, agencies must or are permitted to safeguard or otherwise control the dissemination of. The National Archives provides a good rundown of the difference between FCI and CUI.
    The CMMC Program, then, basically is aimed at ensuring the information that falls in between “classified” and “meant for public release” is properly protected. This program became all the more crucial with the rise of electronic data creation, collection, and processing. “Classified information” generally has to do more with information that must be protected for national security reasons. Just because information is unclassified, that does not mean it is meant to be disseminated to the public. Personal data and financial information all might well be unclassified, yet still improper to disseminate publicly. This is what the CMMC Program seeks to protect.
    Current CMMC
    Under the current CMMC program, federal contracts have five levels of security requirements. For CMMC Level 1, contractors and applicable subcontractors must follow FAR 52.204-21, which has 15 security requirements for the transfer of FCI outside the government. For CMMC Level 2, contractors and applicable subcontractors must follow DFARS 252.204-7012, which has 65 of 110 security requirements for the transfer of CUI outside the government by its reference to the National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations,” along with 7 CMMC practices and 2 CMMC processes. CMMC Level 3 consists of all 110 security requirements from NIST SP 800-171, 20 CMMC practices, and 3 CMMC processes. CMMC Level 4 consists of all 110 security requirements from NIST SP 800-171, 46 CMMC practices, and 4 CMMC processes. Finally, CMMC Level 5 consists of all 110 security requirements from NIST SP 800-171, 61 CMMC practices, and 5 CMMC processes.
    CMMC 2.0
    If implemented, CMMC 2.0 would add 32 C.F.R. Part 170 to the CFR if implemented. It would create a number of new requirements for assessment and affirmation that requirements are being met for CMMC Levels 1 and 2. For CMMC Level 1, contractors and applicable subcontractors would need to verify they are meeting the security requirements through self-assessment and affirm the same annually. For CMMC Level 2, program contracts will either include a self-assessment requirement or a certification assessment requirement at what appears to be the discretion of the contracting officer, the latter of which would involve assessment of contractors and applicable subcontractors by a third-party on whether they are meeting the CMMC Level 2 security requirements. In either case for CMMC Level 2, the contractor and applicable subcontractors would need to affirm continuing compliance after each assessment.
    However, the biggest change with CMMC 2.0 is that it appears it would simplify the leveling system and make CMMC Level 3 the highest level. Per the proposed rule, it would eliminate Levels 2 and 4, and rename the remaining three CMMC Levels as follows:
    Level 1 will remain the same as CMMC 1.0 Level 1 (15 security requirements for the transfer of FCI outside the government); Level 2 will be similar to CMMC 1.0 Level 3 (110 security requirements from NIST SP 800-171); and Level 3 will be similar to CMMC 1.0 Level 5 (110 security requirements from NIST SP 800-171. But, furthermore for CMMC Level 3, contractors and applicable subcontractors would  also be required to implement 24 selected security requirements (outlined in what will be 32 C.F.R. § 170.14) from NIST SP 800-172, “Enhanced Security Requirements for Protecting Controlled Unclassified Information: A Supplement to NIST Special Publication 800-171.” Under CMMC Level 3, contractors and applicable subcontractors would need to verify through a DoD-conducted assessment that they are meeting the Level 3 requirements. They would then get a certification that is valid up to three years. Naturally, the contractor and applicable subcontractors would also be required to affirm compliance after the assessment and then annually thereafter until the next assessment.
    It is worth noting that this CMMC Program applies to defense contracts, and that the implementation will be a phased rollout. Specifically, the proposed rule states: “The DoD is implementing a phased implementation for the CMMC Program and intends to introduce CMMC requirements in solicitations over a three-year period to provide appropriate ramp-up time. The Department anticipates it will take two years for companies with existing contracts to become CMMC certified.” As such, it would seem it should not apply to existing contracts but will apply over time to more and more new solicitations until all such DoD solicitations incorporate this program.
    Summary
    CMMC 2.0 expands upon the CMMC Program in multiple ways, such as simplifying the  security requirement level structure, assessment requirements, and affirmation requirements. No doubt there will be further tweaks to the program in the years to come even if CMMC 2.0 is implemented, but contractors should be aware of the potential for this new program. As of this posting, comments are still welcome on the CMMC 2.0 proposed rule and will be until February 26, 2024. It seems safe to assume that CMMC 2.0 will be implemented in some form or another, so familiarization now may help prevent headaches down the road.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
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    The post CMMC 2.0 and You: A Look at the Department of Defense’s Proposed New Cybersecurity Rules first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  23. Koprince Law LLC
    It’s been one year since the U.S. Small business Administration (SBA) took over the federal government’s veteran-owned small business contracting program from the Department of Veterans Affairs (VA), and a lot has happened in that amount of time. Here, we discuss how SBA has handled the Veteran Small Business Certification Program in the first year and some of SBA’s achievments. And in other big SDVOSB news, the federal government will be providing more contracts for veteran-owned entities under the National Defense Authorization Act’s increased contracting goals.
    VetCert is One Year Old
    In a welcome change to the much longer process of years past, SBA has streamlined the process that service-disabled veteran owned small businesses (SDVOSBs) and veteran owned small businesses (VOSBs) must endure to either become certified for the first time, or to continue its certification. In 2023, VetCert approved over 10,400 applications from SDVOSBs and VOSBs, while averaging only 15 days for the applications to be processed. Wow! Perhaps the CVE can give some pointers to the WOSB certification program, which has endured some very long wait times based on what we’ve heard from folks.
    You can read the full press release here, but some of the high points include:
    Streamlining of ownership and control requirements to make them similar to those of the 8(a) Program and Woman-Owned Small Business Program; Monthly (or more) VetCert webinars for interested applicants discussing the application process (register here); Updated frequently asked questions library; and Centralized reporting, via the Veterans Case Management System (VCMS), for changes in ownership, company structure, veteran status, and recertification. “To date, 42,525 VetCert customer service responses have been completed by the VetCert Verification Support personnel.” From what we’ve heard and experienced, the VetCert program has been very efficient, especially compared to other SBA programs. Kudos to SBA for that!
    Joint Venture Certification
    While the transition from the VA to the SBA has been a relatively smooth one, it still had some questions that needed to be answered. At the top of the list: What does a joint venture need to do to be an eligible offeror? Is there a certification or registration requirement for the joint venture, separate from the registration requirement of the SDVOSB or VOSB venturer? We’ve seen some language in solicitations that seems to state that joint ventures must be certified or registered. But is that the case? And if so, where, or how?
    Well, the answer to that is two-fold.
    First, SDVOSBs and VOSBs do not have to go through the certification process under the regulatory language, and SBA judges have confirmed this. Freedom Technology Partners, LLC, SBA No. VSBC-321-P, 2023 (Dec 4, 2023). Instead, their eligibility is based on the SDVOSB or VOSB status of their managing venturer per 13 C.F.R. § 128.402.
    But, just because the joint venture does not need to be certified, it does appear that SBA is requiring joint venture offerors to be “designated” as an SDVOSB or VOSB joint venture. Late in 2023, SBA published, within its FAQ library, guidance which states, “Joint Ventures do not get certified as SDVOSBs or VOSBs by SBA. Instead, they must be ‘designated’ as eligible for sole-source or set-aside awards under the Veteran Small Business Certification Program by the Managing Venturer.” This is done by the managing venturer, who “must log into VCMS and ‘claim’ the Joint Venture.” Visit the FAQs to view a step-by-step walkthrough of this process.
    SDVOSB Contracting Goals Increase
    Finally, the 2024 National Defense Authorization Act will bring with it a bump in the SDVOSB contracting goals. The government-wide goal for contracting with SDVOSBs will go from three percent, which it has been at since 2000, to five percent. It will be interesting to see if SBA or other agencies change their policies based on this new goal. But based on prior years’ small business scorecards, agencies don’t have too far to go to hit the new goal. In fact, 2022 came in with 4.57%, less than a half of a percentage short of the soon-to-be 5% goal. This is great news for veterans to ensure they continue receiving a large number of federal contracting dollars.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
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    The post SDVOSB Updates: SBA VetCert Achievements, JV Certification, and NDAA Contracting Goal first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  24. Koprince Law LLC
    Happy Friday! Brrr, another very cold day here in the Midwest. We are looking for relief next week as the forecast is set for warmer temperatures after this deep freeze. I think I speak for everyone when I say that we are ready! We hope that you are staying warm in your neck of the woods.
    This week in federal government contracting saw some important stories, including the one-year anniversary of the SBA takeover of the SDVOSB program and the new defense industrial strategy.
    Small Business Size Standards: Notification of Two Virtual Public Forums on the2023 Revised Size Standards Methodology White Paper The Committee on Small Business (the Committee) is investigating National Aeronautics and Space Administration’s (NASA) procurement decisions related to the Solutions for Enterprise-Wide Procurement Government-Wide Acquisition Contracts (SEWP VI GWAC)solicitation. Another possible challenge for DoD’s $19B moving contract: No movers Forbes: Unprecedented Number of Entrepreneurs Opened Small Businesses in Past Three Years Sens. Cruz, Peters Introduce SHARE IT Act to Require Government Agencies to Share Code Governor Murphy Signs Legislation to Support Disabled Veteran-Owned Businesses SBA Celebrates One-Year Success of VetCert Program 3 Major Contract Opportunities Shaping the Defense R&D Ecosystem Will the new defense industrial strategy actually produce results? Private capital for defense needs, DoD’s requirements system will be most challenging areas to address in the coming years Report: Federal Government Awarded Record $765B in FY 2023 Contracts Contractors can be forgiven if they’re grumpy this month GSA’s Polaris contract pulled back into protest vortex Veterans get lip service when it comes to small business loans The post SmallGovCon Week in Review: January 15-19, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  25. Koprince Law LLC
    Everyone has New Year traditions. Some do resolutions, some take vacations, some simply buy a fun new calendar. Here at SmallGovCon we like reading the different federal contracting annual reports. These annual reports function as almost yearbooks or like a friend’s yearly holiday card that discusses all the highlights of the past year. These annual reports are a great resource for contractors to catch up on what a specific agency or tribunal has been up to, and plan for the year ahead. In this quick review of the CBCA and ASBCA’s annual reports, we will cover some of those takeaways. Who knows, maybe in reading this post, you can find something that gives you your own federal contracting new year’s resolution.
    The Civilian Board of Contract Appeals (CBCA) functions as a tribunal at which contractors and civilian agencies can “resolve contract disputes between government contractors and agencies under the Contract Disputes Act.” As such, when reading about the CBCA you will typically hear about contract claims, and different contract administration and performance issues. While it doesn’t seem to get as much traction on publications about federal contracting as say the GAO or Court of Federal Claims, it is still a tribunal which many contractors may someday need to go to in order to resolve issues. Similarly, the Armed Services Board of Contract Appeals (“ASBCA”) is a tribunal that generally hears contract disputes between Department of Defense agencies and contractors . As the CBCA annual report has more information this year than ASBCA, we will start with some nuggets of info from that.
    CBCA Annual Report
    CBCA’s 2023 annual report covers a good amount of ground. You will find some significant case summaries, information on new staff (including a new Judge), acknowledgment of staff achievements, and fiscal year statistics. Of most interest to federal contractors will likely be the cases and statistics, although it is good to put faces to names that you may encounter as well as recognize the great work CBCA’s employees may be completing.
    CBCA Cases of Note:
    In its annual report, CBCA lists summaries of nine cases that it deems “Decisions of Note.” All are worth a quick read (each is about half a page). The cases noted by CBCA in the annual report provide some great examples and pitfalls for contractors to consider prior to filing with CBCA. Some good takeaways are below:
    Alan E. Fricke Memorials, Inc. v. Department of Veterans Affairs, CBCA 7352, et al. (Jan. 12, 2023) VA issued cure notices for performance of a contract for inscription services at a VA cemetery. The contractor did not respond directly to the cure notices, but eventually completed all backlogged work on the contract. VA, however, terminated the contract for default. Upon review, CBCA converted the termination for default to a termination for convenience. CBCA found that the cure language didn’t properly put the contractor on notice that the CO sought a plan for how the contractor would “receive and process orders in the future and that, by the date of the cure notices, [contractor] had no delinquent orders to support a default termination.” With this case, CBCA seems to be issuing an alert to agencies that cure notices must be clear, and that contractors should strive to catch up on any work that may be subject to them. If it’s not clear, a contractor may be able to challenge a default termination. Contractors should also read any cure notices closely, and correct any problems. Cobra Acquisitions, LLC v. Department of Homeland Security, CBCA 7724 (Sept. 21, 2023) The contractor here had a contract with the Puerto Rico Electric Power Authority (“PERPA”) to provide power restoration services. This contract stemmed from the Federal Emergency Management Agency (“FEMA”) entering into a “cooperative agreement with Puerto Rico” to allow FEMA to provide disaster assistance. PERPA failed to pay the contractor “more than $174 million” that the contractor claimed was due. The contractor submitted a claim to FEMA for this. The CBCA however states that under the Contract Disputes Act (“CDA”), its jurisdiction is limited to contracts with an executive agency, and FEMA (the executive agency here) was not a party to the contract between PERPA and the contractor. CBCA continued, clarifying that a “suretyship arrangement is not a contract for the procurement of good or services” and would not be seen as a procurement contract under CDA. The CBCA “lacks jurisdiction to entertain third-party beneficiary contract claims.” CBCA’s jurisdiction is limited to direct contracts with executive agencies; and even if an executive agency may have been the cause behind an action, if the contract itself is not with that agency, then CBCA cannot hear the claim. Contractors need to be sure to nail down who their contract and claim is with, before diving into the CBCA process. SBA Archway Helena, LLC v. General Services Administration, CBCA 5997, et al. (Mar. 6, 2023) In a design/build lease with GSA, the contractor alleged that GSA was “at fault for 234 days of delay in issuing a notice to proceed (NTP) after the contract was awarded.” This caused occupancy and the start of rent payments to be pushed back. CBCA found that the costs at issue (pre-occupancy costs) would not have occurred under the lease without the agency’s delay. That being said, the CBCA did not agree that GSA was liable for the entirety of the delay, adjusting the percentage of costs accordingly. This confirms that an agency’s delay in starting a contract could lead to a viable claim for contractors, but that CBCA will not take a contractor’s length of delay in such claim at face value. CBCA will make its own determination on how much a contractor can recoup in any such claim. CBCA Statistics:
    CBCA notes that there were 409 new cases filed at CBCA in 2023, but this includes cases that are not claim appeals, such as FEMA cases, of which there were quite a few. There were 246 claim appeals docketed in the past year. For the 47 claim appeal cases that went to a decision on the merits, the Board granted the appeal 10 times (contractor fully wins), granted in part the appeal 11 times (contractor won some of its grounds), and denied the appeal 26 times. The report mentions CBCA dismissed 138 CDA cases (125 were voluntarily dismissed, often meaning a settlement was reached). The CBCA also produced a graph of which agencies had the most appeals filed. It would appear that the agency with by far the most appeals filed was the Department of State, followed by the VA, and then the GSA.
    Taking the statistics into account, a great many CBCA appeals end in settlement. And of those not ending in settlement or dismissal, close to half of appeals (about 45%) at least result in some victory for the contractor.
    ASBCA Annual Report
    The ASBCA’s annual report focuses on the statistics for ASBCA during 2023. The ASBCA docketed 342 cases in 2023, representing a decrease of 58 cases from 2022. This also marks a 5-year low for the amount of cases docketed at ASBCA. Among the DoD agencies that had cases docketed, the one with the most was the Corps of Engineers at 105, with the Army, Navy and Air Force with 40 to a little over 50 cases each.
    The ASBCA resolved (or as they say “disposed”) 375 cases in 2023, 22 less than 2022. Of those, 88 were sustained, 44 were denied, and 243 were dismissed. The 88 sustains are lower than 2022, but still represent a higher amount of sustains than in 2019, 2020, and 2021. Of those not dismissed, that represents quite a high sustain rate of 67%–but we have few details on what a sustain resulted in for the contractor. Very few ASBCA cases are appealed up to the U.S. Court of Appeals for the Federal Circuit, as there were 14 appeals filed based on 13 ASBCA decisions in 2023. ASBCA also highlighted that 83 cases were voluntarily diverted to Alternative Dispute Resolution.
    In comparison to CBCA, the ASBCA rules in favor of the contractor more often on the merits. But it does look like ASBCA’s usage was less common than the CBCA this past year, which is interesting because DoD spends many more contract dollars than civilan agencies. Whether that was due to less contracting issues in DoD contracts, or due to some form of wariness in using ASBCA, is unclear.
    While ASBCA and CBCA may not be the most talked about federal contracting tribunals, they are still widely used. As you can see, there is some helpful information in these annual reports. Given the percentage of sustains and settlements reached for claim appeals, it is crucial to fully assess your options with a federal contracting attorney to see if you have a viable case before going to the CBCA or ASBCA.
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    The post Government Claim Appeals Nuggets from the ASBCA and CBCA 2023 Annual Reports first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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