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Happy Friday, Readers! We hope you had a very productive week and can take some time this weekend to relax and unwind. The start of June is proving to be a wet one here in the Midwest and the gardens and trees are loving it! Everything is so green and the spring flowers are beautiful. I’m sure the town will be filled with the sound of lawn mowers this weekend. Here are a few noteworthy articles this week, concerning federal government contracting issues, including some policy changes on the federal management level, reports on time and materials contracts, and small business tech opportunities. We hope you can kick back, relax and carve out some leisure time this weekend. Enjoy! Small Business Size Standards: Termination of Nonmanufacturer Rule Class Waiver [FedReg]2022 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Billions of Dollars in Financial Benefits [GAO]SBA releases hurricane season information guide [ALDIA]Survey Says “No” to Biden’s Project Labor Agreements [ConstEquip]The Government Shutdown and the Impact on Your Business [ExecBiz]Navy Rear Adm. Lorin Selby Declares the Need for a “Hedge Strategy” to Anticipate Warfare’s Technological Changes [GovConWire]A hopeful update on the President’s Management Agenda [FCW]Wage gap between CEOs and US workers jumped to 670-to-1 last year, study finds [Guardian]NASA Awards $50 Million in Funding to Small Businesses [SmlBizTrends]GAO: Agencies relying too much on time-and-material contracts [WashTech]Contractors Beset by Ransomware Threats Have Too Few Options [BlmbrgLaw]Federal Contracting: Opportunities Exist to Reduce Use of Time-And-Materials Contracts [GAO]Connecticut Companies Pay $5.2 Million to Resolve Allegations of False Claims Act Violations Concerning Fraudulently Obtained Small Business Contracts [DoJ]Pentagon recovered millions from contractors using tip line, report shows [FedTimes]DOD exploring requirements for managed service providers under CMMC [Fedscoop] The post SmallGovCon Week in Review: June 6-10, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Greg Weber has recently rejoined the blog and is once again one of our attorney-authors. We’re excited to have him back! Greg spent a stint in the healthcare industry, which has given him increased experience in both regulatory and transactional matters. His recent post discusses the importance of checking your emails in connection with size protests. Email is a common way the federal government gives notice, so a lot can rest on an email sometimes. Greg’s full biography can be found here. Be on the lookout for more of Greg’s posts on SmallGovCon. The post SmallGovCon Welcomes Back Greg Weber! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA’s OHA administrative judges recently sent a warning to all small business contractors that they need to keep an eye on their email inboxes no matter how late in the business day it is. In a size appeal decision, OHA found that even an unread email could derail a contractor’s plans for a size appeal, depending on when it arrived in your inbox. As avid readers of SmallGovCon may recall, timeliness with emails is somewhat of a recurring topic in Federal Government Contracting. Well, in RBVETCO, LLC , SBA No. SIZ-6154 (2022), OHA added its voice to the group of recent decisions related to timeliness of emails received by contractors. In RBVETCO, OHA dismissed a size appeal as late, relying on when the email of the size determination was received in the contractor’s email inbox, not when the email was actually opened by the recipient. (For those of you pulling out your calendars and calculators in fervent anticipation of reading the rest of this post, do not fear, we here at SmallGovCon will break down the dates and times involved.) The SBA sent notification of the size determination to the company on Thursday March 24, 2022 at 3:38 p.m. CST/4:38 p.m. EST and SBA received an automated confirmation that the email was received at that same time. However, the employee whose email was listed on SBA correspondence was busy and out of the office at that time. Consequently, RBVETCO was unable to open the email until 6:41 p.m. EST on March 24, 2022. RBVETCO then sent an email confirming receipt of the size determination ruling on Friday March 25, 2022. RBVETCO prepared its size appeal, serving it to all interested parties on Friday, April 8, 2022 (15 calendar days after March 24, 2022), but due to an administrative oversight, the size appeal petition was not filed with OHA until Monday, April 11, 2022 (18 calendar days after March 24, 2022). OHA asked why the appeal should not be dismissed as untimely, as according to OHA rules of procedure, a size appeal “must be filed within 15 calendar days after receipt of the formal size determination.” 13 C.F.R. § 134.204(b)(2). RBVETCO argued that since the size determination email was not opened until after business hours on March 24th, then the email should be deemed to be received on March 25th. The company continued its argument by reminding OHA that their rules and procedures hold that 5:00 p.m. is generally recognized as the close of business, meaning that filings received after 5:00 p.m. are seen as being received on the next business day. Since 15 days after March 25th would fall on a weekend, the filing deadline for anything received on March 25th would be moved to the next business day, which is April 11, 2022, the date RBVETCO filed its size appeal with OHA. 13 C.F.R. 134.202(d). OHA did not find this argument compelling, and laid out some good reminders for contractor’s planning out a size appeal. OHA stated that they have “long held that ‘receipt’ of an email occurs when the e-mail reaches the intended recipient’s e-mail server.” To OHA, drawing a line at when an email is opened creates an “irrational, if not unworkable, precedent.” OHA declared that if they determined receipt by when an email was opened, logically, “an individual might avoid ever receiving an e-mail by, for example simply deleting the incoming message or refusing to open it,” pushing the filing deadline out almost indefinitely. This would create “a plainly absurd result.” So, since OHA received a confirmation on March 24th that the email was received by RBVETCO’s server during business hours, they ruled that the 15 day deadline fell on April 8, 2022 and the size appeal was dismissed. Finally, OHA did address the fact that RBVETCO served the interested parties within the determined 15 day deadline, but forgot to file with OHA until the 18th day simply due to an administrative error. OHA reiterated that regulations do not allow OHA to extend or modify the filing deadline, no matter how much they may sympathize with an appellant’s administrative accident. For size appeals there are complicated procedural rules, and if you fail to follow these rules they can result in your size appeal being dismissed, regardless of how strong the arguments within it may be. This case should hopefully serve as a reminder to all contractors to keep an eye on your email inbox at all times when you anticipate receiving any important emails from the Government. If you anticipate that you may be receiving some important communication from OHA (or other government official for that matter), make sure to plan out your calendar accordingly because despite your best intentions or circumstances, OHA cannot shift the filing deadline of a size appeal. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Leaving OHA Email on “Unread” still Counts as Receipt For Appeal Timing Rules first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Inflation. A word no one likes, but it is something that is currently impacting nearly every facet of our lives. Gas prices continue to rise, grocery costs are through the roof, and everyday living expenses are taking more hard-earned money from our country’s workers than ever before. However, consumers are not the only ones feeling the effects. Costs and expenses of running a business have increased dramatically as well, and those in the federal contracting world are no exception. Questions from both contractors and contracting officers (CO) prompted the Department of Defense (DOD) release new guidance on May 25, 2022, conveying how it plans to handle inflation through economic price adjustments (EPA) as well as when the use of EPAs is appropriate. However, the guidance also discourages flexibility for increased costs based on inflation. CONTRACT TYPES To understand the new guidance, it is important to first understand what type of contract the contractor is performing under. There are four main ways that contractors can be paid under a DOD contract: cost reimbursement, fixed-price incentive, fixed-price with economic price adjustment (EPA), and firm fixed price. Cost Reimbursement Type Contracts. The Government bears the risk of increased costs, including those due to inflation, in cost reimbursement contracts. Contractors have the responsibility to promptly notify the CO “that the costs incurred are approaching the limits specified in the applicable clause.” Federal Acquisition Regulation (FAR) clause 52.232-20, Limitation of Cost, and FAR clause 52.232-22, Limitation of Funds address the contractor’s obligations in further depth. When the Government receives such notice, it may choose to increase the contract funding for continued performance, or not. If it chooses not to, the contractor is under no obligation to work past the contract’s funded amount. Fixed-Price Incentive Contracts. The contractor’s actual, allowable, and allocable costs are recognized up to the contract ceiling in fixed-price incentive contracts. If actual cost differs from the target cost, “the target profit will be adjusted by application of the contract share ratio to the costs over or under the target cost.” Fixed-Price Contracts with Economic Price Adjustments. Under fixed-price contracts with economic price adjustment, “the EPA clause normally establishes a mechanism to mitigate specifically covered cost risks to both parties as a result of industry-wide contingencies beyond any individual contractor’s control; the Government will bear the cost risk up to the limit specified in the clause (if any).” Firm-Fixed-Price Contracts. Unlike the three previously mentioned contract types, those contracted as firm-fixed-price contracts (FFP), leave the contractors to bear the burden of any increased costs. This includes increases due to inflation and occurs because FFP contracts do not contain “authority for providing contractual relief for unanticipated inflation under an FFP contract.” Many have inquired about the possibility of using a request for equitable adjustment (REA) for this purpose, but the DOD points out that REAs are only to be utilized in the event of CO directed changes. This is a common contract type for many contractors. Unfortunately, the DOD is not encouraging flexibility for inflation: “Since cost impacts due to unanticipated inflation are not a result of a contracting officer-directed change, COs should not agree to contractor REAs submitted in response to changed economic conditions.” DEPARTMENT OF DEFENSE’S SOLUTION To fill the void created by rapidly increasing inflation, DOD has recommended that FFP contracts that are for periods of time longer than six months insert an EPA clause. EPA clauses based on established prices or on the actual cost of labor and material should only be used when delivery or performance will not be completed within six months after contract award. DFARS 216.203-4(1)(ii). EPA clauses based on cost indices of labor and material are limited to contracts with significant costs that will be incurred beyond one year after performance begins. FAR 16.203-4(d)(1)(i). DOD recommends the following factors be taken into account by COs when drafting an EPA clause: When a CO is choosing indices to be used to measure inflation for purposes of an EPA clause, the index used should be “closely related to the cost components judged to be most unstable”; The scope of the EPA clause should be limited to costs most likely to be impacted by economic fluctuations, excluding costs not likely to be affected by inflation from adjustment; Economic price adjustments often do not apply to the profit portion of the contract; CO should use independent, recognized sources as the basis for measurement of inflation in EPA clause; and The index used to measure inflation should not be too large or too small, so only relevant fluctuations are taken into account. Further, EPA clauses should: Be fair to both parties; Allow for contract price adjustments based on pre-established formulas rather than simply reopening price negotiations; Exclude contingency allowances from the base contract price; Explain the method that will be used to calculate price adjustments; and Identify when a price adjustment will be warranted. DOD points out that any clause in a contract that includes adjustments due to changed economic conditions is considered an EPA, whether the term is used or not. Unfortunately, this guidance did not include any information on how DOD plans to address inflation for currently active contracts. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Department of Defense Unveils Plan to Address Effects of Inflation on Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA has issued a final rule changing all employee size standards to a 24-month calculation. This rule is scheduled to be published in the Federal Register on June 6, 2022, and and will take effect 30 days from the date it is officially published. Let’s take a closer look. This final rule actually implements two updates to SBA’s rules that, once effective, will change the way SBA calculates a company’s size to determine whether it qualifies as small for SBA’s various assistance programs. The first one (the primary focus of this article) is that the SBA will adopt a 24-month average to calculate a company’s number of employees for eligibility purposes in all of SBA’s small business and socioeconomic programs. This change to SBA’s size rules will implement section 863 of the 2021 National Defense Authorization Act (NDAA), which amended section 3(a)(2)(C)(ii)(I) of the Small Business Act, to change SBA’s employee-based size standards from a 12-month averaging period to a 24-month averaging period. Once this change takes effect, as SBA explains: [F]or certifications following the effective date, the size of a business concern under an employee-based size standard will be calculated by averaging the concern’s number of employees for each pay period in the preceding completed 24 calendar months. In determining a concern’s number of employees, SBA counts all individuals employed on a full-time, part-time, or other basis. Part-time and temporary employees count as full-time employees, and the concern aggregates the employees of its domestic and foreign affiliates. If the concern has not been in business for 24 months, it would average its number of employees for each pay period during which it has been in business. The change will apply to all industries subject to SBA’s employee-based size standards, which predominantly apply to manufacturers (but also to certain mining, utilities, transportation, publishing, telecommunications, insurance, research and development, and environmental remediation firms). But SBA also noted that nonmanufacturers too qualify for their small business status for government supplies contracts using employee-based size standards. And as such, SBA clarified that even though the nonmanufacturers and nonmanufacturing industries are not technically covered by the 2021 NDAA’s change to its proposed size standards, SBA believes that it would be unworkable to use a 24-month average for manufacturing industries but retain a 12-month average for other industries with employee-based size standards. Firms may participate in multiple industries, and it is burdensome to use different averaging periods for different industries with employee-based size standards. Thus, once the final rule takes effect, the 24-month average will be a widespread change for SBA’s employee based size calculations moving forward. Notably, the second change this final rule implements is that SBA will now allow participants in its Business Loan, Disaster Loan, Surety Bond, and Small Business Investment Company (SBIC) Programs to use a five-year averaging period to calculate their average annual receipts (in addition to the current three-year averaging period). According to SBA, both of “[t]hese changes will allow larger small businesses to retain their small business size status for longer, and some mid-sized businesses to regain their small business status.” Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Upcoming SBA Rule Will Switch to 24-Month Calculation for Employee Size Standards first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy June, Readers! Can you believe it’s the start of summer already? This year is certainly flying by. I hope you have lots of fun summer plans with family and friends. I know that I’m looking forward to it. We’ve included several articles that hopefully provide some good information concerning federal government contracting today. Enjoy the weekend! Small Business Size Standards: Notification of Two Virtual Public Forums on Size Protest [FedReg]4 Tips for Winning Government Infrastructure Contracts [ForConstPros]DoD tells industry how it will handle cost of inflation [FedNewsNet]US Military Budget 2022: How Much Does the U.S. Spend on Defense? [GovConWire]Money Matters: Three SBA programs you probably haven’t heard of and could be taking advantage of [ARentMang]NASA supports small business research to power future exploration [ASM&D]How Does the Government Assist Small Businesses? [ExecBiz]Why are too many GovGon websites so lacking in the basics? [WashTech]DTRA Seeks Proposals for $4B Tech Contract to Counter Weapons of Mass Destruction [GovConWire]How the Pentagon plans to manage inflation costs in contracts [FCW]Previously banned labor law rule for federal contractors comes back into play [FedNewsNet]Wage Compression In Government Contractors Needs To Be Addressed [Forbes]Cross-agency working group reviewing gaps in federal cybersecurity capabilities [FedNewsNet]Pentagon announces new leadership for chief digital, AI office [FedScoop] The post SmallGovCon Week in Review: May 30-June 3, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In a recent decision, GAO sustained a protest arguing that the agency had actually converted a best-value tradeoff procurement into a lowest-priced, technically acceptable competition. GAO held that the agency had not properly followed the evaluation criteria. In the protest, AT&T Mobility LLC (AT&T) protested a RFP award under a DHS for cellular communications services and equipment. AT&T Mobility LLC, B-420494 (May 10, 2022). The solicitation established that the award would be made on a best-value trade-off basis and looked at: “(1) technical (40 percent); (2) transition (40 percent); and (3) corporate experience (20 percent), which included the key personnel experience element.” While price was less important than these factors, the agency would “not make an award at a price premium it consider[ed] disproportionate to the benefits associated with the evaluated superiority” of one proposal over another. AT&T’s total evaluated price was $19,998,857 and Verizon’s total evaluated price was $17,928,540. The protester argued “that the adjectival definition ratings set forth in the solicitation for the ratings of outstanding, satisfactory, and unsatisfactory indicated the agency would conduct a qualitative evaluation to assess whether proposals failed to meet, met, or significantly exceeded requirements, as well as determining whether specific elements of proposals constituted strengths, weaknesses, or deficiencies.” But the agency only looked at whether the proposal was “satisfactory.” GAO sustained the protest based on the agency’s use of pass/fail analysis, over the agency’s argument that the solicitation criteria were actually pass/fail. GAO wrote: We find unavailing the agency’s argument that the solicitation as amended contemplated the type of acceptable/unacceptable assessment of proposals conducted by the evaluators here. The agency’s reliance on the SOW’s statement–that offerors must agree to meet all 112 core requirements to be found technically acceptable–fails to read the solicitation as a whole. Specifically, the agency’s argument gives no effect to the solicitation provisions requiring offerors to provide, and the agency to assess, detailed narrative descriptions for many of the requirements. Because the agency provided no qualitative analysis of proposals on either the technical or transition factor, the agency failed to follow the solicitation criteria. In addition, the agency focused only on the adjectival rating, and did not compare proposals to each other. “The only comparison of the proposals in the record before us is the SSO noting that both proposals received ratings of satisfactory.” Therefore, the agency did not look “behind the adjectival ratings to consider the qualitative value of the proposals in determining that they were technically equivalent.” Agencies must stick to their original evaluation criteria in a solicitation. They cannot change their horses midstream. Here, GAO found that the agency had effectively turned a comparative, best-value evaluation, into a LPTA evaluation. If you suspect that an agency has done a similar thing, a protest may be in order. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO Sustains Protest for Converting Best-Value Evaluation into LPTA first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Memorial Day, originally known as Decoration Day started on May 30th, 1868 as a day of remembrance for Civil War veterans. According to History.com, the date was chosen because it wasn’t tied to any particular battle. In 1968, Congress passed the Uniform Monday Holiday Act. This Act established Memorial Day as the last Monday in May in order to create a three-day weekend for federal employees. The change went into effect in 1971. The same law also declared Memorial Day a federal holiday. We would like to thank our veterans and active military personnel, and their families, on this day and everyday. Thanks for your service. We appreciate you and the sacrifices made for our country. Have a wonderful Memorial Day weekend. The post Memorial Day 2022: A Day of Remembrance first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In a recent post, we examined some proposed new size standards for manufacturing and other industries that utilize employee-based size standards. This probably got many of you wondering: How does the SBA determine what the size standards should be? It’s a good question, and today, we’re going to look at just that. Hopefully, this will provide some insight as to the SBA’s approach to setting size standards. The SBA revised its size standards methodology most recently back in April 2019. This methodology is compiled in a 59-page document located here. We thought it’d be useful to break down and summarize this document for your convenience. While calculations are used, there really isn’t a “one-size-fits-all” calculation that the SBA uses to determine proper size standards. There are five primary factors that SBA uses for determining if an industry’s size standard should be modified. They are: 1) Average firm size, 2) Start-up costs and entry barriers, 3) Industry competition, 4) Size distribution of Firms and Gini Coefficient, and 5) Federal contracting factor. The SBA generally takes the figures it gets for each of these factors and averages them out to get an appropriate size standard, to greatly simplify things. Average Firm Size The first thing the SBA looks at is probably the simplest factor: What’s the average size of a firm in the industry in question? A simple averaging of the industry’s total receipts or employees divided amongst the total number of firms is the first step here. However, that alone is generally not enough. Often, industries have a few very large firms and then many small firms. Just using the average alone weighs in favor of the larger firms. As such, the SBA conducts a weighted average calculation that takes this fact into account. The specific calculation the SBA uses is in the document if you are curious. The SBA uses average firm size because they find it is a close approximation of what they call the “minimal efficient firm size” or MES. The MES is “the level of output where firms in an industry are able to minimize their average cost of production and become competitive.” In other words, how big must a firm be for it to have the lowest possible average cost of production? At that level, the firm becomes most competitive. SBA explains that it also compares average firm sizes of industries: If the average firm size for a given industry is larger than the average firm size for most other industries, that naturally supports a higher size standard. Start-up Costs and Entry Barriers The SBA also considers start-up costs and entry barriers for new firms in an industry when making size determinations. Naturally, it costs more to start up a firm for some industries than for others. For example, a janitorial services company might require some cleaning equipment and transportation to start, whereas a nuclear power provider obviously would need a nuclear reactor (which we imagine is quite costly). Greater start-up costs and entry barriers suggest a higher size standard is appropriate. Unfortunately, there isn’t really data on actual start-up costs and entry barriers, so the SBA often looks at the average assets sizes for industries to get a sense on how much capital is needed for firms in that industry at a minimum. This, too, isn’t perfect, so SBA is always looking for other suggested means of calculation for this factor. Industry Competition Another primary factor the SBA considers is industry competition. What this means is that SBA looks at how market share is distributed across the firms of an industry. If the market share is more concentrated in a few industries as opposed to being more evenly distributed, this suggests to SBA that a higher size standard is appropriate. Of course, the more evenly distributed market share is, the more this tells SBA that a lower size standard is appropriate. The SBA currently utilizes what it calls the “4-firm concentration ratio,” which, to simplify things, basically is just figuring out how much market share the four largest firms in an industry control. Interestingly, it did not always consider this an important factor in the past if the four biggest firms controlled less than 40% of the industry market share combined, but this is changing to be applied more universally. Size Distribution of Firms and Gini Coefficient This factor is actually pretty similar to the factor of industry competition. It looks more, however, at how the industry’s economic activity is distributed. As the SBA explains, if most “of an industry’s economic activity is attributable to several small firms, this generally indicates that small businesses are competitive in that industry and would support adopting a smaller size standard.” What SBA is looking at is the inequality of distribution, that is, how are the industry’s total receipts or employees distributed among the firms in that industry? This is represented by what is called the Gini coefficient. The Gini coefficient is a number between zero and one produced after some calculations that shows how evenly or unevenly distributed the receipts are. A Gini coefficient of zero means that the receipts or employees are perfectly equally distributed among the firms. A Gini coefficient of one means one firm alone has all the receipts or employees. Generally, industries with higher Gini coefficients should have larger size standards and those with lower Gini coefficients should have smaller size standards. Federal Contracting Factor Finally, the SBA looks at small business participation in federal contracting in terms of share of total federal contract dollars awarded to small businesses relative to the small business share of an industry’s total receipts. As the SBA explains, “[i]n general, if the share of Federal contract dollars awarded to small businesses in an industry is significantly smaller than the small business share of total industry’s receipts, all else remaining the same, a justification would exist for considering a size standard higher than the current size standard.” In other words, the less that small businesses in the industry generally rely on federal contract money, the higher the size standard. Secondary Factors The above five factors are only the primary factors the SBA considers when determining size standards. It also considers recent technological changes, competition between industries, growth trends, the industry’s history, and of course how a change in the size standard would impact the federal government. As you can see, the SBA uses a methodical system for determining size standards. Of course, what we presented here is only a summary, each industry’s size standard is arrived at via the SBA’s discretion and own calculations. But hopefully, this sheds some light on how the SBA does just that. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Setting the Standard: How the SBA Determines Size Standards for Small Businesses first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Last week, Nicole Pottroff went through the basics of eligibility for participation in the SBA’s Women-Owned Small Business (“WOSB”) Federal Contracting Program. Today, I’ll walk you through the additional eligibility requirements for participation in SBA’s Economically Disadvantaged Women-Owned Small Business (“EDWOSB”) Program as stated in 13 C.F.R. § 127.200(a). If it has you feeling a little déjà vu, there is good reason for that. Eligibility requirements for the SBA’s WOSB and EDWOSB Programs are very similar, with only a couple small, but very important, differences. To start off, two of the requirements for eligibility to participate in the EDWOSB program (ownership and control by a woman) are very similar to those of the WOSB program. If you’d like to learn more about those requirements, you can find that in Nicole’s post. However, where a WOSB must be directly owned and controlled by women, an EDWOSB must be directly owned and controlled by one or more women who are economically disadvantaged. Further, where a WOSB must simply be a small business as defined by SBA rules, an EDWOSB must be a small business for its primary industry classification. You may be asking, “well, what does economically disadvantaged mean?” In general, economically disadvantaged, at least for the EDWOSB program, means a woman who can demonstrate that her ability to compete in business “has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business.” 13 C.F.R. § 127.203. A woman’s personal net worth must be less that $750,000, exclusive of her ownership interest in the concern, her primary residence, and any funds invested in an IRA or other retirement account In addition to personal net worth, SBA also looks to a handful of other factors. These include income, spouse’s financial situation, and the fair market value of all assets. A woman’s adjusted gross yearly income averaged over the past three years must not rise above $350,000. Income received from the EDWOSB can be excluded if it can be shown the income was reinvested in the business or used to pay the concern’s taxes. The spouse’s financial situation may be considered to determine a woman’s access to credit and capital. And finally, if a woman’s fair market value of all assets, including the primary residence and value of the concern, exceeds $6 million, SBA will determine her not to be economically disadvantaged. If those numbers look familiar, they are the same as the economic disadvantage standards for the 8(a) Program. Additionally, to be able to bid on an EDWOSB set-aside contract, an EDWOSB must operate, under its primary NAICS code, in an industry where women are substantially underrepresented. SBA maintains a list of those NAICS codes, based on a study performed once every five years. Of the 759 industries eligible for WOSB certification, only 113 are eligible for EDWOSB status. For example, many EDWOSB eligible industries are various forms of mining and agriculture. It’s important to note that EDWOSBs may bid on EDWOSB and WOSB set-asides, but WOSBs may only bid on WOSB set-asides. These are valuable programs created to help women-owned businesses grow, particularly when you account for the federal government’s goal to award 5% of all federal contracting dollars to women-owned small businesses each year. For additional information on the SBA’s EDWOSB Program, visit the SBA’s website. Questions about this post, the WOSB Program, or your own eligibility? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: EDWOSB Eligibility first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We invite you to tune into this informative podcast series hosted by The Smalls with discussions on federal government contracting. I just taped an episode with Nate Moser and it was a blast! In it, I discussed what we do at the firm to assist our federal government contracting clients, including things like drafting joint venture and mentor-protégé agreements. The podcast comes out in June and I hope you will give it a listen. The Smalls is nonprofit consortium of Government Contractors, Service Providers, and Manufacturers in Colorado. This weekly podcast is designed for Small Government Contractors, Service Providers, and Manufacturers, as part of the Government Contractor Ecosystem, connecting people, organizations, and resources. Here is the podcast link. I encourage you to check them out. We’ll let you know when the podcast and video is released! The post Coming Soon: The SmallsCast Podcast first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! We’ve been as busy as bees this week here at SmallGovCon. We hope you have had a productive week, as well. The flowers are blooming, the crops are growing and the grass is greening up nicely here in Kansas. Here are a few articles on the happenings in federal government contracting this week. Have a great weekend! The Federal Contract Spending Trends For The Last 5 Years [ExecGov]Class Waiver of the Nonmanufacturer Rule [SBA]Construction Company Agrees to Pay $2.8 Million to Resolve Allegations of Small Business Subcontracting Fraud [DoJ]Notice on the Continuation of the National Emergency with Respect to Securing the Information and Communications Technology and Services Supply Chain [WH]White House permitting plan seeks interagency coordination for infrastructure spending [FedNewsNet]Air Force awards largest ever military construction contract for F-35 facilities at Tyndall [FedNewsNet]Agencies saved about half a trillion dollars via GAO recommendations over a decade [FedNewsNet]Some defense-vetted prototypes could be fast-tracked to civilian agencies under new agreement [FCW]GSA’s new thinking for evaluating Polaris bids [FSW]Pentagon closing in on ‘ethical’ AI implementation [FSW]Orthotic Brace Suppliers Convicted in $6.5 Million Health Care Fraud Scheme [DoJ] US Department of Labor to Offer Prevailing Wage Compliance Seminars Online for Federal Contractors, Contracting Agencies, Unions, Workers [DoL]Don’t Have Two Years of Corporate Experience to Get on Schedule? Consider the Startup Springboard! [GSA]Federal contract workers lose millions to bureaucratic fumbles [WAPOST]Prime and Sub-Government Contractors [ExecGov]3 Meaningful Benefits to Getting a Women-Owned Business Certification [Ascent] The post SmallGovCon Week in Review: May 16-20, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As we’ve written about, it seems like there have been more changes to the Buy American Act and domestic preferences in the last few years than in decades before that. Recently, the FAR Council issued a final rule that spells out how the domestic content thresholds will increase over the next few years. This rule is effective October 25, 2022, so contractors need to be preparing for it now. Originally passed in 1933, the Buy American Act (BAA) supports the policy of federal agencies procuring domestic materials and products, so long as the procured items or the materials thereof are present in sufficient and reasonably available commercial quantities and of a satisfactory quality, with some waivers that may apply. There have been quite a few changes to the domestic preference rules lately. In early 2021, the percentage for the domestic component requirement under the Buy American Act, a percentage that had been in place for nearly 70 years, increased to 55%. Also in early 2021, the Biden White House issued an executive order to reshape the bureaucratic structure for domestic preferences, doing things such as centralizing the BAA waiver process under a Made in America Director. That same executive order also asked the FAR Council to propose a potential “value added” test to replace the existing component test. Earlier in 2022, the White House released new details on the Made in America Council, designed to, among other things, work towards “achieving consistency across agencies” when it comes to BAA waivers. The proposed rule for the final rule we are discussing today was issued in July of 2021. There are a few main changes that are occurring under the recent rule. The FAR Council also responded to various questions and comments about the earlier proposed rule. As context, the BAA uses a two-part test to determine if something is domestic. 1. The end product or construction material must be manufactured in the United States. 2. A certain percentage of all component parts (determined by cost of the components) must also be mined, produced, or manufactured in the United States—a requirement known as the “component test” until early 2021, when it was redesignated the “domestic content test” to be consistent with terminology used in E.O. 13881, Maximizing Use of American-Made Goods, Products, and Materials. For an end product that does not consist wholly or predominantly of iron or steel or a combination of both, the cost of domestic components must exceed 55 percent of the cost of all components; the test is waived for acquisitions of commercially available off-the-shelf (COTS) items. For an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components. That test is not waived for COTS items, except for COTS fasteners. The BAA encourages use of domestic products by slapping a price increase (for evaluation purposes) on products that don’t meet the test. Large businesses offering domestic supplies receive a 20 percent price preference, and small businesses receive a 30 percent price preference. For DOD, the preference is generally 50% across the board. Domestic Percentage Increase The final rule will increase the domestic content threshold by ramping up the percentages every couple years. So, while the rule makes the thresholds higher and higher for domestic content, it also provides a little bit of grace in the form of a “fallback threshold that would allow for products meeting a specific lower domestic content threshold to qualify as domestic products under certain circumstances.” Here is the schedule for the increases: October 25, 2022–the domestic content percentage will go from 55 percent to 60 percent2024–increase to 65 percent 2029–increase to 75 percent As far as timing, the percentage applies based on the year of delivery, not the year of award of the contract. “For example, a supplier awarded a five-year contract in 2027 will have to comply with the 65 percent domestic content threshold initially, but in 2030 will have to supply products with 75 percent domestic content.” An agency could allow the lower threshold to apply if the higher threshold “would not be feasible for a particular contract.” Fallback threshold The rule allows the use of the lower 55% in limited circumstances up through 2030 “where an agency has determined that there are no end products or construction materials that meet the new domestic content threshold or such products are of unreasonable cost.” A contractor has to mark which of its foreign end products exceed the 55% rule. In addition, this fallback exception is inapplicable to products consisting wholly or predominantly of iron or steel and to commercially available off-the-shelf (COTS) items. The purpose of the fallback is twofold: “(1) Help prevent scheduled increases in the content threshold from taking work away from domestic suppliers who are actively adjusting their supply chains; and (2) avoid unintentionally raising the foreign content of Federal purchases through increased use of waivers while domestic suppliers adjust.” Critical Components The headline on critical components is that the rule references them, but the actual list of critical components and the varied enhanced evaluation factors (i.e. price preferences) will be coming soon. The idea behind the critical component concept was that certain products are so important, that an offer proposing non-domestic versions of those products will get tagged with a higher price increase than for standard, non-critical components. But deciding what is critical, as you can imagine, is not that easy. So, this rule references the critical component enhanced prices, but the list has not been released yet. “When a final rule goes into place establishing the list and preference factors at [FAR] 25.105, the higher price preference for critical items or critical components shall be used.” There will also be additional reporting requirements for critical components, but those have been kicked down the road to when the additional rule on critical components comes out. Conclusion Contractors supplying goods to the federal government need to have October 25, 2022 circled on their calendars, and be aware of the schedule for ramping up percentages required to be considered domestic. But it remains to be seen when the FAR Council will drop the additional details on critical components. Watch this space for additional updates coming soon. Questions about this post, Email us . Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Buy American Act Thresholds Are Going Up first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

To level the playing field for women business owners, the Federal Government limits competition for certain contracts to businesses participating in SBA’s Women-Owned Small Business (“WOSB”) Federal Contracting Program. Ideally, those contracts are for specific industries where WOSBs are historically underrepresented. And in fact, the Government even has certain WOSB contracting goals to encourage such set-asides. So, its easy to see why the WOSB Program can be a great opportunity for small businesses to get a leg up in the federal contracting world. But don’t let the name fool you, it takes more than just woman-ownership to get in–and stay in. Let’s take a closer look at SBA’s requirements for becoming certified under the WOSB Program. Under SBA’s WOSB eligibility rules, there are really three main requirements for a company to qualify as a WOSB. The applying (or recertifying) company must: (1) be a small business; (2) with unconditional and direct majority ownership by a woman; and (3) with day-to-day and long-term management by a woman. 1. Small business. First, the company must be a small business under SBA’s size regulations and table of small business size standards. Essentially, the company’s annual receipts averaged over the past five years must not exceed the size standard assigned to the company’s primary North American Industry Classification Systems code. 2. Unconditional and direct majority woman-ownership. Second, the company must be no less than 51% unconditionally and directly owned and controlled by one or more women who are also United States citizens. Easy enough, right? Well, the question that comes up most commonly here is, what do the terms unconditionally and directly really mean. But fortunately for us, SBA’s WOSB ownership regulations elaborate on both. Regarding unconditional ownership, they explain that the ownership may “not be subject to any conditions, executory agreements, voting trusts, or other arrangements that cause or potentially cause ownership benefits to go to another.” The regulations clarify that a pledge or encumbrance of stock or other ownership interest as collateral may still qualify “if the terms follow normal commercial practices and the owner retains control absent violations of the terms.” And they add that the percentage of ownership will be determined without regard to community property laws (important for those in community property states). Regarding the requirement for direct ownership, the regulations state that the qualifying woman or women (combined) must own at least 51% of the company directly; thus, the 51% ownership cannot be ownership “through another business entity or a trust (including employee stock ownership plan) that is, in turn, owned and controlled by one or more women[.]” But the rules do include the caveat that “ownership by a trust, such as a living trust, may be treated as the functional equivalent of ownership by a woman[] where the trust is revocable, and the woman is the grantor, the trustee, and the sole current beneficiary of the trust.” SBA’s ownership regulations then list the various types of companies that the WOSB may be and what is required for woman-ownership in each case. In a nutshell, they explain the following: For Partnership: At least 51% of each class of partnership interest must be unconditionally owned by a woman (or women), and such must be reflected in the partnership agreement (adding that, for purposes of this rule, general and limited partnership interests are to be considered different classes of partnership interest); For LLCs: At least 51% of each class of member interest must be unconditionally owned by a woman (or women); and For Corporations: At least 51% of “each class of voting stock outstanding” and 51% of “the aggregate of all stock outstanding must be unconditionally owned” by a woman (or women), and in determining this, “any unexercised stock options or similar agreements” that are held by a woman (or women) are to be disregarded. But it adds, “any unexercised stock option or other agreement, including the right to convert non-voting stock or debentures into voting stock,” that are held by any other (non-woman) individual or entity are to be treated as having been exercised. Finally, the rules also state that the woman-owner(s) must not be suspended or disbarred or have an active exclusion in SAM.Gov at the time of the company’s application or recertification. That sums up SBA’s WOSB ownership rules. But apart from popular belief, ownership, on its own, does not demonstrate WOSB control–hence SBA’s separate set of regulations for that requirement. 3. Day-to-day and long-term management by a woman. Third, SBA’s WOSB control regulations explain: “To qualify as a WOSB, the management and daily business operations of the concern must be controlled by one or more women.” According to SBA, woman-control entails “both the long-term decision making and the day-to-day management and administration of the business operations must be conducted by one or more women[.]” But the woman-control requirements don’t end there. In fact, the control requirements seem to be the toughest for applicants and participants to meet and maintain–likely due to the amount of sub-requirements. Generally, SBA will look at the company’s organizational documents (i.e. operating agreement or bylaws) to ensure this woman-control requirement is met. SBA will also look at the woman manager’s (or managers’) résumé. Those documents must demonstrate that (1) a woman holds the highest officer position in the company, and that (2) she has the “managerial experience of the extent and complexity needed to run” the company. Often, this can mean having specialized degrees or licenses for certain types of work (i.e. architecture or engineering). Except, the rules do add that the woman manager need not have the technical expertise or possess the required license to be found to control the concern if she can demonstrate that she has ultimate managerial and supervisory control over those who possess the required licenses or technical expertise. But even then, the rules caution that if any man with an equity interest in the company is the one that possesses this required license, he may be found to control the company, instead. The WOSB control rules also limit the woman-manager’s outside employment. They explain that the woman with the highest officer position needs to “manage it on a full-time basis and devote full-time to the business concern during the normal working hours of business concerns in the same or similar line of business.” Indeed, the rules elaborate that the woman-manager “may not engage in outside employment that prevents her from devoting sufficient time and attention to the daily affairs of the concern to control its management and daily business operations.” Next, the WOSB control rules (like the WOSB ownership rules did) list the various types of companies that the WOSB may be and what is required for woman-control in each case. In a nutshell, they explain the following: For Partnership: one or more women must serve as general partners, with control over all the partnership’s decisions;For LLCs: one or more women must serve as management members, with control over all the decisions of the LLC; andFor Corporations: At least one woman must control the company’s Board of Directors, which means the woman (or women) must either:own at least 51% of all voting stock, be on the Board of Directors, and “have the percentage of voting stock necessary to overcome any super majority voting requirements”; or“comprise the majority of voting directors through actual numbers or, where permitted by state law, through weighted voting.” Finally, the control rules address any male involvement head on, stating: Men or other entities may be involved in the management of the concern and may be stockholders, partners or limited liability members of the concern. However, no males or other entity may exercise actual control or have the power to control the concern. * * * Well, there you have it, the basic three requirements for WOSB Program eligibility. But while these rules seem fairly straightforward on paper, they don’t always present easy compliance analyses in reality. And given the significant benefits that participation in SBA’s WOSB Program can bring (including WOSB set-aside competitions and sole source awards)–along with some pretty serious consequences for falsely certifying–it is crucial to understand all of these requirements in full. This is especially true now that the WOSB certification process has become official, now requiring a formal certification by either SBA itself or an SBA-approved third-party certifier. Questions about this post, the WOSB Program, or your own eligibility? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: WOSB Eligibility first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday blog readers! Hope you are having a nice week. Kick back and relax with the latest federal contracting updates. This week saw some interesting federal contracting news. GAO has issued a new report on ways the federal government can potentially save billions of dollars in spending and improve efficiency of its programs. Additional stories include an article I’m quoted in from Bloomberg Law discussing U.S. agencies requests for brand name items in contract proposals. Read on for the details and have a great weekend! When Agencies Should Settle for Less: Brand Name Bid Protests [Bloomberg]How Women-Owned Businesses Can Win Federal Contracts? [ExecBiz]In the relatively small world of government contracting, it pays not to be a jerk [FedNewsNet]Who says small innovators can’t get big federal contracts? [FedNewsNet]Transforming Aviation: Stakeholders Identified Issues to Address for ‘Advanced Air Mobility’ [GAO]Commerce Department CHCO on back to office; Federal contracting with small businesses [FedScoop]Stacy Bostjanick: DOD Could Release CMMC Interim Rule Next Year [GovConWire]US, Allied Cybersecurity Agencies, Advise Reviewing Contracts with Tech Vendors [NextGov]How to mitigate the threat of industrial base consolidation [FedNewsNet]Where can Government Save Money? We’ve Found More than Half a Trillion Dollars in Potential Savings [GAO]GSA’s Public Buildings Service Issues RFP for $125M General Construction Contract Vehicle [GovConWire]IC Agencies Pushing Telework Expansion to Address Workforce Attrition [GovConWire]Virginia Company Agrees to Pay $800,000 to Resolve False Claims Act Allegations [DoJ]Agencies must pick two workforce focuses for the next four years from OPM priority list [FedNewsNet] The post SmallGovCon Week in Review: May 9-13, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you google “GAO discussions,” you will likely see a multitude of results talking about “meaningful discussions.” Source selection authorities (SSA) are given a large amount of discretion beyond that. Despite the high level of discretion SSAs have, there are still certain boundaries that they must work within. These boundaries are premised on the fairness principle that is woven throughout the FAR and other procurement rules. In particular, the process of discussions must fit within these boundaries. Discussions allow all offerors that are still being considered for award an equal opportunity to address deficiencies, weaknesses, and adverse past performance information. But what if the contracting agency engages in discussions with only one offeror, who also happens to be the awardee? Discussions are governed by FAR §15.306(d) and “occur when an agency communicates with an offeror for the purpose of obtaining information essential to determine the acceptability of a proposal, or provide[ ] the offeror with an opportunity to revise or modify its proposal in some material respect.” Gulf Copper Ship Repair, Inc., B-293706.5 (Sept. 10, 2004); FAR 15.306(d). Contracts may be awarded without conducting discussions, but the solicitation must state this intention. If the agency left the door open to discussions, and finds it necessary to conduct discussions, the rationale must be included in the contract file. In Rice Solutions, LLC, the Department of Health and Human Services (HHS or Agency) released a solicitation that stated it planned to make an award without conducting discussions, but the Agency reserved the right to conduct them if deemed necessary. Rice Solutions, LLC, B-420475 (April 24, 2022). HHS received three proposals in response to the solicitation, which were reviewed and rated by the Agency’s technical evaluation team. The protester, Rice Solutions, was determined to be the second choice for the award, but the Agency only entered into discussions with the eventual awardee, and requested a best and final offer. The eventual awardee was permitted to submit a revised proposal, as its best and final offer. That best and final offer led to award of the contract. The Agency’s rationale stated that Rice Solutions’ proposal, as well as the proposal of a third offeror, was technically unacceptable. Therefore, the Agency believed it was not required to conduct discussions with anyone other than the awardee. The Agency also asserted that there was no competitive prejudice created when it allowed only the eventual awardee to submit a revised proposal, because Rice Solutions was not within the competitive range. However, FAR 15.306(d) requires agencies to involve all offerors who are found to be within the competitive range in discussions. Though the Agency asserted that Rice Solutions was outside of the competitive range, there was no such documentation. GAO stated, “[w]here, as here, there is no record or evidence that the Agency established a competitive range, we will not infer the existence of a de facto competitive range in order to validate an Agency’s omission of an offeror during its conduct of discussions.” Therefore, without documentation showing the establishment of a competitive range, the Agency could not demonstrate that Rice Solutions’ exclusion from discussions was reasonable. Further, GAO, when reviewing protests on the grounds of unreasonable discussions, will look to whether the protester has established that it “could have revised its proposal in a manner that would result in a substantial chance of the protester receiving the award” if it had only been included in meaningful discussion. GAO found it possible that Rice Solutions may have been within the competitive range if the Agency had completed a competitive range determination and if the Agency had involved Rice Solutions in discussions. But the Agency did neither, and for that, GAO sustained Rice Solutions protest. So what are the takeaways here? Three things: First, GAO will not establish a de facto competitive range if the agency fails to do so itself; Second, agencies must include all offerors in discussions if competitive range has yet to be established; and Third, discussions, though not required, have the potential to make or break an offer. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Should We Discuss This? Agencies Required to Enter into Discussions with All Offerors in Competitive Range first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

GAO recently sustained a protest to the terms of a solicitation incorporating the Randolph-Sheppard Act (RSA). The RSA is a statutorily-prescribed preference for blind individuals in the operation of vending facilities (which include cafeterias, snack bars, and automatic vending machines) on Federal property. The protester here, the incumbent contractor and a non-RSA HUBZone concern, challenged the agency’s decision to include the RSA preference in its HUBZone set-aside solicitation for food service attendant services, arguing the work the solicitation contemplated was not for the operation of a cafeteria. And GAO agreed. This GAO decision could have a significant impact, given the broad range of food service solicitations that agencies have been (seemingly increasingly) applying the RSA to lately. Let’s take a deeper dive. GAO’s decision in JW Mills Management, LLC, B-420416 (Mar. 24, 2022), involved a FAR part 12 and 15 solicitation issued by the Department of the Navy as a full HUBZone set-aside. The solicitation sought food service attendant (FSA) services for the dining facilities at the Naval Base Ventura County, California. Specifically, it sought the necessary personnel, supervision of those personnel, and any items and services necessary to perform the services outlined in the PWS, which was to include cashier, food service attendant, scullery, and housekeeping services. It said the two dining facilities, called galleys, that would be staffed through the contract were to remain under the operational control of a food service officer (FSO), a military service member. And the FSO would be responsible for inventory, maintaining the facilities’ equipment, ordering and supplying the food, establishing menus, and food preparation and storage. The solicitation said, “[i]n form and fact [the] FSO operate[s] the galleys.” The solicitation anticipated an award on a best-value tradeoff basis, under three evaluation factors: (1) technical; (2) past performance; and (3) price. But it also included a provision giving priority to state licensing agencies (SLAs) pursuant to the RSA. It said: The Government will award a contract resulting from this solicitation to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the Government, price and other factors considered, unless preempted by application of the State Licensing Authority (SLA) priority under the Randolph–Sheppard Act. If the SLA is within the competitive range, is found to be technically acceptable, has a neutral or better past performance rating, offers a price determined to be fair and reasonable, and is deemed a responsible contractor, the SLA priority will pre-empt award to the Best Value Offeror. The solicitation allowed the contracting officer to initiate discussions with only the SLA in the competitive range to facilitate an SLA award without further consideration of other offerors. And it said the SLA could be included in the competitive range even if it was not the lowest priced. By way of brief background, the RSA is a Federal statute that authorizes licensed blind persons to operate vending facilities on any Federal property for the purpose of “providing blind persons with remunerative employment, enlarging the economic opportunities of the blind, and stimulating the blind to greater efforts in striving to make themselves self-supporting[.]” It requires: “[In authorizing the operation of vending facilities on Federal property, priority shall be given to blind persons licensed by a State agency[.]” Under the RSA, it is actually the State Licensing Agency (SLA) that serves as the prime contractor, and the SLA recruits, trains, licenses, and places blind individuals in positions to operate certain Federal facilities. The Department of Education’s implementing regulations for the RSA state: In order to establish the ability of blind vendors to operate a cafeteria in such a manner as to provide food service at comparable cost and of comparable high quality as that available from other providers of cafeteria services, the appropriate State licensing agency shall be invited to respond to solicitations for offers when a cafeteria contract is contemplated by the appropriate property managing department, agency, or instrumentality. The regulation requires RSA solicitations to “establish criteria under which all responses will be judged[,]” which “may include sanitation practices, personnel, staffing, menu pricing and portion sizes, menu variety, budget and accounting practices.” It ultimately requires, if the SLAs proposal is found to be within the competitive range and “ranked among those proposals which have a reasonable chance of being selected for final award,” the agency will award to the SLA (so long as the agency and Secretary of the Rehabilitation Services Administration agree that the “operation can be provided at a reasonable cost, with food of a high quality comparable to that currently provided employees, whether by contract or otherwise.”). In JW Mills Management, the protester timely submitted its pre-award protest to the terms of the solicitation (prior to the date and time proposals were due), challenging the inclusion of the RSA. Specifically, the protester argued that the RSA and its implementing regulations only apply when a blind vendor actually operates the dining facility, and this requires “control or management over the facility as a whole.” According to the protester, this solicitation required the contractor to perform ancillary tasks to support the dining facilities’ overall functions and did not involve control or management of the cafeterias. The Navy argued that the solicitation’s scope of work required “more than the performance of discrete tasks, but instead, tasks necessary for the proper functioning of the cafeterias[,]” and as such, the contracting officer’s decision to apply the RSA here was reasonable. The Navy cited a long line of court and arbitration decisions on the issue broadly applying the RSA to various food service solicitations. And both parties’ arguments asserted that the statutory and regulatory history of the RSA supported their positions. In the end, GAO sustained the protest based on its finding that the Navy’s inclusion of the RSA preference here was improper because the solicitation’s requirements were not for the operation of a cafeteria. First, GAO prefaced its analysis here with a history lesson on the RSA, explaining that the RSA was enacted “in 1936 for the purpose of training and employing qualified blind individuals to operate vending facilities in federal buildings[,]” and amended in 1974 to establish “a clear federal-state relationship[]” and to broaden “the applicability of the RSA to vending machines, snack bars, and cafeterias.” GAO then gave a brief history lesson on another statutory preference, the Javits–Wagner–O’Day Act (JWOD Act), which provides employment for individuals with disabilities (including those visually impaired) and is implemented by the AbilityOne Program. GAO discussed (at length) the potential overlap of these programs and the legislative history regarding the manner in which Congress and the various implementing agencies/programs have viewed their applications, including: the 2006, 2007, and 2015 NDAAs; various joint policy and joint explanatory statements of the implementing agencies; DoD’s proposed (but subsequently withdrawn) final rule; the Secretary of Education’s letter to Congress; and the DOE’s implementing regulations. But in the end, GAO looked directly at the statute and DOE’s regulations in making its decision. GAO began its own analysis by applying the “plain meaning” rule of statutory construction. GAO said, according to the Supreme Court, “[t]he first step is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in this case[,]” and this “begin[s] with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.” GAO again quoted SCOTUS, stating, “[i]f the statutory language is clear and unambiguous, the inquiry ends with the plain meaning.” Applying this rule, GAO explained: [T]he RSA’s statutory preference applies to the “operation of vending facilities on Federal property.” While the statute does not specifically define “operation,” the plain meaning of such a term connotes some degree of control, management, or administration of the vending facility. Then, turning to the factual analysis here, GAO said: In this solicitation, the tasks to be performed are in support of the cafeterias, but do not, in and of themselves, involve operating the cafeterias. Indeed, reasoning by analogy, if a contractor was performing janitorial services at a government facility, it could hardly be construed that the firm was “operating” the facility. Similarly, here, the PWS only asks the contractor to perform cashier, FSA, scullery, and housekeeping services, whereas the solicitation expressly provides that the Navy (through the FSOs) will operate the cafeterias (by retaining control of the overall management and day-to-day operations of the cafeterias). So, GAO found that that the solicitation here did “not involve the ‘operation’ of a vending facility.” GAO went on to confirm its statutory interpretation with the RSA’s implementing regulations. It reiterated the relevant regulatory language in section (a) of the regulation, stating, “[p]riority in the operation of cafeterias by blind vendors on Federal property shall be afforded” when DOE determines “that such [an] operation can be provided at a reasonable cost, with food of a high quality comparable to that currently provided[.]” It also cited section (b)’s language, stating, “[i]n order to establish the ability of blind vendors to operate a cafeteria in such a manner as to provide food service at comparable cost and of comparable high quality as that available from other providers of cafeteria services.” Based on this language, GAO determined: “Implicit in this phrasing is not only that the contractor will have some degree of management or control over the cafeteria, but also that it will do so in relation to providing food.” GAO turned back to the solicitation here, finding that “the contractor does not exercise management or control over providing food, but, at best, performs ancillary tasks in relation to providing food[,]” and pointing to the sections of the solicitation “requiring the contractor to pack/prepare box lunches and picnic rations, distribute and replenish food on the serving line, etc.” And GAO concluded the priority described in the RSA’s implementing regulations should not apply to such circumstances. GAO then reviewed other materials advanced by the parties’, finding that those did “not advance a binding (or otherwise dispositive) interpretation of the RSA’s application,” and provided “no basis to deviate from a plain reading of the statute and implementing regulations.” Specifically, it found that the 2006 and 2007 NDAAs did not clarify the scope of the RSA or “provide a clear interpretive lens” to analyze FSA service contracts, as there was no clear congressional intent to limit or broaden the RSA’s application. Now, in the 2015 joint explanatory statement, GAO did see a clear position regarding the application of the two statutory preferences, “with the JWOD Act, not the RSA, applying to contracts for dining support services and dining facility attendant (DFA) services at a military dining facility.” But GAO said that statement, as well as the Secretary of Education’s letter (seemingly calling for a broader reading of the statute), was “not a product of formal rulemaking[.]” GAO acknowledged the discrepancies among Congress, the agencies, and courts regarding RSA application, stating: We acknowledge that federal courts have grappled with the applicability of the RSA to military cafeteria contracts, in a variety of different factual contexts, and have reached mixed results. Likewise, arbitration panels convened under DOE’s RSA regulations have addressed similar issues, tending to favor a broader application of the RSA to FSA service contracts. But nonetheless, GAO returned to its own “plain meaning” analysis, explaining that, here, “the agency’s own solicitation provides that the Navy will (through the FSO) retain ‘operational control’ of the cafeterias and will, in ‘form and fact’ operate the galleys.” It said: Even without the solicitation expressly providing that the Navy will operate the cafeterias, given the responsibilities of the FSO in managing and directing the workings of the cafeteria, we conclude the discrete tasks to be performed by the contractor do not rise to the level of operating the cafeteria. And thus, GAO concluded the following: [I]n our view, based on a plain reading of the RSA statute and implementing regulations, the work required in the instant solicitation for FSA services does not constitute the “operation” of a cafeteria per the meaning of the RSA. As such, we conclude the Navy’s inclusion of the RSA preference in the solicitation was improper and we therefore sustain the protest. GAO sustained the protest and recommended that the agency amend the solicitation to remove the RSA preference and reimburse the protester the reasonable costs of filing and pursuing the protest, including attorneys’ fees. So what is the big deal here? Sure, this one was a big win for the protester; but the holding specifically applied only to the Navy solicitation here. So, why is this potentially a huge decision? Well, as you can gather from a full reading of GAO’s decision in In JW Mills Management, there has been a ton of discussion regarding the applicability of the RSA at the legislative level, federal agency level, and among various representatives and offices. But we don’t have much at all from GAO on this front, as GAO is extremely limited in its substantive RSA-related decisions. GAO won’t even consider an SLA’s protest that the procuring agency violated the RSA by eliminating its proposal from the competitive range. And when it comes to protests that the agency should not have made an award to an SLA, the priority established by the RSA is a huge hurdle for unsuccessful contractors to overcome–and frankly, one that GAO hasn’t really discussed. Thus, whether or not the RSA should apply to certain solicitations is GAO’s primary focus in RSA-based litigation matters. And GAO has provided very little, if any, real guidance on the matter before this decision. While the RSA is an incredible tool, serving a valuable purpose–to promote employment of the blind in federal contracting–it is safe to say that it was not intended to “take” all FSA work from other small and disadvantaged contractors performing such services. This decision, while it may not create bright line rules for when all solicitations should or should not be subject to the RSA, does demonstrate GAO’s intent to limit RSA’s applicability to the areas GAO believes Congress and DOE intended. And thus, it has to potential to support future litigation of this type. Questions about this post? Email us . Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO Sustains Protest to Solicitation’s Implementation of Randolph-Sheppard Act first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA’s regulations state it will examine monetary-based size standards (e.g., receipts, net income, assets) at least once every five years and determine if adjustments are needed to those standards at such time. 13 C.F.R. § 121.102. But what about employee-based size standards? In fact, the same rule applies for reviewing and adjusting those standards as a result of the Small Business Jobs Act of 2010. On April 26, 2022, the SBA published its proposed rule to change the size standards for a number of employee-based size standards for manufacturing and other industries. Let’s look at these changes. For the proposed rule, SBA reviewed the sectors of Mining, Quarrying, and Oil and Gas Extraction (Sector 21); Utilities (Sector 22); Manufacturing (Sector 31-33); Transportation and Warehousing (Sector 48-49); Information (Section 51); Finance and Insurance (Sector 52); Professional, Scientific and Technical Services (Sector 54); and Administrative and Support, and Waste Management and Remediation Services (Sector 56). While SBA adjusts monetary-based size standards on the basis of inflation, it obviously cannot use inflation to determine a proper employee-based size standard. As such, the SBA examines five primary factors. Four of these factors concern industry structure: average firm size, degree of competition within an industry, start-up costs and entry barriers, and distribution of firms by size. The fifth looks at small business competitiveness with federal contracts. “SBA…examines, for each industry averaging $20 million or more in average annual Federal contract dollars, the small business share in Federal contract dollars relative to the small business share in total industry’s receipts.” SBA will consider other secondary factors such as impact of size standard changes on small businesses. Let’s look at the actual proposed changes. Now, we can’t go through each change in detail, as there have been 150 adjustments to the standards. The rundown begins on page 92 of the proposed rule document if you are curious about any that we do not mention. We’re going to look at some of the more notable changes. Mining, Quarrying, and Oil and Gas Extraction There are a couple notable increases in the size standards here, both applying to two of the more common mining industries. Both Iron Ore Mining and Copper, Nickel, Lead, and Zinc Mining ‘s size standards would increase from 750 employees to 1,400 employees, a near doubling. Utilities The biggest jump proposed is in Wind Electric Power Generation. Here, the SBA wants to take the size standard from a mere 250 employees all the way to 1,150 employees, over four times the current size standard. Nuclear Electric Power Generation is proposed to increase from 750 to 1,150, and Solar Electric Power Generation from 250 to 500. No doubt these major increases reflect the shift to renewable sources of energy. Manufacturing In general, SBA proposed generally moderate size standard changes for manufacturing industries. Here’s a sampling of some of them: Soybean and Other Oilseed Processing: 1,000 to 1,250 Coffee and Tea Manufacturing: 750 to 1,000 Petrochemical Manufacturing: 1,000 to 1,300 Phosphatic Fertilizer Manufacturing: 750 to 1,350 Printing Ink Manufacturing: 500 to 750 Mining Machinery and Equipment Manufacturing: 500 to 900 Power-Driven Hand Tool Manufacturing: 500 to 950 Primary Battery Manufacturing: 1,000 to 1,300 Guided Missile and Space Vehicle Manufacturing: 1,250 to 1,300 Note, these changes do not affect the nonmanufacturer rule size standard, which is set at 500 employees and has not been changed in this rulemaking. While SBA considered increasing the nonmanufacturer rule standard to 550 employees based on its factors, SBA opted to keep it at 500 due to the longstanding familiarity of contractors with that standard. Transportation and Warehousing Only a few changes were made to these industries. Most notably, Deep Sea Freight Transportation’s size standard would increase from 500 to 1,050, and Inland Water Freight Transportation would increase from 750 to 1,050. Information The industry would see a couple changes. All Other Publishers would increase from 500 to 550 employees, Music Publishers from 750 to 900 employees, and, most interestingly, Record Production and Distribution from 250 to 900 employees. We imagine this last one has to do with the digitization of music, which has likely made it harder to run such companies. Financial and Insurance No changes were proposed. Professional, Scientific and Technical Services One change is proposed: The size standard for Guided Missiles and Space Vehicles, Their Propulsion Units and Propulsion Parts (under Exception 3 of NAICS code 541715) would increase from 1,250 to 1,300 employees. Administrative and Support, and Waste Management and Remediation Services One change is proposed: The size standard for Environmental Remediation Services (under Exception of NAICS code 562910) would increase from 750 to 1,000 employees. It is important to remember that this is just a proposed rule at the moment this blog was posted. Until it is issued as a final rule, none of the above changes are in effect. But, it’s worth keeping an eye on as many of these changes will no doubt take place. In another post, we’ll discuss just how the SBA calculates these standards. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Industrial Expansion: Proposed New Size Standards for Manufacturing and Other Industries with Employee-Based Size Standards first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! The lilacs are blooming and this spring seems to be a particularly good year for them. We are enjoying their sweet scent as we stroll through the neighborhood when we get a dry day to do so. April showers are carrying over into May and we are all ready for some sunshine. Fun Fact: Kansas ranks #8 on the sunniest states list according to stacker.com. See how your state ranks here. There was news this week on the OBM gearing up to implement the Infrastructure Investment and Jobs Act as well as information on challenges for federal contractors due to wage inflation and the war in Ukraine. You can read more about this and other news in federal government contracting in the articles below. Have a great weekend! GSA Awards New Blanket Purchase Agreements for Electric Vehicle Supply Equipment Procurement [GSA]Defense Industrial Base faces short and long term challenges [FedNewsNet]OMB Releases Guidance on Infrastructure Investment and Jobs Act Implementation [ExecGov]United States Files False Claims Act Lawsuit Against Maryland Contractor and Owner [DoJ]Military & Government CIOs Talk Cybersecurity, Zero Trust & Cloud [GovConWire]OPM’s Ahuja says agencies need to balance speed with ‘doing it right’ for Bipartisan Infrastructure Law hiring [FedNewsNet]Biden ends nearly 20-year drought by publicly recognizing 2021 Presidential Rank Awards recipients [FedNewsNet] Agency cancels contract with little explanation, and that’s OK [WashTech]KCF Technologies, Inc. To Pay $1.2 Million To Resolve Civil Liability For Alleged Violations Of The False Claims Act [DoJ]National AI Advisory Committee establishes 5 working groups [FedScoop]VA hired 59,000 employees this fiscal year, but still struggles with workforce shortages [FedNewsNet] The post SmallGovCon Week in Review: May 2-6, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Small business federal contractors may soon want to think about getting new luggage. The FAR will be updated to allow for–but not require–small business set-asides in overseas procurements. This has the potential to open up a substantial number of contracting opportunities to small businesses who have the capabilities to compete. The final rule will be effective May 26, 2022. Here are some of the key details to know about. The rule was originally proposed in 2019 and the FAR Council reviewed 26 comments. The FAR updated is based on similar changes to SBA rules. In an October 2, 2013, final rule, the SBA applied the Small Business Act to overseas acquisitions. That change updated SBA rules at 13 CFR 125.2 to reflect that the Small Business Act applies “regardless of the place of performance”. But contracting officers usually look first to the FAR when determining how to run a procurement. The purpose of this rule change is to align the FAR with SBA’s guidance, to “allow for application of FAR part 19 overseas and thereby expand opportunities for small business concerns overseas.” To that end, it will revise FAR 19.000 to state that “Contracting officers may apply this part [FAR Part 19] outside the United States and its outlying areas.” The rule does recognize, though, that there can be limits on small business set-asides, such as “international agreements, treaties, local laws, diplomatic and other considerations that are unique to the overseas environment and may limit the Government’s ability to apply the small business preferences in FAR part 19 on a mandatory basis.” Therefore, use of small business set-asides outside the US is discretionary, not mandatory. The use of small businesses is discretionary due to the unique nature of overseas contracting. For instance, an agency can consider “fair market price, quality, and delivery are some of the factors considered” in making a set-aside decision. But small businesses will gain “experience and knowledge” competing in these markets. The comments to the rule include an important reminder that has been a perennial question for our blog readers. A foreign-owned company can qualify as a small business, if it is “organized for profit, with a place of business located in the United States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor” 13 CFR 121.105. While this is not a mandatory rule, it should encourage use of small business set-asides in overseas procurements. It makes clear that contracting officers can make use of these small business provisions, but only in those circumstances where it makes sense. Because it’s discretionary, it’s hard to know what the impact will be at first, but it is a net positive for small businesses who are able to compete in these markets outside the US. The post The FAR will Soon Allow Small Business Set-Asides Outside the US first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! It’s time for another addition of the Week in Review. This week saw a lot of interesting updates, including lots of programs for small business owners, a little news on CMMC, and some new initiatives to help contractors navigate the federal marketplace. Catch up on all the latest, and enjoy the weekend! New acquisition leader at the Pentagon; TSP technology update; Making ZT work at DOL [FedScoop]Introducing BUY.GSA.GOV [GSA]SBA Administrator Guzman Launches T.H.R.I.V.E, Executive Level Business Training for Entrepreneurs Ready to Maximize their Full Potential [SBA]SBA Introduces Two New Courses, Partnerships and Entrepreneurial Leadership to the Ascent Online Digital Learning Platform [SBA]What Are The Easiest Government Contracts To Win? [ExecGov]Act now if you want help from GSA’s assisted acquisition services [FedNewsNet]Public procurement trends and outlook for 2022 [FedNewsNet]Sanders calls on Biden to cut Amazon out of U.S. federal contracts [Reuters]SBA Proposes Changes to Expand Small Business Eligibility in Manufacturing for Federal Contracting and Loan Programs [GlobeNewsWire]Defense Department New Website to Navigate Innovation Opportunities [DoD]Industry still faces ‘a lot of ambiguity’ around CMMC implementation [FedScoop]Watchdog says VA violated Federal Acquisition Regulation with electronic health records contract payments [FedScoop]Bipartisan legislation to support women business owners passes U.S. House of Representatives [Castor]Government trying to streamline procurement of commercial space data [SpaceNews]SBA Announces 2022 National Small Business Week Cosponsors and Virtual Summit Event Schedule [SBA] The post SmallGovCon Week in Review: April 25-29, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

When a business is poised to win a federal contract award set aside for small businesses, there is always the potential for a competitor to challenge that award on the basis that the proposed winner is not actually a small business based on SBA’s size and affiliation rules. Or, if your company just lost an award, you may consider challenging that the proposed winner is a small business. Either way, it pays to know the basics behind size protests and appeals. While you could read through my recent handbook on Procedures and Pitfalls of Size Protests and Appeals (it’s a good read!), here are some key things to keep in mind when considering size protests and appeals. What is a size protest? As a refresher, an offeror has to be a small business under the NAICS code assigned to a solicitation set-aside for small businesses in order to qualify for the award. At bottom, a size protest is a challenge to a proposed awardee’s size. In essence, a protester argues that the contract awardee should not have been awarded the contract because it’s not a small business. Sometimes, protesters argue that the awardee on its own is just too large a business. But more commonly, a size protest argues that an awardee is affiliated with one or more other companies and, together with its affiliates, the awardee exceeds the applicable size standard. If the SBA determines that the awardee is not a small business, it can lose the award. Who can challenge a company’s size? A size protest must relate to a specific procurement. In most instances, this means that a person can’t protest a company’s size just because that person thinks the company is a large business—the supposedly large business must first be named an awardee under a particular solicitation. There are generally three different persons who might file a size protest against a particular company: A disappointed offeror. If an offeror loses out on the award (for reasons unrelated to its own size), that company could challenge the awardee’s size. Protests by a disappointed offeror must be sent to the contracting officer within five business days from the date the disappointed offeror receives notice of the award. The contracting officer will then forward the protest to the SBA for a decision. The contracting officer. If a contracting officer has reason to doubt the awardee’s size, she can ask the SBA for a size determination. Importantly, this request can be made at any time—meaning that, even a couple of years into performance, the SBA can ask for a size determination. The SBA. Like a contracting officer, the SBA can initiate its own size determination, at any time, if it has reason to doubt a company’s size. How are size protests decided? If a size protest is filed (and isn’t dismissed for untimeliness or some other reason), the SBA will immediately notify the awardee. The awardee must then submit a response to the size protest and provide a trove of documents with that response—including its articles of organization, bylaws, tax returns and financial statements for the preceding three fiscal years, and documents describing its relationship with any potential affiliates. This response (and supporting documentation) is usually due just a few days after the awardee is notified of the protest, although SBA will often grant a short extension. After it receives this information, the SBA will evaluate it thoroughly. Most of the time, it will ask for a more detailed response or additional documents from the company being protested. Once all of the needed information is received, the SBA will evaluate it and make a size determination (either finding that the company is a small or large business under the applicable NAICS code) within a couple of weeks. Can I appeal an adverse size determination? Yes. Any party that is adversely affected by a size determination can appeal it to the SBA’s Office of Hearings and Appeals. If your company is named the awardee and is subsequently found by the SBA to be an ineligible large business, you can appeal this determination to the OHA. Conversely, if your company loses a size protest against a different awardee, you can also appeal that determination. While there is no statistical summary of OHA size appeal decisions, in our experience OHA appeals are oftentimes successful. Size determinations are intensely fact-specific, and the SBA’s regulations are quite nuanced. So, if you think that a determination might have been in error, it could be worth appealing that determination to the OHA. What else should I know about size protests and appeals? Size protests are an important part of the procurement process, as they help make sure that small businesses get the benefit of set-asides. Used offensively, a protest might help take an award away from a competitor. But this cuts both ways: one of your competitors might try to take your award away, too. Size protests must be taken seriously. Size protests and appeals oftentimes involve complicated factual and legal questions. And failing to adequately respond to a protest, in fact, could be considered an admission that your company is not a small business. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: Size Protests and Appeals first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA’s 8(a) Business Development Program is the crème de la crème of federal government contracting and there are two ways for an individual and its business to get into the program. First, individuals can gain admission to the program by being a member of one of the recognized groups individuals that is automatically presumed to be socially and economically disadvantaged. If an individual does not fall into one of the presumed socially and economically disadvantaged groups, the individual must prove they were socially and economically disadvantaged throughout their life through what is called a social disadvantage narrative. Beyond that, there are a number of other qualifications, such as the business’s potential for success and evidence of good character that must also be met. 13 C.F.R. § 124.101. The bar for admittance is high, and once an individual is admitted, they no doubt want to make the most of it. Oftentimes, small businesses that participate in the 8(a) SBA’s Business Development Program remain in the Program for the full 9 years that the SBA allows, which culminates in the small business “graduating” from the program. 13 C.F.R. § 124.302. Sometimes, the business grows so successfully that it no longer meets the qualifications of being small, and thus is required to graduate early from the 8(a) Program. So how exactly does that happen? Read on to find out. Who can graduate the 8(a) Program early? 13 CFR § 124.301 covers graduation and voluntary early graduation from the 8(a) Business Development Program. Graduation occurs at the end of the 8(a) Program term, which is currently set at 9 years. While there was an extra year granted during the COVID-19 pandemic, that is the one exception. A participant can graduate prior to the expiration of its program term (early graduation) where SBA determines that: (1) The concern has successfully completed the 8(a) BD program by substantially achieving the targets, objectives, and goals set forth in its business plan, and has demonstrated the ability to compete in the marketplace without assistance under the 8(a) BD program; or (2) One or more of the disadvantaged owners upon whom the Participant’s eligibility is based are no longer economically disadvantaged. 13 CFR § 124.302. The SBA will determine that the participant substantially achieved its targets, objectives, and goals in its business plan by looking at the “totality of the circumstances” of the following factors: (1) Degree of sustained profitability; (2) Sales trends, including improved ratio of non-8(a) sales to 8(a) sales since program entry; (3) Business net worth, financial ratios, working capital, capitalization, and access to credit and capital; (4) Current ability to obtain bonding; (5) A comparison of the Participant’s business and financial profiles with profiles of non-8(a) BD businesses having the same primary four-digit SIC code as the Participant; (6) Strength of management experience, capability, and expertise; and (7) Ability to operate successfully without 8(a) contracts. 13 CFR § 124.302(b). The SBA may also require early graduation if the concern exceeds the size standard of the primary NAICS code for three successive program years, or if excessive funds or other assets have been withdrawn from the Participant, causing SBA to determine that the Participant has demonstrated the ability to compete in the marketplace without assistance under the 8(a) Program. 13 CFR § 124.302(c)-(d). How does early graduation occur? A concern may decide to voluntarily graduate early from the 8(a) Program, according to 13 CFR § 124.301, if the participant “has substantially achieved the goals and objectives set forth in its business plan.” To initiate early graduation, the Participant must notify its servicing SBA district office of its intent to do so in writing. Once the SBA servicing district office processes the request and the District Director recognizes the withdrawal or early graduation, the Participant is no longer eligible to receive any 8(a) BD program assistance. There are no proactive steps the 8(a) participant must take when it determines it has exceeded the size standard for three successive program years. Rather, the SBA has the duty to notify participants via a Letter of Intent to Graduate Early when it believes the participant has exceeded the size standard. 13 CFR § 124.304(b). Upon notice from SBA, the 8(a) participant has 30 days to submit a written response explaining why the proposed grounds should not justify early graduation. If the concern does not have any objections to the Letter of Intent, SBA then refers the matter to the Assistant Administrator (AA) for DPCE to determine whether early graduation is warranted. 13 CFR § 124.304(c). If the AA determines early graduation is warranted, the matter is then referred back to SBA to process. The 8(a) participant will then receive a Notice of Early Graduation. It is at this point that the 8(a) participant is no longer eligible for program assistance. 13 CFR § 124.304(d). Conclusion While early graduation from the 8(a) Program is a good indicator of how a business is growing, it also means the end of the benefits that come along with being a part of the 8(a) Program. Though many participants remain in the 8(a) Program the full 9 years, some grow so exponentially that they no longer qualify, which leads me to a final question to dwell on: Do you think it is better to remain in the 8(a) Program for the full 9-year term, or do you think the goal of early graduation is a better measurement of long-term success? Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Top of the Class: 8(a) Early Graduation first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We have discussed data rights in the general federal government context, now it is finally time to look at the DFARS’ approach to this area of intellectual property. One thing: The DFARS (Defense Acquisition Regulation Systems) does not replace the FAR. It is a supplement, not a completely different set of rules. That said, there are certain nuances that the contractor needs to be aware of in order to navigate the DoD’s requirements. In General As the DFARS is simply a supplement to the FAR, the FAR rules we discussed generally in earlier posts apply all the same to DoD contracts. The rules we discussed in our previous posts on this matter—unlimited data rights, limited data rights, and computer software rights—must be remembered when considering these contracts. However, there are nuances that need to be considered when working with the military and other agencies that make up the DoD. Technical Data One major specification that the DFARS adds concerns “technical data.” DFARS 252.227-7013 defines “technical data” as “recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). This term does not include computer software or data incidental to contract administration, such as financial and/or management information.” This isn’t a very exact definition, but, basically, this is probably what people picture when you say “data”: scientific and engineering data come to mind. For noncommercial items (those items generally not for sale to the public), unlimited data rights (basically the right for the government to do as it wishes with said rights) apply almost the same as they do in the FAR, but it is worthwhile to note that the government still gets unlimited rights in technical data from studies and tests done for a contract even if the government isn’t the exclusive funder. DFARS § 252.227-7013. For commercial items, the government gets the “unrestricted right to use, modify, reproduce, release, perform, display, or disclose technical data, and to permit others to do so, that” have been provided to the government or others without restrictions on use; are form/fit/function data; are a correction to technical data furnished; are necessary for operation/maintenance/installation/training; or have been provided with similar rights to the government under a prior contract or licensing agreement. DFARS § 252.227-7015. We’ll explore this more in depth below. Government Purpose Rights – Noncommercial items Where the DFARS differs from FAR most notably is with the concept of government purpose rights. Government purpose rights means the rights to “use, modify, reproduce, release, perform, display, or disclose technical data within the Government without restriction; and release or disclose technical data outside the Government and authorize persons to whom release or disclosure has been made to use, modify, reproduce, release, perform, display, or disclose that data for United States government purposes.” DFARS § 252.227-7013. The key distinction here from unlimited rights is that government purpose rights “do not include the rights to use, modify, reproduce, release, perform, display, or disclose technical data for commercial purposes or authorize others to do so.” Outside of the government, any usage or exchange of the technical data must be for government purposes. These include “cooperative agreements with international or multi-national defense organizations, or sales or transfers by the United State Government to foreign governments or international organizations.” It also includes use in government procurements. This form of rights is specific to DoD solicitations, and has its own marking that is required on any data delivered under said rights in DFARS § 252.227-7013. Limited Rights – Noncommercial items Limited rights are applied differently under the DFARS than the FAR. It applies in circumstances similar to the FAR (technical data developed at private expense), but the contractor does not have the option of withholding it. Instead, the contractor must provide it with the markings provided by DFARS § 252.227-7013. Limited rights mean the government cannot release or disclose the data outside the government without the contractor’s permission. There are exceptions for emergencies, contractor support, and certain situations with foreign governments where the data is needed for certain agreements. Special License Rights – Noncommercial Items There is a further form, special license rights, which are basically negotiated data rights. The government can’t receive less than limited rights, in any event, and data with these rights also require specific markings in DFARS § 252.227-7013. Commercial Items For technical data regarding commercial items, things are simplified a bit. The government has unrestricted rights to use and disclose the data if the technical data are provided to the Government or others without restrictions on use, modification, reproduction, release, or further disclosure other than a release or disclosure resulting from the sale, transfer, or other assignment of interest form, fit, and function data; a correction or change to technical data furnished to the Contractor by the Government; necessary for operation, maintenance, installation, or training (other than detailed manufacturing or process data); or have been provided to the Government under a prior contract or licensing agreement through which the Government has acquired the rights to use, modify, reproduce, release, perform, display, or disclose the data without restrictions Otherwise, “the Government may use, modify, reproduce, release, perform, display, or disclose technical data within the Government only.” DFARS § 252.227-7015. That said, the government can ask for additional rights, to be negotiated with the Contractor. As you can see, there is nuance when it comes to data rights and the DoD thanks to the DFARS. Most importantly, there are additional categories of rights that the contractor needs to consider whenever dealing with the DoD, particularly when they see mention of “government purpose rights.” Next, we will look at computer software, as it too has different rules. Questions about this post or your own 8(a) Program eligibility? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post The DFARS Approach to Data Rights first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! I hope you had a very productive week. It’s hard to believe that we are almost through the month of April already and It won’t be long before the kids are out of school. Parents get ready!!! The world of federal government contracting just seems to get busier and busier. This week there were several articles on the Pentagon’s budget increasing for AI capabilities and the implementation of Buy American Preference for infrastructure. We’ve also included a few cautionary tales on why it’s a terrible idea for contractors, or anyone else, to try to defraud the federal government. Enjoy and have a great weekend! Biden requests $773 billion for Pentagon, a 4% boost [FedTimes]State Department tech leader says pace of operational demands has helped to spur cloud transition [FedScoop]Mysterious American robotic ships headed to Ukraine [FedScoop]Missouri contractor charged with fraud for minority business claims [ConstDive]JAIC director sees improvement in Pentagon contracting for artificial intelligence capabilities [FedScoop]Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure [Whitehouse]Government Contractor Pleads Guilty to Bribing a Government Official [DoJ]GSA’s busy 2022 so far: Inflation, 876 and a new strategy [FedNewsNet]Department of Veterans Affairs receives $10.5M from TMF to support Login.gov transition [FedScoop]Despite delay, experts not concerned by DOD’s JWCC cloud contract timeline [FedScoop]Why Congress should reauthorize, strengthen the SBIR program [FedNewsNet]Idaho woman pleads guilty in case involving more than $11 million in government contracts [EastIdahonews]GSA Announces Actions to Advance Equity and Supplier Diversity in Federal Procurement [GSA]Biden to require US-made steel, iron for infrastructure [FedNewsNet]DHS Outlines Steps to Increase Contract Opportunities in Equity Action Plan [HSToday] The post SmallGovCon Week in Review, April 18-22, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article