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Touted as a “game-changer” when it was first introduced in 2016, the U.S. Small Business Administration’s All Small Mentor-Protégé Program isn’t new anymore. Known now as simply the “SBA Mentor-Protégé Program,” it is still extremely useful for large and small contractors alike. View Preview Please join me and Gregory Weber as we explain the ins and outs of the SBA Mentor-Protégé Program, covering the program’s eligibility requirements, its potential benefits (including the ability to form special mentor-protégé joint ventures), the application process, and common misconceptions and pitfalls. Additionally, we will provide an introduction to the even older DoD Mentor-Protégé Program, which set the stage for the SBA’s program, and compare the two programs. Register here. The post Free Event! SBA & DoD Mentor Protégé Webinar hosted by MST Contract Opportunities Center APEX Accelerator, El Paso: January 23, 2024, 10:00-11:30am MST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy New Year to our SmallGovCon readers! While we have already posted some updates from 2024, it’s a good time to reflect on the important posts from 2023. This post revisits those blog posts from 2023 that were the most popular. Below, we summarize the blogs written in 2023 that were the most popular as well as the perennial favorites from years past that were the most viewed in 2023. It’s a good chance to look back on the important articles from 2023, and those topics of continuing interest to federal contractors. Here are the top 10 blog posts that were posted in 2023. As usual, our readers were interested in changes to SBA’s rules, including changes to the 8(a) Program and the social disadvantage requirement, as well as our Back to Basics series focusing on issues such as teaming agreements, debriefings, and SAM registration. Top Posts Published in 2023 1Back to Basics: Teaming Agreements. Obviously, readers are very interested in why they should use a teaming agreement for federal contracts. Thankfully, this post goes into all the reasons.2Initial Challenge to 8(a) Presumption of Social Disadvantage for Certain Minority Groups Succeeds: What This Means for Now. Back on July 24, we wrote our first post about the Ultima decision that forced a revamp of how SBA reviews social disadvantage for the 8(a) Program. 3SBA Puts “Temporary Pause” on New 8(a) Program Application Submissions. After the Ultima decision, SBA had to pause new 8(a) Program applications. 8(a) Program applications resumed after a short break. One of our latest posts reminds readers what SBA is looking for in the new streamlined social disadvantage narrative format.4SBA Final Rule Relaxes Change of 8(a) Program Ownership, Allows Limited Populated Joint Ventures. This post summarized many changes that SBA made to 8(a) ownership rules, as well as joint ventures. This was a lengthy rule change from SBA that included lots of small changes to many SBA rules.5Back to Basics: Debriefings. This post can tell you all the basics about debriefings, a crucial part of the complicated world of bidding on government contracts. 6Back to Basics: Registering in SAM.gov. Before you can bid on a federal contract, you have to be registered in SAM. But what does that entail?7SBA Revisions to the “Two-Year Rule” for Joint Ventures: a Reminder to Read the Entire Rule. This post explored the still-confusing language of SBA’s “Two-Year Rule” for joint ventures.8SBA New Rule: Guidelines for Compliance with Limitations on Subcontracting in 13 C.F.R. 125.6. SBA updates its limitations on subcontracting rule to require that compliance with the limitations be looked at on an order-by-order basis for multi-agency set aside contracts and added additional consequences for violations of the limitations on subcontracting. 9Senate-Passed 2024 NDAA set to Raise DoD Set-Aside Sole-Source Contract Threshold Limits. Unfortunately, this increase did not make it into the final text of the NDAA. 10Back to Basics: Calculating Small Business Size. A helpful article that reminded our readers of the key aspects of calculating small business size for federal contracts. Top Posts Viewed in 2023 from All Time 1“In Scope” vs. “Out of Scope” Modifications: GAO Explains The Difference. This is the famous inflatable craft decision from 2017. In it, GAO explained with some detail on how far an agency can modify a contract before it becomes, essentially, a new contract that can be protested at GAO.2Goodbye PTAC, Hello APEX Accelerators. While we are still trying to get used to the name change, APEX Accelerators carry on the PTAC legacy of providing free procurement assistance to small businesses that work with all levels of the government, whether federal, state, or local. 3FedBizOpps is Almost Gone. There must be a lot of folks nostalgic for FedBizOpps and not so happy with sam.gov, based on the popularity of our post saying goodbye to FBO.4Back to Basics: Limitations on Subcontracting. A post from 2022 that is becoming very popular. With the renewed focus on limitations on subcontracting, it’s always good to know how to stay compliant. 5DOD: Sole-Source Contracts up to $100 Million Don’t Need Justification. This post explored the sole-source limits for entity-owned 8(a) companies, a continuing source of interest for 8(a) companies and their partners.6FAR Final Rule: Increased Micro-Purchase and Simplified Acquisition Thresholds. The FAR was updated to increase the micro-purchase threshold and the simplified acquisition threshold, effective August 31, 2020. Based on recent inflation trends, it might be time for Congress to look at updating these numbers. Perhaps in next year’s NDAA.7Don’t Ignore NAICS Code Changes: New Rule a Reminder to Contractors. This post reminded contractors that the U.S. Office of Management and Budget routinely revises the North American Industry Classification Systems (NAICS), which the SBA in turn incorporates as the new applicable NAICS codes for small business size purposes. 85 Things You Should Know: HUBZone Program (The Basics). This post explores a crucial program for small businesses: the Historically Underutilized Business Zone—or HUBZone. 9SAM Registration: What The Heck Is An “Immediate Owner?”. The SAM definition of “immediate owner” still creates questions for a lot of federal contractors. 10Back to Basics: Teaming Agreements. This post from 2023 made it into the top 10 from all time. I’m sure there will be much to talk about in 2024. Make sure to keep up to date on SmallGovCon for all the updates. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Year in Review: Top SmallGovCon Posts of 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Back in 2020, we discussed an SBA Office of Hearings and Appeals (OHA) decision stating that the managing venturer must control every aspect of the joint venture. This position, which we questioned in that article, has changed since that time, and we explored the changes to the regulatory language in question not long thereafter. But this regulatory language was still vague. Since that time, there has been much case law development. The Court of Federal Claims (COFC) held in 2022, “[a] minority owner’s control over “extraordinary” actions, such as actions intended to protect the investment of minority shareholders, will not result in a finding of negative control” and applied this idea to a populated joint venture. Swift & Staley, Inc. v. United States, No. 21-1279, 2022 WL 1231428 (Fed. Cl. Mar. 31, 2022), aff’d, No. 2022-1601, 2022 WL 17576348 (Fed. Cir. Dec. 12, 2022). It now appears, fairly established at this point, that non-managing venturers can have a say in what can best be described as “extraordinary actions.” These are the sorts of decisions that can completely change the trajectory of the joint venture. But contractors must still be very careful in giving the non-managing venturer a say in the joint venture’s decisions. As one firm learned the hard way in a recent COFC case, a joint venture with too many actions controllable by the non-managing venturer may end up ineligible for set-asides. Here, we explore this decision. The Case In 2023, the COFC heard an appeal of the SBA’s determination that LS3, LLC, (LS3), a mentor-protégé joint venture comprised of LUKAYVA—the protégé and SDVOSB—and its mentor, Systems Application & Technologies, Inc. (SA-TECH), was not an eligible SDVOSB joint venture. LS3, LLC v. United States, No. 23-1392, 2023 WL 8638647 (Fed. Cl. Dec. 14, 2023). LS3 was awarded a contract for engineering support services for the Navy, and a competitor filed a combined size and status protest with the SBA, alleging that LS3 both was not small under the regulations and further lacked eligibility for SDVOSB contracts. SBA OHA found that LS3 was not eligible for SDVOSB eligibility, and then dismissed the size protests as moot since LS3 was already found ineligible. The appeal to the COFC thus specifically concerned the allegation that LS3 lacked SDVOSB eligibility. OHA based its decision on four simple considerations: (1) LS3’s operating agreement established a management committee; (2) the Management Committee held decisional power over LS3’s actions; (3) management committee actions required a majority vote of the members of the committee; and (4) SA-TECH and LUKAYVA had equal representation on the committee, providing SA-TECH with the ability to block any management committee actions. The COFC stated that the question on appeal then was whether “OHA’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law and, if so, whether the error is prejudicial.” LS3 essentially argued that OHA was wrong because it found that LUKAYVA did not have unequivocal control over LS3. However, this overstated OHA’s position. COFC observed that “OHA took issue with the type of negative control SA-TECH could assert via the Management Committee and the breadth of activities it could control.” As the SDVOSB member of the joint venture, “LUKAYVA needs to be in the driver’s seat when it comes to day-to-day management and administration of the business operations.” While LS3 argued that OHA was saying SA-TECH could have zero negative control, the COFC observed this was not the case. “OHA’s decision is specific to SA-TECH’s ability to assert negative control in the day-to-day management and administration of the contractual performance by virtue of its fifty percent representation on the Management Committee. That is, OHA’s decision is limited to who can control the breadth of LS3’s day-to-day management and administration of contract performance.” This was the problem with LS3’s agreement. It didn’t just let SA-TECH have a deciding say in those “extraordinary actions.” It gave SA-TECH and LUKAYVA 50% of the vote each. And because a majority of the vote was required for any action, essentially, SA-TECH could block any vote of LUKAYVA, be it on an extraordinary action OR a day-to-day matter. As a result, the operating agreement created a situation that went well past any extraordinary action exception to the requirement that the managing venturer control the joint venture. SA-TECH had essentially complete power to block all decisions by LUKAYVA. As such, contractors need to keep in mind that, while this extraordinary action exception is useful, it is not unlimited. You must be very careful to ensure non-managing venturers for socioeconomic joint ventures and mentor-protégé joint ventures only have say on extraordinary actions. But that raises the question: What is and is not extraordinary? Extraordinary Actions v. Day-To-Day Actions 13 C.F.R. 125.8(b)(2)(ii)(A) states: “The managing venturer is responsible for controlling the day-to-day management and administration of the contractual performance of the joint venture, but other partners to the joint venture may participate in all corporate governance activities and decisions of the joint venture as is commercially customary. The joint venture agreement may not give to a non-managing venturer negative control over activities of the joint venture, unless those provisions would otherwise be commercially customary for a joint venture agreement for a government contract outside of SBA’s programs.” What is meant, however, by “commercially customary” regarding extraordinary actions? There is no hard rule it appears. The case law is what must be looked at. There appear to be some generally agreed ideas. “Adding new members and dissolving the concern has been found to be an extraordinary action.” Strategic All. Sols. LLC, SBA No. VET-277, 2022 (Sept. 22, 2022). The same SBA decision held “[s]elling or otherwise disposing of the firm’s assets, admitting new members, amending the JVOA in any manner that materially alters the rights of existing members, or filing for bankruptcy all constitute extraordinary actions that may require the minority shareholder’s input, but do not create negative control.” Id. The same decision also helpfully points out some examples of day-to-day actions. “Conversely, OHA has characterized a number of actions as essential to the daily operation of the company, and therefore granting a minority owner the power to block such actions does in fact constitute negative control. A minority member who has control over the budget, has the power to hire and fire officers, and sets employee compensation, has control over the daily operations of a concern.” Id. This helps give at least some sense of what is and is not an extraordinary action. This post also discusses a recent joint venture agreement that provided do much daily control to the non-managing venturer. However, keep in mind with all this that this area of law is still rapidly developing, and some of this may change. One thing that can be safely said: Take drafting your joint venture agreement and joint venture operating agreement very seriously. Little mistakes can cause serious consequences. The language you choose is crucial. We always recommend at least having an attorney look over your joint venture agreement before you prepare to bid on that first contract. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post Extraordinary Actions v. Day-to-Day Decisions for Joint Ventures: A Cautionary Tale first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy new year! We hope you enjoyed the holiday and are looking forward to what 2024 brings. It’s been a pretty mild winter so far, but we expect old man winter will be showing up any day now. Until then, everyone has been taking advantage of getting out and about without any major travel problems. We are all grateful for that. This week in federal government contracting news saw more insights on the new CMMC regime as well as important trends for 2024. Investigations into DoD struck a chord in 2023 Cyber risks to defense industrial supply chains are ‘substantially worse’ than other concerns Navigating the Challenges and Opportunities in Government Contracting: A Guide for C-level Executives Nondisplacement of Qualified Workers Under Service Contracts GSA Technology Transformation Services Names Eric Mill Its Executive Director of Cloud Strategy PF 2024-11 Acquisition Guide, Chapter 7.1, Acquisition Planning and Acquisition Letter 2010-05 Contract Periods of Performance Exceeding 5 Years Five things to remember about CMMC Battle renews over $356M Veterans Affairs records contract If, Then: 2024 serves up many questions and potentials Fugitive Leonard Francis Back in San Diego; Appears in Federal Court The post SmallGovCon Week in Review: January 1-5, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We at SmallGovCon are excited to announce this first in a new line of blogs we call Why File. Our firm handles a wide variety of federal procurement and contract litigation matters–from SBA size and status protests to contract claims and appeals, and everything in between. One of the most common and important questions we get in that regard is, should I file? Of course, we can only directly answer that question for our current clients after reviewing the relevant facts giving rise to the potential filing. But through our new Why File series, we will cover some of the most common facts and circumstances that lead contractors to initiate litigation. So, without further adieu, here is the first blog in the series, covering some of the most common reasons contractors file size protests. Size protests are a vital and effective tool for promoting small business goals and competition in the federal procurement and award process. If the concept is newer to you–or you just need a refresher–check out this Back to Basics blog on the subjects of size protests and appeals. And if you want a deeper dive into how to file size protests and appeals, check out our handbook. When it comes to the question whether you should file a size protest, we can only provide a direct and specific answer to our clients after a review of the award and awardee at issue. But there are still some common red flags that have historically led contractors to file size protests–and that have even led SBA to agree and sustain in many cases. 1. The awardee has publicly available information that, under SBA’s size regulations, indicates it may be other-than-small for the contract’s assigned size standard. This first reason to file a size protest goes to the most basic of SBA’s size regulations, those explaining how to calculate a firm’s size. In SBA’s words, “[t]o be eligible for government contracts reserved for small businesses, your business must meet size requirements set by SBA[,]” which “define the maximum size that a business — and its affiliates — can be to qualify as a small business for a particular contract.” As SBA’s size regulations explain: SBA’s size standards define whether a business entity is small and, thus, eligible for Government programs and preferences reserved for “small business” concerns. Size standards have been established for types of economic activity, or industry, generally under the North American Industry Classification System (NAICS). The size standard for a particular contract is the one that corresponds with the NAICS code assigned to the contract, which you can find here. Once you know the applicable size standard for the contract, you can use SBA’s size regulations to calculate the firm’s size. For purposes of this blog, we will briefly summarize and discuss SBA’s size calculation standards (but we won’t go into too much detail here; so, check out this Back to Basics blog for more information on calculating a firm’s size for purposes of federal government contacting). At a basic level, SBA’s size standards are either based on number of employees or annual receipts. To determine number of employees, SBA’s size regulations say: SBA counts all individuals employed on a full-time, part-time, or other basis. This includes employees obtained from a temporary employee agency, professional employee organization or leasing concern. SBA will consider the totality of the circumstances, including criteria used by the IRS for Federal income tax purposes, in determining whether individuals are employees of a concern. Volunteers (i.e., individuals who receive no compensation, including no in-kind compensation, for work performed) are not considered employees. They clarify that the firm’s “average number of employees” is used, based on the “numbers of employees for each of the pay periods for the preceding completed 24 calendar months[,]” and SBA counts part-time and temporary employees the same as full-time employees. To determine average annual receipts, SBA’s size regulations explain: Receipts means all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered “total income” (or in the case of a sole proprietorship “gross income”) plus “cost of goods sold” as these terms are defined and reported on Internal Revenue Service (IRS) tax return forms[.] The rule lists a few limited exceptions for what counts as annual receipts and notes that those are “the only exclusions from receipts” SBA will allow. So, “[a]ll other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, investment income, and employee-based costs such as payroll taxes, may not be excluded from receipts.” The rule explains, in determining size, “[t]he Federal income tax return and any amendments filed with the IRS on or before the date of self-certification must be used to determine the size status of a concern[.]” And where the firm hasn’t filed a federal income tax return for the fiscal year being measured, SBA calculates the firm’s annual receipts “using any other available information, such as the concern’s regular books of account, audited financial statements, or information contained in an affidavit by a person with personal knowledge of the facts.” Based on both size regulations, it is easy to see why an unsuccessful offeror may want to protest an award upon finding public information indicating the awardee’s number of employees or annual receipts exceed the contract’s size standard–or information directly contradicting the awardee’s SAM profile or other representations or certifications of small business size. This could be information on the number of employees listed on a company website, SAM profile, or LinkedIn profile. Or it could be publicly available award and government spending information acquired from SBA’s Dynamic Small Business Search (or DSBS) website, the USA Spending.Gov website, or another reputable federal government contracting website. Since a size protest cannot be based on speculation alone, protesters often collect and use screenshots or print outs of this kind of information to allege that an awardee is too large for the award–and thus, ineligible. And where valid and reputable, such support could even lead to a sustained size protest on that basis. Review of the regulatory language in SBA’s size rules also gives rise to our second reason to file a size protest, affiliation. 2. The awardee has a relationship with another entity or individual that gives rise to concerns about what or who has power to control. Both rules for calculating size (employee and annual receipts based) note that a firm’s size must include in its calculations the employees or annual receipts of any acknowledged “affiliates” as well. SBA’s employee-based size regulations explain: If a concern has acquired an affiliate or been acquired as an affiliate during the applicable period of measurement or before the date on which it self-certified as small, the employees counted in determining size status include the employees of the acquired or acquiring concern. Furthermore, this aggregation applies for the entire period of measurement, not just the period after the affiliation arose. SBA’s receipt-based size regulations similarly explain: The average annual receipts size of a business concern with affiliates is calculated by adding the average annual receipts of the business concern with the average annual receipts of each affiliate . . . [and] [t]his aggregation applies for the entire period of measurement, not just the period after the affiliation arose. SBA’s affiliation rules, also found here (at section 121.103), state: In determining the concern’s size, SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. Now, what constitutes an “affiliate” is not a simple question–nor does it have a simple answer, as affiliation can be found for many different reasons. Since we won’t get too deep into affiliation here, check out these two Back to Basics blogs covering affiliation generally, as well as the specific types of affiliation. But for purposes of this blog, we will briefly summarize why affiliation matters for purposes of size calculations. SBA defines an affiliate as follows: Concerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both. It does not matter whether control is exercised, so long as the power to control exists. As you can see, control is key. If SBA finds that one firm has the power to control another firm, the two firms are affiliates. Such control can be obvious, affirmative control (i.e. the right to make decisions on the company’s operations), or it can be negative control (i.e., “instances where a minority shareholder has the ability, under the concern’s charter, by-laws, or shareholder’s agreement, to prevent a quorum or otherwise block action by the board of directors or shareholders.”). Such control can be exercised indirectly through a third-party–or even, unexercised. SBA will look at many factors, including the firms’ “ownership, management, previous relationships with or ties . . . and contractual relationships, in determining whether affiliation exists.” The rule even contains a fallback SBA can rely on to find affiliation where the firms are not considered affiliates under one specific affiliation basis (i.e., common ownership or management, economic dependence, familial affiliation). It says, “[i]n determining whether affiliation exists, SBA will consider the totality of the circumstances, and may find affiliation even though no single factor is sufficient to constitute affiliation.” So, this second reason to file a size protest could actually be broken into 10 or so reasons, if we wanted to. For example, just to name a few, many size protests are filed because the unsuccessful offeror finds out or determines: The awardee works closely with another firm run by an immediate family member (potential familial affiliation); The awardee gets a substantial portion (70% or more) of its revenue from another firm–or provides a substantial portion of another firm’s revenue comes from the awardee (potential economic dependence); The majority owner of the awardee also holds majority ownership in another firm or firms–even if the ownership is less than 50%, but large compared to the other owners (potential common ownership affiliation); Individuals who manager the awardee also manage another firm or firms (potential common management affiliation); and The awardee simply has so many ties to another firm that it cannot be ignored (potential totality of the circumstances affiliation). Again, this list is far from exhaustive. The only thing that matters across the board is that the size of the awardee, when the employees or annual receipts of all of its affiliates are added on, would no longer be small under the contract’s size standard. So, if you file a size protest that meets the jurisdictional prerequisites (i.e., relies on nonspeculative information or findings), the awardee will get a chance to show that affiliation doesn’t exist (typically, by providing information/documentation to SBA regarding its organization, owners and managers, financials, existing agreements, etc., and by showing that the affiliation factors and/or required control are not present)–or that the affiliation has been severed. Notably, SBA’s rules do clearly allow companies to “sever their affiliation” by removing the ties giving rise to such affiliation or–where affiliation is familial–by showing a “clear fracture” of the relationship. In such case, the former affiliate’s employees or receipts would no longer be aggregated. If the awardee cannot show that affiliation doesn’t apply or has been severed–and the addition of their affiliate’s size does make them too large for the contract at hand–SBA will find them ineligible and will likely require the contracting agency to rescind or terminate the award. If a size protest leads to a finding of general affiliation, such could affect the awardee’s size standard for other contracts moving forward (unless and until affiliation is severed)–and could even affect any certifications the awardee may hold (i.e., 8(a), WOSB, SDVOSB, etc.). Affiliation, as well as SBA’s basic size regulations, also gives rise to the third reason to file a size protest that we will discuss. 3. The awardee has recently initiated M&A proceedings with the potential to affect its size calculations. Affiliation can also be found where a firm has stock options, convertible securities, and agreements to merge with another firm. SBA will essentially treat such agreements as though they’ve already been put into effect under its “present effect” rule. But even where a firm is acquired by another firm or acquires another firm, and affiliation itself isn’t really the issue, the firm’s size could still be affected in a way that makes it ineligible for award. Indeed, SBA’s employee-based size regulations explain: If a concern has acquired an affiliate or been acquired as an affiliate during the applicable period of measurement or before the date on which it self-certified as small, the employees counted in determining size status include the employees of the acquired or acquiring concern. Furthermore, this aggregation applies for the entire period of measurement, not just the period after the affiliation arose . . . [and] if a concern has sold a segregable division to another business concern during the applicable period of measurement or before the date on which it self-certified as small, the employees used in determining size status will continue to include the employees of the division that was sold. And SBA’s receipt-based size regulations similarly explain: If a concern has acquired an affiliate or been acquired as an affiliate during the applicable period of measurement or before the date on which it self-certified as small, the annual receipts used in determining size status includes the receipts of the acquired or acquiring concern. This aggregation applies for the entire period of measurement, not just the period after the affiliation arose. However, if a concern has acquired a segregable division of another business concern during the applicable period of measurement or before the date on which it self-certified as small, the annual receipts used in determining size status do not include the receipts of the acquired division prior to the acquisition . . . The annual receipts of a former affiliate are not included if affiliation ceased before the date used for determining size. This exclusion of annual receipts of such former affiliate applies during the entire period of measurement, rather than only for the period after which affiliation ceased. However, if a concern has sold a segregable division to another business concern during the applicable period of measurement or before the date on which it self-certified as small, the annual receipts used in determining size status will continue to include the receipts of the division that was sold. Based on the size regulations, affiliation rules, and present effect rule, even an awardee’s written intent to engage in a business acquisition that affects its size–and thus, its eligibility for a small business set-aside contract–could give rise to a size protest, and even an SBA sustain of such protest. So, often, unsuccessful offerors will file a size protest upon getting word that the awardee plans to acquire another company or be acquired in the future. Finally, our last reason to file isn’t based on regulations at all–but rather on a gut feeling. 4. Something doesn’t feel right and you want SBA to ensure the awardee is eligible for the award. Indeed, many a size protest has been filed because the unsuccessful offeror simply has a bad feeling that the awardee is hiding something about its size, organization, or eligibility. And again, so long as the size protest isn’t solely based on speculation, that is ok. While we may not encourage protests based solely on a gut feeling, we are not naive to the fact that gut feelings serve as the basis for many size protests. Now, there are SBA protective orders for size appeals that safeguard the proprietary information of the protested concern (where requested and granted by SBA). But many unsuccessful offerors will have their trusted government contracts attorneys file the size protest and eventual appeal to get access to information on the awardee’s size and eligibility. The protester can rely on its counsel, along with SBA, to check if the awardee is eligible for the award. * * * These are just a few (of many) reasons why unsuccessful offerors file size protests. And a size protest–filed for any reason–is an important part of the government contracting world and process. Size protests, and their resulting size determinations, serve the crucial policies of transparency and fairness and further the nation’s small business contracting goals. Questions about this post? Need help filing or responding to a size protest of your own? Or need additional government contracting legal assistance? Email us. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Why File: A Size Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! It’s time to say goodbye to 2023 and usher in the new year. Here at SmallGovCon, we would like to thank all of our blog readers for a wonderful year. We will continue to work hard to provide helpful federal contracting news and updates in 2024 and we truly appreciate your continued support and feedback. Happy new year! Enjoy a final few federal contracting updates to round out the year, including the new CMMC rules and new SDVOSB goals. Strengthening Digital Accessibility and the Management of Section 508 of the Rehabilitation Act Class Deviation—Implementation of the United States Trade Representative Trade Agreements Thresholds Civilian Agency Acquisition Council (CAAC) Consultation to Issue a Class Deviation from the Federal Acquisition Regulation (FAR) Regarding New Trade Agreements Thresholds Risk Management: Identifying and Mitigating Risks in Federal Contracts Cybersecurity Maturity Model Certification Program Proposed Rule Published Proposed rule would allow DOD program managers to request waivers for CMMC requirements DOD Seeks Comments on Proposed CMMC Program Rule to Protect Sensitive Unclassified Information Congress Increases the Government-Wide Goal for Awards to Service-Disabled Veteran-Owned Small Businesses From 3% to 5% in a Victory for NVSBC, Veterans and American Small Businesses GSA’s Federal Acquisition Service achieves $100 billion status Addressing cyber shortages and going after zero trust: Pentagon’s efforts to modernize its forces Army Futures Command to focus more on rapid acquisition, with an eye toward potential pitfalls The post SmallGovCon Week in Review: December 25-29, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Holidays, Blog Readers! Please make sure to thank all those that work tirelessly during the holidays to make things merry and bright and I’m not just referring to Santa. We truly appreciate you! We hope you have a very joyful holiday season surrounded by family and friends. And now in federal government contracting news this week, a big update about labor in federal construction projects. Fact Sheet: Biden-⁠Harris Administration Announces Action to Support Economic and Efficient Construction Projects While Creating Good-Paying and Union Jobs FACT SHEET: President Biden to Highlight How His Investing in America Agenda Has Led to a Black Small Business Boom Why the General Services Administration has a busy year coming up OMB Releases Guidance on Use of Project Labor Agreements in Federal Construction Projects Owner of Kansas Company Pleads Guilty to Crimes Related to Scheme to Illegally Export U.S. Avionics Equipment to Russia and Russian End Users Executives Charged with Bid Rigging, Territorial Allocation and Defrauding the U.S. Forest Service After a Wiretap Investigation Use of Project Labor Agreements on Federal Construction Projects ‘Fat Leonard,’ fugitive in Navy bribery case, facing extradition to US Iowa’s Ernst touts defense bill boost for small businesses seeking federal contracts Sterling Shepard Gets Into Holiday Spirit, Shows Support for Women-Owned Small Businesses SBA’s Handling of Identity Theft in the COVID-19 Economic Injury Disaster Loan Program Small Business Administration: Procedures for Reporting on Veteran-Owned Businesses Need Improvement Legislative Branch: Options for Enhancing Congressional Oversight of Rulemaking and Establishing an Office of Legal Counsel The post SmallGovCon Week inReview: December 18-22, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

When submitting an offer, it is important to make sure that all the requirements of the solicitation are met. This is essentially Federal Government Contracting 101 and applies to any type of solicitation. In RELX, Inc., B-421597.2, 2023 CPD ¶ 262 (Comp. Gen. Nov. 17, 2023), GAO looked at this issue in the context of a lowest-price, technically acceptable (LPTA) solicitation for a brand name or better product, with an unexpected ending that the protester surely did not see coming. Brand Name or Better Under a brand name or equal solicitation, described in full at FAR 52.211-6, a firm offering product equal to the brand name product must demonstrate that the product conforms to the salient characteristics of the brand name product listed in the solicitation. This doesn’t mean that the product being offered must be identical to the name brand. What it does mean is that the features identified in the solicitation are presumed to be material and essential, and any offerors that are not the manufacturer of the name brand product must demonstrate that it meets all requirements. Any products that do not meet the essential requirements must be rejected. In RELX, the Air Force was accepting quotations for an electronic search and data tool license that was capable of meeting specific requirements that the LexisNexis search engine could do. Since this was solicited on an LPTA basis, the agency planned to evaluate offers received starting with the lowest-priced option and continuing its evaluation of offers with increasing prices until it found an offer that met the salient characteristics of the LexisNexis product. Only two offers were submitted, one by the protester, RELX, Inc. d/b/a LexisNexis, and one by West Publishing Company. West submitted the lowest price, and the agency found its search engine to be technically acceptable, meeting all the requirements that the LexisNexis product offers. Upon award, RELX protested the agency’s decision, stating that the West product did not meet the requirements. As often happens, the agency responded by taking corrective action—though there were no details on what exactly that corrective action was to entail—and the protest was dismissed. Fast forward a couple of months to the second award to West, and RELX again protests the award on the basis that the award to West was improper because West’s offer did not contain all the required characteristics listed in the solicitation. The first, and only, issue discussed in the decision asserted that West’s research platform was not equal to the LexisNexis platform offered by RELX because West’s product provided a singular login to access multiple applications, while the solicitation required a singular login to access one application. West’s offer included two platforms: CLEAR, which is used for law-enforcement searches, and Westlaw, its legal and legislative search product. And the solicitation made it clear that multiple platforms would not be acceptable. Though the decision mentions additional requirements that West’s product did not offer, discussion of the salient characteristics stopped there because it was enough to warrant a sustain on that basis. Open Market Items There was a second issue identified by RELX, though RELX likely regrets its decision to bring this one up. This solicitation was for a task order offered under a Federal Supply Schedule (FSS) contract, meaning the offerors were already awarded indefinite duration, indefinite quantity contracts with products that the agency would then solicit for task orders. Products and services acquired via a FSS contract cannot offer open market items, meaning items that the offeror did not include in its FSS contract. And here, the items offered by West were open market items that were not included in West’s FSS contract, yet another reason why this award was improper. However, as the agency pointed out, RELX also included open market items in its offer. Therefore, the agency claimed that its award to West was allowable because awarding RELX would have the same issue. Regardless, GAO didn’t follow that same reasoning. Instead, it took a “two wrongs don’t make a right” stance and required the agency to terminate the award to West. And, because West and RELX were the only two offerors, GAO instructed the agency to revise the solicitation, obtain new proposals, conduct a new evaluation, and issue the task order to the successful offeror under the revised solicitation. Not exactly the ending RELX hoped for, I am sure. Conclusion Though this surely was not a result that any protester hopes for, the decision supports two concepts. First, strict adherence to the salient characteristics in a name brand or better solicitation is essential. Second, when making an offer for an FSS task order, ensure that all items being offered are in your FSS contract, so you don’t end up like this protester: out of luck. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post Two Bites of the Same Apple: Protester Wins Sustain on Second Name Brand or Equal Protest with an Unexpected Result first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Congress has made it pretty tough to file a protest against a task order. For one thing, task order protests can generally only occur at the Government Accountability Office (GAO). For another, if a task order dollar value is too small, it can’t be protested at all. A recent case confirms that the exceptions to the restrictions on task order protests are quite narrow. However, a protest can allege that a task order increases the scope, period, or maximum value of the contract under which it is issued. Here, the protester did that. GAO had jurisdiction, but still denied the protest. In Duro Health, LLC, B-421947 (Nov. 30, 2023), GAO considered an Air Force task order proposal under Defense Health Agency’s (DHA) Medical Q-Coded Service (MQS) multiple award contract vehicle. DURO was not one of the MQS contract holders. The protester argued that instead of being solicited under the MQS IDIQ contract vehicle, the work should have been procured under United States Special Operations Command’s (USSOCOM) Preservation of the Force and Family Program (POTFF). MQS is designed for “procurement[s] of health care staffing requirements,” including “physician, nurse, dental, and ancillary contract services” as well as “ancillary services” from health care workers. This particular task order sought “services of physical therapists, certified athletic trainers, performance dietitians, licensed clinical social workers, and strength and conditioning specialists.” DURO’s main argument in its protest was that the “agency seeks services that are outside the scope of the MQS contract. The protester contends that the instant requirement is part of USSOCOM’s POTFF program, and as such, the services are beyond the scope of the MQS contract vehicle.” As we’ve noted on the blog before, there are very specific requirements dealing with protests of task order proposals. Specifically, GAO can only review “protests of task orders that are issued under multiple-award contracts established within the Department of Defense (or protests of the solicitations for those task orders) where the task order is valued in excess of $25 million, or where the protester asserts that the task order increases the scope, period, or maximum value of the contract under which the order is issued.” 10 U.S.C. § 3406(f). GAO, in reviewing scope, will examine “whether the order is materially different from the original contract, as reasonably interpreted.” Here the dollar value of the task order was under $4 million. So, it seems like GAO would simply say, no jurisdiction. Not so fast. Here, the protester properly argued that the task order was not within the scope of the underlying MQS contract. Specifically, DURO argued “that the services sought are outside the scope of the underlying MSQ IDIQ contract,” so GAO found that “this protest is within our Office’s jurisdiction.” However, the protester still lost. GAO determined that the “MQS IDIQ contract covers the provision of health care workers . . . in providing direct health care services to eligible beneficiaries” and the MQS solicitation specifically listed positions that were in this task order RFP, such as physical therapist and performance dietitian. Therefore, the scope of the MQS included the services sought under this task order, and GAO denied the protest. GAO’s jurisdiction is limited when it comes to task orders. However, it will consider a protest that a task order expands the scope of the underlying IDIQ contract. Therefore, just because GAO had jurisdiction doesn’t mean the protest is won. Rather, GAO will look to the scope of the IDIQ contract to determine if the task order fits within it. It doesn’t matter if another IDIQ contract might work, too, only whether the IDIQ contract chosen by the agency fits the scope of the task order. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post GAO: Small Task Order Protesters Can Protest Scope of Task Order first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! We are halfway through December already and oh my, how time does fly! 2024 is just around the corner and the holiday season is now in full swing. We hope you are enjoying all the season has to offer. There have been a lot of changes in federal government contracting this year, and here at SmallGovCon, we strive to include weekly, helpful content that explains what the impact of those changes are on federal government contractors. Thank you so much for all the wonderful feedback. We truly appreciate it. This week in federal government contracting had some interesting updates, including new size standard processes, and what contractors should look for in the new NDAA. Small Business Size Standards: Revised Size Standards Methodology How federal contracting looks to women-owned businesses U.S. General Services Administration announces departure of Federal Acquisition Service Commissioner SBA Issues Request for Comment on Proposed Changes to Enterprise Size Standards Methodology GSA’s Hashmi leaving at end of the month Virginia Leads As The Top State For Veteran-Owned Businesses Construction Company President Sentenced To 10 Years In Prison For 25-Year Fraud On The U.S. Government Five things contractors need to know about the Defense authorization bill Senate bill would limit federal contracts with foreign-linked biotech firms READOUT: White House Hosts American Rescue Plan Funded Community Navigators and Small Business Owners, Reiterates Call for Continued Support National Women’s Business Council; Notice of Public Meeting Class Deviation—The Service-Disabled Veteran-Owned Small Business Program The post SmallGovCon Week in Review: December 11-15, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA recently issued new guidance on how to demonstrate social disadvantage–one of the elements an individual must meet to be eligible for SBA’s illustrious 8(a) Business Development Program. The guidance implements a streamlined social disadvantage narrative format–limiting the number of social disadvantage instances to two and asking only for direct answers to six questions for each instance. The “new” format really just hones in on the elements SBA has always asked for 8(a) social disadvantage narratives to demonstrate, substantively, not changing a thing. Nevertheless, SBA has been quite firm in requiring this new, short and sweet, structured format–so let’s dig into it a bit. Since the federal court’s decision in Ultima (you can read all about here), the 8(a) Program has been swept up in a whirlwind of change. The whole application process was paused and un-paused. Awards were postponed. The vast majority of active, individual 8(a) participants had to submit social disadvantage narratives (some, in just a few days). And naturally, there was a massive influx in social disadvantage narratives requiring SBA’s review: some needing immediate review for 8(a) awards; and all hoping for prompt review to avoid any 8(a) Program term pause or termination. Here at SmallGovCon, this inspired our 8(a) landing page, the 8(a) Contractors’ Toolkit (for all the recent 8(a) happenings and updates you might’ve missed). Over at SBA, it inspired steps to maximize the 8(a) Program’s review capacity and efficiency. For one, SBA rallied the troops–dramatically increasing its fleet of 8(a) eligibility reviewers. It also issued this new guidance simplifying the narrative format–hoping to streamline reviews. The guidance changes the narrative format in two primary ways: (1) it directs drafters to focus on just two instances of social disadvantage; and (2) it asks them to directly and succinctly (and to only) answer six specific questions for each instance. In regard to the first change it, it says: An individual should typically provide two incidents of bias to establish chronic and substantial social disadvantage. One incident may be enough to establish social disadvantage if it is pervasive or recurring. SBA recommends limiting yourself to two examples to avoid unnecessary delays during the review process. It was previously pretty standard for narratives to include as many instances as possible to support a finding of social disadvantage. This was largely because SBA’s rules say narratives must demonstrative that the “social disadvantage [was] chronic and substantial, not fleeting or insignificant[.]” But now, since SBA has expressly limited these narratives to two instances, it allows drafters to focus on detailing and analyzing just two of the strongest instances. As for the second big change, SBA now wants drafters format their analysis as an essential Q&A. The guidance states: For each incident, please describe who, what, where, why, when, and how discrimination or bias occurred. Incidents are more readable if they provide information in the following order within a narrative: When – Explain when the discriminatory conduct occurred. Exact dates, where available, are preferred but are not necessary so long as the incident provides a specific time period. This discrimination can be from any period of your life; you do not need to be experiencing current discrimination to qualify. Where – Explain where the discriminatory conduct occurred. The incident must have occurred in American society. Who – Explain who committed the discriminatory action. This could include an individual, a group of individuals, or an institution. Individual names, where available, are preferred but not necessary so long as the incident provides a specific figure or organization. What – Explain the discriminatory conduct. Why – Explain the reason(s) that the conduct was more likely motivated by bias or discrimination than other non-discriminatory reasons. Without additional facts, a mere assertion that the action was the result of bias or discrimination is will not be enough to support a claim of social disadvantage. How – Explain how each instance of discriminatory conduct impacted your entry into or advancement in the business world. Offensive comments or conduct, while reprehensible, will not support a claim of social disadvantage if there is no negative impact associated with the incident. SBA’s guidance also provides helpful examples of acceptable and unacceptable responses to each of these questions. This new Q&A format, in effect, discourages inclusion of generalized, statistical, or political information in these narratives–information SBA does not deem relevant to the specific social disadvantage instances experienced. This is actually something SBA has always urged drafters to avoid in their narratives (even asking for shorter narratives for this reason a few years back–but never enforcing the suggested page limit). And this isn’t the only SBA policy or rule that appears to underlie and motivate SBA’s recent guidance and new format. In fact, it is very important to keep in mind that (outside of those covering the now-prohibited rebuttable presumption of social disadvantage) the underlying social disadvantage regulations remain intact, in full force and effect. One must demonstrate the same substantive elements, the same facts and level of detail, and the same analyses (which you can learn all about in my prior blog–a still relevant and highly beneficial read for anyone drafting a narrative now or at any point in the future). The guidance states, “[e]xperiences should be related to education, employment, and business history[,]” the same three categories SBA has always allowed individuals to pull social disadvantage experiences from. And as you can see from SBA’s descriptions for its “who,” “where,” “when,” and “what” questions, SBA is still looking for a specific and detailed account of all the relevant facts for each incident. SBA’s “why” question goes directly to its regulatory requirement to demonstrate why each instance was due to bias/discrimination or or at least more likely due to bias/discrimination than some “alternative ground.” And SBA’s “how” question hits on the always-vital regulatory requirement to demonstrate long-term impact for each instance. Specifically, the rules state: An individual claiming social disadvantage must present facts and evidence that by themselves establish that the individual has suffered social disadvantage that has negatively impacted his or her entry into or advancement in the business world. Each instance of alleged discriminatory conduct must be accompanied by a negative impact on the individual’s entry into or advancement in the business world in order for it to constitute an instance of social disadvantage. So, again, what SBA is really looking for in a social disadvantage narrative hasn’t changed. SBA only changed the way you present the experiences in the narratives–and put a limit on how many. Outside of that, the guidance did introduce one thing that’s brand new–the latest, alternative option for new 8(a) applicants to demonstrate social disadvantage via a fillable questionnaire on SBA’s Certify platform (but unless you’ve completed that questionnaire yourself, it is still quite the mystery). * * * Here at SmallGovCon, we’ve been studying the art and science of 8(a) narrative-drafting since long before the newly-lit spotlight on 8(a) social disadvantage. So, like many, we were a bit uneasy when recent judicial challenges began to effect these narratives–who has to submit them, when and where to submit them, and even, their contents. And the lack of any official new rule on the subject naturally causes us lawyerly types a bit of unease. But now that at least some of the dust has settled, we can comfortably say (from extensive recent experience) that the tried-and-true art and science of narrative drafting is holding strong. At this point, there are just some new formatting rules–and a very helpful limitation–that seems to make the process more concise and efficient for drafters and reviewers alike. And while I would love to leave you on a positive note, I will at least mention that there have been some recent challenges and requests from the plaintiff in Ultima in regard to this “less rigorous” narrative review, which you can read about here. Stay tuned for any updates, as we will, of course, keep you posted. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post SBA’s 2023 Update: Demonstrating 8(a) Social Disadvantage first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Earlier this year, SBA’s Office of Hearings and Appeal (“OHA”) released its first HUBZone status protest appeal decision. That decision, as you may recall was fairly straightforward, resulting in a dismissal of the appeal. About half a year later, OHA has issued its second HUBZone status appeal decision! This one is even more straightforward than the first one, but it is important nonetheless as it now gives us further insight into the HUBZone appeal system. Let’s take a little look. In PAE Applied Techs. LLC, Appellant Re: Lynker Techs. LLC, SBA No. HUB-102, 2023 (Dec. 5, 2023), the appellant did correctly appeal a decision on a HUBZone status protest, as opposed to challenging a decision of SBA to decertify, as appeared to have been the case in that first decision, New Source Corp. back in June 2023. It cannot be emphasized enough how important following the procedures are if you want a chance of winning your appeal. We, of course, understand that many of these things seem very minor. For example, in New Source, one of the reasons the appeal was found deficient (and therefore was dismissed) was that it was unsigned and was not properly served to the required parties. But these procedures do have a foundation in real concerns. Signatures are evidence that the party is who they say they are, and service is important because it puts parties on notice that the matter is being challenged. However, the biggest issue in New Source was that it was a challenge of SBA’s decision to decertify the company from HUBZone. It did not involve any HUBZone status protest. This is important. As we noted earlier this year, the HUBZone appeal system is only for appeals of HUBZone status protests. It is not a means to challenge any decision about whether a company is or is not HUBZone eligible. We are curious if the protest system may get expanded later, but for now, it’s just for challenging the results of HUBZone protests. Here, PAE indeed appealed a HUBZone protest decision, so OHA did have jurisdiction over the matter. Unfortunately for PAE, they made a misstep as well in their appeal. PAE’s appeal challenged a decision dismissing its protest of the HUBZone status of another company, Lynker Technologies, LLC. It appears that PAE, however, did not give a sufficient argument as to why the original dismissal decision was erroneous. Since we lack access to what PAE filed, we do not know what actually was in their appeal. But, as it was, OHA basically gave PAE an ultimatum: Explain why the appeal shouldn’t be dismissed or OHA will dismiss it. PAE chose to withdraw the appeal. When one appeals an SBA status determination or size determination, it is not enough to simply say that one is challenging the decision. Even if SBA’s error is obvious, you have to spell out what the reason for the challenge is in your appeal and it has to have some base logic to it. This goes for essentially all appeals processes. In itself, OHA’s decision here does not shed much light on how OHA will actually analyze HUBZone eligibility issues. However, some information can be gleaned. It is quite clear that HUBZone appeals to OHA are not common, at least not yet. In a six-month period, there have been just two, and both ended in dismissal. It is safe to assume that HUBZone appeals will not be common going forward either. We’ll keep our eye out, though. We hope to see a HUBZone appeal decision that actually discusses some of the eligibility requirements for the HUBZone program to help provide some needed clarity on the program. Questions about this post? Email us. Need legal assistance? 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 A HUBZone Appeal Appears! Continuing our Look at the HUBZone Appeal Process first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! It was another busy week here at SmallGovCon and in the federal government contracting world. GSA announced some new political appointees, while cyber security and AI have also been ongoing hot topics. You can read more about these and other contracting news in the articles below. Have a wonderful weekend. Three Military Contractors Sentenced in Procurement Fraud Scheme CX: The Next Frontier in Government’s Digital Transformation GSA announces new political appointees Special Report: Common Cybersecurity Weaknesses Related to the Protection of DoD Controlled Unclassified Information on Contractor Networks (DODIG-2024-031) The continuing resolution doesn’t do a whole lot for contractors Better data protests could benefit, agencies, vendors alike 5 GovCon Reforms to Maximize AI Implementation in US Government GAO Report Finds Gaps in Federal Agencies’ Event Logging Practices for Cybersecurity Incident Response How one company set itself up to continue thriving post SBA’s 8(a) program Veterans Affairs sheds more light on $14B transformation recompete CEO of Charity for Veterans Charged with Federal Fraud Crimes The post SmallGovCon Week in Review: December 4-8, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SmallGovCon has covered the SBA’s assumption of control over certification of Service-Disabled Veteran Owned Small Businesses (“SDVOSB”) and Veteran Owned Small Businesses (“VOSB”) since it was first announced well over a year ago. Now, we are coming close to one of the final deadlines associated with SBA taking over these certification processes. It is hard to believe that it is already the end of the calendar year once again. But time flies when you are having federal contracting fun! With the end of 2023 comes a crucial deadline for certain veteran businesses to keep in mind–the date for self-certification to go away. As we discussed during the SBA’s SDVOSB certification rules rollout, self-certification of SDVOSBs was an item that SBA planned to get rid of. In the final rules and in follow up guidance, SBA stated that self-certified SDVOSB contractors would be given a one-year grace period to submit their certification application to the SBA. During that period, SDVOSBs could still self-certify as an SDVOSB. However, after that one-year grace period, SDVOSB self-certification would be eliminated. (That being said, SBA did indicate in its final rule that SDVOSB self-certification would be allowed for subcontracting purposes and goaling credit, for another five more years). As you likely know, SBA assumed control of SDVOSB certification on January 1, 2023. So, that one year grace period is coming to an end very soon. As SBA states on its site, there is “one-year grace period for self-certified SDVOSBs until January 1, 2024.” Meaning the grace period’s last day is December 31, 2023, only a few short weeks away. SDVOSB contractors who are self-certified were given the one-year grace period to file an application for SDVOSB certification. Consequently, a self-certified SDVOSB that sends in its application for SDVOSB certification to SBA prior to January 1, 2024, “will maintain their eligibility through the expiration of the grace period until SBA issues a final eligibility decision.” Meaning, a SDVOSB could self-certify through 2023 to compete for most SDVOSB set-asides (note, though, that VA does not recognized SDVOSB self-certification), but that ability will end on December 31, 2023. Therefore, if you are a self-certified SDVOSB, you have only a few weeks (as of the date of this blog) to get your application in to the SBA. Applications must be sent to the SBA through the SBA’s VetCert portal. If a self-certified SDVOSB contractor misses that deadline, it will find itself no longer SDVOSB certified and standing in line with other new applicants to regain SDVOSB status. In fact the SBA states “Self-certified SDVOSBs are encouraged to submit an application in advance to ensure the certification process is complete by January 1, 2024.” While every application is different, SBA will generally look for the same things. We highlighted many of these in our back to basics post on SDVOSBs and VOSBs. But it basically boils down to two major things: 1) ownership; and 2) control. In general, the SBA will want to make sure service-disabled veteran(s) directly and unconditionally own the majority of the business. The SBA will also want to make sure service-disabled veteran(s) control the business. Control is typically shown through control of the day-to-day affairs and long-term strategic decision-making of the applicant business. Self-certified SDVSOBs applying to SBA will need to keep these things in mind when preparing their applications. The SBA has provided a FAQ, email (vetcert@sba.gov), and toll free line (M-F, 8am-6pm ET, 800-862-8088), for any assistance they can provide. Of course, if you find yourself in the situation of needing to apply for SDVOSB certification, it may be a good idea to reach out to a federal contracting lawyer for input, to see if you meet the certification requirement, because there are many nuances to the eligibility requirements SBA places on contractors for the SDVOSB program. Questions about this blog? Email us at info@koprince.com. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Reminder: 2023 SDVOSB Deadline Looming first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Please join Greg Weber and I for this informative webinar on small business certifications. Participants will get an overview about: Woman Owned Small Business and Economically Disadvantaged Woman Owned Small Business 8(a) Business Development Program HUBZone (Historically Underutilized Business Zone) Service Disabled Veteran Owned Small Business We will discuss how to get certified, how long it may take, regulations, changes, updates, and tips and tricks on how to be prepared. We hope you will join us. Register here. The post Webinar Event: Small Business Certifications hosted by the Catalyst Center for Business & Entrepreneurship, December 14, 2023, 4:00pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If your small business status hangs in the balance, you can’t afford mistakes in your next SBA size determination. Join us for an in-depth look at key accounting strategies and lessons from recent SBA size appeal decisions involving affiliation issues, joint ventures, and receipts calculation. Learn how to properly account for inter-affiliate transactions, raise strong arguments, and avoid missteps that could lead to an adverse size determination. Register now to demystify SBA rules and gain the knowledge needed to respond to size protests and succeed in appeals. If you are interested, please register here. The post Free Webinar Event: Mastering Size Calculations for SBA Size Determinations hosted by LeftBrain, December 12, 2023, 1:00pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy December! If you haven’t started your holiday shopping, don’t panic, you still have time! It’s hard to believe that 2023 is almost over. I don’t know about you, but here at SmallGovCon, the year seemed to fly by. We hope you have a nice weekend and can get out to enjoy all the holiday season has to offer. And now, in federal government contracting news, check out some interesting articles about how the federal government is approaching the use of AI and protecting critical supply chains. Virginia tactical gear & equipment company agrees to pay more than $2 million to settle allegations related to Buy American Act RAI Toolkit Executive Summary Defense Logistics Agency Makes Thanksgiving Meals Possible Worldwide Disparities In Government Contracting And How Leaders Can Boost The Economy Executive Order on Interagency Security Committee 10 HUBZone Companies Secure Spots on $700M Air Force Construction Services Contract Here’s who’s responsible for AI in federal agencies Is an earthquake ahead for a mainstay of federal procurement? Average security-clearance-processing speed, hits a speed bump Generative AI, Edge Computing & Modernization: Homeland Security Leaders Share Top Priorities Inspector general to probe decision on relocating FBI building New DHS supply chain center aims to head off future crises The post SmallGovCon Week in Review: Nov. 27-Dec. 1 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Updates to the SBA’s Small Business Subcontracting Plan regulations in response to the National Defense Authorization Act of 2020 Section 870 are changing the circumstances in which a prime contractor can receive credit for lower-tier subcontractors, effective November 13, 2023. Such changes make the inclusion of lower-tier subcontractors in certain situations optional and put the onus on the lower tier subcontractors to report such work to the SBA if the lower tier subcontractor wishes to receive credit. It is important to note that these changes have no effect on any first tier subcontracting requirements. For those that may be unfamiliar, small business subcontracting plans are a requirement for federal contracts that exceed $750,000, or $1.5 million for construction contracts. A small business subcontracting plan is not needed when an award is made to a small business, there are no subcontracting opportunities, or performance will occur completely outside of the United States and its outlying areas. But what is a small business subcontracting plan and why is it important? Well, as implemented by FAR 52.219-9 and 13 C.F.R. § 125.3, small business subcontracting plans describe how an other-than-small prime contractor will meet the small business subcontracting requirements of most federal contracts. And they are important to “provide the maximum practicable subcontracting opportunities for small business concerns.” Prior to the most recent change, prime contractors with individual subcontracting plans were required to include information on lower-tier subcontractors. Now, prime contractors have a choice. They can elect to have their lower-tier subcontracting plans considered with their proposal in certain circumstances. This applies only in situations when the subcontracting plan applies to a single contract with one federal agency. For other situations—including commercial plans, comprehensive contracting plans, governmentwide contracts, and multi-agency contracts—contractors are prohibited from receiving credit for lower-tier subcontractors. The rule also removes the requirement that a prime offeror submit two different sets of subcontracting goals: one for first-tier subcontractors and one for lower-tier subcontractors. However, the NDAA prohibits agencies from setting subcontracting goals at a specific tier. Therefore, SBA has updated the regulation so prime contractors are only required to submit one small business subcontracting plan regardless of the tier in which subcontractors fall. Note that if the prime contractor wants to receive credit for a lower tier subcontractor, it must incorporate the lower tier subcontractor’s own individual subcontracting plan goals. Finally, prime contractors are now required to submit, along with offers, a statement of the types of records the will maintain to substantiate subcontracting credit. However, the prime contractors are not required to make reports for their lower-tier subcontracts. Rather, the lower-tier subcontractors must submit that information on their own. Within the comments and responses, commenters hit on a couple of interesting points that come out of this rulemaking. One commenter requested that SBA define its role in holding subcontractors who fail to meet their lower-tier subcontracting goals accountable. In response, SBA said that, aside from the government sending “a ‘show cause’ letter that proposes debarment for subcontractors that repeatedly fail to meet their lower tier subcontracting goals,” prime contractors can accomplish their goals “by not subcontracting to firms that fail to meet subcontracting requirements.” With this, it seems as though SBA will be hands-off unless and until a contractor has failed to meet their subcontracting requirements repeatedly. Another commenter requested extra time before the lower tier subcontracting plan was required to be incorporated into the subcontracting plans submitted with proposals, but SBA declined to do so, stating that the plans must be in place by the time of award when required per 13 C.F.R. 125.3(a). In a response to another question, SBA recognized that contractors may not know of lower tier subcontracting opportunities when initially awarded a contract, but that any change to the subcontracting plan in place at the time of award must be submitted to the contracting officer for a contract modification. And there you have it. Prime contractors may, but are no longer required, to provide lower tier subcontracting information to agencies or the SBA. If desired, the lower tier subcontracts for single contracts with one federal agency will now be included in the prime contractor’s individual subcontracting-plan goals. Finally, if a lower tier subcontractor wants to receive credit for its work on the lower tier subcontract, the lower tier subcontractor must have its own individual subcontracting plan. Questions about this blog? Email us at info@koprince.com. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post FAR Subcontracting Plan Update: Credit for Lower Tier Subcontractors Means Lower Tier No Longer Lower Value first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA’s size protest rules contain a stick to force companies to respond to SBA as part of size determination. That stick is called the adverse inference rule. The adverse inference rule says that, if SBA requests specific information and a protested company refuses to provide it, SBA may assume that the missing information would show that the company is not a small business. In a recent decision, SBA’s Office of Hearings and Appeals (OHA) upheld the use of the adverse inference. In Portacool, LLC, SBA No. SIZ-6251 (October 24, 2023), Defense Logistics Agency (DLA) conducted a small business set-aside procurement for for evaporative coolers. DLA assigned North American Industry Classification System (NAICS) code 333415, Air Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing, with a corresponding size standard of 1,250 employees. Portacool (or Appellant) was the apparent awardee and its size was protested by Portable Air Group, LLC (PAG or protester). The protest alleged that Portacool was acquired in April 2012 by a large business and is no longer small. As part of the standard response to a size protest, a protested company receives a letter from the SBA informing it that it has to provide a “response to each of the allegations in the protest”, as well as provide certain relevant documents and completed Form 355. The Form 355 provides basic information about ownership and management of the protested concern and potential affiliates. Among the items requested by SBA were: “A copy of organizational documents (i.e., Articles of Organization and Operating Agreement or Bylaws) for [Appellant] and all potential affiliates”; “If [Appellant] is not the manufacturer [of the evaporative coolers], an explanation of [Appellant’s] compliance with each of the four elements of the manufacturer rule in 13 CFR 121.406(b) is required”; “Completed employee calculation worksheet for [Appellant] and all of the potential affiliates, each affiliate will need to prepare a [worksheet].” Portacool received an extension to its response due date. After some back and forth with the SBA, the SBA wrote: Although Appellant had already indicated that it is 100% owned by [Company 1], Appellant must disclose “who owns [Company 1] and up the chain until individuals are provided.” The SBA Area Office determined that Portacool was not small. “The Area Office found that Appellant did not adequately respond to the Area Office’s requests for information posed on July 19, 2023, August 7, 2023, and August 14, 2023, and therefore drew an adverse inference that the missing information would have shown that Appellant is not small.” Among other things, the Area Office noted that “Appellant claimed that it is 100% owned by [Company 1]” but “Appellant did not disclose the owners of [Company 1] nor identify other potential affiliates.” Overall, the Area Office found that Portacool’s responses “lacked the necessary detail for the Area Office to determine ‘who ultimately owned and controlled’ Appellant” and failed to address various potential affiliates and their employee counts. Portacool appealed the size determination, arguing it had provided all relevant information to show it was small. Adverse Inference Under SBA size protest rules, protested companies must respond to SBA questions, provide a Form 355, and has the burden to establish it is small. In particular: If a concern whose size status is at issue fails to submit a completed SBA Form 355, responses to the allegations of the protest, or other requested information within the time allowed by SBA, or if it submits incomplete information, SBA may presume that disclosure of the information required by the form or other missing information would demonstrate that the concern is other than a small business. A concern whose size status is at issue must furnish information about its alleged affiliates to SBA, despite any third party claims of privacy or confidentiality, because SBA will not disclose information obtained in the course of a size determination except as permitted by Federal law. 13 C.F.R. § 121.1008(d). Under OHA’s test, SBA may impose an adverse inference based on three factors: “(1) the information sought by the area office is relevant to an issue in the size determination; (2) there is a level of connection between the entity being protested and the entity the area office is seeking information from; and (3) the area office’s request for information was specific.” In this case, OHA confirmed that the Area Office properly imposed the adverse inference penalty. First, the Protester “raised a specific and credible protest allegation, i.e., that Appellant is not small because Appellant was acquired in April 2012 by” another company–and SBA asked questions related to this protest allegation. However, Portacool did not adequately respond because it “failed to disclose specific information about other concerns that may be owned or controlled by” Portacool, its parent companies, or the individual owner of the parent companies. Portacool provided no information about the size of potential affiliates. Portacool, in its Form 355, had indicated it had an affiliate, but then tried to disclaim affiliation on appeal. OHA rejected this request. Conclusion Ultimately, OHA rejected this appeal. This case shows how important it is to fill out the Form 355 carefully upon the initial submission to SBA. It is very hard to walk back what is submitted in the initial version of documents sent to SBA. It is also very important to make responses to size protest allegations and requests for information that are both responsive and timely. Federal contractors must be careful in how they respond to an SBA size protest. Some things cannot be fixed on appeal. Questions about this post? Email us . Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post OHA: Respond to SBA Size Determination Questions, or Risk an Adverse Inference first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

While losing a procurement is never easy, many contractors will learn some valuable lessons from a debriefing. On top of that, a debriefing can delay bid protest filing deadlines at GAO. However, recently, GAO clarified that the bid protest filing deadline delay for debriefings only applies to GAO protests. A protestor found this out the hard way after a pre-award debrief, and multiple protest actions. Given the importance that debriefings (or debriefs, for short) hold for contactors to determine areas to improve, possible bid protest grounds, and bid protest deadlines, we have written about them many times. There is our Back to Basics post on the topic, and, relevant to this case, we even have a post on pre-award debriefs affecting deadlines. If this post piques your interest, we highly recommend these and our other posts to learn more about debriefs. That being said, this case provides a great opportunity for a quick review of pre-award debriefs, and GAO’s filing rules. GAO’s bid protest filing regulations state that protests based on a solicitation’s terms must be filed “prior to bid opening or the time set for receipt of initial proposals.” For any other protests, they must be “filed not later than 10 days after the basis of the protest is known or should have been known.” However, GAO built in an exception for debriefings. The regulations state, when there is a competitive procurement in which “a debriefing is requested and, when requested, is required,” then the protest will not be filed “before the debriefing date offered to the protester” and not later than “10 days after the date on which the debriefing is held.” What this means is that in most cases, for a GAO bid protest, if a contractor is allowed a debrief under the solicitation, and if requested the agency has to give it, then the GAO bid protest deadline clock does not start until the debrief is given. Note, this is separate from the deadline to file to get a stay of award, which applies if a GAO protest is filed “within 5 days after a debriefing date offered to the protester for any debriefing that is required by 15.505 or 15.506.” FAR 33.104. That being said, there are some oddities regarding pre-award debriefs that could affect filing deadlines. If a contractor is offered a pre-award debrief after being excluded from the competitive range, there is an option to delay the debrief until after the award to get more information through a post-award debrief. This will get contractors more information about their evaluation, but critically, GAO has held that if a contractor chooses to postpone the pre-award debrief until post-award for more information, the contractor actually loses its right to protest. Also, the DoD has enhanced debriefs. which could allow for more information and push a GAO bid protest filing deadline out further, but the DoD’s enhanced debrief rules only apply to post-award debriefs. In NikSoft Systems Corporation, B-421801 (Comp. Gen. Aug. 16, 2023), GAO examined how a pre-award debrief affects (or in this case doesn’t affect) agency-level bid protest deadlines. On June 15th, 2023, NikSoft received notice that it was excluded from the competitive range for the subject procurement. NikSoft requested a pre-award debrief (debrief that occurs when excluded from competitive range before award). The debrief was received by NikSoft on June 30th, with the option of supplying questions on the debrief by July 5th. On July 6, NikSoft sent an email to the agency stating it disagreed with the weaknesses identified, and rebutted the agency’s evaluation. As this email was sent over 10 days after June 15th, the Agency treated this email as an agency-level protest, and deemed it untimely under the FAR agency level protest deadline of 10 days after notice of adverse action. On July 7th, NikSoft sent an email to the Agency that it labeled as an agency-level protest. The agency treated this second email as an appeal of the decision to treat the July 6th email as an agency-level protest. The agency’s senior procurement officer denied this appeal. NikSoft then filed a protest with GAO stating that the agency did not reasonably evaluate its proposal, and the exclusion of the proposal was improper. GAO dismissed this protest for being untimely. In its dismissal, the GAO focused on filing deadline requirements. As a general matter, GAO holds that a matter that was initially filed with an agency will be seen as timely “only if the agency protest was filed within the time limits provided by [GAO],” unless the agency places a “more stringent time for filing.” In that case, GAO will honor the agency’s filing requirements. GAO stated that the initial notice of exclusion sent to NikSoft on June 15th provided “sufficient information to inform the protester of its bases of protest” and the protester was required to file a protest within 10 days of June 15th. NikSoft in the GAO bid protest argued it waited for the debrief to be concluded before filing any protest. But GAO states in this decision “the debriefing exception established in our Bid Protest Regulations” for protest timeliness is “inapplicable to agency-level protests, which are governed by the timeliness rules in the FAR.” This is the lynchpin of GAO’s decision. The delay of a filing deadline because of a debrief is exclusive to GAO, and the agency, relying on the FAR, had a more stringent filing deadline. Thus, if a protester wants to file an agency-level protest, the FAR’s 10-day filing deadline applies, and has no exceptions for debriefs. A contractor cannot keep asking questions or delay a protest to seek more facts to fill out a protest. And if the contractor files an agency level protest before going to GAO, that protest must be timely under the agency’s rules (if those rules are more restrictive). This case has made some things clear to the contracting community: 1) contractors must be sure to start the proverbial protest deadline clock as soon as the notice of exclusion from award is received, if they plan to do an agency level protest; 2) contractors must be careful about how communications with the agency are worded, as an agency may treat it as a agency-level protest; 3) Debriefs will only effect bid protest filing deadlines, if the bid protest is filed at GAO. Given this complicated web of filing deadlines, it is important not hesitate about reaching out to federal government contracting lawyers as soon as possible if you find yourself excluded from award or a competitive range. That will allow you to fully discuss the various filing deadlines, exceptions, and forums for a potential protest. If not, you run the risk of a dismissal and missing your chance to fully state your case. Questions about this post? Email us . Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Debriefings Only Delay Filing Deadlines For GAO Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Just as agencies have established goals to award a certain percentage of their procurements to small businesses and businesses participating in socio-economic programs like the 8(a) Program, large business contractors must establish goals to include small business subcontractors in their pool of subcontractors for unrestricted awards over the applicable threshold in FAR 19.702 ($750,000 for most contracts, $1.5 million for construction contracts). While the specific goal will vary with each contract (or in some cases may be on a company-wide basis), it is rare for a contracting officer to find a large business hasn’t met the given goal. However, an investigation by GAO indicates that large business contractors aren’t meeting their small business subcontracting goals as often as the government would hope. Let’s take a deeper look at these findings. The Gist On November 9, 2023, GAO issued its report regarding large business compliance with small business subcontracting plans. (Helpfully, it summarizes this report very quickly here, in case reviewing the whole report isn’t particularly time-effective for you). This report has proven to be quite eye-opening. GAO reviewed six separate agencies: The Air Force, the Army, Homeland Security (DHS), Health and Human Services (HHS), Veterans Affairs (VA), and NASA. For the report, GAO interviewed contracting officers to see how large businesses were reporting their compliance with these small business subcontracting requirements. Most contracting officers said their contractors were meeting the goals, and that they rarely assigned “below satisfactory” ratings to them. However, GAO noted that “[i]n contrast, according to government-wide data released by the Small Business Administration (SBA), many contractors reported not meeting their subcontracting goals in fiscal year 2022.” Indeed, for only 63% of completed contracts, large businesses met their small business subcontracting goal, meaning close to 40% failed to meet it. And that’s for the goals for small businesses in general. When it comes to goals for socio-economic programs, like the 8(a) Program and WOSB Program, compliance was even worse. It was as low as 35.9% of completed contracts for 2022 for SDVOSBs! There is a substantial discrepancy here that makes it very uncertain whether contractors are complying with these small business subcontracting goals. For its part, GAO observed that “most federal agencies GAO reviewed do not report or review data on contractors’ achievement of their subcontracting goals at the agency level, as required by statute.” In the report, GAO stated: Our selection of contracting offices was not generalizable, which may partially explain this apparent discrepancy. It is difficult to explain the differences between the contracting officers’ experiences and the government-wide data because these data generally are not broken down by agency. We have previously found that some contracting officers did not ensure that contractors submitted required ISRs and SSRs, and that some contracting officers accepted subcontracting report submissions with erroneous information on subcontracting goals. Recommendations for Agencies and SBA As it stands, GAO essentially feels there is not enough information being collected to tell what’s really going on. This problem it laid at the feet of the agencies. It noted that of the six agencies, only NASA was collecting information on small business subcontracting compliance as required by statute (15 U.S.C. § 637(d)(7)). After discussing the lack of compliance on the part of the agencies, GAO observed: By periodically collecting and reviewing agencywide data, these agencies could better understand the extent to which contractors comply in good faith with their subcontracting plans and the overall success of the agencies’ small business subcontracting program, as well as ensure they are in compliance with statutory requirements. Further, they could identify opportunities to adjust their efforts or improve oversight. At the same time, GAO also called out SBA for what it felt were insufficient numbers of “subcontracting program compliance reviews” (“SPCRs”). Apparently, for fiscal years 2021 and 2022, SBA only completed six SPCRs. It was even more concerning to GAO that despite each of the SPCRs finding that contractors generally weren’t complying with their subcontracting plans (with many companies being out of compliance both years), that further review efforts weren’t being undertaken. GAO stated “SBA has not analyzed the risk to its understanding of contractor compliance gained by conducting only six SPCRs in each fiscal year, with selection criteria that results primarily in contracts with commercial subcontracting plans.” Good Faith Standard Finally, GAO looked at the entire good faith standard for small business subcontracting compliance. Where large businesses fail to meet their goals, they will not receive unsatisfactory ratings if they can show they made good faith efforts to meet them, per FAR 19.705-7. While agencies noted the benefits of this standard (and GAO certainly did not recommend that this standard be abandoned), contracting officers did express frustration with how inherently subjective the standard is. It is worth noting, however, that FAR 19.705-7 provides examples of indicators of good faith (or lack thereof) for contracting officers to look out for. In any case, GAO recommends further training of contracting officers on evaluating large business compliance efforts. Our Thoughts Needless to say, some of the numbers from SBA’s reviews are striking. Certainly, we would not expect large businesses to always meet their subcontracting goals. That’s something that isn’t always in their control. But figures suggesting that up to two-thirds of large business contractors aren’t meeting goals for particular socio-economic programs like SDVOSBs and HUBZone businesses is concerning. We are of course aware that there may not always be businesses with those statuses available for subcontracts, which of course is why the good faith standard is needed. But we also hear of many small businesses that are eager and willing to do many types of work in the federal contracting sphere. But these numbers do raise concerns that that compliance with the small business subcontracting plans isn’t being taken seriously enough. The fact that many agencies weren’t even complying with federal statutory requirements for reporting only further solidifies this concern. Of course, we very much doubt that this was an intentional choice on the part of the agencies—it shows a marked lack of interest from the agencies, though. That is why reviews like that conducted by GAO are essential. We hope this will lead to an improvement in how agencies monitor small business subcontracting plan compliance. In turn, that will no doubt lead to more large business contractors meeting their plan goals. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Room for Improvement: Statistics Suggest It is Unclear if Large Businesses are Meeting Small Business Subcontracting Goals. first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! Next week is Thanksgiving and we want to take this opportunity to thank all of you for your support of SmallGovCon. We always strive to provide helpful content and we appreciate all the wonderful feedback that we have received from our readers. We hope you have a great Thanksgiving and are able to spend some time with friends and family. This week in federal government contracting news include a plan to fund the government (hear that one before?), AI and its effect on government, and new GSA acquisitions. The healing power of dogs for vets The misguided attacks on the 8(a) program must end Meetings: Interagency Task Force on Veterans Small Business Development Local veteran to speak at the US Senate about veteran-owned small businesses Meetings: National Small Business Development Center Advisory Board How the New AI Executive Order Will Impact Government’s AI Landscape COMET recompete, Polaris protests keep acquisition exciting in early fiscal 2024 This New Senate Bill Will Give Veterans a Break on Some SBA Loans Getting better deals for the government GovCon M&A Deals ‘Rebounding’ After Slow Period—Dispatch from 2023 Baird Conference House Approves Bill to Keep Government Funded Past Saturday Ernst Works to Meet Needs of Veteran Entrepreneurs The post SmallGovCon Week in Review: November 13-17, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In this webinar, Nicole Pottroff and I will cover the most important legal developments for federal contractors in 2023. We will discuss some new small business rules, updates to the 8(a) rules and application procedures, joint venture changes, updated SDVOSB certification requirements, key provisions of the recent National Defense Authorization Act, and more. Hope you can join us. Register here. The post Govology Webinar Event: 2023 Government Contracting Year in Review, December 7, 2023, 1:00pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

This article was originally published by Steven Koprince on LinkedIn and is reprinted with permission. Steve is the founder of Koprince McCall Pottroff LLC but has retired from the practice of law to focus on other endeavors. His views do not necessarily represent those of the firm or its attorneys. To read more of Steve’s current government contracting writing, follow him on LinkedIn and subscribe to his LinkedIn newsletter. The U.S. Small Business Administration’s Office of Inspector General isn’t mincing words–OIG thinks that SBA has strayed from Congressional intent with its expansive definition of who qualifies as a HUBZone employee for purposes of satisfying the HUBZone Program’s eligibility requirements. In a recent report, SBA OIG points out that SBA’s broad definition could result in a company becoming HUBZone-eligible even if none of the company’s employees currently live in HUBZones. By way of background, the HUBZone Program generally requires that at least 35% of a HUBZone-certified company’s employees be residents of a HUBZone. (HUBZone companies owned by entities such as Indian tribes may elect an alternative standard, but that’s not relevant here). In 2020, as part of an effort to overcome the government’s longstanding inability to meet its 3% HUBZone prime contracting goal, the SBA expanded the definition of who qualifies as a HUBZone employee. The current definition, set forth in 13 C.F.R. 126.200(d), says, in relevant part: An employee who resides in a HUBZone at the time of certification (or time of recertification where the individual is being treated as a HUBZone resident for the first time) shall continue to count as a HUBZone resident employee if the individual continues to live in the HUBZone for at least 180 days immediately after certification (or recertification) and remains an employee of the concern, even if the employee subsequently moves to a location that is not in a HUBZone or the area in which the employee’s residence is located no longer qualifies as a HUBZone. When it adopted the revised definition, SBA explained that as employees experience increased financial success, they tend to move out of HUBZones. SBA did not want to essentially penalize success by revoking HUBZone certification when a company’s previous HUBZone residents moved out of HUBZones. That makes sense, but as the SBA OIG says, it absolutely is true that the revised definition means that a company can be HUBZone-certified even if none of its employees live in a HUBZone, or have lived in one for years. For example, consider a company with five employees, two of whom live in HUBZones. This arrangement meets the HUBZone Program criteria (40% of employees live in HUBZones, exceeding the 35% mark). Based on this, the company becomes HUBZone-certified. Seven months later, both HUBZone residents move to non-HUBZones. Under the expanded definition, the company remains HUBZone-eligible indefinitely, even though none of its employees now live in HUBZones. In its new report, SBA OIG says: In 2020, SBA changed a HUBZone requirement, allowing certified businesses to have employees who are not current HUBZone residents. Under the new requirements, the business continues to meet the requirement as long as it has employees who lived in a HUBZone for at least 180 days after the business was first certified. HUBZone businesses could have no employees residing in the HUBZone at all and still qualify because employees initially hired as HUBZone residents moved out of the HUBZone after the 180-day period. The requirements of the rule are clearly inconsistent with legislative intent. Later in the report, SBA OIG adds: The new HUBZone employee residency requirement may reduce the program’s ability to meet legislative intent. Allowing certified businesses to count employees who are not current HUBZone residents does not ensure continual employment of individuals who live in distressed areas. We question if the full economic benefits of the HUBZone program will be realized in these areas. SBA OIG’s position doesn’t seem to have swayed SBA, which remains committed to the expanded definition. HUBZone-certified firms relying on the expanded definition, however, should tread carefully. Not only could SBA OIG’s continued objections catch Congress’s eye, but the issue could someday end up in federal court. For instance, an unsuccessful offeror on a HUBZone set-aside contract might file a lawsuit alleging that the winning bidder’s reliance on the expanded definition is contrary to law. In such a case, the fact that SBA OIG agrees with the protester may be persuasive. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA OIG Again Challenges SBA’s Revised Definition of a HUBZone Employee first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

This workshop will focus on teaming agreements and subcontracts which can be essential to winning and successfully performing federal government contracts. Greg Weber and I will explain how to develop, negotiate and administer agreements that are both compliant and effective for both small and large contractors. The presentations will cover both the key rules (such as flow-downs and ostensible subcontractor affiliation) and best practices for agreements that go beyond the bare minimum legal requirements. Please join us! Register here. The post Event: Teaming Agreements & Subcontracts Workshop hosted by The Catalyst Center for Business & Entrepreneurship, November 16, 2023, 3:00-5:00pm CST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article