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It’s Friday, and that means its time for another round of SmallGovCon updates as you ease on into your weekend. I’m excited to be heading to Norman, Oklahoma next week for the ICBS 2022 show. I’ll be speaking about local opportunities related to the Infrastructure Act. Hope to see you there! https://www.icbsshow.com/. Have a great one and enjoy these last few weekends of summer! Multiyear Procurement: Navy Should Provide Congress More Complete Information on Budget Request Decisions [GAO]Capitol Hill is anything but slow this summer season [FedNewsNet]Pentagon advisers want DoD to build out agreements between small and large defense businesses [FedNewsNet]GSA Events [GSA]VA set to grow its health care workforce with new pay incentives after Biden signs PACT Act [FedNewsNet]How the Navy deals with all that data; State of cloud acquisition in government [FedScoop]5 things every first-time bidder for federal contracts should know [FedTimes]GSA extends Polaris GWAC due date again [Sam]Veterans Affairs makes a single front door for contractors and would-be innovators [FedNewsNet]Does the government need a FOIA enforcer? [FedNewsNet]Representatives are Too Invested in Defense Contractors [POGO] The post SmallGovCon Week in Review: August 8-12, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

This is a the second article of two taking you back to the basics of affiliation. The first, giving you a general overview of affiliation, can be found here. This follow-on article goes through the different bases for affiliation, as set forth in SBA’s affiliation regulations. Keep in mind though, this is still affiliation “basics” and does not go into a detailed analysis of each type of affiliation, as that would be a novel–not a blog. 1. Common ownership. Common ownership affiliation arises when two companies have shared ownership. Specifically, it arises when one company owns or controls, or has the power to control, 50% or more of another company’s voting stock, or a block of voting stock which is large compared to other outstanding blocks of voting stock. For example, if one individual owns the majority share in two companies, those companies are affiliated on this basis. But it is important to note, majority ownership is not always necessary under this rule. For example, if a company has five owners–three with 25% each of the voting stock, one with 15%, and one with 10%–the three 25% owners will each be presumed to control the company because their minority holdings are large, compared with any other stock holding. Additionally, SBA can find that a minority owner controls a company if she or he has “negative control,” or the abiliity to block ordinary actions essential to operating the company–and that entity will be affiliated with other firms the minority owner has control over. 2. Stock options, convertible securities, and agreements to merge. Affiliation may also arise under stock options, convertible securities, and agreements to merge. Basically, the SBA will treat these types of agreements as though they are already effective, the so-called “present effect” rule. So, for example, when a company agrees to merge with another company, SBA will consider the merger as already having happened. Now, the SBA’s OHA has said it will not apply this present effect rule if the agreement (1) is subject to a condition precedent that is “unusual, incapable of fulfillment, speculative, or conjectural,” or (2) there is a low probability that the transaction would be effectuated, or the rights exercised. 3. Common management. Affiliation based on common management may arise when two firms share management. Specifically, it arises “where one or more officers, directors, managing members, or partners who control the board of directors and/or management of one concern also control the board of directors or management of one or more other concerns.” According to SBA’s OHA, this “control” does not “require that individual manager(s) exercise total control of a concern, just that they possess critical influence or the ability to exercise substantive control over a concern’s operations.” Keep in mind, this is a different basis that common ownership and does not require majority ownership. For example, if two companies have the same president, those companies may be affiliates, regardless of whether the president is the majority owner of either company. 4. Identity of interest. Affiliation based on identity of interest arises when two companies “have identical or substantially identical business or economic interests (such as family members, individuals or firms with common investments, or firms that are economically dependent through contractual or other relationships)[,]” and such companies “may be treated as one party with such interests aggregated.” Under this rule, there are three types of identity of interest affiliation: familial relationships, common investments, and economic dependence. Familial Affiliation is presumed where firms are owned or controlled by spouses, parents, children, and siblings, and those firms conduct business with each other. Common investment affiliation may be presumed where SBA finds that enough common business interests cause the parties to act in unison for their common benefit (but the rules don’t elaborate on how many common interests that is). And economic dependence affiliation is presumed “if the concern in question derived 70% or more of its receipts from another concern over the previous three fiscal years.” Importantly, this basis for affiliation (including each of its sub-bases) does not automatically lead to affiliation. It leads to a presumption of affiliation which may be rebutted by showing that the companies’ interests are in fact separate. 5. Newly-organized concern. Affiliation under the newly-organized-concern rule is used by SBA to prevent the use of “spin-off firms” posing as small, independent firms, which are really large firms’ affiliates. It requires four factors: (1) former officers, directors, principal stockholders, managing members, or key employees of one company organize a new company; (2) the new company and old company are in the same or related industry or field of operation; (3) the former officers, etc. serve as officers, directors, principal stockholders, managing members or key employees of the new company; and (4) the old company provides assistance to the new company in the form of contracts, financial assistance, technical assistance, facilities and so on. 6. Joint ventures and ostensible subcontractor. This affiliation rule explains, subject to exceptions for joint ventures meeting certain SBA requirements, the members of a joint venture are affiliated when the two companies form the joint venture for the purposes of seeking a contract; but, they are affiliated for the purposes of that contract alone. It also provides that a prime contractor may be affiliated with its subcontractor for purposes of the procurement at issue if the subcontractor will perform the primary and vital portions of the work and/or the prime contractor is unusually reliant upon the subcontractor, which is called the “ostensible subcontractor rule.” And a prime contractor and its ostensible subcontractor are treated as joint venturers in determining their size for a particular contract. 7. Franchise and license agreements. A franchise or license agreement will only result in affiliation based on the restraints in the agreement, or other means, such as common ownership or management. The franchise may place restraints on the franchisee or licensee related to standardized quality, advertising, accounting format and other similar provisions, but excessive restrictions upon the sale of the franchise interest may result in affiliation. 8. Totality of the circumstances. Great! We made it through the list! If you are a small contractor trying to avoid affiliation and you got through all of those grounds for affiliation without a scratch, you are good, right? Eh, not quite yet. SBA’s affiliation regulations add in a fun little catch-all. They say, “In 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.” Under this totality of the circumstances affiliation, SBA will simply decide if it finds two companies’ interactions to be so suggestive of reliance that affiliation can be found. And if so, it won’t matter how many “no” boxes for affiliation your companies’ already checked. * * * This is an extremely surface-level swim through the various grounds of affiliation in SBA’s rules. Affiliation is a highly-complex and ever-evolving concept in small business government contracting. So, don’t be afraid to reach out for help in analyzing potential affiliation for your company. Questions about affiliation? Or need help with another government contracting legal issue? 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 Back to Basics: Types of Affiliation first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers. We hope you had a great week. Shane McCall, our usual Week in Review contributor, is enjoying a much deserved vacation with this family and I have the delightful privilege of filling in for him. Can you believe it’s August already and school will soon be starting? The Summer is flying right by! Here are some highlights in federal government contracting this week. Enjoy and have a great weekend! Moderna to Supply New COVID-19 Vaccine Booster Under $1.74B Contract With US Government [GovConWire]The state of governmentwide contracting [FedNewsNet]Senate passes bill to root out conflicts of interest in federal contracting [FCW]Industry Needs to Speak Up About Contracting Rules: Larry Allen [BGov]Lawmakers push Biden for an order to root out dark money from federal contractors [FCW]Pentagon Releases Inflation Guidance to Industry [NatDefMag]SA to set baseline requirements for cloud providers through Ascend [FedScoop]GSA expanding use of COMET blanket purchase agreement: CIO Shive [FedScoop]US Department of Labor, Esri Agree to Resolve Alleged Pay Discrimination at California Headquarters; Company to Pay $2.3M to 176 Female Workers [DoL]Monmouth County Company Agrees to $7.6 Million Judgment for Violating False Claims Act; Owners and Related Company to Pay $375,000 [DoJ]US Department of Labor Finds Honolulu Contractor Failed to Pay Correct Wages, Fringe Benefits to 46 Employees on Federally Funded Projects [DoL]Cross-agency group explores where government should go next with identity verification [FCW] The post SmallGovCon Week in Review: August 1-5, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Back in April 2022, we looked at how data rights are handled by the Department of Defense in the DFARS (Defense Acquisition Regulation Systems), and prior to that, we explored many of the regulations regarding data rights and similar intellectual property. This is all well and good, but many of you probably wonder what this might look like when it is applied in the real world. For this, we turn to a recent case in front of the Court of Federal Claims (COFC) involving Raytheon concerning what exactly is “technical data.” Since 2009, the United States Army and Raytheon have been in a series of contracts with each other in which Raytheon helped engineer the Patriot weapons system. Each one of these contracts expressly incorporated DFARS 252.227-7013, “Rights in Technical Data,” as well as another DFARS clause, DFARS 252.227-7037, “Validation of Restrictive Markings on Technical Data.” We discussed the former in that April 2022 post. As for the latter clause, it provides for how contracting officers verify that a contractor’s use of restrictive markings to protect its rights in data is justified. One of Raytheon’s contracts was modified to include an item requiring Raytheon to provide “vendor lists” to the Army in one of the Contract Data Requirement List (“CDRL”) items. It is worth noting that according to DoD protocol, when drafting a CDRL, a contracting agency may reduce the scope of information that is required for data acquisition but may not add to the scope. In this case, the item in question was a form, DI-MGMT-80894, which stated that the reason for the requirement of the vendor lists was “to identify a complete listing of all sources used … in procuring any subcontracted item,” and to provide “a means for the government to track parts selection, qualification, and identification of parts.” The vendor lists were to include the part number of components purchased, the manufacturer’s name and address, the supplier’s CAGE code, whether the part was specification controlled, and whether the part was source controlled. This information was to come from contractor invoices and orders, not existing government documentation. Raytheon did provide vendor lists. However, the first two it provided bore restrictive markings that did not comply with the requirements for restrictive markings on technical data. Raytheon maintained the position that the information in the vendor lists was not “technical data” under DFARS 252.227-7013, and so were not subject to that clause or related regulations. Raytheon claimed that the vendor lists were “management” data. The Army rejected this characterization, stating that the data was technical data. Eventually, this dispute wound up in the COFC. The COFC, of course, first looked specifically to the language of DFARS 252.227-7013 for the definition of “technical data.” The clause provides that “[t]echnical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.” This definition unfortunately did not define what information is of a technical nature. Quoting a Federal Circuit case, the COFC observed, “[w]hen terms [in a regulation] are undefined, the court may consider the [dictionary] definitions of those terms in order to determine their meaning.” The dictionary, in turn, defined “technical” to mean “of or pertaining to the mechanical arts and applied sciences generally.” The information in the vendor lists was comprised of names of companies, addresses, and various identification numbers and codes. The COFC concluded this information was not of a technical nature. For one, the court noted, “the vendor lists are just what their name implies—lists of the vendors from which Raytheon purchased parts used in the missile system.” Additionally, “the lists do not include information about the technical aspects of the parts Raytheon purchased. They do not, for example, reveal the physical, functional, or performance requirements of the components listed.” Nor did the lists include any information on the design, manufacture, or assembly of the parts, the COFC remarked. In fact, there were parts not even on the lists at all due to lack of recent purchase history. None of the information on the lists was derived from technical sources or prepared by technical experts either. Although the government made a last-ditch effort by arguing the information was technical as it would be used by persons with technical expertise to accomplish technical tasks, the COFC rejected this as unpersuasive. The COFC also looked at the DI-MGMT-80894 form to determine whether the information was technical in nature but found it irrelevant to the analysis. The language was part of the contract, but it did not impose an obligation on the Army to limit the use of the lists to identifying “a complete listing of all sources used … in procuring any subcontracted item” and providing “a means for the government to track parts selection, qualification, and identification of parts.” After considering prior regulations which gave a description of technical data as “research and engineering data, engineering drawings and associated lists, specifications, standards, process sheets, manuals, technical reports, catalog item identifications” and the objectives of the DFARS rules on technical data, the COFC sided with Raytheon. This case provides, in addition to a little clarity on what is “technical data,” keen insight on the fact-specific nature of these intellectual property matters. The contractor should notice how easily these cases can turn on the smallest things, and so pay extra attention to intellectual property issues when entering agreements with the federal government. If you are uncertain what rights might apply to your intellectual property, do not simply roll the dice in the hopes that it will work out. Talk with an attorney that specializes in either intellectual property, government contracts, or both to see what is best for you. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post DFARS Data Rights Provisions in Action first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA recently released the Government Wide Small Business Procurement Scorecard for fiscal year 2021. This annual scorecard details information on the various categories of small businesses recognized by the SBA, including whether SBA met its goals related to small business federal contractors. Specifically, the scorecard is used to assess “how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals,” to “provide accurate and transparent contracting data,” and “report agency-specific progress.” SBA met or exceeded its goals in the majority of categories despite the fact that the overall number of small businesses decreased. Below, we take a look at the process, the numbers, and discuss which groups are, and which are not, receiving the greatest benefits. Read more First, a little background on the scorecard (just in case this is your first time hearing about this). Congress sets annual goals for federal agencies to meet when awarding contracts and subcontracts to small businesses. These goals include governmentwide goals, as well as agency specific goals, which are determined pursuant to 15 U.S.C. § 644(g). To determine these goals, each included agency submits proposed goals based on SBA’s review of agency year-to-date performance prior to the beginning of the fiscal year. SBA then evaluates each agency’s proposal, and either notifies the agency that its proposal is acceptable, or negotiates with the agency to reach a goal that is acceptable. In total, there are 24 agencies total. You can find a list of all included agencies as well as more detailed information on how the process works here. Following each fiscal year, SBA reviews information from the various agencies to determine whether goals were met and assigns each agency a “grade” based on how well it performed. So, where were the most federal contracting dollars spent? Overall, there was $154.2 billion directed toward small business Prime Contractors in general. This represented 27.23% of total federal contracting dollars spent and exceeded its goal of 23%. The largest sub-category was small disadvantaged businesses, including those in the 8(a) Program, which received $62.4 billion, or 11.01% of all federal contracting dollars. That is over twice as much as its 5% goal for the year. Service Disabled Veteran Owned small businesses (SDVOSB) also exceeded its 3% goal for the year with $25 billion, or 4.41% of all federal contracting dollars. Unfortunately, women owned small businesses (WOSB) and HUBZone businesses, in what appears to be a trend throughout the last decade, fell short of their goals. WOSB’s goal for fiscal year 2021 came in at $26.2 billion, or 4.63%, while its goal had been 5%. This means that agencies, as a whole, did not reach their WOSB goal for the ninth time in the past decade. However, WOSB performance is marginally better than HUBZone business’s, which came in at $14.3 billion, or 2.53% in fiscal year 2021. This means the 3% goal for HUBZone contracts has not been met a single time in the past ten years. Additionally, the overall number of small businesses decreased 5.85% from 2020. The category with the largest decrease was, once again, WOSB, with a 6.8% decrease. Despite HUBZone receiving the smallest percentage of small business contracting dollars, it was the category with the largest gain in terms of prime contractors, with 3.8% growth from 2020 to 2021. The agency-specific score cards show that overall agency performance is strong and that agencies are overall performing better than in the 2020 fiscal year. While not specifically mentioned in the scorecards, this increase could be due to both agencies and contractors adjusting to changes brought on by Covid-19. Nonetheless, there are a few agencies that fall short. The Department of Health and Human Services and the Department of Treasury were both assigned a “B”, but the worst offender is the Department of Housing and Urban Development (HUD) which received a “C”. This makes the second year in a row that HUD was the lowest-rated agency. Taken as a whole, more agencies met their goals in the 2021 fiscal year than in 2020, even though the number of contracts being awarded to small businesses generally decreased. More federal contracting dollars were directed towards small businesses as well. Nonetheless, there is still work that needs to be done to increase the number of contracts being awarded to both WOSBs and HUBZones if they are going to meet their goals. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Issues 2021 Small Business Scorecard, Small Businesses Contracting Over $154 Billion! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We’ve been enjoying summer out here in Lawrence and many of our SmallGovCon professionals are taking a little time to themselves for summer vacation. We hope our readers are able to do the same thing! Whether you’re getting back from a vacation or working regular hours, here’s our weekly roundup of news from the federal government contracting to keep you updated on what’s been happening lately. This week in the federal government contracting world, there is some interesting news, including the small business procurement scorecard from the SBA, which exceeded its contracting goal and the White House announced initiatives to ensure equity in federal procurement. Enjoy the weekend! Biden-Harris Administration Awards Record-Breaking $154.2 Billion in Contracting to Small Businesses [PRNewsWire]Small business contract awards hit record $154B [FCW]How the Pentagon is messing up a crucial contract finance study three years in the making [FedNewsNet]GSA Hires New Climate Adviser, Names Permanent Strategic Communications Chief [POC]CISA Official Warns Smaller Critical Infrastructure Companies of Cyber Threats [POC]After a 5-year wait, VA gets a new top medical leader [FedTimes]HUBZone awards keep missing federal contract goals a quarter-century after creation [FedTimes]House advances some key agency spending provisions for 2023 [FedNewsNet]US Department of Labor Finds Virginia Tech, Engineering Contractor Underpaid 63 Workers $268K in Pay, Benefits on Government-Funded Project [DoL]Tampa Man Arrested For Fraudulently Using Federal GSA Smartpay Account Numbers [DoJ]Small business procurement scorecard overview [SBA]Department of Defense Small Business Subcontracting Requirements [DoD]Bill to streamline federal agency tech acquisition introduced in Senate [FedScoop]SBA: Federal Agencies Awarded 27% of Fiscal 2021 Contracting Dollars to Small Businesses [ExecBiz]White House Announces Initiatives to Ensure Equity in Federal Procurement [ExecGov] The post SmallGovCon Week in Review: July 25-29, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA has issued a final rule that should help small businesses demonstrate their past performance more easily. Perhaps most importantly, the rule will allow for a small business to receive a written performance record, similar to CPARS, showing its performance as a subcontractor to a large business prime. The new rule will also allow a small business to better utilize its past performance that it carried out as a member of a joint venture. Both of these new rules are rooted in the 2021 National Defense Authorization Act. The final rule will be effective August 22, 2022 and will create a new section 13 CFR 125.11. Here are some of the key aspects of these new rules and how SBA responded to comments on the proposed rule. Subcontractor Past Performance The rule will allow small businesses to more easily utilize its past performance as a subcontractor to large business prime contractors. The main aspects of the new subcontractor past performance procedure are: A small business can request and obtain a past performance rating where the small business performed as a first-tier subcontractor on a large business prime contract that included a subcontracting plan. The subcontractor must request the rating “30 calendar days after completion of the period of performance for the prime contractor’s contract with the government.” So, small businesses must not wait to request these performance reviews. It may be good to simply include that request as part of a subcontract, rather than having to make a separate request for each performance period.A prime contractor is required to provide a rating of the small business past performance within 15 calendar days of the request. The small business can then submit the rating report to an agency, and an agency must consider that past performance rating when evaluating the small business’ offer on a prime contract. There is no timeliness restriction on using past performance, although that had been in the proposed rule. This means, if a solicitation allows it, a small business past performance has no expiration date. Some commenters were concerned about enforcement if the prime contractor does not provide a rating. To this, SBA pointed to the various penalties built in to the subcontracting plan regulation, including termination for default; a lower past performance rating; liquidated damages; and even debarment if the failure is willful or repeated. However, SBA also added to the rule that “that subcontractors should notify the contracting officer in the event that the prime contractor fails to submit the requested rating within the rule’s prescribed timeframe.” As far as the rating format itself, it must follow the the CPARS evaluation factors and include the the five-scale rating system at FAR 42.1503(b)(4): Exceptional, Very Good, Satisfactory, Marginal, and Unsatisfactory. Some commenters asked about rebuttal of the prime contractor’s rating–but the rule doesn’t provide one. SBA noted: “This final rule does not adopt a rebuttal procedure as none is provided or required by the statute. However, subcontractors may be able to negotiate a rebuttal procedure as part of their subcontract.” While it’s not stated in the regulation, “SBA believes that, in most cases, the subcontractor past performance rating should be treated as equivalent to a prime’s past performance rating.” Finally, a small business member of a joint venture that was a subcontractor to a large prime could also request a past performance rating from the prime contractor for a contract for which the joint venture served as a subcontractor if the prime contract included a subcontracting plan. This rule should provide an additional avenue to smooth the way for small businesses to enhance their past performance record, and be evaluated for that past performance, even where the small business served as a subcontractor. Joint Ventures The new rule will enhance past performance ratings where a small business performed as part of a joint venture. It creates a new requirement to address the circumstance upon which an agency is required to consider past performance of small businesses that have been members of certain joint venture or first-tier subcontractors. Here are the key components: To receive past performance credit, a small business must: (a) identify the joint venture (b) list the contracts of the joint venture the small business wants to use; and (c) tell the agency what duties and responsibilities the company performed within the joint venture. No credit is given for work the small business did not perform.An agency must “consider the past performance of the joint venture when evaluating the past performance of the small business concern, giving due consideration to the information submitted about the duties and responsibilities that the small business carried out.” The SBA provides a helpful example for how this could work in a solicitation: For example, a solicitation might require three past performance examples. This final rule authorizes the small business offeror to submit two examples from performance in its own name and one example from performance of a joint venture of which it was a member if the small business cannot independently provide the third example of past performance on its own. This final rule provides that the joint venture’s past performance may supplement the relevant past performance of the small business when the small business cannot independently demonstrate the past performance on its own. Note that the agency must simply “consider” the past performance example. It doesn’t guaranty that the past performance example will be evaluated positively or result in a high past performance score. But at minimum an agency cannot ignore the joint venture past performance example, provided all the data points are submitted to an agency. This rule will make it easier for a small business to utilize joint venture past performance as part of its evaluation for a particular solicitation. It’s nice to see these rules come out that will help small businesses utilize their past performance from various arrangements. Good on Congress and SBA for implementing these new rules. Questions about this post? Email us. Need legal assistance with a government contracting legal issue? 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 FAR Final Rule Eases Use of Small Business Joint Venture and Subcontractor Past Performance first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The Office of Hearings and Appeals, more commonly referred to as OHA, is tasked with deciding size determination appeals that arise under the Small Business Act of 1958, as well as 13 C.F.R. parts 121 and 134. When an unsuccessful offeror raises a question, via a size protest, regarding an Awardee’s size under the North American Industry Classification System (NAICS) code on any given solicitation, the SBA Area Office will review the protest and issue a size determination. Then, a losing party can appeal the size determination to OHA. Affiliation is a common topic that OHA addresses. In a recent decision, OHA looked at the question of how nonprofits fit into the affiliation rules. Since a small business has to be a for-profit entity, can a small business be affiliated with a nonprofit parent company? In a recent size appeal, the unsuccessful offeror ACS Ventures raised an issue with ACTFL Professional Services’ (the Awardee) size due to its affiliation with what ACS Ventures deemed a nonprofit parent company. ACS Ventures, LLC, SBA No. SIZ-6160, 2022 (June 21, 2022). According to ACS Ventures, the non-profit parent company “control[led] the activities of [Awardee] and [Awardee] benefit[ted] from the pass-through taxation for income.” Additionally, [ACS Ventures] claimed that the non-profit parent company, as the owner of Awardee, held Awardee’s assets and directed its activities.” ACS Ventures also claimed that Awardee was a disregarded entity per IRS standards, and as such, Awardee’s “income is not subject to unrelated business income tax.” For the above reasons, ACS Ventures claimed that the Awardee is actually the non-profit parent company, and that the award conflicts with SBA’s intent to award the contract as a 100% small business set-aside. OHA dismissed the initial protest due to the unsuccessful offeror’s alleged untimely protest submission, which then led to the Appeal, but we will come back to the timeliness issue in a moment. On appeal, ACS Ventures again asserted that Awardee was affiliated with the non-profit parent company. Further, ACS Ventures claimed that the parent company’s non-profit status rendered Awardee ineligible for award per 13 C.F.R. 121.105(a)(1), which requires that a small business concern must be “organized for profit” in order to be eligible for SBA assistance. Finally, ACS Ventures claimed that Awardee’s relationship with its non-profit parent company gave it an unfair advantage when competing with other for-profit concerns. Despite ACS Ventures’ claims, OHA precedent holds that “mere affiliation with a non-profit organization does not render a small business ineligible for small business set-aside contracts.” Accordingly, Awardee’s affiliation with the non-profit parent company did not make Awardee an “other than small” business and did not, in turn, make Awardee ineligible for award. So, what this means is that, in order to be an eligible small business, a company must be organized for profit. A nonprofit business does not qualify as a small business under SBA’s rules. But the parent company of small business can be a nonprofit company. What matters is whether the actual government contractor representing itself as a small business is organized for profit, not its parent company. Remember that initial dismissal? In the appeal, OHA reiterated that the size protest was untimely because a size protest in a negotiated procurement must be received by the Contracting Officer no later than close of business on the fifth day following notice of award. 13 C.F.R. 121.1004(a)(2). Appellant claimed that the email was, in and of itself, the protest in an attempt to overcome the strict filing deadline. However, OHA disagreed with Appellant’s claim that the email was the protest, stating that it did not contain the specificity required by 13 C.F.R. § 121.1007(b), meaning Appellant’s email did not “provide a reasonable notice of the grounds upon which the protested concern’s size is challenged.” In summary, a small business can have a nonprofit subsidiary, as long as the contractor itself is organized for profit. Protesters should be sure to include specific facts to support the allegations on which they are protesting. An email expressing intent to file a protest is not sufficient. For a deeper dive into the relationship between non-profit companies that are affiliated with other for-profit small businesses, check out this blog. Questions about this post? Email us. Need legal assistance with a government contracting issue? Call 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 Nonprofit Parent Companies do not Automatically Cause Affiliation for SBA Size Determinations first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! I hope you are all staying cool. It seems the whole country is under a heat advisory and we are not the exception here at SmallGovCon, with temperatures hovering around 100 degrees. Whew…who’s ready for Fall? There was a lot of news in the federal government contracting world this week and we’ve included some articles that we hope you will find informative. Have a great weekend and enjoy the AC or a cool pool to lounge in. US senators push for stronger conflict of interest rules for federal contractors [Consulting]HUBZone awards keep missing federal contract goals a quarter-century after creation [FedTimes]3 Government Tech Trends Shaping The Federal Market [GovConWire]DLA’s case for small business waiver [FedNewsNet]Federal Research Centers: Revising DOD Oversight Policy Could Assure Access to Performance and Effectiveness Information [GAO]Priority recommendations to OPM; White House contracting goals; CMMC questions remain for DIB [FedScoop]Senate leader Schumer met with Microsoft President Brad Smith to discuss tech antitrust bills [Fedscoop]Senate wants tighter cyber-electronic warfare integration, clarity on organizations for cyber ops [FedScoop]EEOC: Women still lag far behind men in the government’s STEM workforce [FCW]Bipartisan group seeks to limit who federal agencies can contract with [FCW]SBA Announces Funding Opportunity to Provide Entrepreneurship Training to Service-Disabled Veterans [SBA]Five LinkedIn Actions for Business Development: Mark Amtower [BGov]GSA Tells Bidders to Expect Last Two Polaris Pools in September [BLaw]For small businesses, crisis presents opportunity: Louis DeCuzzi [Cleveland] The post SmallGovCon Week in Review: July 18-22, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Once again, the incumbent service worker rule has had its pendulum swing back to the hiring of incumbent workers, reflecting a “general policy of the Federal Government that service contracts which succeed contracts for the same or similar services, and solicitations for such contracts, shall include a non-displacement clause.” This proposed rule would insert a contract clause requiring contractors who are awarded a service contract with an incumbent on it, to offer employment to the incumbent contractor employees, for performance of the contract. This is of course quite the shift from current regulations, but it also places many new contract compliance requirements on contractors awarded a new contract as they try and stand up performance. As you may recall, this rule is not new and in 2020, this rule was actually repealed. We blogged about the repeal here at SmallGovCon. Since then, President Biden has issued an Executive Order to reimplement the rule, and on July 15, 2022, a proposed rule was released to follow through on the aims of President Biden’s Executive Order. This proposed rule will generally require that federal contracts include a “non-displacement clause [that] requires the contractor and its subcontractors to offer qualified employees employed under the predecessor contract a right of first refusal of employment under the successor contract.” Comments on this rule closes August 15, 2022. We of course highly encourage contractors to read this proposed rule as it will impact contractors who are awarded contracts with incumbents, and if necessary, submit your comments to the proposed rule. However, we will still review some of the highlights of the proposed rule here. Key Provisions This proposed rule will be reflected in Subpart 9 of the Federal Acquisition Regulations. According to the Department of Labor, this proposed rule reinforces President Biden’s Executive Order aims, stating that a “carryover workforce minimizes disruption in the delivery of services during a period of transition” and “provides the Federal Government the benefit of an experienced and well-trained workforce that is familiar with the Federal Government’s personnel, facilities, and requirements.” To achieve this, the propose rule will require contracts to include a “non-displacement clause” and as previously mentioned, contractors who are awarded a contract with that clause present and an incumbent currently performing, must give the incumbent prime contractor employees right of first refusal to “suitable employment under the contract”. This requirement would be applicable to any contract over the simplified acquisition threshold, and in which performance calls for the “same or similar” work to what the incumbent contractor is currently performing. When determining if something is “same or similar” the proposed rule states it would be a fact specific determination, but provided the following examples: A contract for food service at a location that was previously a food service location with similar job descriptions would be “same or similar work”, but having a contract for dry cleaning services at a location that used to be a food service location is not “same or similar work”. So, it appears it would first be quite obvious, but may depend on if certain requirements of performance were changed. Under this rule, a contractor generally cannot fill any open positions until offering bona fide employment opportunities to incumbent contractor employees who are qualified for the positions offered, and would have their positions terminated by the awarding of a new contract. It does not have to be for the same job title, or pay, so long as it is for a job the employee is qualified, and the offer is not so low or made in a way that would discourage the employee from accepting the offer. The offer also needs to be more than an invitation to apply for a job. It must be a legitimate job offer, and the terms of the offer must be in a language for each employee to understand. Note, this rule doesn’t apply to certain types of management employees, as it “does not extend to contracts for services to be performed exclusively by persons who are not service employees, i.e., persons who qualify as bona fide executive, administrative, or professional employees as defined in the Fair Labor Standards Act’s (FLSA) regulations at 29 CFR part 541.” It is expected that there would be a certified list of employees of the incumbent who are currently performing the contract given to the new awardee contractor, but this is not the only way for contractors to determine if someone was an employee of the incumbent and thus meets the requirements of the proposed rule. A contractor can also accept other, “reliable evidence of an employee’s entitlement to a job offer”, such as a paystub. Once proven as employees of the incumbent, these employees may be offered jobs, in pursuance of this proposed rule. Once the offer of employment is given to the incumbent contractor’s employee, the new contractor can explicitly require the employee respond to the offer of employment in a certain amount of days, but cannot have the deadline for response be less than ten days. The new contractor must continue to offer employment to the incumbent contractor’s employees until they have all rejected or accepted the offers. Also, If someone quits a position under the new contractor within ninety days of the start of performance, the open position must be offered to an incumbent prior to offering it to someone else. This rule does tie in to small business affiliation principles. Under SBA precedent, where this incumbent worker rule is in effect, “the hiring of incumbent non-managerial personnel cannot be considered strong evidence of unusual reliance” because FAR 52.222-17 “specifically encourages contractors to offer a right of first refusal to qualified incumbent non-managerial employees.” Human Learning Servs., SBA No. SIZ-5785 (2016). When this rule is not in effect, hiring all of the incumbent’s employees may show over reliance on an incumbent subcontractor. But when the incumbent worker rule is in effect, hiring those same service employees does not indicate reliance. While this proposed rule doesn’t represent a new concept in the world of federal contracting, it does present contractors with many requirements for employees that they currently do not face, as the rule was repealed in 2020. It is important to remember that this is a proposed rule, so there is still room for comments and changes based on any comments submitted. After this proposed rule receives comments, the rule will be published again with the answers to public comments and explanation of any changes. That publication should give contractors more context as to the proposed changes and implementation of the rule. Therefore, contractors should keep their eyes on the federal register for any updates, submit comments to the rule if they feel it is necessary, and of course, we here at SmallGovCon will continue to keep an eye on how this rule progresses, with updates posted here as needed. Questions about this post? Or need help with a government contracting legal issue? 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 FAR Proposed Rule: Incumbent Service Workers Need to be Hired first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Affiliation is quite possibly one of the scariest words to small business government contractors. And it is easily one of the most misunderstood concepts in SBA’s small business regulations. Perhaps the widespread fear and misunderstanding are due to the fact that there are so many potential bases for affiliation listed in SBA’s rules–or the fact that you can be found affiliated with another company even if SBA finds that none of the listed bases for affiliation are met. Or maybe its the fact that, while affiliation isn’t always a bad thing, it can lead to severe consequences, like preventing an otherwise responsible and eligible business from competing under set-asides contracts. Either way, this “Back to Basics” blog will be the first of two blogs that will “unpack” this concept for you, hopefully, removing some of the mystery. This first blog will provide a general overview of affiliation and what it means for government contractors, while the second blog will focus on the different types of affiliation. What is affiliation? Affiliation is, at its most basic, a determination that one business can control another, or that a third party controls both. According to SBA’s rules, policies, and case law, one thing is very clear: control is the most important concept in the field of affiliation. But it is not just “actual control” that can raise control concerns in an affiliation analysis. As SBA’s rules state: 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. It is often this concept of the “power to control,” which includes what we like to call “negative control,” that seems to trip people up. In contrast, if one business is controlling the day-to-day and long-term operations of another business, a finding of affiliation isn’t going to shock anyone. But situations where one business has a right to control certain aspects of another business, even if that control is never in fact exercised, can be just as problematic. For example, sometimes you will see a situation where one business (or an individual principal of that business) has a right to block a voting quorum of the shareholders or board of another business, or to veto certain decisions (sometimes as a part of financing or equity purchase agreements). We won’t get too far in the weeds on this one. The takeaway here is that even just the “power to control” is enough to find affiliation. The SBA may consider all aspects of the parties’ relationship (the totality of the circumstances, in legal-speak) to determine whether this control–or ability to control–exists. Though the second blog on this topic will go into more detail on the various basis for affiliation (including the totality of the circumstances term mentioned above), some of the most common reasons for finding affiliation are when firms share common ownership or management, one entity is basically a spin-off or is economically dependent on another, or a company is unusually reliant on another as its ostensible subcontractor. But, so what? Who cares if you have an affiliate? Let’s look at why it may (or may not) matter to you. How can affiliation make a small business large? To qualify as a small business for purposes of a government contract, a business has to be small under the size standard associated with the North American Industry Classification System (NAICS) code assigned to the solicitation. In addition to considering the firm’s own revenues or employee count, the SBA will add the size of any affiliates. So if your business’s size, together with that of any affiliates, exceeds the applicable size standard, your business won’t be eligible for the award. And unfortunately, this won’t only prevent your business from bidding on small business set-asides, but also on any 8(a) Program, WOSB/EDWOSB, SDVOSB/VOSB, and HUBZone set-asides for which your size, plus your affiliate(s), would be considered large. So your next question may logically be: “How does the SBA find out whether or not you have affiliates?” Well there are a few ways, which often begin with the award of a small business (or other set-aside) contract. We will talk about some of those now. Who can challenge an awardee’s size? The SBA may determine affiliation in a variety of contexts. But an affiliation analysis often arises due to a formal size protest. After your business is named the awardee under a set-aside solicitation, another bidder (or even the contracting officer themselves) may file a protest questioning your company’s size. If so, and if the protest satisfies certain jurisdictional prerequisites, it will be up to you to show that affiliation doesn’t exist (if it truly doesn’t). This is typically done by providing SBA with the requested organizational documents and information, information on owners and managers, financials, agreements, etc., as well as by arguing your case to the SBA that the affiliation factors and/or the required control are not present in your case. If your business’s size is successfully protested in connection with a set-aside solicitation, you won’t be eligible to receive the award. If the contract has already been awarded, it will likely be rescinded or terminated. Additionally, if you are found “generally affiliated” with your affiliate (we will discuss this in the next blog), you could be ineligible for all other set-aside work under the same (or a lower) size standard unless and until such affiliation is severed. Affiliation should therefore be taken very seriously. But the good news is, as I hint at above, affiliation does not have to be permanent. Can affiliation be fractured (or mitigated)? Indeed, affiliation should be a serious concern for every small government contractor. If you’re concerned that your small business might be affiliated with another company, there are steps you can take to try to fracture that affiliation before you submit an offer on a small business solicitation. Doing so could help save a contract. Even if you are found generally affiliated with another business in a formal size investigation, while you are almost certainly out of luck for that contract, you can also take steps to “sever” the affiliation for future work. Affiliation is a fluid concept. If SBA finds you affiliated with another business based on common management, for example, and you reorganize your company to remove the common manager’s title, role, and ability to exercise any control, you at least have a solid argument that the affiliation has been severed (though, it is obviously up to SBA in the end). Well, that sums up affiliation, very generally. But you might be wondering, are there exceptions to it/protections from it? And the answer is, yes. There are some limited exceptions /protections out there for certain types of affiliation, for example, for companies in mentor-protégé relationships, under some ANC and NHO rules, and (perhaps the most common) for joint ventures. Do joint ventures enjoy some protection from affiliation? Yes, but it is limited. Many of the small business owners I speak with operate under the belief that their business will be exempt from affiliation with its joint venture partner. This isn’t true—the members of a joint venture enjoy some special affiliation benefits, but not blanket immunity. Don’t let this same mistaken assumption jeopardize an award to your joint venture. Affiliation can make your small business large and, in doing so, jeopardize an award. If you have concerns and would like legal assistance about affiliation, please give us a call at 785-200-8919. Questions about this post? Or need help with a government contracting legal issue? 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 Back to Basics: Affiliation, An Overview first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello, Blog Readers! We hope you had a productive week. Here at SmallGovCon we have been geeking out to the new images from the James Webb Space Telescope. If you haven’t seen the spectacular images, we encourage you to do so! This photo was captured in infrared light and the image reveals for the first time previously invisible areas of the universe. “The Webb team’s incredible success is a reflection of what NASA does best. We take dreams and turn them into reality for the benefit of humanity. I can’t wait to see the discoveries that we uncover – the team is just getting started!”, stated NASA Administrator Bill Nelson. You can find more spectacular images from NASA here. Transitioning from universal news to federal government contacting news, we have included several articles for your reading pleasure including a report about the False Claims settlement for cybersecurity issues that stemmed from a five-year-old whistleblower lawsuit brought by a former employee of the company. Enjoy the weekend and stay cool out there! Aerojet Rocketdyne Agrees to Pay $9 Million to Resolve False Claims Act Allegations of Cybersecurity Violations in Federal Government Contracts [DoJ]Army Eyes RFP for Potential $8B Common Hardware Systems 6th Generation Contract [GovConWire]Defense contractor pays $9m to settle whistleblower’s cybersecurity allegations [The Reg]The House’s Defense Policy Bill Could Codify Contractor Minimum Wage [GovExec]White House updates acquisition, business of government priorities [FCW]Settlement shows False Claims Act is no silver bullet for cybersecurity compliance [SCMag]The Biden administration’s aggressive anti-trust approach includes federal contractors [FedNewsNet]Contractors Sound Off on Troubled DOD Integration Money Pot [BBLaw]Federal contractor to pay $9M to resolve cyber-related false claims case [FSW]Video Interview Series: GovCon Expert Jim McAleese On What 1Q Contractor Financial Results Mean for Investors & Businesses [GovConwire]PF 2022-36 Verification and Validation Delays prior to SAM registration [DoE]State raises potential EVOLVE IT contract ceiling to up to $10B [FedScoop] The post SmallGovCon Week in Review: July 11-15, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

While many industries have existed since time immemorial, new industries are created and old industries fade all the time. A mere twenty-five years ago, there was no such thing as social media and video rental stores were all the rage. Now the former is a multi-billion-dollar industry, and the latter is basically extinct. In recognition of the changes that we experience over time, 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. More importantly for contractors, this includes a change in size standards for businesses. In early July 2022, the SBA proposed a rule doing just that which would apply effective October 1, 2022, which we will explore in this post. The NAICS revision of 2022 created 111 new NAICS industries, although it’s worth noting that most of these aren’t “new” industries in the sense they are providing completely new kinds of products or services. Most of these new designations were created by splitting, merging, or otherwise modifying existing industry designations. For example, the industries of gold ore mining (former NAICS code 212221) and silver ore mining (former NAICS code 212222) have been combined into one industry, Gold Ore and Silver Ore Mining, with a new NAICS code of 212220. In general, the changes to the industry designations themselves mostly concern industries that rarely engage in federal contract work. Construction and engineering NAICS were not affected by the change, among others. Additionally, many of the changes are really just changes to the NAICS codes, without any real change to the underlying industry’s title or scope. For example, the industry of software publishers is no longer NAICS code 511210, but 513210. Worth noting when reviewing a solicitation to make sure that the right code is listed, but such a change in and of itself will have no substantive impact on contractors in that field. One major change, however, concerns electronically-based retailers (think Amazon and the like). For years, there have been industries in NAICS titled “Electronic Shopping and Mail-Order Houses” (Former NAICS code 454110) and “Other Direct Selling Establishments” (Former NAICS code 454390). This is no longer the case. In recognition of the ubiquity of e-commerce, solely online retailers are now being subsumed into the respective retail industries they specialize in. For example, if you had a website that provided sales of flowers and similar florist services, your business now simply falls under NAICS code 459310, Florists. This actually has tremendous implications for many companies. The old “Electronic Shopping and Mail-Order Houses” industry had a size standard of $41.5 million. Now, the size standard that applies to your company is the same as that for florists: $8.0 million. That’s a sudden reduction in applicable size standard of $33.5 million! If this rule passes, as we presume it will, this will have tremendous implications for online retailers of all kinds that have up to now been considered small by the SBA. While most, if not all, of the changes in this proposed rule will likely have little impact on the average federal contractor, there is an important lesson here: Do not disregard changes to NAICS codes as simply procedural or cosmetic changes. There are situations where you could find your size standard has shrunk or ballooned overnight with how these changes can work. Federal contracting is highly technical stuff, and a close eye to detail is essential for the federal contractor to stay in compliance with the rules. Questions about this post? 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 Don’t Ignore NAICS Code Changes: New Rule a Reminder to Contractors first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA’s Office of Hearing and Appeals (OHA) recently said that the SBA Area Office should have informed the protested concern of the issues its adverse size determination focused on before ruling against the concern’s size eligibility on that basis. In addition to its lesson on due process, OHA also took this opportunity to distinguish totality of the circumstances affiliation (the basis on which the Area Office found affiliation here) from ostensible subcontractor affiliation (the basis for affiliation alleged in the size protest). OHA vacated and remanded the Area Office’s decision. OHA’s decision in C2 Alaska, LLC, SBA No. SIZ-6149, 2022 (Apr. 19, 2022), concerned a Securities and Exchange Commission (SEC) Request for Proposals for the Integrated Professional Acquisition Support Services 2.0 (iPASS 2.0) acquisition, seeking “resources, management, and oversight to appropriately acquire and retain professional contractor personnel with skills essential to provide support services in the SEC’s mission accomplishment.” The solicitation was 100% set aside for 8(a) Program participants under NAICS code 541611 (Administrative Management and General Management Consulting Services) with a corresponding size standard of $16.5 million. The SEC awarded an IDIQ contract under the solicitation to C2 Alaska, LLC (C2 or Appellant). The iPASS 2.0 contract was the successor acquisition to the iPASS Pilot contract for similar services, which was performed by Chenega Healthcare Services, LLC (CHS), the incumbent contractor. CHS and the C2 are both wholly-owned subsidiaries of the Alaskan Native Corporation (ANC), Chenega Corporation. Notably, SBA’s affiliation regulations stipulate that sister companies owned and controlled by the same ANC cannot be affiliated with each other: (1) through common ownership or common management; and (2) “based upon the performance of common administrative services” (i.e. bookkeeping, payroll, recruiting, HR support, etc.), as long as adequate payment is provided for such services. But the rules add that such concerns may still be found affiliated on alternate grounds, provided this common administrative services exception does not apply. After the award of iPASS 2.0, a size protest alleged that C2 was affiliated with its subcontractor–its sister company and the incumbent, CHS–under SBA’s ostensible subcontractor rule (found in SBA’s affiliation regulations). SBA defines the term ostensible subcontractor as a subcontractor that “performs primary and vital requirements of a contract, or of an order, or is a subcontractor upon which the prime contractor is unusually reliant.” And in analyzing this, SBA will consider “[a]ll aspects of the relationship between the prime and subcontractor[.]” This may include proposal terms, any agreements between the prime and subcontractor, and whether the subcontractor is an incumbent contractor now too large to bid on the current work. Where SBA finds a prime contractor has an ostensible subcontractor, it deems the two parties affiliates for the specific procurement at issue and add their sizes together in determining whether the prime is considered small under the solicitation’s size standard. The protest here argued that both bases of ostensible contractor affiliation were met. It said CHS would perform the primary and vital requirements, which it listed as “the recruitment, retention and administration of geographically dispersed professional staff to support SEC operations.” And the protest said that C2 would also be unduly reliant upon CHS and its “ample experience supporting iPASS staffing.” The protest alleged that each of the four of the key factors SBA says are suggestive of unusual reliance were present here, as well. The Area Office directed C2 to respond to allegations regarding: its own relevant experience; the identities and sizes of its subcontractors; the division of work and of specific tasks; the anticipated workforce source; and what each party would provide as far as equipment, facilities, required licenses, etc. It also asked for the C2’s organizational documents, tax returns, proposal for the iPASS 2.0 solicitation, and any applicable subcontracts or teaming agreements. Later on, the Area Office requested more information on Appellant’s proposed staffing for the iPASS 2.0 contract and its history of business dealings with CHS on the incumbent contract. The Area Office size determination found that C2 was other-than-small for the iPASS 2.0 contract. But interestingly, the Area Office found that the Appellant would self-perform at least 51% of the work, in line with the limitations on subcontracting; only subcontract 25% to CHS; perform the primary and vital work itself; and not be unduly reliant on CHS (as the Area Office said some of the four key factors were not met). As such, the Area Office found no ostensible subcontractor affiliation. Instead, the size determination explained that the Area Office had found C2 affiliated with CHS under the totality of the circumstances. For those unfamiliar, this is the SBA affiliation rule that permits the SBA to “find affiliation even though no single factor is sufficient to constitute affiliation[,]” after it considers the totality of the circumstances surrounding the potential affiliates’ relationship. Perhaps one of the most interesting parts of this decision, in my humble opinion, is that the Area Office found the C2 and CHS affiliated, under the totality of the circumstances, for the iPASS 2.0 procurement only (note: it is typically used as a basis of general affiliation rather than contract-specific affiliation). Thus, it aggregated the Appellant’s average annual receipts with CHS’s. And because those combined receipts exceeded iPASS 2.0’s $16.5 million size standard, the Appellant was found ineligible for the iPASS 2.0 award. In reaching its decision, the Area Office focused on three connections between the C2 and CHS, finding: (1) that C2 and CHS shared at least one key employee; (2) that C2 may not control employee assignments for iPASS 2.0; and (3) that C2 and CHS shared facilities and a computer system. And it found that their relationship did not qualify for the “common administrative services” exception. C2 appealed. First, C2 said that the Area Office erred in finding totality of the circumstances affiliation “without notifying Appellant of the change in focus in the investigation, thereby denying Appellant due process[,]” adding that the protest alleged ostensible subcontractor affiliation, and such was not found here. But the Area Office’s stance was that “totality of circumstances is an extension examination of the ostensible subcontractor rule analysis.” Second, C2 said the Area Office erred in finding affiliation based on the three connections identified, because: (a) the underlying facts were wrong; and (b) there was no explanation about how the connections enabled either entity to control the other. The Appellant said the Area Office: never asked about shared employees; misinterpreted the Appellant’s responses to other staffing questions; incorrectly assumed the Appellant would not control hiring decisions; and erred in finding that CHS and the Appellant would share facilities and a contract-specific computer system, without even inquiring about lease agreements or other office arrangements. The Appellant submitted new exhibits with its appeal, arguing there was good cause for OHA to consider them, since it “was not given the opportunity to respond or provide evidence regarding the three findings upon which the Size Determination is based.” OHA began its analysis by establishing its standard of review, explaining, “OHA will disturb an area office’s size determination only if, after reviewing the record, the administrative judge has a definite and firm conviction that the area office erred in making its key finding of fact or law.” OHA based its final remand decision on two main findings: (1) the Area Office did not provide sufficient notice of the change in focus of the size investigation; and (2) that the Area Office did not articulate a valid basis for affiliation under the totality of the circumstances. Regarding its first finding, OHA noted that the protest only alleged ostensible subcontractor affiliation, which the Area Office had investigated but rejected. But the Area Office failed to inform the C2 that it was “examining affiliation through the totality of the circumstances[]” and clearly did not “raise any of the three associated factual issues[]” to the Appellant, either. OHA explained: OHA has long held that, although SBA area offices are empowered to explore new issues beyond those set forth in a size protest, due process requires that the challenged concern must be given notice of the new issues and an opportunity to respond . . . Here, because Appellant was not provided notice of the change in focus of the size investigation, remand of this case is warranted. OHA also addressed the protester’s (and Area Office’s) arguments responding to the appeal: (1) that the protest referenced the affiliation rule concerning exceptions for ANCs; and (2) that “the totality of the circumstances is a theory of affiliation related to, or encompassed within, an ostensible subcontractor allegation.” But OHA found these points unpersuasive and took the opportunity to distinguish the two types of affiliation at issue in this appeal. OHA acknowledged that the protest made such references but said, “this regulation is not an independent ground for affiliation but rather an exception to affiliation for concerns owned and controlled by Indian Tribes or ANCs.” OHA explained that the protest “did not attempt to argue that Appellant and CHS could be affiliated due to noncompliance with” the exceptions–but instead, cited to that section to contend that the ANC-based exception to affiliation was not absolute (i.e. that the Appellant and CHS could be still affiliated under the ostensible subcontractor rule, even though they were both wholly-owned subsidiaries of the same ANC). And as such, this was “not sufficient to give Appellant notice that it might be found affiliated with CHS on grounds other than the ostensible subcontractor rule.” Then, OHA said, although SBA’s affiliation regulations say an Area Office will consider “[a]ll aspects of the relationship between the prime and subcontractor” in an ostensible subcontractor analysis, OHA’s precedent clearly establishes that the ostensible subcontractor rule and the totality of the circumstances are considered “fundamentally different theories of affiliation.” OHA explained: [The] totality of the circumstances is not an applicable ground of affiliation under an ostensible subcontractor analysis. A totality of the circumstances analysis rests on whether numerous factors taken together establish that a business concern has the power to control another, not whether it can control a particular contract. Conversely, an ostensible subcontractor analysis is contract specific and is a completely different form of determining affiliation. Accordingly, because the size protest here was solely based on the ostensible subcontractor rule, the “Appellant would not reasonably have understood that the Area Office also would be reviewing the totality of the circumstances.” And even if C2 had been aware, OHA added, “it is not clear that Appellant could have prepared a meaningful response to this issue, without more detailed information as to the Area Office’s particular concerns[,]” because the Area Office did not notify the Appellant of the three specific factual issues it focused on. Even though the Appellant had provided the Area Office with some information on staffing, key personnel, etc., in response to the ostensible subcontractor allegations, the “Appellant would not have known that such information might be repurposed to find Appellant affiliated with CHS on other, unrelated grounds.” As such, OHA could not conclude that the C2 was given “proper notice of, and a fair opportunity to address, the Area Office’s concerns.” After coming to this conclusion on the due process issue, OHA said, remand was further warranted because the size determination failed to articulate valid grounds for affiliation under totality of the circumstances affiliation. OHA explained: OHA has repeatedly held that “in order to find affiliation through the totality of the circumstances, ‘an area office must find facts and explain why those facts caused it to determine one concern had the power to control the other.”’ An area office thus “cannot merely list connections between the firms, it must explain how those connections could lead one firm to control the other.” Here, OHA found, although the Area Office identified three aspects of the C2’s and CHS’s relationship it found supportive of totality of the circumstances affiliation, it failed to explain how these three connections enabled CHS to control C2, or vice versa–as required by OHA precedent. In the end, OHA granted the appeal, vacated the size determination, and remanded the matter to the Area Office for further review. This decision could be a very important one for small businesses facing affiliation allegations. Sometimes, it seems Area Offices blur the lines between the various bases for affiliation and between general affiliation and contract-specific affiliation–often using totality of the circumstances affiliation as a wide-reaching catch-all. While SBA’s affiliation regulations serve a valuable purpose in the small business federal contracting world, decisions like this one provide useful guidelines for contractors and crucial boundaries for the SBA Area Offices. Questions about this post? 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 OHA Remands Size Determination Because Area Office Failed to Provide Due Process to Protested Concern first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! We hope you had a nice, long 4th of July weekend and we’d also like to show our appreciation for our veterans and active duty military personnel. Thank you for your service. This week in federal government contracting news there were announcements from a key cyber agency set to get procurement authority this month as well as an announcement from the Federal Register concerning bid guarantees, performance and payment bonds, and alternative payment protection. Have a great weekend! A Short History of DCAA [DCAA]Former Contracting Officer for the Department of Defense to Plead Guilty in Conspiracy to Defraud the Government [DoJ]Construction Company Owner Convicted of Fraud in Securing More Than $240 Million in Contracts Intended for Service-Disabled Veteran-Owned Small Businesses [DoJ]Key cyber agency set to get procurement authority, contracting officers [FedNewsNet]Federal Sustainability Plan ‘rebuilding’ momentum on green government goals [FedNewsNet]Should feds go back to office? Here’s a thought: Ask them! [FedNewsNet]Top 10 Government Cybersecurity Company Contractors [GovConwire]VA watchdog clears senior IT leader of misconduct allegations made by former CISO [FedScoop]Justice Department identifies disrupting ransomware and cyberattacks as key objective in new strategic plan [FedScoop]Submission for OMB Review; Bid Guarantees, Performance and Payment Bonds, and Alternative Payment Protection [FedReg]GSA looks to help get LGBTQI-owned small businesses in the contracting mix [FSW]Vendors prep for new cyber rules of the road [FSW]FCC taps GSA’s Hill to be new CIO [FedNewsNet]Federal contractors moving ahead after a bizarre 2022 fiscal year [FedNewsNet] The post SmallGovCon Week In Review: July 4-8, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA has issued its draft rules on how it will go about certifying Veteran-Owned Small Businesses (VOSBs) and Service-Disabled, Veteran-Owned Small Businesses (SDVOSBs). Below, we highlight some of the main components of these rules. The changes stem from Congress’s requirement in the 2021 NDAA to to eliminate SDVOSB self-certification and adopt a government-wide SDVOSB certification requirement, while transferring control of the certification process from the VA to the SBA. For the most part, SBA has taken a simple approach, combining its existing rules on eligibility with much of the application procedures from VA. But the details do matter, and below we’ll walk through some of them. SBA issued its proposed rule on July 6, with comments due August 5, 2022. So, if you have questions about the process, be sure to send your comments to SBA. SBA will take over veteran-owned certifications on as of January 1, 2023 (the Transfer Date) and, for those self-certified SDVOSBS out there (and I’m sure there are a lot), those companies “that submit an application within the one-year grace period will maintain eligibility until SBA makes a final eligibility decision.” So, better mark December 31, 2023 on your calendars as the date to apply for certification if you are a self-certified SDVOSB. Key Aspects Here are some of the key aspects of the proposed rule: SBA is establishing a Veterans Certification Program (Vets Program) to handle the required certifications for SDVOSBs and VOSBs. SBA will house the Veterans Certification Program rules in a new 13 CFR part 128.SBA will grant reciprocity to participants in the 8(a) Program and Women-Owned Small Business (WOSB) program that are owned and controlled by veterans or service-disabled veterans. Firms certified with the VA CVE program will continue to be certified for the remainder of the 3-year eligibility term. SBA generally adopted the procedures that the VA had used for application guidelines, rules on continuing eligibility, program examinations, and program exit procedures. Generally, the eligibility rules would be similar to the SDVOSB ownership and control rules that currently exist in SBA’s rules.“SBA has not established the policies and procedures for application processing at this time.” Those details will be released in a future rule. Noteworthy Changes There are some interesting changes from how things worked under the CVE verification process. Size of Firms. Firms can qualify if they are small for any NAICS code under which it currently conducts business activities, not just a primary NAICS code, but SBA is still working on how to define what “currently conducts business activities” means.Self-Certification for Limited Purposes? For the limited purpose of counting agency’s SDVOSB goals, a firm may still self-certify. SBA states: “a self-certified SDVO SBC may be awarded a small business set-aside and the agency may count the award as both a small business and SDVO SBC toward the agency’s goals.”Parole Removal. SBA “proposes to eliminate consideration of whether an individual who is currently incarcerated, or on parole or probation owns or controls an applicant concern” as being a responsibility issue. Therefore, the good character review would be limited to whether a company was debarred or suspended.Rebuttable Presumptions? Interestingly, SBA is requesting comments on the so-called rebuttable presumptions and whether they should be amended. For instance, there is a “rebuttable presumption that non-service-disabled veteran individuals or entities control” an SDVOSB if the “non-service-disabled veteran individual or entity who is involved in the management or ownership of the firm is a current or former employer or a principal of a current or former employer of any service-disabled veteran individual.” 13 CFR 125.13. Those are some of the major points from SBA’s proposed rule on SDVOSB and VOSB certification. We’ll keep you up to date as new developments on this important change come out. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Breaking: SBA Issues Veteran-Owned Certification Rules first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Fourth of July, Readers! We hope you have a fun and relaxing holiday weekend planned. Here are 3 fun facts about Independence Day: The Declaration of Independence Was Written on a Laptop. Not a modern laptop, but still. Thomas Jefferson drafted the Declaration of Independence on a writing desk that could fit over one’s lap. This device was referred to at the time as a “laptop.”There is Something Written on the Back of the Declaration of Independence. According to the History Channel, a simple message is written upside-down across the bottom of the signed document that reads, “Original Declaration of Independence dated 4th July 1776.” The Designer of the 50-Star Flag Lived in Lancaster, Ohio. In 1958, a history teacher asked students to redesign the national flag as both Alaska and Hawaii neared statehood. Robert G. Heft, who was 16 at the time, designed a new flag using the old 48-star flag and spent $2.87 on materials. His design earned him a B-minus to which he challenged by sending it to Washington D.C. to be considered by President Dwight D. Eisenhower. While you are enjoying the weekend, we have provided a few noteworthy articles pertaining to federal government contracting for your reading consideration, including Polaris timing update, category management struggles for small businesses, and predictions for the 2023 NDAA. Enjoy your 4th! Military Contractors Indicted for $7 Million Procurement Fraud Scheme [DoJ]SBA working to reform category management, reverse decline in small business contractors [FedNewsNet]SBA Administrator Releases Statement on Reversal of Roe v Wade [Small Business Trends]DHS looks to expand its Procurement Innovation Lab [FCW]Twelve senators reject VA’s plans to reshape health care real estate under AIR Commission [FedNewsNet]Six government agencies launch quantum technology research consortium [FedScoop]Biden signs VA health record modernization transparency act into law [FedScoop]Contractors start looking at what’s in the defense authorization bill for 2023 [FedNewsNet]Why the National Security Agency overpaid contractors during the height of the pandemic [FedNewsNet]GSA acquisition exec says agency will proceed with Polaris solicitation by end of June [FedScoop]CMMC early adopter program to further spur vendor cyber actions [FedNewsNet]GSA Federal Acquisition Service’s Laura Stanton on STARS III, Alliant 3 and Polaris [FedScoop] The post SmallGovCon Week in Review: June 27- July 1, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Last week, the U.S. House of Representatives Small Business Committee held a hearing to discuss how the SBA will meet Small Business Contracting goals, and specifically how the SBA can meet its goals related to socioeconomic programs. The committee challenged the Office of Government Contracting & Business Development to show how they will help grow participation in SBA’s small business development programs, and small business participation in federal contracting as a whole. The Small Business Committee raised questions related to inflation, increasing socio-economic program participation, and SBA technology updates. As is customary, the Small Business Committee released a memorandum illustrating their thoughts prior to the hearing, and the written testimony of witnesses for review. The information in these documents is useful, and are repeated in the hearing itself, all of which (including a link to a vide of the hearing) can be found on the Small Business Committee’s website. The committee brought in Ms. Bibi Hidalgo, Associate Administrator for the SBA’s Office of Government Contracting & Business Development (OGCBD) to testify. If you have a chance to read the testimony, read the committee’s memorandum, and watch the hearing, I highly recommend it, as the committee and its witness had a meaningful discussion on small business federal contracting. However, as advocates for small businesses across the country, we realize your time is limited and you may not have time. So, this blog post will provide you some of the key takeaways. Certification Websites The committee repeatedly requested updates on SBA’s progress on its certification websites such as certify.sba.gov and any other IT solutions SBA have been planning on implementing. Ms. Hidalgo stated that SBA has made it a priority that all websites they utilize for certification are running smoothly so small business owners have well oiled machines to utilize when certifying their socio-economic program status. Ms. Hidalgo also informed the committee that the SBA is processing certifications faster than in previous years, and is pushing technology forward in this realm to prepare for SBA overseeing all SDVOSB certifications. Category Management Contracts The committee really drilled down on category management contracts and how their June 14th hearing on Governmentwide contracts found that these contracts may have a negative effect on small business participation in federal contracting. Consequently, the committee asked what the OGCBD and SBA are doing to mitigate the effects of these contracts decreasing small business contracting. Ms. Hidalgo stated that the SBA and the White House are aware of this effect and are focusing on how these contracts have effected small business participation. As you may know, category management contracts are government wide procurement vehicles in which businesses or products are placed on Tiers (0 through 3), with each tier having separate requirements for contracting, spending, and tracking. The SBA and White House have negotiated with Office of Management and Budget (OMB) to move all socioeconomic firms (SDVOSB, WOSB, 8(a), HUBZone) into Tier 2 of category management. This should allow 33,000 more firms to possibly compete for even more contracts than before. According to Ms. Hidalgo, the SBA is already seeing increases in small business participation due to this tier change in Category Management Contracts. Support of SBA’s Business Development Programs As noted in the hearing and in the released documents, 8(a) participation had declined over multiple years, but in 2021 data finally showed an increase in businesses participating in the program. Meanwhile, HUBZone and WOSB programs were not meeting certain goals, and it seemed to some members of the committee that contracts seemed to be going to the small businesses in a small number of geographic locations. The Committee explicitly wanted Ms. Hidalgo to describe what measures the SBA and OGCBD were doing to help promote these programs and participation in them. Ms. Hidalgo stated to help promote these programs, there have been different initiatives implemented. First, the SBA is now including HUBZone and WOSB participation goals in performance evaluations for agencies and their staff to promote usage. Additionally, the SBA is now tracking new entrants to federal contracting and socio-economic SBA program participation, as well as requiring procuring agencies to track participants in their contracts. This allows SBA and procuring agencies to know the entire pool of possible contractors, and when agencies reach out for data, SBA can provide accurate data about how many businesses are qualified to fulfill contracts in certain SBA programs. SBA is also attempting to build up its own capabilities to help small businesses. Ms. Hidalgo stated that the SBA is attempting to shift focus in their communications with small businesses from compliance with regulations, to helping develop businesses, such as focusing on guidance with businesses on how to qualify for programs. Evidencing this shift, the Committee discussed a recent $5 million dollar increase in staff funding for the SBA Business Development programs, which Ms. Hidalgo believes will give SBA the flexibility to focus more on the aim of helping small businesses, rather than focusing on compliance. The SBA also believes, along with the committee, that contract bundling is a negative factor in promoting small business participation in federal contracting. Ms. Hidalgo stated that it appears when multiple contracts or needs are bundled together, a larger contract is then created which small businesses cannot service, giving more money to large businesses and fewer growth opportunities for small business. The SBA is analyzing contracts to be un-bundled and how to prevent over-bundling from occurring. The SBA also is examining maps of where small businesses awarded contracts are located, so that the SBA can determine which locales may have small business contract awards that are disproportionate compared to other locations around the country. Also, due to the tracking discussed earlier, agencies are able to learn from the SBA what areas of the country have small business contractors, but are receiving less awards proportionately as compared to other areas in the United States. Finally, Ms. Hidalgo stated that SBA recently published a new rule qualifying more NAICS codes for WOSB set-asides, causing, in her words, “92% of all federal spend [to] qualify as a set-aside for [WOSB].” Inflation and Other Topics As is front of mind for many Americans, the Committee asked Ms. Hidalgo what the SBA is doing to combat inflation, or help contractors survive inflation. Ms. Hidalgo testified that the SBA is looking at threshold flexibility on contracts and allowing for more variable price adjustments. In line with that, the SBA is working with the White House, and the seven largest procuring agencies, to make sure any changes undertaken are consistent across federal contracting. The SBA is also looking at shifting the window for reimbursement from the federal government for project performance from every thirty days, to every fifteen days. As Chairwoman Velazquez stated in her opening remarks to the hearing, “when small contractors can thrive, our nation’s small businesses, government and the economy all benefit.” The Small Business Committee has shown in this hearing, and others recently (such as their hearing on Governmentwide Contracts) that they understand the importance of small businesses in federal government contracting, and will hopefully continue to advocate for effective small business contracting initiatives. Small business contractors should also keep an eye out for the different initiatives articulated by Ms. Hidalgo, as there may be significant gains to be achieved for small businesses. Finally, keep an eye out for further data form the SBA, as they stated that they are compiling data to share with Congress on small business contracting and its impact on certain identified groups. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Small Business Committee Raises Concerns to SBA About Certification Speed, Category Management first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Many bid protests we handle at Koprince McCall Pottroff are filed after the contract has been awarded to an offeror. However, sometimes there are issues that are apparent in the solicitation that require clarification or correction prior to the bidding or proposal deadline. In these situations, potential offerors can file a pre-award protest that challenges solicitation terms, but, as with most GAO matters, there are strict deadlines that must be adhered to if the protestor wants to avoid her protest being dismissed. While pre-award protest is the common term, remember that a challenge to a solicitation’s terms is due before the proposal deadline. First, what is a pre-award protest? While post-award protests address the agency’s evaluation of proposals, pre-award protests challenge the terms of the solicitation. For example, a pre-award protest may argue that the solicitation is improperly restricted for a particular socioeconomic designation or the solicitation’s technical requirements are unfairly restrict offerors from presenting a novel solution. Pre-award protests may also assert that the solicitation violates an applicable law, like the VA Rule of Two that requires a solicitation be set aside for service-disabled veteran-owned small businesses (“SDVOSB”) if two or more verified and capable SDVOSBs are identified that can do the work at a reasonable price. Timing is very important for a pre-award protest, but luckily there is a fairly simple rule to remember: a pre-award protest must be filed before the proposal (or equivalent document like a quotation) is due. 4 C.F.R. § 21.2 discusses the time for filing bid protests at GAO, with § 21.2(a)(1) discussing pre-award protests. The specific deadline depends on the type of solicitation. If a solicitation was issued prior to bid opening, and the alleged improprieties in the solicitation are apparent prior to bid opening, then the protest must be filed prior to bid opening. If a solicitation and bid opening happen concurrently, the protest must be filed at any time “prior to the time set for receipt of initial proposals.” It is important to note that “days” means calendar days, unless the deadline falls on a weekend or federal holiday. In those instances, the deadline is pushed to the next business day. Also, pre-award protests can be filed with the agency itself, GAO, or the Court of Federal Claims, though they are most frequently filed with GAO. You may now be wondering how pre-award bid protests can help a small business. Well, pre-award protests can help small business federal contractors enhance their competitiveness under a particular situation by reshaping the foundation of that procurement to make it more likely that a business will win an award. Let’s return to the VA Rule of Two once again. The VA sets a procurement aside for small businesses in general based on incomplete market research, believing there were no eligible SDVOSBs capable of performing. If an SDVOSB were to successfully protest that set-aside designation through a pre-award protest, it could lead the agency to reopen the procurement on a restricted basis solely for SDVOSBs, enhancing the SDVOSB contractor’s odds of being awarded the contract. While 4 C.F.R. § 21.2(c) states that GAO may consider untimely protests, in practice, that pretty much never happens, and we wholeheartedly advise against it. Further, if a solicitation’s terms are clearly ambiguous, but the potential offeror does not file a pre-award protest, the potential offeror will be deemed to have effectively waived any arguments challenging the solicitation. For this reason, it is important to file a pre-award protest if you believe the solicitation’s terms are unfair or unreasonable. Because you won’t get a second chance. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: Pre-Award Bid Protests first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The U.S. House of Representatives recently passed H. R. 5879, clarifying the application of the price evaluation preference for qualified HUBZone small business concerns to certain contracts. If this becomes law, the Act would make sure the HUBZone Price Evaluation Preference applies to certain orders under partially restricted multiple award contracts. H. R. 5879, cited as “The HUBZone Price Evaluation Preference Clarification Act of 2021,” was passed by the House on June 8, 2022. The Act amends Section 31(c)(3) of the Small Business Act (15 U.S.C. 657a(c)(3)) a by adding to the end the following new subparagraph: (E) APPLICATION TO CERTAIN CONTRACTS.—The requirements of subparagraph (A) shall apply to an unrestricted order issued under an unrestricted multiple award contract or the unrestricted portion of a contract that is partially set aside for competition restricted to small business concerns. The subparagraph (A) referenced in the above section, if the Act passes, would apply to unrestricted orders under unrestricted multiple award contracts, or the unrestricted portion of a contract partially set aside for small business competition. It states: 3) Price evaluation preference in full and open competitions (A) In general . . . in any case in which a contract is to be awarded on the basis of full and open competition, the price offered by a qualified HUBZone small business concern shall be deemed as being lower than the price offered by another offeror (other than another small business concern), if the price offered by the qualified HUBZone small business concern is not more than 10 percent higher than the price offered by the otherwise lowest, responsive, and responsible offeror. As you may remember from Schoolhouse Rock, to become an effective law, H. R. 5879 still must pass the Senate and be approved by the President (or, if vetoed by the president, have the veto overridden). If the Act does in fact become law, it will help procuring agencies and offerors alike in understanding exactly when the HUBZone price preference will apply to certain types of contracts, portions of those contracts, and/or orders thereunder. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post House Passes HUBZone Price Evaluation Preference Clarification Act of 2021 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy summer, readers! We hope you have some fun plans for the season. Here at SmallGovCon we are gearing up for some nice R & R time with friends and family. But, the first few days of summer have been anything but lazy, with much activity in federal government contracting, including updates on the new OASIS (not the latest summer trend, rather the GSA services IDIQ), rumblings on the new NDAA, and how DoD is making things easier on small businesses. As usual, please enjoy the articles we have included in this week’s WIR and have a great weekend. Procurement Scorecard Program; Treatment of Deobligations [FedReg]CONGRESS: Three things to watch in the House 2023 NDAA [FedNewsNet]OASIS+ or OASIS-Plus? Either way, GSA puts the next generation services contract on the fast track [FedNewsNet]TMF Board announces $94.8M for 3 network security projects [FedScoop]Biden signs bill creating federal cybersecurity rotational program [FCW]DOD Official Talks on Easing Process to Work With Small Businesses [DoD]Government Official Pleads Guilty to Accepting Bribes [DoJ]Contractual Remedies to Ensure Contractor Compliance with Defense Federal Acquisition Regulation Supplement Clause 252.204-7012, for contracts and orders not subject to Clause 252.204-7020; and Additional Considerations Regarding National Institute of Standards and Technology Special Publication 800-171 Department of Defense Assessments [DoD]GSA Announces First Cohort of 40 U.S. Digital Corps Fellows [GSA]The General Services administration is downright spacey… it has three north stars [FedNewsNet]A new look at an old problem: the Pentagon’s weapons procurement [FedNewsNet]Defense agencies among worst ranked for disclosing contracting needs to businesses [FedTimes]Report: The slow destruction of the defense industrial base [FedNewsNet] The post SmallGovCon Week in Review: June 20-24, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We are pleased to announce that Steven Koprince, Govology Legal Analyst and retired founder of Koprince McCall Pottroff LLC, will be kicking off his work with one of our favorite federal contracting partners: Govology! Join Steven in his new role as a legal analyst as he discusses various federal small business certification programs, including Small Business Self Certification, Small Disadvantaged Business (SDB) & 8(a), Service-Disabled Veteran-Owned Small Business (SDVOSB), Veteran-Owned Small Business (VOSB), Historically Underutilized Business Zones (HUBZone), Woman-Owned Small Business (WOSB), and Economic Disadvantaged Woman-Owned Small Business (EDWOSB). This one will be provide a great base of knowledge for those looking to know more about the various federal small business certification programs. For more information about this webinar please visit Govology and receive 25% off the registration fee by using discount code: gsc25. Registration link. The post Webinar: June 23, 1:00pm EDT, An Introduction to Government Small Business Certifications, by Steven Koprince, Govology Legal Analyst first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA has issued new size standards for industries in the Wholesale Trade and Retail Trade sectors. The interesting thing about these size standards is that they don’t apply to federal procurement actions. Instead, there is a different size standard for supply contracts. So, did SBA see fit to increase the supply-contract size standard? The answer is no, in the final rule, SBA did not increase the 500-employee size standard for Federal contracts in the Wholesale and Retail Trade sectors. Now, SBA did increase size standards for 57 industries, with 22 industries in NAICS Sector 42 (Wholesale Trade) and 35 industries in NAICS Sector 44-45 (Retail Trade) going up. The reason for the increase is that the Small Business Jobs Act of 2010 requires SBA to adjust size standards every five years. It’s important to remember that size standards in Sectors 42 and 44-45 cannot be used in Federal contracts for supplies. Rather procurements for Wholesale and Retail Trade sectors use a 500-employee size standard. As SBA regulations state: Acquisitions for supplies must be classified under the appropriate manufacturing or supply NAICS code, not under a Wholesale Trade or Retail Trade NAICS code. A concern that submits an offer or quote for a contract, order, or subcontract where the NAICS code assigned to the contract, order, or subcontract is one for supplies, and furnishes a product it did not itself manufacture or produce, is categorized as a nonmanufacturer and deemed small if it has 500 or fewer employees and meets the requirements of § 121.406(b). 13 CFR § 121.402. So, the prime contractor still has to meet the 500-employee standard under the nonmanufacturer rule. The manufacturer, in turn, must be small (absent a waiver), and the actual manufacturer’s small business status is determined by the solicitation’s NAICS code and its relevant size standard. SBA is not ignoring the 500-employee standard for the nonmanufacturer rule, however. SBA foreshadows that “in an upcoming proposed rule covering the manufacturing sector and industries with employee-based size standards in other sectors (except Wholesale Trade or Retail Trade), SBA will examine whether the current 500-employee size standard for nonmanufacturers is appropriate and provide a detailed response to the Subcommittee’s comment.” We’ll be sure to keep you posted on that change. So, the increases in these size standards do not affect procurement. However, they may affect eligibility for certain businesses for things like SBA loans and other types of assistance that are only available to small businesses. As one example, 423140 Motor Vehicle Parts (Used) Merchant Wholesalers is going from 100 to 125 employees. Stay tuned for updates on future size changes. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Updates Size Standards for Wholesale Trade and Retail Trade first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday and Happy Juneteenth! This year, June 19, Juneteenth, falls on a Sunday, so the federal holiday, established in 2021, will be observed on Monday, June 20. Juneteenth arose from the date of June 19, 1865, in Galveston, Texas–when African Americans in the state learned of their freedom due to the Emancipation Proclamation and Thirteenth Amendment. Juneteenth celebrations often focus on education and reflection on the path to freedom as well as the steps still needed to achieve equity in our country. We encourage you to participate in your state and local Juneteenth festivities to honor this important date in American history. Have a great weekend! ‘Grandmother of Juneteenth’ celebrates federal holiday — but there is more work to do. Here’s how you can help [CNN]New VA portals provide simplicity, transparency to vendor interactions [FedNewsNet]More reality checks could help keep DOD programs on time and on budget, GAO says [FSW]The White House just pulled its nominee to fill the still-vacant job of federal procurement chief [FCW]Four Million Hard-Hit Businesses Approved for Nearly $390 Billion in COVID Economic Injury Disaster Loans [SBA]We get the latest on how inflation is impacting government contracting [FedNewsNet]DOE Announces Contract Awards and Issues Fourth Emergency Sale of Crude Oil From the Strategic Petroleum Reserve [DoE]KBR Defendants Agree to Settle Kickback and False Claims Allegations [DoJ]CDAO sees contracting as a way to build innovation [FedNewsNet]Space Systems Command using a ‘buy first’ attitude with procurement [FedNewsNet]Congress wants more oversight over VA’s plans to implement automation [FedNewsNet]Frederick County Businessman Sentenced to Federal Prison for Conspiracy to Commit Wire Fraud in Connection with Overcharging the U.S. Postal Service Under His Company’s Contract to Perform Maintenance and Repair Services at Postal Service Facilities [DoJ]Are Governmentwide Contracts Helping or Hurting Small Contractors? [CoSB] The post SmallGovCon Week in Review: June 13-17, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Representations and certifications are an integral part of the requirements for any solicitation. While each solicitation may require different representations and certifications, what precisely is required for a given representation or certification is generally governed by the FAR. One of the more common requirements is that an offeror provide information to the Federal Awardee Performance and Integrity Information System (FAPIIS) regarding its current federal awards and recent judgments against it concerning federal procurements that result in payment by the offeror, and this is governed by FAR 52.209-7. Recently, GAO addressed the question of just what recent judgments must be disclosed under that FAR rule. In this post, we will explore their decision. GAO issued the decision in question on May 26, 2022, for The Logistics Company, Inc., B-419932.3. On January 8, 2020, the Army issued a request for proposals (RFP) for logistics readiness center maintenance, supply, and transportation requirements. This RFP included FAR 52.209-7. 14 offerors submitted proposals for the award on July 30, 2020 seeking award. The Army eventually awarded Vanquish Worldwide, LLC (Vanquish) the contract. The Logistics Company, Inc. (TLC), another offeror, protested this award and alleged that Vanquish had made false certifications by failing to disclose multiple outstanding civil judgments. The Army initially took corrective action, reviewed the matter more fully, and concluded Vanquish did not make false certifications. The Army then re-awarded the contract to Vanquish, and TLC again filed a protest on the same grounds as before. GAO first recounted FAR 52.209-7, pointing out that “this FAR provision requires offerors to disclose when they (or their principals) have been the subject of a civil proceeding in the last five years in connection with a federal contract or grant in which there was a finding of fault or liability that resulted in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more. FAR provision 52.209-7(c)(1). Additionally, the FAR requires offerors to disclose dispositions of civil or administrative proceedings by consent or compromise that include an acknowledgement of fault.” TLC claimed in its protest that Vanquish failed to disclose three separate judgments: the Barton judgment, the Sadat arbitration award, and the Koshani judgment. GAO looked first at the Barton judgment. The Barton judgment was the result of divorce proceedings involving one of Vanquish’s principals issued July 6, 2018. After reviewing that judgment, GAO concluded that Vanquish did not need to disclose this judgment under FAR 52.209-7. The judgment involved one of Vanquish’s principals, yes. But GAO explained that FAR 52.209-7 “does not require offerors to disclose any finding of fault or liability, but rather only requires offerors to disclose certain findings of fault or liability ‘in connection with the award to or performance by the offeror of a Federal contract or grant.’” Just because it was a divorce proceeding involving a principal of Vanquish does not mean that the proceeding concerned federal contracts or grants. This was an easy issue for GAO to dispose of. The Sadat arbitration award, GAO noted, did involve a finding that Vanquish was liable for a matter related to a federal contract. However, that original judgment was made in May 2015. Vanquish made its certification for the RFP on July 30, 2020. FAR 52.209-7 only requires the disclosure of judgments or findings of fault or liability made within five years prior to the certification date and the Sadat award was entered about two months before that period began on July 30, 2015. GAO did observe there was subsequent litigation stemming from the arbitration award, but it was unclear if it had anything to do with federal contracts themselves and in any event ended in a settlement without a finding of fault or liability. Settlements without a finding of fault or liability “do not generally meet [FAR 52.209-7’s] disclosure requirements.” At last, GAO turned to the Koshani judgment. Here, the matter involved a federal contract or grant, and a judgment was made against Vanquish in 2019 that found fault and liability. While normally FAR 52.209-7 requires disclosure of such judgments, there was a catch here: The case was later settled without an admission of fault, and so the judgment was vacated. TLC argued that it did not matter, as a judgment had been made against Vanquish finding fault and liability. GAO noted that while, yes, a judgment had been made against Vanquish, the FAR is explicit that offerors must disclose a civil finding of fault or liability that “results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more.” FAR provision 52.209-7(c)(1)(ii). A payment made pursuant to an out-of-court settlement admitting no fault is not a payment of a fine, penalty, reimbursement, restitution, or damages, and also cannot be said to clearly result from a civil finding of fault or liability. This is the case regardless of when such a settlement occurs. In other words, it’s not the judgment itself that matters, but if the offeror has made payment under that judgment. Here, the wording of FAR 52.209-7 is crucial. If the language was “results in the award” rather than “results in the payment,” the result could be different, as an award of damages is not the same as the payment of those damages. The award is the court ordering the liable party to pay, the payment is the party actually paying. This was the crucial part of the regulation that this case hinged on. As Vanquish never made payment under the judgment before it was vacated as a result of the no-fault settlement, the Koshani judgment was not a finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more. Further rejecting TLC’s argument that there were garnishments made against Vanquish that would suffice as “payments” of the Koshani judgment as they did not go into effect due to settlement negotiations, as well as rejecting an argument by TLC that the Army should have still taken the above judgments and awards into consideration for making responsibility determinations on the basis that the Army exercised its reasonable discretion in finding Vanquish a responsible party, GAO dismissed the protest. Two things are worth noting here: First, as always, the precise language of the FAR matters. Do not simply assume that because you see a few words like “disclose” and “judgment” that you, as an offeror, need to disclose every judgment against you in your proposal. Look at the language to determine exactly what is required. In this case, Vanquish enjoyed the good fortune of having not made any payments on its judgment before it was vacated, which meant it did not need to disclose it. As noted above, simply changing the word “payment” to “award” in “results in the payment” would change this completely. Second, this is worthwhile information for the contractor that is worried about some past judgments that never actually resulted in any payment. Per this decision, if FAR 52.209-7 applies, those judgments do not need to be disclosed. Now, whether or not voluntary disclosure may be prudent is a different story, as sometimes going above and beyond on disclosure can prevent other headaches. But, as a matter of actual requirements, this is good news for contractors who have had some rough times recently. Questions about this post? Email us. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post No Pay, No Need to Say: GAO Clarifies What Judgments and Settlements Require Disclosure under FAR 52.209-7 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article