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Happy Friday, Readers. We hope you had a great week. We are starting to get a little fall weather around these parts, which is exciting. Fall has also brought the prospect of a potential government shutdown and what the impact will be, as reflected in some of these articles. The budget process is complicated, so we are all waiting to see how it shakes out. We’ve also included some other articles on topics such as OASIS+ and cybersecurity, we hope will be of interest to you below. Have a great weekend. US Department of Labor, Navient Corp. Enter Into Agreement to Resolve Allegations of Hiring Discrimination PF 2023-41 Class Deviation from the Federal Acquisition Regulation provision at 52.204-7, System for Award Management Air Force needs to clarify its goals for space technology acquisition GSA’s OASIS+ sucked into the protest void US Department of Labor, Nielson Company US Reach Agreement to Resolve Alleged Race-Based Hiring Discrimination in Dallas, San Antonio Top 10 Common Legal Mistakes to Avoid in Federal Government Contracting Congress Losing Patience on Federal Workforce’s Return to Office Bootcamp held for small business owners on how to win government contracts GSA announces new political appointees New Pentagon cyber strategy emphasizes industry and global partnerships Senate confirms deputy secretary at VA IRS to remain ‘fully operational’ if Congress triggers government shutdown Subcontractor Sentenced to Pay Nearly $9 Million in a Criminal Fine and Restitution for Rigging Bids and Defrauding the U.S. Military GSA shifts Federal Acquisition Service organizational structure to align with customers The post SmallGovCon Week in Review: September 11-15, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As we have previously written about in several recent 8(a) articles and updates, which can all be found on our 8(a) landing page here, SBA had previously told all 8(a) participants not pending an 8(a) award to “sit tight” and wait for the go-ahead to submit their social disadvantage narratives. Well, according to SBA’s just-released Certify Help Desk Guidance, it appears that go-ahead was just given to all the (justifiably) anxious 8(a) participants out there hoping to confirm their continued 8(a) Program eligibility as soon as possible. If you are one of our loyal blog readers, you are already well aware of SBA’s new requirement for all individually-owned 8(a) applicants and participants to now demonstrate their social disadvantage via a social disadvantage narrative–even those that had previously qualified for the rebuttable presumption of social disadvantage based on membership in one of SBA’s designated groups. These SBA actions are the direct result of the recent decision in the Ultima case out of the Federal District Court out of the Eastern District of Tennessee, which you can read all about here. SBA’s swift reaction to the Ultima decision and injunction, unfortunately, came with a lot of uncertainty for all 8(a) applicants and all 8(a) participants not currently pending an 8(a) award, as the 8(a) application and certification portal, Certify.SBA.Gov, was essentially closed for any narrative submissions. SBA has still been requesting, accepting, and prioritizing social disadvantage narratives from any active 8(a) participants currently pending 8(a) awards–obviously, trying to minimize the immediate impact of the Ultima decision and recent 8(a) Program changes on our federal agencies, need for supplies and services, and economy. As such, those 8(a) Program participants were promptly contacted by their Business Opportunity Specialists (BOSs) about drafting and uploading their social disadvantage narratives on a very short timeframe. But all the while, SBA was essentially just advising all other 8(a) applicants and participants to get their narratives drafted as quickly as possible–not to wait–but also, to “sit tight” for further instructions on how to actually get those narratives to the SBA. This has, understandably, caused some concern and panic in the 8(a) community given that everyone previously accepted into the 8(a) Program based on the rebuttable presumption of social disadvantage is basically now “pending” eligibility until their narratives are both submitted and approved. While some of that uncertainly remains, specifically for new 8(a) applicants, it at least looks like the next step in SBA’s implementation of the Ultima decision is underway: the acceptance of narratives from current 8(a) Program participants who are not pending current 8(a) award from a federal agency. As you can see from the Certify Help Desk Guidance SBA just released, for all those who are already in the 8(a) Program but now needing to submit their social disadvantage narrative to stay in the program, SBA has just opened the door for those submissions. And SBA’s recent guidance has also assured everyone of what we already suspected, which is that the sooner you can submit your narrative, the sooner your narrative can be reviewed and approved, and the sooner you can confirm your 8(a) eligibility for future awards and opportunities through the program. So, best bet is to get moving on your narrative drafting and submission as soon as possible. Keep an eye on our blog for updates regarding new 8(a) applications, as we assume that accepting new applications will be the next step by SBA once they prioritize those with pending awards, followed by those already in the 8(a) Program. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post UPDATE: SBA Opens Certify Portal for Social Disadvantage Narrative Uploads by Current 8(a) Participants Not Pending 8(a) Award first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Steven Koprince, Govology Legal Analyst and retired founder of Koprince McCall Pottroff will be presenting this webinar which covers the Foreign Ownership, Control or Influence (FOCI) Rules for Federal Contractors, including which contracts are subject to FOCI rules, how does the government evaluate whether a contractor is operating under foreign ownership, influence, or control, what responsibilities does a contractor or potential contractor have to identify and report FOCI concerns, and more. Don’t miss your chance to learn all about FOCI, in plain English! Register here today! The post Govology Webinar: Foreign Ownership, Control or Influence (FOCI) Rules for Federal Contractors, Sept. 14, 2023, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! We hope you enjoyed the nice long weekend. After this long heatwave, we’ve been enjoying the cooler weather this week, here in Kansas. I think it’s safe to say that most everyone is ready for fall. There was a lot of activity this week in federal government contracting. We have included some articles that we hope will be of interest, including updates on the 8(a) Program, and a lot of changes on the IT front for federal agencies. Enjoy the weekend! SBA program upended in wake of Supreme Court affirmative action ruling Sen. Ernst to agencies: No more ‘easy As’ on the SBA scorecard Maryland Woman Charged for Role in Million Dollar Fraud at New Orleans Marine Forces Reserve Facility You’re not innovating if you’re not talking to small business SBA looking to accelerate AI breakthroughs as part of ‘customer-centric’ transformation VA vows ‘full review’ of website after IT issues impact disability claims for nearly 57,000 veterans How NASA, NOAA and AI might save the internet from devastating solar storms The Pentagon’s innovation arm has a new chief and a new strategy Verizon agrees to settle False Claims allegations over cyber standards for federal contractors GSA opens office to support Biden’s open government plan Federal agency contingency plans lay in wait for shutdown notices Army switches from GDIT to Leidos to run its multibillion-dollar hardware contract vehicle UW and Wyoming APEX Accelerator to Host ‘Lunch and Learn’ Workshop Sept. 13 The post SmallGovCon Week in Review: September 4-8, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Our very own Nicole Pottroff was featured in the Washington Post yesterday, in an article titled: “SBA program upended in wake of Supreme Court affirmative action ruling.” This article covers SBA’s 8(a) Program and its recent changes, as well as the federal court decisions that sparked the changes and some of the more widespread concerns moving forward. As you probably know as one of our readers, the 8(a) Program has always been a subject close to our hearts here at SmallGovCon. We have been fortunate enough to help countless companies get into the program, stay in the program, and navigate all the opportunities and benefits it has to offer. As such, we have been blogging about the 8(a) Program since long before the recent changes. And since then, we have blogged consistently on everything from the federal court decisions at issue to the SBA’s implementation of the ordered changes to the 8(a) Program–doing our best to ensure our readers stay up-to-date on all things 8(a) in these times of uncertainty and change. So suffice to say, we are excited to see the program being talked about on such a highly-esteemed, public, national forum. We are also very proud to see Nicole’s name in such a significant article on that forum. If you haven’t yet, please go check out the article linked here. https://www.washingtonpost.com/business/2023/09/07/sba-8a-program-ruling-affirmative-action/ The post Partner Nicole Pottroff Discusses Recent 8(a) Program Changes in Washington Post Article first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

I’m excited to announce that I will be presenting at Senator Ernst’s Entrepreneur Expo in Ames, Iowa. This is a wonderful opportunity for Iowa’s small businesses to learn about government contracting and federal innovation programs. This event will feature successful small business speakers, multiple information sessions with procurement experts, and networking opportunities with federal, state, and local agency officials. I’ll be discussing both the SBA Mentor-Protégé Program and small business joint ventures. There are multiple programming tracks within the Expo for participants to choose from, as well as networking sessions. Hope to see you there! Free registration at this link. Additional information about this event here. The post Event Announcement: Senator Joni Ernst’s Entrepreneur Expo, September 22, 2023 Ames, Iowa first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

For large and small contractors alike, teaming agreements are often essential to winning and successfully performing federal government contracts. Many agencies are (increasingly) requiring teaming agreements for a prime contractor to rely on subcontractor experience, qualifications, or resources. Even where a teaming agreement is not required to compete for a contract, it can still significantly reduce the likelihood of disputes during contract performance. So it is easy to see why teaming agreements are special enough to be the star of their own show. In this webinar, government contracts attorney, Nicole Pottroff & Greg Weber, will explain how to develop, negotiate, and administer teaming agreements that are both compliant and effective, covering best practices for teaming agreements that go beyond the bare minimum legal requirements and lead to more successful teams. Please join us! Register here. The post Virtual Event Announcement: Teaming Agreements hosted by Wyoming APEX Accelerators, September 13, 2023, 1:00pm CDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Join this webinar as John Holtz and I explore the pivotal role of NAICS codes in determining eligibility for SBA’s exclusive small business set-aside contracts. Recent revisions in size thresholds, size calculations, and industry classifications within the latest NAICS manual have reshaped the landscape. We’ll also discuss NAICS codes appeals, which can be a powerful tool. Register here. The post Govology Webinar: Cracking the Code: NAICS Essentials for Government Contractors, September 12, 2023, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA administers four socioeconomic programs: Service-Disabled Veteran-Owned Small Business (SDVOSB), 8(a) Business Development Program (8(a)) Women-Owned Small Business Program (WOSB) and HUBZone. The SDVOSB, 8(a), and WOSB programs all require that the key owner generally have control over the long-term decision-making and the day-to-day operations of a company. These same rules apply to the veteran-owned small businesses program (VOSB) as well. A recent decision from the Office of Hearings and Appeals at SBA reveals that the operating agreement or bylaws for these types of companies must be very clear about how they are operated. In VSBC Appeal of: Tree Services, Inc., SBA No. VSBC-291 (2023), OHA looked at a VOSB company that was seeking certification. SBA denied certification due to what it considered defects in the bylaws. SBA rules state that “Non-qualifying-veterans may be found to control or have the power to control in circumstances where non-qualifying-veterans control the Board of Directors of the Applicant or Participant, either directly through majority voting membership, or indirectly, where the by-laws allow non-qualifying-veterans to prevent a quorum or block actions proposed by the qualifying veterans.” 13 C.F.R. § 128.203. Specifically, the company had increased the size of its board from six to nine directors, but only one director was a veteran. However, the bylaws stated that: “The number of directors of the corporation shall be one (1).” “The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.” SBA’s initial review of the bylaws indicated it would likely not meet the veteran control requirements “(1) there appears to be only one veteran among Appellant’s nine-member Board and (2) the quorum and voting provisions in the Bylaws would enable non-veteran directors to block corporate decisions.” More directly, SBA recommended that the company revise the bylaws to avoid any confusion about veteran control, and provided a deadline for an amendment. When the company did not amend the SBA denied the certification application, writing that ““it appears that there are more Directors than authorized by the Bylaws and only one Veteran individual [i.e., Mr. Anna] holds a Director position, it cannot be determined that the Veteran is able to meet the Board of Director quorum and voting requirements set forth in the Bylaws.” Here’s one interesting thing about the Veteran Small Business Certification (VetCert) program–it allows a company to revise its documents and resubmit for an updated review. This means that, in many cases, a veteran-owned company can update its documents and address concerns from the SBA. It’s something that most companies should take advantage of. In this, the company did not take advantage of the opportunity to amend. After denial, though, Tree Services filed an appeal with OHA, arguing that, although SBA gave it until May 12, 2023 to amend its bylaws, SBA nevertheless denied the application on May 10, 2023. Interestingly, OHA granted the appeal. OHA noted that, under SBA’s rules for the VeCert program, SBA can “request additional documentation at any time in the eligibility determination process.” 13 C.F.R. § 128.302(c). SBA must, however, “take into account any clarifications made by an Applicant in response to” an SBA request for information, and must ‘consider’”’ all information provided by the concern in deciding whether the concern qualifies as a VOSB or SDVOSB.” In this case, SBA did not play by its own rules and denied the application prior to the deadline. The applicant, though, did not indicate it would amend its bylaws, or provide a response showing its bylaws met the requirements. In the end, OHA remanded this matter back to SBA for further consideration. Thoughts When a government reviewer such as SBA gives a company an opportunity to revise an application to meet any errors, it’s usually (although not always) the right move to take advantage of the opportunity. This is often the case when it comes to a certification program such as the VetCert program. However, SBA must also play by the rules as well. If it appears SBA did not abide by the deadline it set, it may be worth appealing such a decision. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Clearing Things Up: OHA Remands Matter for Unclear Veteran-Owned Bylaws first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! We always know it’s almost Labor Day when the sunflower fields start blooming in Kansas. They hold a special place in our hearts because they are the state flower. People come from miles around to visit and photograph the beautiful fields each year. I mean, how can you not smile when you see a sunflower, right? We hope you have some fun plans for the long Labor Day weekend and if you have a bit of spare time, we have provided some interesting articles on what’s happening in federal government contracting below, including new small business data, updated rules on the 8(a) Program, and more. Have a great holiday weekend. SBA Releases New Small Business Award Data Hub Local Small Business Achievements by Fiscal Year Government contracting: Protecting the recipe to your intellectual property Contractors make plans for a messy start to the next fiscal year U.S. Department of the Treasury, IRS Release Guidance on Inflation Reduction Act Provision to Ensure Good-Paying Clean Energy Jobs, Expand Clean Energy Workforce CAAC Consultation to Issue a Class Deviation From the Federal Acquisition Regulation (FAR) Regarding the Small Business Administration (SBA) Memorandum, “Impact of Recent Court Decision (Ultima Servs. Corp. v. Dep’t of Ag. (E.D. Tenn.)) on the use of the 8(a) Program” Asphalt Paving Company and President Plead Guilty to Bid Rigging SBA Announces Extension of Moratorium on 8(a) Eligibility Requirement Telework leads to feds ‘phoning it in,’ says senator seeking IG assessment Defense Contracting:DOD’s Use of Federal Prison Industries Class Deviation—Verification of Eligibility for the 8(a) Program The post SmallGovCon Week in Review: August 28-Sept. 1, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

While some federal contractors have (understandably) been focused on the court decision that found the 8(a) Program’s rebuttable presumption of social disadvantage for members of certain racial minorities unconstitutional, the SBA doesn’t just operate the 8(a) Program. It has to look out for all small businesses in America as well. In connection with this obligation, the agency recently released a new web application that allows visitors to discover a great deal about federal small business awards and socio-economic set aside awards. Called the “Small Business Data HUB,” this free program provides some interesting insights on how the government awards contracts. In this post, we’re going to explore this datahub a little and see what’s going on. Local Scorecard When you first go to the datahub, the default view is the local scorecard for the state of Alabama (As that is alphabetically the first state). The local scorecard provides details on the total federal awards to businesses within a certain state or territory, a certain SBA region, or a certain SBA district, depending on which area the user chooses in the dropdowns to the left. The data also shows a breakdown of award by small business type: Small Disadvantaged Businesses (SDB), Women-Owned Small Business (WOSB), HUBZone, and Service-Disabled Veteran-Owned Small Business (SDVOSB). One curiosity we quickly noted is how much Alaskan small businesses received in federal contracts relative to all Alaskan businesses. The state’s businesses received about $5.95 billion in federal contracts in 2022. $5.29 billion of that was for small businesses, a whopping 88.81% of the federal contract value! And small disadvantaged businesses got most of that share, likely due to the many Alaska Native Corporation 8(a) companies based in Alaska. Compare this to California, where small businesses received only 25.44% of the federal contract value that the state’s businesses received in 2022. Or New York, where small businesses received only 12.49% of the federal contract value that the state’s businesses received in 2022. It does not appear that it’s just large (population-wise) states that tend to see most federal contracts go to larger businesses. For example, in 2022, only 9.38% of federal contract value went to small businesses for the state of Iowa. In fact, California has seen a great increase in the proportion of federal contract value going to small businesses, as it’s seen an increase of over 10% since 2017. Vendor Counts The Vendor Counts tab allows viewers to see how many active federal contractors there are, nationally as well as by state, NAICS, or agency the vendor is performing for. The idea is fairly straightforward, just like the local scorecard. One thing to observe is that there has been a clear trend going back at least as far as 2009 (which is as far back as the data on the site goes)—there has been a steep decline in the number of active federal contractors, going from 148,778 in 2009 to 85,013 in 2022. The decline has been quite consistent too, with the number only increasing for 2009 to 2010 and 2015 to 2016, and even there the increase has only been slight. The number of small business federal contractors has essentially followed the same path, going from 121,181 in 2009 to 62,670 in 2022. In fact, it is fairly safe to say that the drop in small business contractors has made up most of the overall decline in federal contractor numbers. One group bucks the trend though: Small Disadvantaged Businesses (SDBs). This has increased from 13,080 in 2009 to 23,260 in 2022. Top Funding Offices and Vendors This tab is what it sounds like: It tells you which agency branches and which federal contractors have awarded and received the most awards in terms of contract value, respectively. This you can breakdown by state, congressional district, and even county, along with NAICS and PSC code. It only goes back for the past three fiscal years, however. Hopefully, more years will be added to help with data tracking. As for the information itself, unsurprisingly, when it comes to the agencies, the Department of Defense always takes up much of the top 10, and always holds 4 of the top 5 spots. It is a bit surprising that in fiscal years 2020 and 2021, the CDC did not jump any higher than the 6 spot, considering the COVID pandemic. As for vendors, naturally the top vendors are almost all giants, such as Pfizer, Lockheed Martin, and Raytheon. The one exception appears to be Modernatx, Inc., which in FY 2021 received $7,363,802,576 in federal contracts. The reason it appears to be an exception is that all of that contract value was small business dollars. So, congrats to Modernatx on what must have been a very successful year! Set Asides The final tab provides how much is being set aside for small businesses and the various SBA programs like 8(a) and WOSB. This can be broken down by department and agency as well. One thing that is very curious is that while the small business contractor count has decreased since 2010, the amount set aside for small businesses has nearly doubled since 2010, going from $55.9 billion in 2010 to $99.5 billion in 2022. While much of this can be attributed to general growth in the federal government and some is likely attributable to inflation and increases in size standards, the percentage of federal contract value set aside for small businesses has increased from 12.93% in 2010 to 16.40% in 2022. So, while competition has declined, demand has also increased, suggesting a favorable situation for small business contractors who have remained in the (increasingly consolidated) market. Thoughts This program could be very helpful, especially for new contractors or contractors wishing to expand their services, in helping determine where the money is. It will also be very useful for agencies in helping track their progress in achieving their goals with regards to set-aside percentages. From a legal perspective, some of the data could also potentially be useful in protests, although how useful and in what contexts will remain to be seen. Either way, this is a good resource from the SBA and we recommend it to all federal contractors. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Releases New Small Business Award Data Hub first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

It’s no secret that the 8(a) federal government contracting world has been in a bit of an upheaval this summer. When the Eastern District of Tennessee published its decision for the Ultima Services Corporation case, small business federal contractors everywhere began scrambling to keep up to date on how various agencies would react. We here at SmallGovCon have been keeping up to date on the developments as they happen. This time, we have more information on how the Ultima Services Corporation case will affect procurements with the Department of Defense, thanks to a new class deviation effective August 24, 2023. As of August 17, the SBA is no longer presuming that any individually owned 8(a) applicants or participants are socially disadvantaged (this does not affect entity owned firms). The class deviation—which replaces FAR 52.219-18 and DFARS 252.219-7010—requires 8(a) participants, including the 8(a) partner in a joint venture, to either receive an affirmative response of SBA’s acceptance of the participant’s social disadvantage or to provide a copy of the concern’s SBA qualification letter, prior to the DoD making an 8(a) award. So, what situations does this apply to? Competitive and sole-source 8(a) contracts; 8(a) sole-source orders placed against new or existing 8(a) set-aside multiple-award contracts (including GWACS and FSS contracts); 8(a) orders placed against new or existing non-8(a) set-aside multiple-award contracts (including GWACS and FSS contracts); 8(a) orders under BPAs; and Out of scope modifications and unpriced options under existing 8(a) contracts. I find this last one particularly interesting because it is a great reminder that out-of-scope modifications should be approved prior to the out-of-scope work being performed, in accordance with FAR Part 43. This appears even more important now because this deviation reads in such a way that suggests a contractor that performs out-of-scope work on an 8(a) contract, but cannot meet the social disadvantage requirement, may be out of luck on recouping any of those costs. What situations does this not apply to? Existing 8(a) contracts (though it will apply to options and orders as mentioned above); In-scope modifications; Exercising priced options; Competitive 8(a) orders against existing 8(a) set-aside multiple-award contracts, GWACS, and FSS contracts; and Entity owned firms owned by “Indian [T]ribes, Alaska Native Corporations, Native Hawaiian Organizations, or Community Development Corporations. Though, it should be noted that the above situations will still require verification of eligibility if otherwise required, such as 8(a) contracts that, inclusive of options, exceed five years per FAR 19.812(d). Admittedly, it seems a bit strange that 8(a) sole-source orders on existing 8(a) GWACs and FSS contracts will require the additional verification, but competitive 8(a) orders on existing 8(a) GWACs and FSS contracts will not. But, hey, I don’t make the rules. I just follow them. Need assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post DoD FAR Deviation Addresses 8(a) Social Disadvantage Changes first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As you likely know if you have been anywhere around federal government contracting lately, the SBA’s 8(a) Program is in a little bit of an upheaval. Due to a court case we have blogged on, SBA is subject to a court order with how it administers certain aspects of the 8(a) Program and has temporarily suspended new 8(a) Program applications. However, there are many contractors already in the 8(a) Program that SBA is now asking to complete social disadvantage narratives to allow for continued eligibility. SBA held a webinar on August 24, 2023 to discuss what they expect from social disadvantage narratives submitted by these current 8(a) Program participants. What SBA expressed represents a change to how SBA has reviewed social disadvantage in the past. But we are here to walk you through some of these changes. Prior to the current events shaking up the 8(a) Program, social disadvantage narratives (SDNs) were only needed for those applicants who did not meet one of the categories of presumed social disadvantage. The way SBA reviewed SDNs was pretty strict. SBA rules state that individuals who are not presumed socially disadvantaged must submit a social disadvantage narrative that shows “individual social disadvantage by a preponderance of the evidence”. The narrative had to include the following four elements: You need at least one objective distinguishing feature; Your social disadvantage must be rooted in treatment experienced in American society; Your social disadvantage must be chronic and substantial, not fleeting or insignificant; and Your social disadvantage must have negatively impacted your entry or advancement in the business world. These occurrences would come from your experience in education, employment, and/or business history. Traditionally, SBA would look for a large amount of detail and expect multiple occurrences of discrimination to be listed in the narrative. SBA did have some guidance stating that narratives should be three pages or less, but often the experience of contractors applying to the 8(a) Program did not reflect SBA holding applicants to that limit. In our extensive experience, regardless of whether or not a contractor reached out to a third party (such as attorneys or consultants), this did not change the fact that SBA would routinely come back to the applicant with requests for clarification or more information. As such, we always recommended that 8(a) Program applications involving social disadvantage narratives include a large amount of detail and occurrences addressing SBA’s listed elements. Recently, SBA’s 8(a) Program was challenged in court, leading to SBA being placed under a court order and the 8(a) Program no longer accepting applications. The crux of the court challenge was SBA’s presumptions of social disadvantage. Because the court ruling found the presumption of social disadvantage to be unconstitutional, SBA suspended new applications to the 8(a) Program, and contractors currently in the 8(a) Program who were admitted under presumed social disadvantage were informed that they would need to submit social disadvantage narratives. On August 23, 2023, SBA held a webinar to explain what specifically they were looking for in these social disadvantage narratives form current 8(a) Program participants. SBA stated that it would post this webinar at some point, but we will review some of the larger points here for you. For one thing, current 8(a) Program contractors who are going to be affected by their guidance and requests for new social disadvantage narrative are those who relied on the social disadvantage presumption to obtain participation in the 8(a) Program. Contractors who did not do this should have received notices from the SBA that they do not need to do anything. That would include 8(a) Program contractors who already demonstrated their social disadvantage through an approved narrative, or that were owned by a Native American, Alaska Native Corporation, or Native Hawaiian entity. For those who do need to submit social disadvantage narratives, SBA is still looking for the “who, what, when, where, and why” of all the occurrences listed in a social disadvantage narrative. These occurrences need to still be felt in American society, be chronic and substantial, be tied to a visible characteristic, and must negatively impact the eligible individual’s entry or advancement in the business world. None of this is new, and fits SBA’s previous guidance and rules. However, SBA in the webinar provided new guidance, which if taken literally, could lead to quite a few changes in social disadvantage narratives. SBA stated that they are looking for two cases or occurrences, and these could theoretically even be a paragraph long. SBA then went on to state that even one occurrence could work, if it shows multiple, chronic and ongoing instances of discrimination. Despite the SBA saying things such as “just need to get two examples” or “if you have a bunch, just give your best two”, SBA seemed to backpedal their new brief requirements by stating there should be “at least” two. SBA assured contractors on the webinar that they would work with 8(a) Program participants if their new social disadvantage narratives weren’t adequate, allowing revisions and feedback. However, SBA did not mention what happens if the social disadvantage narrative is eventually rejected or if at a later date SBA wants more detail in their narratives. Unchanged is the need for narratives to be individually specific, tied to one objective distinguishing feature, based in American society, and chronic and substantial. SBA presented three elements of review of social disadvantage narratives: Whether each supporting claim establishes an incident of bias that could lead to a finding of social disadvantage; Whether each incident of bias negatively impacted the individuals entry into or advancement in the business world; and Whether in the totality, these qualifying incidents establish chronic and substantial social disadvantage. SBA went on to explain that the shortened narrative should address these three elements with occurrences from education, employment or business history, and that they will continue to apply a “preponderance of the evidence” standard when evaluating. The presentation from SBA did not mention any changes to the exiting regulations or rules, and did not discuss whether there will be continued legal challenges on the court’s decision that spurred all this on. Unfortunately, despite SBA’s efforts, their explanations may raise even more questions from contractors. While previously, SBA seemed to want as many instances of discrimination as possible, SBA has indicated that right now, especially for those pending awards, it may prefer that participants focus on meeting all their requirements only in regard to a few of the most egregious incidents of social disadvantage. If SBA truly wants just two examples and minimal paragraphs, that would be quite the shift from previous guidance, especially given the fact that the regulations themselves have not changed at all, only this internal guidance. Given SBA’s own reluctance to firmly declare if it is only accepting two examples, or more, as well as the lack of changes in the rules themselves, it may be best to err on the side of caution, providing more details and occurrences in case the two examples do not work. Need legal assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? call at 785-200-8919 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 Webinar Clarifies New Expectations for 8(a) Social Disadvantage Narrative first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We at SmallGovCon are trying to get back into the routine of school. Pick-ups, drop-offs, practices, and clubs–it’s a lot. And the government is also ramping up activity a bit as it prepares for fiscal year end and what usually is a big rush of contract awards. With that in mind, check out the latest news, including SBA’s social disadvantage requirements, cybersecurity, and potential changes from a defense procurement commission. Have a great weekend. A court ruling is forcing small businesses to detail bias to keep special contracting status Contractors ask a defense-procurement commission: Where’s the beef? NCMA Insights: How interactive procurement contracting is changing the training landscape NCMA Insights: Contracting and purchasing for the fourth largest county in the nation Bronx Man Sentenced for Offering Bribe to Government Official GSA undertaking study to examine racial bias in facial recognition tech ONCD extends deadline for comments on new sector cybersecurity requirements SBA to require social disadvantage narratives for most 8(a) program participants House bill would require federal contractors to adopt cyber vulnerability disclosure policy SBA offers 8(a) guidance to agencies after court ruling Owners of Military Contracting Companies Sentenced for Bid Rigging in Texas The post SmallGovCon Week in Review: August 21-24, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We are pleased to announce that the Second Edition of the GovCon Handbook, SBA Small Business Size and Affiliation Rules, is now available! Is your small business really small? When it comes to federal government contracts, the answer can be a lot more complex than it sounds. In this GovCon Handbook, government contracts attorneys provide an in-depth look at the size and affiliation regulations for federal contractors. Written in plain English and packed with easy to understand examples, this GovCon Handbook demystifies the SBA’s rules regarding small business status for government contracts. This updated handbook was co-authored by me and Nicole Pottroff as well as firm founder Steven Koprince. It is now available through Amazon at this link. The post Koprince McCall Pottroff’s GovCon Handbook, SBA Small Business Size and Affiliation Rules is Now Available! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

To keep federal contractors apprised of recent decisions affecting the 8(a) Program, we are launching the 8(a) Contractors’ Toolkit. The goal is to provide relevant and useful information for government contractors about eligibility, contract requirements, and best practices. We are here to help federal contractors navigate the rapidly changing waters of the 8(a) Program. Check back regularly as we cover various topics bearing on federal contractors currently participating in or hoping to gain entry into the 8(a) Program. We will regularly and promptly update the site to keep our readers informed of all updates, clarifications, and guidance regarding the 8(a) Program, as they are released. We understand that things may feel a bit uncertain and overly complex in the 8(a) Program at this time. Our greatest hope is that this collection of specific information on the current changes to the 8(a) Program and social disadvantage narratives will guide contractors in drafting their narratives, but we are also here to help anyone who needs assistance. More information is available at this link. If you are needing legal assistance, please reach out at info@koprince.com or call 785-200-8919. The post SmallGovCon & Koprince McCall Pottroff LLC Announce the 8(a) Contractors’ Toolkit first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Writing a social disadvantage narrative for application to SBA’s 8(a) Business Development Program has always been an arduous undertaking–to say the least. And up until a recent Federal District Court decision (which we blogged on here), only a small portion of 8(a) Program applicants had to submit this time-consuming, highly personal, difficult task. But now (as discussed in the above-linked blog and in this blog on SBA’s recent actions in response to the decision), this requirement is being expanded to all individual applicants that haven’t already provided a social disadvantage narrative. You can read much more about SBA’s implementation of this here. But essentially, you will need to write a social disadvantage narrative if you are an individually-owned1 8(a) applicant or program participant who is trying to get into the 8(a) Program or already in the 8(a) Program–even if you were planning to or already had relied on the rebuttable presumption of social disadvantage (which SBA can no longer use). Fortunately, we have been drafting these narratives for a long time now, meticulously studying and utilizing: (i) SBA’s rules, policies, and guidance on social disadvantage narratives (recent guidance can be found here); (ii) SBA’s feedback on individual narratives; and (iii) SBA’s Office of Hearings and Appeals (OHA) decisions covering the SBA’s initial appealed decisions on applicants’ social disadvantage eligibility–as well as OHA’s final decisions on the appeals. So, while SBA’s current regulations and guidance can guide your pen, they are certainly not the only source of helpful information out there. Let’s take a look at some SBA guidance and recommendations based on SBA’s actual decisions that may increase your chances for success. To orient yourself, SBA’s 8(a) Business Development Regulations are found in 13 C.F.R. Part 124, Subpart A, which includes both the general 8(a) application requirements and the social disadvantage rules. According to SBA, individuals are socially disadvantaged if they “have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities[,]” and this social disadvantage stems “from circumstances beyond their control.” Again, we are not sure exactly how SBA’s new social disadvantage rules are going to look. But we do know the prior “presumption of social disadvantage” based on membership in a designated group (currently under section 124.103(b)) is gone. So, now, every individually-owned 8(a) applicant and participant will need to draft and submit a social disadvantage narrative to get or keep their 8(a) Program certification. That said, let’s dig right in to how to draft your narrative. Drafting a Social Disadvantage Narrative This narrative must prove to SBA that you are socially disadvantaged based on a preponderance of the evidence and should include corroborating evidence wherever possible. SBA’s regulation don’t define preponderance, but SBA’s Helpful Tips to Apply to the 8(a) Program state that “preponderance is evidence of a quality and quantity which leads the decision maker to objectively conclude that the existence or truth of the facts asserted is more probable than not,” and SBA provides examples of evidence that meets this standard. According to SBA, there are four elements of establishing social disadvantage: You need at least one objective distinguishing feature (discussed further below); Your social disadvantage must be rooted in treatment experienced in American society; Your social disadvantage must be chronic and substantial, not fleeting or insignificant; and Your social disadvantage must have negatively impacted your entry or advancement in the business world. An objective distinguishing feature is an identifiable feature that has caused or contributed to your social disadvantage. Generally, this means a characteristic individuals who are not socially disadvantaged don’t have. SBA’s regulations provide examples, such as race, ethnic origin, gender, physical handicap, and long-term residence in environment isolated from mainstream American society. The second and third elements of social disadvantage are pretty self explanatory. The negative treatment you’ve received must’ve been in the United States, and it must have been long-term and significant. To demonstrate the negative impact required under the fourth element, you must demonstrate your social disadvantage through experiences of discrimination or negative treatment relating to your education, employment, and/or business history. But most importantly, for each of these experiences, you must show three things: the details surrounding the event (names, dates, locations, etc.) to the best of your ability; that there was no legitimate alternative ground for the treatment you received (or, if an alternative ground exists, that the treatment was more likely due to your objective distinguishing feature than the alternative ground); and the negative impact of the experience on your entry into or advancement in the business world. This is crucial, as SBA has denied many applications that failed to demonstrate experiences meeting all three of these factors. And there are some important takeaways from SBA’s decisions denying applications on these bases. In one decision that we previously blogged on, SBA denied a woman’s application based primarily on her statements that she had become an advocate and mentor to women in the field after overcoming gender-based bias. SBA said, this “apparently is a very successful company, well respected in its field,” and therefore, the applicant did not “prove social disadvantage to entering or advancing in the business world.” In another decision we discussed, SBA again denied a woman’s application where she alleged gender-based bias, this time because she failed to show that her unequal treatment was due to her gender and not her physical condition (muscular dystrophy). So what have I learned from these and other SBA decisions regarding social disadvantage? First, the more specific you can be about the experience, the better. It may help to include facts about the location, the parties involved, etc. A lot of people struggle with this one–and honestly, for good reasons. For one, many of these events are traumatic, memories people don’t want to hang on to. Also, sometimes people are worried about disclosing names of people, companies, etc., given the sensitive subject matter. And both of these are more than understandable. So, here are a few tips to help: If you don’t remember a date, try including a season (i.e., “I remember it was winter, as there was snow on the ground”) a year, what grade you were in (for education events), etc.; and If you don’t remember, never knew, or don’t want to disclose a name, try giving a name to the individual or company and simply disclosing to SBA why (i.e., “I am going to call him Mr. S, because I was never told his name or forgot it”). NOTE: There is always a chance that SBA inquires for more details if your narrative contains more vague information like this, so it is important to still include as many details as you can remember (i.e., “Mr. S, though I didn’t know his name, was the Principal at the school and was roughly 40 years old, etc.”) Second, testimonials from others are gold. Even if your corroborating evidence is a statement from your business partner about the way you were treated, it is better than nothing. And in the age of technology, don’t forget to check your past emails, social media, text messages, call logs, etc., for any supporting evidence for the instances discussed in your narrative. Third, it is absolutely crucial to tie all of your listed experiences directly to your objective distinguishing feature. If there are other potential reasons for the negative treatment you received, you must discuss those–and you must show SBA why those were not the actual reasons for your negative treatment (or–at a minimum–why you have good reason to believe they were not the actual reasons for it). Fourth, long term impact is key! I have seen far too many narratives returned for revision and/or denied because the applicant failed to show how each instance of social disadvantaged negatively impacted their success–their entry or advancement in the business world. So, make sure you take the time to really explain the various ways each event affected you long-term. Also, don’t tell SBA how you overcame the discrimination or negative treatment; focus instead on how it became an uphill battle that others never had to face, and held you back compared to other–non-socially disadvantaged–people. * * * Is your head spinning yet? Don’t worry, you are not alone. Even many brilliant, successful business owners and other professionals have struggled immensely to draft an acceptable social disadvantage narrative. SBA has historically been tough as nails on these things. Now, with how many narratives SBA is now going to review–and many on very short time frames pending awards, we (probably like you) are anxious to see if the huge influx of narratives and need for prompt answers will have any effect on these rules, guidance, policies, or SBA’s enormously high standard of review. We shall see! But for now, your best bet is to start working on the best narrative you can, right now. Need assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. Note: This requirement does not apply to any entity-owned 8(a) companies (ANCs, NHOs, or other Tribal Nation owned-entities, as their eligibility was never based on social disadvantage to begin with. ︎The post 8(a) Social Disadvantage Narratives: What SBA is Looking For–Now, From ALL Individually-Owned 8(a) Applicants and Participants first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As you likely know, there are some major changes going on in the SBA’s 8(a) Business Development Program. And like many, I am sure you have a lot of questions—given the fact that these changes are being implemented right now without a published final rule explaining the details, limitations, and new requirements. While we may not have a rule, we have been closely following any and all SBA guidance on the matter as it has released. And as usual, we are here to pass that valuable information along to you. On August 17, SBA counsel John Klein provided an important update as part of the National 8(a) Association’s regular update series. The recording will be available soon, so check back on their website if you missed it. A key takeaway is that the SBA will require social disadvantage narratives for all individually-owned entities to establish social disadvantage. But there were some other updates as well. Key Update: Based on an August 17 update from SBA counsel John Klein, SBA will no longer allow a presumption of social disadvantage for individually-owned 8(a) companies. If you have questions on those narratives, please see our blog posts and other guidance on the topic. If you have questions about writing your social disadvantage narrative, this video from Nicole Pottroff has great information about what SBA is looking for. Please check it out and contact our firm if you may need additional help. No effect on entity-owned firms. This change will not affect entity owned firms, such as ANCs. Those firms don’t require a finding of social disadvantage. For instance, the rule governing tribal entities states that for “social disadvantage,“ a tribal entity “as defined in § 124.3 is considered to be socially disadvantaged.” There is no presumption involved, unlike the language for individually owned entities. Already did a social disadvantage narrative? This change will not affect companies that already demonstrated social disadvantage by SBA reviewing the social disadvantage narrative as part of the 8(a) Program application process. But for individually owned firms that did not already do so, they will need to work on their social disadvantage narrative as soon as possible to be accepted and remain in the 8(a) Program, and to receive 8(a) awards. Pending 8(a) Award. If you have a pending 8(a) award for which SBA action is needed for approval, you may have as little as 5 days (SBA’s time period to approve an 8(a) award) to have your social disadvantage narrative approved by SBA. So get cracking. For contracting actions where SBA approval is not needed, such as priced options or in-scope modifications for existing contracts, SBA review of social disadvantage is generally not necessary. Other situations, such as novations, do require SBA review of 8(a) eligibility, so you would need an approved social disadvantage narrative. New Instructions. SBA will be updating the questions for new applicants to provide guidance on the social disadvantage narrative requirements. Once the application site is reopened, those questions will guide applicants. But existing 8(a) Participants that don’t have a social disadvantage narrative should start working on those now. While SBA will prioritize companies with pending 8(a) contracting awards, other companies should consider getting their social disadvantage narrative together so that SBA can review over the next few weeks and months–no one wants an offer for 8(a) award denied on this basis (so, be proactive). Need assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Update: Get Your Social Disadvantage Narrative Ready first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Steven Koprince, Govology Legal Analyst and retired founder of Koprince McCall Pottroff (and all around cool dude) will be presenting this webinar which covers the Ins and Outs of the DPA Title III Agreement, including which contractors are eligible, how to find and pursue DPA Title III opportunities, typical terms of DPA Title III agreements, and more. Don’t miss your chance to learn all about DPA Title III, in plain English! Register here. The post Govology Webinar: The Ins and Outs of Defense Production Act Title III Agreements, August 24, 2023, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! School started this week and I’m not sure who was more excited, the kids or the parents? Seems like the summer school break flew by. It’s really fun to see all those first day of school photos that the parents are posting. Here in Lawrence, Kansas the university students are also back in town and the energy level is always palpable as the semester is starting. We hope you had a nice summer and were able to get out and enjoy a little family time, prior to the start of the school year. Enjoy the weekend! And now, the news in federal government contracting, as the fiscal year comes to a close, there are updates on some big MACs, government IT and cybersecurity, and new DOL regulations. Department of Labor to Offer Online Seminars for Employers, Workers in September on Recent Updates in Regulations for Federal Contractors Government IT provider challenges elimination from a $50B solicitation in federal court Multiple award schedule pricing paradoxes How federal acquisitions will help recovery in Maui How to cut the chances of getting hit with a protest DoD’s JWCC memo is a scene setter for the future of cloud A Snapshot of Government-Wide Contracting for FY 2022 Things are cookin’ at the DHS Procurement Innovation Lab Trends in the government market SBA administrator steps into Eisenhower’s back yard on 70th anniversary of agency’s launch IRS must improve oversight of third-party cybersecurity, watchdog says Blame the lawyers if your agency is paying 10%-to-25% more for certain cloud services The post SmallGovCon Week in Review: August 14-18, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In a recent decision, the Small Business Administration’s Office of Hearings and Appeals (OHA) reviewed the requirements to establish that a company is a manufacturer of a product under SBA’s rules. In particular, there is a requirement that a company use “its own facilities” in manufacturing the product. But how does a company establish it will use its own facilities? The first decision was Size Appeals of: Master Boat Builders, Inc. SBA No. SIZ-6198 (2023) and then a little later OHA reconsidered and reaffirmed its earlier decision. The case looked at a size protest of Birdon America, Inc. (Birdon), which received a contract under a Coast Guard Solicitation for different types of river and inland cutter vessels (known as WCCs). The solicitation was set-aside for small businesses under NAICS Code 336611, Ship Building and Repairing, with a corresponding 1,250 employee size standard. Bollinger Shipyards, LLC (Bollinger) was to assist Birdon in performing the contract. Initially, the SBA Area Office found Birdon to be small, based on its employee count being below the threshold and because Birdon was the manufacturer of the cutters. The manufacturer test under SBA rules states: (i) SBA will evaluate the following factors in determining whether a concern is the manufacturer of the end item: (A) The proportion of total value in the end item added by the efforts of the concern, excluding costs of overhead, testing, quality control, and profit; (B) The importance of the elements added by the concern to the function of the end item, regardless of their relative value; and (C) The concern’s technical capabilities; plant, facilities and equipment; production or assembly line processes; packaging and boxing operations; labeling of products; and product warranties. 13 C.F.R. § 121.406(b)(2)(i). The Area Office found all elements were met. (A) “Birdon is primarily responsible for the design and production process. According to the Proposal, Birdon will ‘install equipment, outfit the vessels, test, train and oversee quality on-site.'” (B) “Birdon plans to manufacture the superstructure of the cutters, Bollinger will manufacture the bare steel hull and steel pipework under Birdon’s oversight and supervision. Birdon will then turn the bare hull into a cutter with the assistance of other subcontractors.” (C) “The Area Office determined Birdon met factor three of the applicable SBA regulations because of Birdon’s technical capabilities; and the Teaming Agreement between Birdon and Bollinger establish an intent to lease, occupy and control Bollinger Facilities. The Area Office considered Birdon’s technical capabilities as a prime contractor and found them to be adequately supported by the proposal’s past performance section. The Area Office noted Birdon’s intent to execute a lease agreement with Bollinger based upon the terms of the Teaming Agreement and sworn Declarations from officials of both Birdon and Bollinger. On appeal, OHA disagreed that Birdon was the manufacturer. OHA noted, first, that “that the ostensible subcontractor rule does not apply to procurements for manufactured products.” That argument had been raised by appellants. OHA focused on one aspect of the manufacturer test, that a company must be “the concern which, with its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired.” 13 C.F.R. § 121.406(b)(2). SBA doesn’t require outright ownership of the facilities, a lease can be enough: “the phrase “its own facilities” in the regulation means that the contractor need only occupy and control the facilities, if not as an owners, then as a lessor or tenant.” Here, Birdon owned no shipyard, so the question became what type of lease did it have to have, and at what point in time relative to the proposal. The OHA judge, in reviewing the regulation and past SBA caselaw, concluded that to determine a challenged concern’s proposal met the ‘its own facilities’ requirement, a fully executed lease of the proposed premises for manufacturing need not be in place at the time of the proposal. However, there must be some agreement in writing between the challenged concern and its prospective landlord in place at the time of the proposal for the challenged concern to occupy and control the facilities it will use to manufacture the end item-if not as an owner, then as a tenant. In this case, Birdon had no agreement meeting these standards. Instead, it had a teaming agreement and proposal. The teaming agreement, though, while including a “chart which illustrates Shops 4, 6 and the Wetdock as areas designated for Birdon to perform under the contract, . . . does not state that Bollinger agrees to lease these premises to Birdon.” The proposal, similarly, merely said that Birdon “selected Bollinger as the best available facilities for the construction of the WCCs.” But these documents amounted to “nothing more than an agreement to come to an agreement.” But that is not enough because no document demonstrated Bollinger’s agreement to provide facilities. On reconsideration, OHA didn’t budge. The teaming agreement in this case did not establish intent to provided leased facilities. Rather, like most teaming agreements it reflected Bollinger’s role in the contract, but did not speak to leased facilities. OHA remanded the matter back to the area office for further review on the manufacturer question. This case is a good reminder that a contractor must comply with all aspects of SBA’s rules, not just most of them. Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post OHA: A Manufacturer Must Own or Lease Facilities to Qualify first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

A lot has been happening in the 8(a) Business Development Program world over the past couple of weeks. SBA has been busy updating regulations applicable to the 8(a) Program to both bring SBA rules into alignment with the economic realities in a post-COVID world and to make 8(a) requirements more uniform across the board. Here, we focus on a change to ownership rules for non-disadvantaged owners of 8(a) Program participants that are also part of an SBA-approved Mentor-Protégé Agreement. As mentioned, the SBA has been busy with a flurry of activity related to the 8(a) Program. With probably the largest impact to the 8(a) Program, was the decision regarding a challenge to a presumption of social disadvantage. That decision led to the ongoing temporary pause on submission and at least some application reviews. And don’t forget the SBA’s regulatory agenda which includes a planned change to increase the economic disadvantage thresholds for 8(a) (and economically disadvantaged women owned small business) participation. Now, we turn to the 8(a) Program participant ownership rules, and resolve a long-standing conflict between such rules and those applicable to Mentor-Protégé Program participants. 13 C.F.R. § 124.105 discusses, in detail, the ownership requirements for the SBA’s 8(a) Program including the minimum ownership percentage a disadvantaged individual may have and the maximum ownership percentage that non-disadvantaged individuals may have in an 8(a) Program participant. The ownership requirement for the disadvantaged individual is relatively easy to determine. Ownership of a partnership? “At least 51 percent of every class of partnership interest.” 13 C.F.R. § 124.105(b). Ownership of an LLC? “At least 51 percent of each class of member interest.” 13 C.F.R. § 124.105(c). Ownership of a corporation? “At least 51 percent of each class of voting stock outstanding and 51 percent of the aggregate of all stock outstanding.” 13 C.F.R. § 124.105(d). This is consistent with the SBA’s ownership requirements for woman-owned small businesses and service-disabled veteran owned small businesses as well. In short, the qualifying individual, or group of qualifying individuals, must unconditionally and directly own 51% of the business. Logic then follows that non-disadvantaged individuals and/or non-8(a) concerns, which we will collectively call non-disadvantaged persons, are permitted to own up to 49% of the 8(a) participant. Simple, right? Yes, but—there’s always a “but,” right?—when non-disadvantaged owners begin “collecting” ownership shares in multiple 8(a) participants, the rules get a bit more complicated. The ownership restrictions for non-disadvantaged persons with an interest in multiple 8(a) concerns are much more limited. 13 C.F.R. § 124.105(h)(1) restricts non-disadvantaged persons that are a general partner or stockholder with an ownership share of at least 10% in one 8(a) participant from owning more than a 10% interest in another 8(a) participant in the developmental stage, or 20% in the transitional stage. There was no change to this particular section between the prior version and the current version. However, there were some changes to 13 C.F.R. § 124.105(h)(2) to help clarify a conflict between 8(a) ownership rules and the Mentor-Protégé Program rules. The information in the previous version of 13 C.F.R. § 124.105(h)(2), focusing on non-8(a) participant concerns in the same or similar line of business, remains intact, although it is broken up between different sections. 13 C.F.R. § 124.105(h)(2) restricts non-8(a) participant concerns, or principals of such concerns, in the same or similar line of business from owning more than a 10% interest in an 8(a) participant in the developmental stage, or 20% in the transitional stage. The remaining information was moved to a new sub-section, found at 13 C.F.R. § 124.105(h)(2)(i), which restricts former 8(a) participants in the same or similar line of business, or principals of such concerns, from owning more than a 20% interest in a current 8(a) participant in the developmental stage, or 30% in the transitional stage. If you are familiar with SBA programs, you are probably wondering whether this means that mentors are now restricted from, at the very most, owning more than a 30% interest in a current 8(a) participant. According to SBA’s Mentor-Protégé Program rules, a mentor has traditionally been permitted to own up to a 40% interest in its protégé. It’s no doubt one of the benefits that attracts mentors to the Mentor-Protégé Program. But the former language of 13 C.F.R. § 125.9(d)(2) made no mention of participants in the Mentor-Protégé Program. So, which is it: 10, 20, 30, or 40%? Well, this, my friends, is exactly what the change in this particular 8(a) Program ownership rule targets. Finding a need for clarity, SBA added new language, found at 13 C.F.R. § 125.9(d)(2)(i), which states that a mentor in an SBA-approved Mentor-Protégé Agreement may own up to 40% of its protégé. This applies whether the mentor and protégé are in the same or similar line of business—“same or similar line of business” meaning business activities that share the same four-digit industry group of the NAICS Manual as the 8(a) participant’s primary industry classification. For example, a mentor who worked in 541310 Architectural Services would be in the same or similar line of business as its protégé if the protégé’s primary industry classification is 541330 Engineering Services, because both NACS Codes fall under the 5413 industry group of Architectural, Engineering, and Related Services. Given the number of changes that occurred within this particular rule amendment in the Federal Register, it is easy to see that the SBA is making an attempt to clear up some long-standing ambiguities within the 8(a) Program. Stay tuned for more information on even more changes within this action-packed Federal Register entry. Questions about this blog? email us at info@koprince.com Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Clarifies Inconsistencies in 8(a) and Mentor-Protégé Ownership Rules first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

John Holtz was recently interviewed by Dr. Kizzy Parks with K. Parks Consulting, Inc. about the current 8(a) Program situation and the pause on applications. Please use this link to access this informative podcast and we invite you to visit YouTube for all of Kizzy Parks podcasts concerning federal government contracting matters. The post Podcast: Understanding the 8(a) Lawsuit and Its Impact: Attorney John Holtz Reveals All first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello, Readers! Many small business contractors and agency personnel are paying close attention to the fallout from the recent court decision on the 8(a) Program, as shown in this week’s articles. For an explanation of the decision, see the post from John Holtz, while Nicole Pottroff has explained SBA’s pause on taking current 8(a) Program applications. Another big story was DOL’s new rules. We hope you have a wonderful weekend and please refer to our most recent blog posts for additional information on federal government contracting matters. How to inoculate your agency’s acquisitions against protests DHA faces legal challenges to how it conducted $2.5B procurement One of SBA’s signature contracting programs is on hiatus Three ways the proposed NDAA could change the way contractors do business State Department providing extra cyber-supply chain risk training for 150 contracting officers 5 Companies Win Spots on $100M Air Force ISR, Cyber Support Contract Small tech companies ask Congress for changes to make acquisition easier to navigate A forest of proposed rules sprouts up around federal acquisition A state official calls on GSA to reopen its multiple award schedule Harris touts new prevailing wage rule for construction projects Labor Department now has better ability to dig into discrimination claims against federal contractors GSA’s commercial platforms gaining steam, but data, other concerns persist Amphenol Corporation Pays $18 Million To Resolve Allegations That It Submitted False Claims For Electrical Connectors US Department of Labor Announces Final Rule to Modernize Davis-Bacon Act The post SmallGovCon Week in Review: August 7-11, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Through an amendment to the Senate-Passed 2024 NDAA, the Department of Defense (“DoD”) sole source threshold for many socioeconomic set-aside programs would be increased significantly under the Senate-passed version of the 2024 National Defense Authorization Act. Also a method to adjust DoD sole-source thresholds for inflation would be created. The Senate version of the 2024 NDAA includes an amendment that would raise the sole-source caps for Department of Defense (“DoD”) manufacturing and non-manufacturing contracts awarded to 8(a) Program participants, Woman-Owned Small Businesses (“WOSB”), Economically Disadvantaged WOSB (“EDWOSB”), HUBZone Program participants, and Service-Disabled Veteran-Owned Small Businesses (“SDVOSB”). Senator Ben Cardin of Maryland, proposed an amendment to the 2024 NDAA , that if the Senate-Passed NDAA is eventually ratified into law, would make the following changes to the sole-source thresholds for manufacturing contracts: Set-Aside DesignationCurrent Manufacturing Sole-Source Contract ThresholdsProposed DoD specific Manufacturing Sole-Source Contract Thresholds8(a) Program$7 Million$10 MillionHUBZone$7 Million$10 MillionWOSB$7 Million$10 MillionEDWOSB$7 Million$10 MillionSDVOSB$7 Million$10 Million As mentioned, the amendment also updates the sole-source threshold for DoD non-manufacturing contracts (basically all other contracts): Set-Aside DesignationCurrent Non-Manufacturing Sole-Source Contract ThresholdsProposed DoD specific non-Manufacturing Sole-Source Contract Thresholds8(a) Program$3 Million$8 MillionHUBZone$3 Million$8 MillionWOSB$4 Million$8 MillionEDWOSB$4 Million$8 MillionSDVOSB$3 Million$8 Million In addition, presumably to prevent contradictions between statutes, the amendment also updates the SDVOSB and VOSB contracting goal statute. This change would update the cap on sole-source awards found therein to change from $5 Million to “the dollar thresholds under section 36(c)(2) of the Small Business Act (15 U.S.C. 657f(c)(2))”. What that boils down to is that the contracting goal statute for SDVOSBs and VOSBs would now have it’s sole-source threshold set by the same statute that we discussed above being updated. Of note, this amendment seems to focus only on DoD contracts. The amendment does not replace the current all-encompassing sole-source thresholds with a new number. Rather, it inserts a parenthetical phrase after the current sole-source thresholds that states: “(or [INSERT NEW THRESHOLD], in the case of a Department of Defense Contract, as adjusted for inflation by the Federal Acquisition Regulatory Council under section 1.109 of the Federal Acquisition Regulation).” This basically carves out an exception or DoD specific sole-source threshold. Consequently, the changes under this amendment would only raise sole-source thresholds for DoD manufacturing and non-manufacturing contracts. Additionally, the parenthetical language also seems to add in the ability for the Federal Acquisition Regulatory Council to adjust these new DoD specific sole-source thresholds for inflation, under Section 1.109 of the FAR. This represents a potential new avenue for the FAR council to update DoD sole-source thresholds to compensate for inflation. This version of the NDAA has passed the Senate, and we will have to wait and see if the final version of the NDAA includes these same threshold adjustments. However, it is possible that if fully passed and ratified, federal contractors may feel somewhat let down by these threshold increases and the inflation adjustment process, as this amendment only applies to DoD contracts. While DoD contracts certainly represent a significant chunk of federal contracts, by no means do they represent all contracts. As such, this amendment only goes so far to raise thresholds and address inflationary concerns across federal contracting. My colleagues and I will keep you posted on the progress of the 2024 NDAA as it impacts federal contractors. You can view the Senate-passed 2024 NDAA, including its multitude of amendments here. Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Senate-Passed 2024 NDAA set to Raise DoD Set-Aside Sole-Source Contract Threshold Limits first appeared on SmallGovCon - Government Contracts Law Blog.View the full article