Koprince Law LLC

When it comes to calculating a company’s receipts for size purposes, the procedure for is (or at least was) pretty simple: Look at the company’s tax returns. Indeed, it has long been SBA’s position that they can only consider tax returns, as noted in Nordstrom Contracting & Consulting Corp., SBA No. SIZ-5891 (Mar. 7, 2018) (“[T]here is no authority for an area office to consider any evidence apart from tax returns…when calculating a firm’s average annual receipts.”) among other cases. In other words, if something was not mentioned in a tax return, it couldn’t be considered by SBA. The only exception was if the tax returns were not filed, in which case SBA will review financial statements or similar information in lieu. 13 CFR § 121.104. Therefore, other than that exception, a contractor only needs to rely on the information in its tax return when making its size representation. But the U.S. District Court of the District of Columbia (DDC) thinks otherwise. On May 18, 2023, it entered a decision on opposing motions for summary judgment in a size protest that had become a False Claims Act case. In this decision, it concluded the opposite: Contractors must in some cases consider information outside their tax returns. Let’s take a deeper dive. United States ex rel. Bid Solve, Inc. v. CWS Mktg. Grp., Inc., 678 F. Supp. 3d 53 (D.D.C. 2023) began as a standard size protest back in 2018. At first, the matter was simple enough: CWS Marketing Group’s (CWS) size was protested, it submitted its tax returns, and SBA sided with CWS over the protester, Bid Solve, Inc. (Bid Solve) after reviewing those returns. However, Bid Solve apparently knew there was something more going on and filed a False Claims Act case with the DDC against CWS. Bid Solve alleged that CWS had misreported its receipts by improperly subtracting expenses that it shouldn’t have subtracted. If these expenses were not subtracted, then CWS would be over the size standard. Proving this would necessarily require looking at information that wasn’t in CWS’ tax returns, and here is where the question arose: Was CWS justified in only relying on the information in its tax return? The DDC said “no” in light of 13 C.F.R. § 121.104: Defendants misread the regulation: They were not allowed to rely solely on CWS’s tax returns. And because of that, they should have never subtracted “flowthrough income” from CWS’s total revenue. … § 104(a) provides a clear formula: receipts are “all revenue … reduced by returns and allowances,” and “the only exclusions from receipts are those specifically” listed in § 104(a). Tax returns may be used to calculate receipts, but they cannot override § 104(a)’s basic rules. Looking at CWS’ argument, the DDC further explained why it was rejecting it: Defendants disagree, proposing a different reading. They urge that a subsection—§ 104(a)(1)—required them to use only CWS’s tax returns when calculating its receipts. That provision states that “The Federal income tax return and any amendments filed with the IRS on or before the date of self-certification must be used to determine” whether a business is small…(i)n other words, if they plugged in numbers from CWS’s tax returns, then they are in the clear, no matter if that calculation flouts other parts of the regulation. The DDC then noted that, basically, CWS was using the “only tax returns” argument to justify the fact that they violated the provision that “reimbursements for purchases a contractor makes at a customer’s request” may not be excluded from receipts. CWS’ position would basically make it impossible to enforce the rest of the regulation if the contractor in question made an inaccurate tax return (unintentionally or otherwise). The DDC then further explained how CWS’ position does not make sense. “For example, 13 C.F.R. § 121.1009(b) says that when making a size determination, the SBA will mostly rely on the information a bidder provided but ‘may use other information and may make requests for additional information.’” It would not make sense for the rule to be that others can submit other information but the contractor itself need only rely on its own tax returns. After all, the contractor would have the most access to its own information. Impact on SBA Rule Quite frankly, we think the DDC’s ruling here is just common sense. It does not stand to reason that a contractor could file inaccurate tax returns and then rely on those same inaccurate tax returns to its own benefit, or that tax returns could allow subtractions from receipts that SBA rules do not allow. It would completely undermine the size determination process. With that, we turn to the fact that, as we noted above, SBA has historically stated that area offices will only rely on tax returns, when filed, in making size determinations. Thus far, it does not appear any SBA decision has cited to the DDC’s decision, either to accept it or attempt to get around it (technically, the DDC did not overturn any SBA precedent, this was a False Claims Act case). That said, we think it would make sense for SBA to adopt the DDC’s ruling as its own standard for size determinations. However, that is basically something that SBA will have to do on its own, although we could see SBA continuing to rely on tax returns in the interest of efficiency. For it would have to be an odd situation indeed for a protester to have enough evidence about an awardee’s internal finances to be able to say that the awardee’s own tax returns are wrong. Generally, such an assertion is going to be pure speculation on the part of the protester, which means that a request that the protested firm provide additional information would be rejected by SBA. SBA will not act on requests or protests based on speculation alone. As such, it is going to be on SBA to change its own standard and ask protested firms to provide more than just their own tax returns in these protests. Whether it will do so remains to be seen. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Beyond Tax Returns: Federal District Court Says Contractors Must Include Information Outside Tax Returns in Calculating Size first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday everyone! Here in the Midwest we are enjoying some nice spring weather. But along with the beautiful flowers comes the allergies for some folks. In contracting news this week legislators in Washington have been working on bills in an attempt to make it easier for small businesses to work with the government and there is continued movement on cybersecurity for federal contractors. You can read more about that in the articles below as well as other contracting news. Have a great weekend. Former Veterans Affairs Procurement Supervisor Sentenced to Seven Years in Prison for Pocketing Kickbacks Readout of Roundtable on Project Labor Agreements for Large Federal Construction Projects Breaking Down the DOD’s New Defense Industrial Base Cybersecurity Strategy Accenture Federal Services acquires major federal contractor How legislators could make things a little easier for those companies working with the government Congressional minority caucuses call for data on government spending on contractors Investigating the US Army’s FY2025 Budget Proposal Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million House Committee on Small Business Unanimously Reports Seven Bipartisan Bills Favorably to the House Ensuring Prevailing Wages: A Closer Look at the Davis-Bacon Act Former Federal Contract Employee Sentenced to 18 Years for Child Pornography US Department of Labor Recovers $34K in Back Wages, Benefits for 9 Workers Misclassified by Subcontractor on Federal Project in District of Columbia The post SmallGovCon Week in Review: April 15-19, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Please join us for an in-depth exploration of past performance management in government contracting. Gain valuable knowledge to leverage your past successes for future growth and competitive advantage. Past performance management holds significant weight in the success of government contractors. Government agencies now place a premium on a contractor’s ability to deliver on promises, emphasizing the adage that “actions speak louder than words.” Contractors with a strong track record of past performance gain a competitive edge in the government contracting arena. Nicole Pottroff and Greg Weber, will discuss the essential components of past performance crucial for building a solid foundation for success. Register here. The post Govology Webinar: Past Performance: A Critical Factor For Success in the Government Marketplace (2024 Update), April 25, 2024, 1:00-2:30pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The Rule of Two is the federal contracting rule requiring agencies to set aside a solicitation for competition only between small businesses when there are at least two small businesses that could do the work for a fair price. But that rule does have some exceptions. These exceptions can make it difficult to know the situations that would justify filing a Rule of Two protest. Read on to find out. First, a primer on SBA’s Rule of Two. Note that this particular post relates solely to the SBA’s Small Business Rule of Two. The Department of Veterans Affairs has its own Rule of Two for service-disabled veteran owned businesses. For more information on the VA’s SDVOSB Rule of Two, visit our post here. FAR 19.502-2(a) requires that all acquisitions for supplies or services that have an anticipated dollar value above the micro-purchase threshold ($10,000 at the time of this post) but not over the simplified acquisition threshold or SAT ($250,000 at the time of this post) be set aside for small businesses. That is, unless the contracting officer does not have a “reasonable expectation” that it would receive offers from two or more responsible small businesses that were competitive in terms of fair market prices, quality, and delivery. The rule in FAR 19.502-2(b), which pertains to acquisitions above the simplified acquisition threshold, is worded a little differently. As noted in the prior paragraph, acquisitions between the micro-purchase threshold but below the SAT must be set aside for small businesses unless the contracting officer does not have a reasonable expectation that it would receive offers from two or more small businesses. In contrast, those over the SAT must be set-aside for small businesses when there is a reasonable expectation that offers will be obtained from at least two responsible small business concerns and award will be made at fair market prices. (In practice, both formulations should typically result in small business set-asides under the same circumstances). However, an acquisition should not be a total small business set-aside unless such a reasonable expectation exists. Otherwise, the acquisition may be partially set-aside under FAR 19.502-3. This leads us to the question of how a contracting officer will know whether there is a reasonable expectation or not? Well, that is a decision that the contracting agency must make if market research shows at least two small businesses that meet the criteria. When should you file a Rule of Two protest? Now that we have the background out of the way, what situations are appropriate to file a Rule of Two protest? Rule of Two protests are filed in situations where the protester believes that a procurement should have been set-aside for small businesses, but it was not, or those in which the protester believes the procurement was improperly set-aside for small businesses, when it should not have been. Simple, right? In nearly all GAO Rule of Two protests, no matter which way you argue it, the protest will be won if GAO determines that the agency’s basis for its decision is inadequate. Such decisions are generally based on market research. Sometimes market research will include issuing a sources-sought notice, internal meetings, conducting research (generally, online searches looking for capable potential offerors), market surveys, looking back at prior procurements for the same or similar products or services, speaking with small business analysts, and more. Though there is no specific method that must be used in market research, the basic rule is that the decision “must be based on sufficient facts so as to establish its reasonableness.” (See Mountain West Helicopters, LLC). In some capacity, the market research must examine the capabilities of the potential offerors to determine not only whether two or more small businesses will submit offers, but whether they are capable of performing the contract requirements. You can read more about that in this previous SmallGovCon blog post. Therefore, if your company is a small business that can do the work on a solicitation that is unrestricted, and you know of at least one other company that can do the work, you have the basis of a small business Rule of Two protest. Other Important Details Remember how I said that it’s up to the contracting agency to determine whether a small business set-aside is appropriate? Well, in a protest, GAO will not second guess unless there has been an abuse of discretion, which it is up to the protester to show. (See Nordic Sensor Tech., Inc.). Unfortunately, it doesn’t matter if the protester is a small business protesting because it believes that an unrestricted solicitation should have been set aside for small business competition, or whether the protester is a large business protesting the fact that a solicitation is limited to small business offerors only. The requirement that the protester prove a clear abuse of discretion when protesting a set-aside (or unrestricted) solicitation is the same. GAO has sustained a protest and held that a contracting officer should conduct additional research into the existence of additional firms that could meet the Rule of Two. In that decision, GAO held that an Agency must contact firms that meet requirements of a set-aside if it is aware of any. (See SWR, Inc.). Additionally, because a protest involving the Rule of Two is an issue with the solicitation, most Rule of Two protests must be filed before bid submissions are due. 4 C.F.R. § 21.2(a)(1). This covers situations when you believe there was a mistake in setting a contract aside, or not setting a contract aside, for a small business. This covers most Rule of Two protests. Therefore, if you think that there was a mistake in setting aside, or not setting aside, a procurement, raise the protest early! Otherwise, you may miss the opportunity. If you think you may have grounds for a protest, it’s best to act early in the solicitation process. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Why File: A Rule of Two Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, readers. Around these parts, we’ve been enjoying some nice spring weather as we try to fill the void left by the end of March Madness. But it will be heating up soon, so enjoy the spring weather while you can and have a great weekend! Here are some recent updates from the world of federal contracting, including some new congressional initiatives to streamline federal contracting processes, as well as create new cyber standards for federal procurement. SBA Recognizes 2024 Government Contractors and 8(a) Graduate of the Year Wyden bill requires new cyber standards in federal tech procurement Evaluation of DoD Financial Responsibility Reviews on Prospective DoD Contractor FACT SHEET: Vice President Kamala Harris Launches Call to Action to Bring the Benefits of Space to Communities Across America Technology Modernization Fund announces targeted investments to improve security at NASA, Department of Labor Mace sponsors bill to ban educational requirements for government contractors Senate Bill Introduced to Streamline Federal Procurement Processes How Government Contractors Can Plan for a Bright Future by Forecasting the Right Metrics Lawmakers push skills-based hiring for federal contractors Highlights from the Defense-Wide FY 2025 Unclassified IT Budget Request General Services Administration announces $23.8 million for projects to improve federal facilities and benefit local communities as part of President Biden’s Investing in America agenda Libby woman admits stealing mail while working as a contract carrier Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise Program Implementation Modifications The post SmallGovCon Week in Review: April 8-12, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA’s Service-Disabled Veteran-Owned Small Business (SDVOSB) rules include one particular component dealing with the working hours of a service-disabled veteran owner of an SDVOSB business, often called the full-time devotion rule. SBA has recently reviewed its full-time devotion requirement in an SDVOSB protest, and found that the company in question did not establish that a service-disabled veteran met the requirement. In Marathon Indus. Equip., LLC, SBA No. VSBC-342-P (Mar. 14, 2024), a protester challenged the SDVOSB status of Gilk and Sons, LLC (Gilk and Sons) in connection with a DLA solicitation set aside for SDVOSBs. A competitor can challenge the SDVOSB status of a proposed awardee on SDVOSB set-aside contracts. In this case, the protester argued that the veteran owner (Mr. Gilkison) worked at a different company (PacTec) that was the supplier of the products under the Solicitation. As part of the initial SDVOSB application, Gilk and Sons explained that Mr. Gilkison “works for Gilk and Sons Monday to Friday from 8:00am to 5:00pm” and he is “finishing up some consulting work with PacTec that will be completed by the end of the year … [w]hen I consult it is outside of the business hours for Gilk and Sons … [t]his does not conflict with my normal working hours.” SBA regulations prohibit the key service-disabled veteran for SDVOSB status from being engaged “in outside employment that prevent[s] [him or her] from devoting the time and attention to the concern necessary to control its management and daily business operations.” 13 C.F.R. § 128.203(i). Normally, the service-disabled veteran “must devote full-time during the business’s normal hours of operations”. Id. As part of the protest, OHA (which processes these sort of protests) “required Gilk and Sons to clearly state Mr. Gilkison’s current working hours at both Gilk and Sons and PacTec. The Order also required Gilk and Sons to specify Mr. Gilkison’s duties at Gilk and Sons and at PacTec.” OHA then reviewed the response and determined that Gilk and Sons had not met the full-time devotion requirement. SBA OHA pointed out that Gilk and Sons did not properly respond to the request for more information. The response to OHA fails to clearly state just what Mr. Gilkerson’s working hours are both at Gilk and Sons and at PacTec. The Response fails to describe what Mr. Gilkerson’s duties are at Gilk and Sons and at PacTec. It does not describe how Mr. Gilkerson handles his duties at Gilk and Sons while also performing his duties at PacTec. Because of the failure to respond, OHA assumed “that disclosure would be contrary to the interests of the party failing to make disclosure.” 13 C.F.R. § 134.1011. So, OHA assumed that Gilk and Sons “failed to establish that Mr. Gilkison devotes himself to the concern full time during normal business hours. The big takeaway from this case is that SBA is still enforcing the full-time devotion requirement for SDVOSBs (and the rule is also present in the 8(a) Program regulations). If an SDVOSB company veteran owner works a second job, pains must be taken to explain (1) current working hours at both companies, (2) the duties at each job, and (3) how the veteran owner devotes sufficient time to the SDVOSB necessary to control its management and daily business operations. As a side note, it is always important to fully respond to questions from SBA or other federal government agencies. As we noted on the blog, SBA made some comments that it wanted to introduce more flexibility into some of these rules, including the full-time devotion requirement. However, we have yet to see a published decision where SBA has demonstrated this flexibility. Should you face a similar situation, reach out to our firm. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA: Full-Time Devotion Still Matters for SDVOSBs first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy April! We hope everyone had a great week. Yet another beautiful spring Friday for us at SmallGovCon! And you guessed it, it’s time for your week in review. We’ve included some fascinating articles on what’s happening in the federal government contracting world we think you will enjoy. These included how contractors may be impacted in an election year, as well as a bill to reduce red tape in procurement. Have a wonderful weekend! Small Business Research Programs: Increased Performance Standards Likely Affect Few Businesses Receiving Multiple Awards Women-owned small businesses win record $25.5B in federal contracts How election years affect federal contracting WSU’s Kansas APEX Accelerator surpasses $1 billion in government contract awards Some federal agencies want to make IT security contracting rules simpler to find Army Posts Draft Solicitation for Follow-On Space and Missile Defense Command Support Contract Disabled veterans who own small businesses target lucrative government contracts Senate bill looks to chop through red tape in procurement ABC Submits Comments Opposing Ban on Federal Contractors Considering Salary History During Hiring DOD is looking to grow its marketplace for speedy acquisitions of innovative tech Federal Government Employee Arrested for Conspiracy to Defraud the District of Columbia to Benefit His Private Company Coast Guard salutes outstanding contracting and procurement professionals with annual Head of the Contracting Activity Awards FAR Case 2023–021, “Pay Equity and Transparency in Federal Contracting” Federal Acquisition Regulation: Establishing Federal Acquisition Regulation Part 40 The post SmallGovCon Week in Review: April 1-5, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If federal contracting had a proverbial town square, it would be SAM.gov. So much federal contracting activity flows through or starts there. A large portion of SAM is contractor information. Contractors are required to be on SAM and are expected to keep their profiles on SAM updated. A “hot off the presses” GAO ruling has confirmed that the timing of SAM registration can make or break a contractor’s winning bid. In TLS Joint Venture, LLC, B-422275 (Comp. Gen. Apr. 1, 2024) GAO heard a protest focused on the timing of an awardee’s SAM registration renewal. At the center of the protest is FAR 52.204-7, which lays out the requirements for SAM registration when bidding on a federal procurement. FAR 52.204-7 states: “An Offeror is required to be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award, during performance, and through final payment of any contract, basic agreement, basic ordering agreement, or blanket purchasing agreement resulting from this solicitation.” This FAR provision also warns offerors: “Processing time should be taken into consideration when registering. Offerors who are not registered in SAM should consider applying for registration immediately upon receipt of this solicitation.” In this case, the awardee submitted its renewal information on SAM prior to the expiration of its current SAM registration, but the processing of its renewal did not complete until after the expiration date. The protester argued that the awardee’s SAM registration had lapsed for that short period of time between expiration and active status, and that the agency was required to ensure a contractor’s SAM registration is “active.” The agency argued back that since the renewal was submitted prior to expiration, the awardee’s registration did not lapse. GAO sided with the protester. GAO first analyzed FAR 52.204-7 and found that the text of the FAR provision requires offerors to maintain SAM registration throughout the evaluation period (i.e., the time between proposal submission and the award of any contract). GAO also noted that the United States Court of Federal Claims recently held in Myriddian, LLC v. United States, 165 Fed. Cl. 650 (2023), that FAR 52.204-7 “requires offerors to maintain their SAM registrations without lapses during the solicitation period” (which we blogged about here). In this case, GAO found that this FAR provision was unambiguous, and even though an agency monitoring an offeror’s SAM registration throughout the evaluation period may be burdensome, it is not GAO’s job to weigh the pros and cons of a procurement regulation. GAO pointed to FAR 52.204-7’s definition of “Registered” in SAM as partially determinative. This definition states a four step process to be “Registered” on SAM: “(1) The Offeror has entered all mandatory information, including the unique entity identifier and the EFT indicator, if applicable, the Commercial and Government Entity (CAGE) code, as well as data required by the Federal Funding Accountability and Transparency Act of 2006 (see subpart 4.14) into SAM; (2) The offeror has completed the Core, Assertions, and Representations and Certifications, and Points of Contact sections of the registration in SAM; (3) The Government has validated all mandatory data fields, to include validation of the Taxpayer Identification Number (TIN) with the Internal Revenue Service (IRS). The offeror will be required to provide consent for TIN validation to the Government as a part of the SAM registration process; and (4) The Government has marked the record ‘Active.'” GAO stated that this definition places requirements on both the contractor and agency to take actions to make sure a contractor is registered on SAM. The offeror “must enter all mandatory information and complete the representations and certifications,” and the agency “must validate all information and mark the offeror’s record as ‘Active.'” All this must be completed for an offeror to be considered “registered” on SAM. GSA (who essentially manages SAM) explained to GAO that a contractor’s SAM registration expires within one year of when the contractor last submitted registration information. GSA sends reminder emails to contractors so they don’t miss this annual renewal date. After a renewal is sent in by contractors on SAM, GSA and and other agencies, such as the IRS, review the information. So there is a delay between submission of the information, and approval of “active” status on SAM. Here, the awardee did submit their renewal prior to their expiration date of December 11. But the processing of its renewal information to achieve “active” status did not complete until December 12. So for about a day, the awardee was not “active” on SAM, during the evaluation period for the subject procurement. GAO found that this is a lapse in SAM registration, and thus violated FAR 52.204-7. GAO, with this decision, has essentially issued a warning to all contractors; stay on top of your SAM registration, or risk losing award. GAO also placed on agencies a requirement to proactively check SAM statuses for any offerors during the evaluation period. While it may seem a simple and quick action to confirm SAM information or do quick updates to your SAM profile, the timing of when these occur can be critical. Here, there was a very short lapse between expiration and “active” status. But that short time cost the contractor an award. Contractors need to make sure to not delay SAM registrations or updates, and anticipate that any submission has to be bounced around multiple agencies prior to being approved for “active” status. Cutting SAM renewal close to a deadline could cost you an award. Need legal assistance with a government contracting matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Don’t Slip Up on SAM Registration, Even for One Day first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In this webinar, John Holtz and I will discuss the most important legal developments for federal contractors in 2023 and the first part of 2024. Specifically, we will discuss important new small business rules, updates to the 8(a) rules and application procedures, joint venture changes, updated SDVOSB certification requirements, key provisions of the recent National Defense Authorization Act, recent cases pertinent to federal contractors, and more. Register here! The post Free Webinar! Regulatory Updates in Government Contracting hosted by El Paso APEX Accelerators, April 11, 2024, 10:00-11:30am MDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We hope you had a great week and are enjoying some nice spring weather. Here are some happenings from the federal government contracting world this week, including more updates on the funding package, upcoming information on complying with labor regulations, and new policies on AI. Enjoy your weekend! DoD’s approach to fix its computers is function over form Biden signs $1.2 trillion funding package after Senate’s early-morning passage ended government shutdown threat Contractors wonder which of two procurement systems applies to them Government contracting helps tribal economies diversify Labor Department to Open Contractor Portal for Affirmative Action Certification in April Small Business Works 2024: A.C.T.S. on Maximizing Small Business Opportunities FACT SHEET: Vice President Harris Announces OMB Policy to Advance Governance, Innovation, and Risk Management in Federal Agencies’ Use of Artificial Intelligence Peaceful protests, lawful assembly can’t be sole reason for DOJ facial recognition use under interim policy GSA’s commercial platforms program to grow by five providers Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence Recission of “Treatment of Nontraditional Defense Contractors” Memorandum Defense Federal Acquisition Regulation Supplement: DoD Mentor-Protégé Program Defense Federal Acquisition Regulation Supplement: Trade Agreements Thresholds Submission for OMB Review; Federal Acquisition Regulation Part 3: Improper Business Practices and Personal Conflicts of Interest Rep. Scott Franklin eyeing public-private partnerships as his House AI task force work kicks into gear DoD seeks single point of entry, new governance to boost vendors’ cyber defenses The post SmallGovCon Week in Review: March 25-29, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you are a small business government contractor who ever utilizes subcontractors to complete federal set-aside contracts, knowing what a “similarly situated entity” is for a given contract is vital to your success. So, let’s take it back to the basics of “similarly situated entities.” Even if you are not sure where this term comes from, don’t fret, a great place to start is this other Back to Basics blog on limitations on subcontracting. Because as you guessed it, the term comes from the SBA’s limitations on subcontracting. And since you can read-up on those at the links above, I will keep my explanation of the limitations on subcontracting pretty simple. For work that the federal government sets aside for any small business concerns–including those in the 8(a) Business Development Program, the Veteran Small Business Certification Programs (SDVOSB/VOSB), the Historically Underutilized Business Zones (HUBZone) Program, or either of the Woman-Owned Small Business Programs (WOSB/EDWOSB)–provided such contract exceeds the simplified acquisition threshold (which is currently $250,000.00 under FAR 2.101), there are limitations on how much the prime can subcontract out to whom. There are different sections of the SBA rule dedicated to–and thus, different limitations for–the various types of federal contracts as follows: A 50% limitation for services contracts and contracts for supplies or products (other than from a nonmanufacturer); An 85% limitation for general construction contracts; and A 75% limitation for specialty trade contracts. Note: the Nonmanufacturer Rule may be applied instead to contracts for supplies from a nonmanufacturer, but such is not relevant here; so, check out this other Back to Basics blog on it if you would like more information. Since all three of the limitations listed above utilize essentially the same language in regard to “similarly situated entities,” we will use services contract limitations to explain it. For those, SBA’s limitations on subcontracting rules state: (a) General. In order to be awarded a full or partial small business set-aside contract with a value greater than the simplified acquisition threshold (as defined in the FAR at 48 CFR 2.101), an 8(a) contract, an SDVOSB contract, a VOSB contract, a HUBZone contract, or a WOSB or EDWOSB contract pursuant to part 127 of this chapter, a small business concern must agree that: (1) In the case of a contract for services (except construction), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated. Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded. In a nutshell, whatever this “similarly situated entity” is can actually help the prime contractor reach its 50% subcontracting limitation on a services contract. So, now we just need to fully understand that term. SBA’s definitions section of its government contracting regulations says the following: Similarly situated entity means a subcontractor that has the same small business program status as the prime contractor. This means that: For a HUBZone contract, a subcontractor that is a certified HUBZone small business concern; for a small business set-aside, partial set-aside, or reserve, a subcontractor that is a small business concern; for a SDVOSB contract, a subcontractor that is a certified SDVOSB; for a VOSB contract, a subcontractor that is a certified VOSB; for an 8(a) contract, a subcontractor that is a certified 8(a) BD Program Participant; for a WOSB or EDWOSB contract, a subcontractor that is a certified WOSB or EDWOSB. In addition to sharing the same small business program status as the prime contractor, a similarly situated entity must also be small for the NAICS code that the prime contractor assigned to the subcontract the subcontractor will perform. Crystal clear right? Ok, if not, I will break it down a bit. A “similarly situated entity” is a subcontractor that directly qualifies for: (a) the prime contract’s set-aside designation; and (b) the size standard assigned to the NAICS code for that prime contract. It is as simple as that, folks. Yes, by default, if a subcontractor meets (a) and (b) here, it will also have “the same small business program status as the prime contractor.” But again, since that should be inevitable if (a) and (b) are met–assuming the prime contractor was directly eligible for the prime contract’s set-aside and size standard to get the award–I think it is best to focus on (a) and (b). Here’s an example. Let’s say the government sets aside a contract for event planning services under NAICS code 812990, All Other Personal Services, with a corresponding size standard of $15 million, for the SBA’s SDVOSB Program. The prime contractor who received the award is “Blake Anderson Events, Inc.”–an SDVOSB with $10 million in annual receipts (thus, eligible for the prime contract). Blake Anderson Events, Inc., has two subcontractors for the prime contract: “DeVine Events & Services, LLC,” an SDVOSB with annual receipts of $12 million, and “Anders Activities & Events, Inc.” an SDVOSB with annual receipts of $20 million. Are these subcontractors “similarly situated entities” for the prime contract? Now, you might be tempted to say, “Yup, they are both SDVOSBs”–and move on. But remember it is a two-pronged qualification. The only “similarly situated entity” here for the prime contract awarded to Blake Anderson Events, Inc., would be DeVine Events & Services, LLC–meeting both the prime contract’s SDVOSB designation and its $15 million size standard (just like Blake Anderson Events, Inc.). Anders Activities & Events, Inc., is considered large under the prime contract’s $15 million size standard–and thus, doesn’t meet both prongs for qualification. As a quick side note, if you are at all wondering how this is possible, the SDVOSB rules (like some of the other SBA Program rules) allow an SDVOSB to be considered a small business for the purpose of participating in the SDVOSB Program generally if the company “meets the size standard corresponding to any North American Industry Classification System (NAICS) code listed in its SAM profile[.]” But they also note: “At the time of contract offer, a VOSB or SDVOSB must be small within the size standard corresponding to the NAICS code assigned to the contract.” And this second part of the rule is exactly what the two pronged approach to being a “similarly situated entity” is based on. To read up on all the SBA’s Program’s size qualifications, check out this blog. Finally, what does all this mean for Blake Anderson Events, Inc.? This simply means that any work Blake Anderson Events, Inc., subcontracts to DeVine Events & Services, LLC, will count toward the 50% minimum for Blake Anderson Events, Inc.’s, limitation on subcontracting for the prime contract here. But any work Blake Anderson Events, Inc., subcontracts to Anders Activities & Events, Inc., will count against the 50% minimum for Blake Anderson Events, Inc.’s, limitation on subcontracting for the prime contract here–or rather, it will count toward the 50% maximum that can be paid out to subcontractors for the prime contract. *** Understanding and complying with the SBA’s limitations on subcontracting is no easy feat. And the consequences can be dire for noncompliance. So, if you have rule application or compliance concerns, never hesitate to reach out for assistance–you are certainly not alone. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: Similarly Situated Entities first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Please check out the new release from my friend, federal contracting expert Michael LeJeune. Bestselling author and GovCon expert, Michael LeJeune is releasing his new book, “I’m New to Government Contracting – Where Should I Start?” on March 26th. Michael’s new book has all that a growing federal contractor needs to get started on a path to success. I was especially struck by the emphasis on avoiding shortcuts. As a GovCon attorney, we sometimes hear about get-rich-quick schemes involving federal contractors. Michael puts those to bed. For instance, you have to read his takedown of the middleman strategy if you have heard about that online. But he also provides time-tested strategies for getting into government contracting and for growing your business. As one example, there is a nice overview of how to do an evaluation of your business and examine how your processes will translate to government contracting. The book also has great explanations and concrete checklists for things like 9 core marketing tools and 7 key ways to build your pipeline. Register here to get a special 60% discount link on the day of launch: https://mailchi.mp/f3520f7e9b0a/5snc8wdmhp. The post Michael Lejeune’s New Book Now Available! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As we often tell people, language in a teaming agreement is important for a federal contract. But so is complying with the terms of a solicitation. A recent GAO decision hinged on a very specific portion of the language in a teaming agreement that was required as part of a solicitation. Because the contractor did not include the required language in a teaming agreement, it lost out on an award. In Global Patent Solutions, LLC, B-421602.2 (Feb. 23, 2024), GAO looked at a solicitation from the Patent and Trademark Office (PTO or USPTO) for professional services to assist the PTO in reviewing international patent applications. Protester Global Patent Solutions, LLC (GPS), challenged award under the solicitation to CPA Global, Inc. (CPAG). The protest argued that CPAG was not evaluated properly under Factor 4, Small Business Participation. Here, the solicitation required large business offerors to submit a small business subcontracting plan, and provided that an offeror’s plan “shall comply with all elements of FAR Subpart 19.704 (Subcontracting Plan Requirements) and FAR Clause 52.219-9 (Small Business Subcontracting Plan).” In particular, there was a requirement that “[t]he extent of small business participation shall equal or exceed the minimum requirement” of at least 10 percent with a goal of reaching at least 25 percent. In addition, “[t]o receive credit under this factor, an enforceable teaming agreement must be in place with one or more small businesses (unless the Prime Offeror is a small business) and a copy of each signed agreement shall be included with the Offeror’s proposal as an attachment.” Finally, an “Enforceable agreement” was defined as one “signed by both parties committing to a teaming arrangement if the contract is received and identifying the percentage of the total contract to be subcontracted.” As far as the evaluation, small business subcontracting plan would “be evaluated to the extent the Offeror complies with all elements of FAR Subpart 19.704 . . . and FAR Clause 52.219-9″ and proposals would “be evaluated to ensure it meets or exceeds the Government’s minimum requirement that at least ten percent (10 [percent]) of the annual order value be directed to small business for each of the five ordering periods,” and that the teaming agreements would “be reviewed to ensure compliance.” The small business teaming agreement for CPAG stated that the small business “Partner will accept and perform a subcontract for the services for up to [DELETED] [percent] of awarded volumes.” In reviewing this language, the agency initially determined that the subcontractor teaming agreements submitted by CPAG “do not specify any percentages of work to be contracted.” The evaluation team also noted that it was “impossible for the USPTO to evaluate exactly how much is guaranteed to go to small business” and “CPAG’s proposal also neglected to state what the percentages were as a portion of the subcontract value as required by FAR 52.219-9.” That FAR provision, FAR 52.219-9, in part states that a subcontracting plan should express small business subcontracting goals “as a percentage of total planned subcontracting dollars.” Ultimately, the agency weighed the missing information in the teaming agreement against the historical performance by the awardee when it comes to small business subcontracting and concluded that “CPAG’s flaws” in the small business participation “area were mostly procedural and not substantive.” GAO disagreed. GAO ultimately found that the agency did not follow its own solicitation rules: Specifically, under the small business participation factor, the solicitation established a material requirement that a minimum of 10 percent of the annual order value be subcontracted to small businesses. RFP §§ L‑M at 12. The solicitation was clear and unambiguous that, for an offeror to receive credit under this factor, it must submit “enforceable teaming agreements” that were signed by both parties and identified “the percentage of the total contract to be subcontracted.” In the evaluation record, all statements by the USPTO found “CPAG’s teaming agreements and the firm’s overall subcontracting plan to be lacking.” This included the contract specialist, who found that the agreements “do not specify any percentages of work to be contracted[.]” Similarly, the TET stated that CPAG’s teaming agreements failed to include “firm commitments with guaranteed minimum percentage[s] as specified in the [solicitation][.]” Finally the SSA found that the teaming agreements “did not represent a guaranteed amount of work to be subcontracted.” GAO concluded that “the evaluators’ and SSA’s conclusions were inconsistent with the solicitation’s material requirement for offerors to demonstrate through the use of enforceable teaming agreements that a minimum of 10 percent of the annual order value would be subcontracted to small businesses.” The agency tried to get a little sneaky in its argument, saying that the solicitation requirement for “the percentage of the total contract to be subcontracted” could mean any range of percentages, rather than a specific number. Again, GAO didn’t buy it–“the percentage” meant a specific percentage, not a range. GAO sustained the protest because USPTO did not follow its own solicitation requirements in evaluating a teaming agreement. But the take home message for contractors is that, if a solicitation asks for a specific number, even if it is in a teaming agreement, the contractor should include a specific number, or risk losing an award. Need legal assistance with a government contracting matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Small Business Teaming Agreement Must Follow Solicitation Guidelines first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you are a government contractor, odds are you have faced a situation where some aspect of the contract you were performing changed outside of your control, or you ran into something that neither you nor the government expected. As a result, your work requirements likely changed, and with that, your costs likely changed as well. When this happens, there are multiple paths to getting reimbursements for those new costs, and one of the most common ones is a request for equitable adjustment. Today, we’re going to explore when you should submit a request for equitable adjustment as opposed to the other routes. What is a request for equitable adjustment? Curiously, as much as it is referenced in the FAR, there is no set definition for “request for equitable adjustment” in the FAR. That said, the appellate court has taken a stab at it: “It is a remedy payable only when unforeseen or unintended circumstances, such as government modification of the contract, differing site conditions, defective or late-delivered government property or issuance of a stop work order, cause an increase in contract performance costs.” Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1577 (Fed. Cir. 1995). Basically, a request for equitable adjustment is when you ask the government to reimburse you for some unexpected occurrence or issue that has increased your work costs. You are asking the government to make you whole for something that was outside your control. An adjustment made for equitable reasons, so to speak. A request for equitable adjustment is not the same as a formal cost claim. This is a crucial distinction. There is a specific procedure, located in FAR 52.233-1, to submitting a formal cost claim that requires the contracting officer to respond and that starts the path towards filing an appeal with a board of contract appeals or the Court of Federal Claims (COFC). A request for equitable adjustment does not set those mechanisms (or their corresponding deadlines) into motion. When you submit a request for equitable adjustment, there is no requirement that the contracting officer will respond, nor does a denial of the request allow you to take the matter to the board of contract appeals or COFC. So, with that said, you may ask why even consider filing a request for equitable adjustment at all? There are often good reasons to go that route. You have a cordial relationship with the agency. Just because the contracting officer isn’t required to respond to a request for equitable adjustment does not mean a contracting officer won’t respond. For every example of a bad relationship between a contractor and the contracting agency, there are many examples of good relationships. In our experience, it is rare for a contracting officer to not respond to a request for equitable adjustment, even where the relationship isn’t that great. The more informal nature of a request for equitable adjustment, as opposed to a formal cost claim, can be an advantage for the contractor. It comes across as less adversarial (think of the difference between “Could you please” and “I demand”) and so can help preserve a good relationship (or even help mend a strained one) while still getting the whole cost issue sorted. Many contractors go for a request for equitable adjustment before resorting to a formal cost claim for this reason: Why make things any more difficult than they need to be if the contracting agency is on good terms with them? You want to test the waters of your cost claim. When you file a formal cost claim, as noted earlier, it sets into motion a formal process in which the contracting officer must make a decision on the claim. When the contracting officer makes a decision on the claim, that is the contracting officer’s final decision. If you do not like the decision, you then have 90 days to take the matter to a board of contract appeals or 1 year to take it to COFC. If you try taking it to a board of contract appeals after 90 days have passed or to COFC over a year later, you will be too late. These two clocks start ticking from the moment you receive the contracting officer’s final decision. You are, essentially, locked in. On the other hand, if you make a request for equitable adjustment and the contracting officer denies your request for equitable adjustment, no clock starts on bringing the claim to the board of contract appeals or COFC. You can decide to start the formal claim process then by filing a formal cost claim, or you can even just make another request for equitable adjustment. (Keep in mind you should make your initial request for equitable adjustment or at least assert the right to increased payment within 30 days of whatever caused your costs to increase (FAR 52.243-4) and that you must file the request before the contract is closed out). As such, a request for equitable adjustment can let you test the waters of your cost claim and see if there are any major issues with it without starting the formal process. Attorney fees are potentially recoverable with requests for equitable adjustment, unlike claims. Requests for equitable adjustment are considered negotiations rather than litigation, and under FAR 31.205-33, contract administration costs are allowable costs. This was the finding in Tip Top Const., Inc. v. Donahoe, 695 F.3d 1276, 1281 (Fed. Cir. 2012). Generally, costs in preparing requests for equitable adjustment are considered part of the negotiation process, and so are considered contract administration costs. That means that attorney and accounting fees incurred for preparing a request for equitable adjustment can be included in the request and in a later cost claim. Costs to prepare a formal claim, however, are considered litigation costs. Such costs are not allowable under FAR 31.205-33. So, this can be a great incentive to pursue a request for equitable adjustment instead of a formal cost claim, as there is the potential to get the costs of preparing that request. Summary There are many reasons why one might go with a request for equitable adjustment as opposed to a formal cost claim, but the above three are three of the most common reasons we see contractors go that route. It really will depend on the contractor’s situation on which route might be best for them. A request for equitable adjustment may be a great route in some cases, but not in others. We always recommend consulting with a government contracts attorney to discuss the potential options if you are unsure. Need legal assistance with a government contracting matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Why File: A Request For Equitable Adjustment first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hope you are having a good week readers, and enjoying some March Madness. While it looks like spring in our neck of the woods, in this part of the country the weather can change quickly. We joke around that we must always have every type of coat or jacket at the ready on any given day. Never a dull moment! Speaking of never a dull moment, the NCAA tournament has started and there certainly have been some great games in the first round! How’s your bracket doing? We hope you had a great week and are enjoying some nice spring weather as well as some exciting basketball. Here are some happenings from the federal government contracting world this week. Interesting updates include an update on OASIS+ timing and enhancing whistleblower protections for DoD contracts. Enjoy your weekend! Busted! Is your March Madness bracket breaking government ethics rules? GSA’s Tiffany Hixson Offers Advice for New Providers Breaking Into the GovCon World Supreme Court rules public officials cannot block critics on social media, even from personal accounts GAO Urges DOD to Implement Better Monitoring of Procurement Administrative Lead Time Data Contracting Brief: AI Funding Plans Spread Across Budget Request GSA Targets Summer for Initial OASIS+ Small Business Awards Senators Coons, Kennedy introduce bill to help small businesses compete for federal contracts Women’s History Month 2024: Celebrating a vital business force US Department of Labor Nearly $200K for Workers Underpaid by Massachusetts Subcontractor at Rhode Island Worksite Whistleblower Protections in Defense Contracts Aventura Technologies, Inc. Pleads Guilty to Wire Fraud and Illegal Importation for Reselling Chinese Goods as U.S.-Made Washington State Man Sentenced to Federal Prison for Marketing and Selling Low-Quality Ballistic Protective Equipment Produced in China to Dozens of Law Enforcement Agencies and the U.S. Military The post SmallGovCon Week in Review: March 18-22, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article