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  1. Koprince Law LLC
    Just as agencies have established goals to award a certain percentage of their procurements to small businesses and businesses participating in socio-economic programs like the 8(a) Program, large business contractors must establish goals to include small business subcontractors in their pool of subcontractors for unrestricted awards over the applicable threshold in FAR 19.702 ($750,000 for most contracts, $1.5 million for construction contracts). While the specific goal will vary with each contract (or in some cases may be on a company-wide basis), it is rare for a contracting officer to find a large business hasn’t met the given goal. However, an investigation by GAO indicates that large business contractors aren’t meeting their small business subcontracting goals as often as the government would hope. Let’s take a deeper look at these findings.
    The Gist
    On November 9, 2023, GAO issued its report regarding large business compliance with small business subcontracting plans. (Helpfully, it summarizes this report very quickly here, in case reviewing the whole report isn’t particularly time-effective for you). This report has proven to be quite eye-opening. GAO reviewed six separate agencies: The Air Force, the Army, Homeland Security (DHS), Health and Human Services (HHS), Veterans Affairs (VA), and NASA. For the report, GAO interviewed contracting officers to see how large businesses were reporting their compliance with these small business subcontracting requirements. Most contracting officers said their contractors were meeting the goals, and that they rarely assigned “below satisfactory” ratings to them.
    However, GAO noted that “[i]n contrast, according to government-wide data released by the Small Business Administration (SBA), many contractors reported not meeting their subcontracting goals in fiscal year 2022.” Indeed, for only 63% of completed contracts, large businesses met their small business subcontracting goal, meaning close to 40% failed to meet it. And that’s for the goals for small businesses in general. When it comes to goals for socio-economic programs, like the 8(a) Program and WOSB Program, compliance was even worse. It was as low as 35.9% of completed contracts for 2022 for SDVOSBs!
    There is a substantial discrepancy here that makes it very uncertain whether contractors are complying with these small business subcontracting goals. For its part, GAO observed that “most federal agencies GAO reviewed do not report or review data on contractors’ achievement of their subcontracting goals at the agency level, as required by statute.” In the report, GAO stated:
    Our selection of contracting offices was not generalizable, which may partially explain this apparent discrepancy. It is difficult to explain the differences between the contracting officers’ experiences and the government-wide data because these data generally are not broken down by agency. We have previously found that some contracting officers did not ensure that contractors submitted required ISRs and SSRs, and that some contracting officers accepted subcontracting report submissions with erroneous information on subcontracting goals.
    Recommendations for Agencies and SBA
    As it stands, GAO essentially feels there is not enough information being collected to tell what’s really going on. This problem it laid at the feet of the agencies. It noted that of the six agencies, only NASA was collecting information on small business subcontracting compliance as required by statute (15 U.S.C. § 637(d)(7)). After discussing the lack of compliance on the part of the agencies, GAO observed:
    By periodically collecting and reviewing agencywide data, these agencies could better understand the extent to which contractors comply in good faith with their subcontracting plans and the overall success of the agencies’ small business subcontracting program, as well as ensure they are in compliance with statutory requirements. Further, they could identify opportunities to adjust their efforts or improve oversight.
    At the same time, GAO also called out SBA for what it felt were insufficient numbers of “subcontracting program compliance reviews” (“SPCRs”). Apparently, for fiscal years 2021 and 2022, SBA only completed six SPCRs. It was even more concerning to GAO that despite each of the SPCRs finding that contractors generally weren’t complying with their subcontracting plans (with many companies being out of compliance both years), that further review efforts weren’t being undertaken. GAO stated “SBA has not analyzed the risk to its understanding of contractor compliance gained by conducting only six SPCRs in each fiscal year, with selection criteria that results primarily in contracts with commercial subcontracting plans.”
    Good Faith Standard
    Finally, GAO looked at the entire good faith standard for small business subcontracting compliance. Where large businesses fail to meet their goals, they will not receive unsatisfactory ratings if they can show they made good faith efforts to meet them, per FAR 19.705-7. While agencies noted the benefits of this standard (and GAO certainly did not recommend that this standard be abandoned), contracting officers did express frustration with how inherently subjective the standard is. It is worth noting, however, that FAR 19.705-7 provides examples of indicators of good faith (or lack thereof) for contracting officers to look out for. In any case, GAO recommends further training of contracting officers on evaluating large business compliance efforts.
    Our Thoughts
    Needless to say, some of the numbers from SBA’s reviews are striking. Certainly, we would not expect large businesses to always meet their subcontracting goals. That’s something that isn’t always in their control. But figures suggesting that up to two-thirds of large business contractors aren’t meeting goals for particular socio-economic programs like SDVOSBs and HUBZone businesses is concerning. We are of course aware that there may not always be businesses with those statuses available for subcontracts, which of course is why the good faith standard is needed. But we also hear of many small businesses that are eager and willing to do many types of work in the federal contracting sphere. But these numbers do raise concerns that that compliance with the small business subcontracting plans isn’t being taken seriously enough. The fact that many agencies weren’t even complying with federal statutory requirements for reporting only further solidifies this concern. Of course, we very much doubt that this was an intentional choice on the part of the agencies—it shows a marked lack of interest from the agencies, though. That is why reviews like that conducted by GAO are essential. We hope this will lead to an improvement in how agencies monitor small business subcontracting plan compliance. In turn, that will no doubt lead to more large business contractors meeting their plan goals.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post Room for Improvement: Statistics Suggest It is Unclear if Large Businesses are Meeting Small Business Subcontracting Goals. first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  2. Koprince Law LLC
    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
  3. Koprince Law LLC
    Happy February! Our Kansas City Chiefs have once again managed to make it back into the Super Bowl and we couldn’t be happier about it! Whether you’re a Chiefs fan, a 49ers fan or a Swiftie, it’s sure to be a good one! Start gathering those favorite snack recipes and get out the lucky sports gear, folks!
    This week in federal government contracting news had some important updates, including a new GSA schedule catalog platform, a report on savings in software purchases, and a revamped SBA training program from small businesses.
    The SBA Revamps the Federal Contracting Program for Small, Disadvantaged Businesses Procurement Innovation Lab to tackle ‘big A’ acquisition at DHS New FAS Catalog Platform is a “game-changer” for vendors using GSA Advantage Former Federal Employees Sentenced for Conspiracy to Steal Proprietary U.S. Government Software and Databases Agencies are losing out on software savings, GAO finds Government Contractors Agree to Pay $3.9 Million to Resolve Claims of Misrepresenting Women-Owned Small Business Status For contractors, a lot to ponder five months into the fiscal year Department of Labor Announces Seminars for Prospective Federal Contractors on Prevailing Wage Requirements Business Leaders Applaud SBA’s Improved Empower to Grow (E2G) Program Federal government contracting is an opportunity for minority business owners Increasing Small Business Participation on Multiple-Award Contracts The Evolving Landscape of Government Contracting: Why Networking Matters Whistleblower Receives $900,000 for Alleging Army Contracting Fraud Information Collection; Small Business Size Rerepresentation Four Additional Defendants Plead Guilty to Bid Rigging in Michigan Asphalt Industry Project Manager Pleads Guilty to Kickback Scheme to Defraud a U.S. Army Facility The post SmallGovCon Week in Review: Jan. 28-Feb. 2, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  4. Koprince Law LLC
    Happy Friday! Next week is Thanksgiving and we want to take this opportunity to thank all of you for your support of SmallGovCon. We always strive to provide helpful content and we appreciate all the wonderful feedback that we have received from our readers. We hope you have a great Thanksgiving and are able to spend some time with friends and family.
    This week in federal government contracting news include a plan to fund the government (hear that one before?), AI and its effect on government, and new GSA acquisitions.
    The healing power of dogs for vets The misguided attacks on the 8(a) program must end Meetings: Interagency Task Force on Veterans Small Business Development Local veteran to speak at the US Senate about veteran-owned small businesses Meetings: National Small Business Development Center Advisory Board How the New AI Executive Order Will Impact Government’s AI Landscape COMET recompete, Polaris protests keep acquisition exciting in early fiscal 2024 This New Senate Bill Will Give Veterans a Break on Some SBA Loans Getting better deals for the government GovCon M&A Deals ‘Rebounding’ After Slow Period—Dispatch from 2023 Baird Conference House Approves Bill to Keep Government Funded Past Saturday Ernst Works to Meet Needs of Veteran Entrepreneurs The post SmallGovCon Week in Review: November 13-17, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  5. Koprince Law LLC
    Happy December! If you haven’t started your holiday shopping, don’t panic, you still have time! It’s hard to believe that 2023 is almost over. I don’t know about you, but here at SmallGovCon, the year seemed to fly by.
    We hope you have a nice weekend and can get out to enjoy all the holiday season has to offer.
    And now, in federal government contracting news, check out some interesting articles about how the federal government is approaching the use of AI and protecting critical supply chains.
    Virginia tactical gear & equipment company agrees to pay more than $2 million to settle allegations related to Buy American Act RAI Toolkit Executive Summary Defense Logistics Agency Makes Thanksgiving Meals Possible Worldwide Disparities In Government Contracting And How Leaders Can Boost The Economy Executive Order on Interagency Security Committee 10 HUBZone Companies Secure Spots on $700M Air Force Construction Services Contract Here’s who’s responsible for AI in federal agencies Is an earthquake ahead for a mainstay of federal procurement? Average security-clearance-processing speed, hits a speed bump Generative AI, Edge Computing & Modernization: Homeland Security Leaders Share Top Priorities Inspector general to probe decision on relocating FBI building New DHS supply chain center aims to head off future crises The post SmallGovCon Week in Review: Nov. 27-Dec. 1 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  6. Koprince Law LLC
    Happy final Friday of February! Can you believe that next week is March already? I guess we can start preparing for St. Patrick’s Day because it will be here soon. I think folks are hoping that our spring like weather will hold and that winter is over. Of course, in Kansas, the weather can change on a dime so we won’t count on it! Here’s hoping the weather is nice wherever you are and have a great weekend.
    This week in federal government contracting news included reactions to proposed federal rules on cybersecurity for contractors, and an update on potential expanded whistleblower protections.
    U.S. Attorney Announces $25.5 Million Settlement With Durable Medical Equipment Supplier Lincare Inc. For Fraudulent Billing Practices Pentagon IG not impressed by effectiveness of DoD vendors’ award fees 4 lessons for tech startups expanding into government contracting DoD ready to start implementing multibillion dollar moving contract after solving latest tech hurdle Small and minority-owned businesses see more opportunity than ever Potomac man pleads guilty in federal contracting scheme Defense Innovation Board: Scaling Innovation Forward Contractors on edge because of Pentagon’s proposed buying rules SBA Announces Funding Competition to Organizations Providing Entrepreneurship Training to Women Veterans Oklahoma Man Pleads Guilty to Defrauding Government’s Online Auctions, Purchasing Vehicles and Jewelry for $1 Whistleblower protection legislation stalls amid congressional chaos House leaders announce new, bipartisan AI task force General Services Administration Acquisition Regulation; Updated Guidance for Non-Federal Entities Access to Federal Supply Schedules The post SmallGovCon Week in Review: February 19-23, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  7. Koprince Law LLC
    Please join Greg Weber and I for this informative webinar on small business certifications. Participants will get an overview about:
    Woman Owned Small Business and Economically Disadvantaged Woman Owned Small Business 8(a)  Business Development Program HUBZone (Historically Underutilized Business Zone) Service Disabled Veteran Owned Small Business We will discuss how to get certified, how long it may take, regulations, changes, updates, and tips and tricks on how to be prepared. We hope you will join us. Register here.
    The post Webinar Event: Small Business Certifications hosted by the Catalyst Center for Business & Entrepreneurship, December 14, 2023, 4:00pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. Koprince Law LLC
    It’s been one year since the U.S. Small business Administration (SBA) took over the federal government’s veteran-owned small business contracting program from the Department of Veterans Affairs (VA), and a lot has happened in that amount of time. Here, we discuss how SBA has handled the Veteran Small Business Certification Program in the first year and some of SBA’s achievments. And in other big SDVOSB news, the federal government will be providing more contracts for veteran-owned entities under the National Defense Authorization Act’s increased contracting goals.
    VetCert is One Year Old
    In a welcome change to the much longer process of years past, SBA has streamlined the process that service-disabled veteran owned small businesses (SDVOSBs) and veteran owned small businesses (VOSBs) must endure to either become certified for the first time, or to continue its certification. In 2023, VetCert approved over 10,400 applications from SDVOSBs and VOSBs, while averaging only 15 days for the applications to be processed. Wow! Perhaps the CVE can give some pointers to the WOSB certification program, which has endured some very long wait times based on what we’ve heard from folks.
    You can read the full press release here, but some of the high points include:
    Streamlining of ownership and control requirements to make them similar to those of the 8(a) Program and Woman-Owned Small Business Program; Monthly (or more) VetCert webinars for interested applicants discussing the application process (register here); Updated frequently asked questions library; and Centralized reporting, via the Veterans Case Management System (VCMS), for changes in ownership, company structure, veteran status, and recertification. “To date, 42,525 VetCert customer service responses have been completed by the VetCert Verification Support personnel.” From what we’ve heard and experienced, the VetCert program has been very efficient, especially compared to other SBA programs. Kudos to SBA for that!
    Joint Venture Certification
    While the transition from the VA to the SBA has been a relatively smooth one, it still had some questions that needed to be answered. At the top of the list: What does a joint venture need to do to be an eligible offeror? Is there a certification or registration requirement for the joint venture, separate from the registration requirement of the SDVOSB or VOSB venturer? We’ve seen some language in solicitations that seems to state that joint ventures must be certified or registered. But is that the case? And if so, where, or how?
    Well, the answer to that is two-fold.
    First, SDVOSBs and VOSBs do not have to go through the certification process under the regulatory language, and SBA judges have confirmed this. Freedom Technology Partners, LLC, SBA No. VSBC-321-P, 2023 (Dec 4, 2023). Instead, their eligibility is based on the SDVOSB or VOSB status of their managing venturer per 13 C.F.R. § 128.402.
    But, just because the joint venture does not need to be certified, it does appear that SBA is requiring joint venture offerors to be “designated” as an SDVOSB or VOSB joint venture. Late in 2023, SBA published, within its FAQ library, guidance which states, “Joint Ventures do not get certified as SDVOSBs or VOSBs by SBA. Instead, they must be ‘designated’ as eligible for sole-source or set-aside awards under the Veteran Small Business Certification Program by the Managing Venturer.” This is done by the managing venturer, who “must log into VCMS and ‘claim’ the Joint Venture.” Visit the FAQs to view a step-by-step walkthrough of this process.
    SDVOSB Contracting Goals Increase
    Finally, the 2024 National Defense Authorization Act will bring with it a bump in the SDVOSB contracting goals. The government-wide goal for contracting with SDVOSBs will go from three percent, which it has been at since 2000, to five percent. It will be interesting to see if SBA or other agencies change their policies based on this new goal. But based on prior years’ small business scorecards, agencies don’t have too far to go to hit the new goal. In fact, 2022 came in with 4.57%, less than a half of a percentage short of the soon-to-be 5% goal. This is great news for veterans to ensure they continue receiving a large number of federal contracting dollars.
    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 SDVOSB Updates: SBA VetCert Achievements, JV Certification, and NDAA Contracting Goal first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  9. Koprince Law LLC
    Happy Friday, Readers! It was another busy week here at SmallGovCon and in the federal government contracting world. GSA announced some new political appointees, while cyber security and AI have also been ongoing hot topics. You can read more about these and other contracting news in the articles below. Have a wonderful weekend.
    Three Military Contractors Sentenced in Procurement Fraud Scheme CX: The Next Frontier in Government’s Digital Transformation GSA announces new political appointees Special Report: Common Cybersecurity Weaknesses Related to the Protection of DoD Controlled Unclassified Information on Contractor Networks (DODIG-2024-031) The continuing resolution doesn’t do a whole lot for contractors Better data protests could benefit, agencies, vendors alike 5 GovCon Reforms to Maximize AI Implementation in US Government GAO Report Finds Gaps in Federal Agencies’ Event Logging Practices for Cybersecurity Incident Response How one company set itself up to continue thriving post SBA’s 8(a) program Veterans Affairs sheds more light on $14B transformation recompete CEO of Charity for Veterans Charged with Federal Fraud Crimes The post SmallGovCon Week in Review: December 4-8, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  10. Koprince Law LLC
    Happy Friday! March Madness is upon us! For you college basketball fans, it’s a great time of year. The upsets keep things exciting, even if they do bust everyone’s brackets. I guess that’s what makes March Madness so maddening and exciting–one can never predict the outcome. Listening to the news out of the federal government can sometimes feel like March Madness.
    So, before you start your weekend of studying those basketball stats, here are some things that happened in federal government contracting this week. These include updates on government spending bills, AI, and use of apprentices. Have a wonderful weekend.
    With FOIA backlogs on the rise, do agencies need direct-hire authority? SBA Administrator Guzman Announces 2024 National Small Business Week Award Winners VA Seeks Veteran-Owned Small Businesses to Provide Software Tool, Information Submission Support The New JADC2—Explaining CJADC2 & How Companies Are Meeting DOD’s Needs If you’re a budget numbers nerd, this is the week to watch FACT SHEET: President Biden Signs Executive Order: Scaling and Expanding the Use of Registered Apprenticeships in Industries and the Federal Government and Promoting Labor-Management Forums How the Federal Government Is Continuing AI Progress Post-Executive Order Committee on Small Business Holds Hearing Examining GAO Recommendations to Reduce Mismanagement at the SBA Additional Contractors Indicted for Rigging Bids and Defrauding the U.S. Military in South Korea Air Force Employee Indicted for Unlawful Disclosure of Classified National Defense Information House passes $460 billion package of spending bills. Senate expected to act before shutdown deadline White House presses agencies to use apprenticeships for skills-based hiring 5 Women-Owned Defense Contracting Companies That Are Crushing It The post SmallGovCon Week in Review: March 4-8, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  11. Koprince Law LLC
    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
  12. Koprince Law LLC
    Happy Friday! We are halfway through December already and oh my, how time does fly! 2024 is just around the corner and the holiday season is now in full swing. We hope you are enjoying all the season has to offer.
    There have been a lot of changes in federal government contracting this year, and here at SmallGovCon, we strive to include weekly, helpful content that explains what the impact of those changes are on federal government contractors. Thank you so much for all the wonderful feedback. We truly appreciate it.
    This week in federal government contracting had some interesting updates, including new size standard processes, and what contractors should look for in the new NDAA.
    Small Business Size Standards: Revised Size Standards Methodology How federal contracting looks to women-owned businesses U.S. General Services Administration announces departure of Federal Acquisition Service Commissioner SBA Issues Request for Comment on Proposed Changes to Enterprise Size Standards Methodology GSA’s Hashmi leaving at end of the month Virginia Leads As The Top State For Veteran-Owned Businesses Construction Company President Sentenced To 10 Years In Prison For 25-Year Fraud On The U.S. Government Five things contractors need to know about the Defense authorization bill Senate bill would limit federal contracts with foreign-linked biotech firms READOUT: White House Hosts American Rescue Plan Funded Community Navigators and Small Business Owners, Reiterates Call for Continued Support National Women’s Business Council; Notice of Public Meeting Class Deviation—The Service-Disabled Veteran-Owned Small Business Program The post SmallGovCon Week in Review: December 11-15, 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  13. Koprince Law LLC
    Happy New Year to our SmallGovCon readers! While we have already posted some updates from 2024, it’s a good time to reflect on the important posts from 2023.
    This post revisits those blog posts from 2023 that were the most popular. Below, we summarize the blogs written in 2023 that were the most popular as well as the perennial favorites from years past that were the most viewed in 2023. It’s a good chance to look back on the important articles from 2023, and those topics of continuing interest to federal contractors.
    Here are the top 10 blog posts that were posted in 2023. As usual, our readers were interested in changes to SBA’s rules, including changes to the 8(a) Program and the social disadvantage requirement, as well as our Back to Basics series focusing on issues such as teaming agreements, debriefings, and SAM registration.
    Top Posts Published in 2023
    1Back to Basics: Teaming Agreements. Obviously, readers are very interested in why they should use a teaming agreement for federal contracts. Thankfully, this post goes into all the reasons.2Initial Challenge to 8(a) Presumption of Social Disadvantage for Certain Minority Groups Succeeds: What This Means for Now. Back on July 24, we wrote our first post about the Ultima decision that forced a revamp of how SBA reviews social disadvantage for the 8(a) Program. 3SBA Puts “Temporary Pause” on New 8(a) Program Application Submissions. After the Ultima decision, SBA had to pause new 8(a) Program applications. 8(a) Program applications resumed after a short break. One of our latest posts reminds readers what SBA is looking for in the new streamlined social disadvantage narrative format.4SBA Final Rule Relaxes Change of 8(a) Program Ownership, Allows Limited Populated Joint Ventures. This post summarized many changes that SBA made to 8(a) ownership rules, as well as joint ventures. This was a lengthy rule change from SBA that included lots of small changes to many SBA rules.5Back to Basics: Debriefings. This post can tell you all the basics about debriefings, a crucial part of the complicated world of bidding on government contracts. 6Back to Basics: Registering in SAM.gov. Before you can bid on a federal contract, you have to be registered in SAM. But what does that entail?7SBA Revisions to the “Two-Year Rule” for Joint Ventures: a Reminder to Read the Entire Rule. This post explored the still-confusing language of SBA’s “Two-Year Rule” for joint ventures.8SBA New Rule: Guidelines for Compliance with Limitations on Subcontracting in 13 C.F.R. 125.6. SBA updates its limitations on subcontracting rule to require that compliance with the limitations be looked at on an order-by-order basis for multi-agency set aside contracts and added additional consequences for violations of the limitations on subcontracting.
    9Senate-Passed 2024 NDAA set to Raise DoD Set-Aside Sole-Source Contract Threshold Limits. Unfortunately, this increase did not make it into the final text of the NDAA. 10Back to Basics: Calculating Small Business Size. A helpful article that reminded our readers of the key aspects of calculating small business size for federal contracts. Top Posts Viewed in 2023 from All Time
    1“In Scope” vs. “Out of Scope” Modifications: GAO Explains The Difference. This is the famous inflatable craft decision from 2017. In it, GAO explained with some detail on how far an agency can modify a contract before it becomes, essentially, a new contract that can be protested at GAO.2Goodbye PTAC, Hello APEX Accelerators. While we are still trying to get used to the name change, APEX Accelerators carry on the PTAC legacy of providing free procurement assistance to small businesses that work with all levels of the government, whether federal, state, or local. 3FedBizOpps is Almost Gone.  There must be a lot of folks nostalgic for FedBizOpps and not so happy with sam.gov, based on the popularity of our post saying goodbye to FBO.4Back to Basics: Limitations on Subcontracting. A post from 2022 that is becoming very popular. With the renewed focus on limitations on subcontracting, it’s always good to know how to stay compliant. 5DOD: Sole-Source Contracts up to $100 Million Don’t Need Justification. This post explored the sole-source limits for entity-owned 8(a) companies, a continuing source of interest for 8(a) companies and their partners.6FAR Final Rule: Increased Micro-Purchase and Simplified Acquisition Thresholds. The FAR was  updated to increase the micro-purchase threshold and the simplified acquisition threshold, effective August 31, 2020. Based on recent inflation trends, it might be time for Congress to look at updating these numbers. Perhaps in next year’s NDAA.7Don’t Ignore NAICS Code Changes: New Rule a Reminder to Contractors. This post reminded contractors that the U.S. Office of Management and Budget routinely revises the North American Industry Classification Systems (NAICS), which the SBA in turn incorporates as the new applicable NAICS codes for small business size purposes. 85 Things You Should Know: HUBZone Program (The Basics). This post explores a crucial program for small businesses: the Historically Underutilized Business Zone—or HUBZone. 9SAM Registration: What The Heck Is An “Immediate Owner?”. The SAM definition of “immediate owner” still creates questions for a lot of federal contractors. 10Back to Basics: Teaming Agreements. This post from 2023 made it into the top 10 from all time. I’m sure there will be much to talk about in 2024. Make sure to keep up to date on SmallGovCon for all the updates.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
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    The post Year in Review: Top SmallGovCon Posts of 2023 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  14. Koprince Law LLC
    The second entry in our new “Why File” series covers some of the main reasons unsuccessful offerors file veteran-owned small business (VOSB) and service-disabled veteran owned small businesses (SDVOSB) status protests. Don’t worry if VOSB and SDVOSB are new acronyms to you–or you just need a refresher–we’ve got a Back to Basics blog for that. If you’re a seasoned vet (pun intended), you already know SBA now handles the Veteran Small Business (VSB) Certification Program (VetCert) (which covers VOSBs and SDVOSBs) administration and status protests. So, the following (non-exhaustive) list of some of the most common reasons VSB status is protested is based primarily on SBA regulations and cases. But please keep in mind, despite the commonalities discussed below, the question of whether to protest is highly fact-specific and demands careful consideration.
    1. The qualifying veteran or service-disabled veteran (SDV) owner (Qualifying Veteran) does not appear to be meaningfully involved with the company’s operations.
    This one might seem obvious. But contractors sometimes assume that because a VSB went through SBA’s certification process (or previously, through VA Center for Verification and Evaluation), they must be compliant–even where the Qualifying Veteran is MIA. But that’s not necessarily true. Despite the illegality and major potential (and even criminal) consequences, some VSBs represent (and even certify to) Qualifying Veteran-ownership and -control, while the Qualifying Veteran actually has little to no involvement in the VSB’s operations. And regardless of whether such misrepresentation rises to the level of an indictment or statutory violation, (as you might’ve guessed) it is certainly not compliant with SBA’s VSB eligibility requirements.
    The VSB control rules say, “[t]o be an eligible [VOSB or] SDVOSB, the management and daily business operations of the concern must be controlled by one or more [veterans or] service-disabled veterans[,]” and control here “means that one or more qualifying veterans controls both the long-term decision-making and the day-to-day operations of the Applicant or Participant.” Note my emphasis on the “and” here. The facade of eligibility is often based on the assumption or claim that the Qualifying Veteran is never around the office or worksites because they are too busy making all the big decisions behind some velvet curtain. But as you can see, SBA’s rules speak directly to this. SBA requires the Qualifying Veteran to control the company both at the big picture management/long-term decision-making level and at the day-to-day operations level.
    In fact, there used to be a VSB control rule that essentially required a Qualifying Veteran to live near (within a reasonable commute of) the company office and worksites. SBA’s most recent final rule on VSB eligibility (among other things) did away with the infamous “reasonable commute rule.” But that does not absolve Qualifying Veterans of their required multi-level management and control of company operations and decisions. In fact, there is a specific provision in SBA’s current rules that states:
    So, if the Qualifying Veteran is persistently absent from the office and worksites, a status protest would likely lead to SBA raising and investigating the issue of VSB control. But even if the Qualifying Veteran is around sometimes, just not during normal business hours, a status protest would still likely lead to such SBA compliance review (at a minimum). Even though this rule only says that SBA will assume there are control violations in such case, it is no easy feat to convince SBA of Qualifying Veteran control where the Qualifying Veteran is rarely physically present. Now, we may have seen some leeway provided by the COVID-19 pandemic–leading to assertions that the Qualifying Veteran virtually controls all operations. But SBA has historically been pretty tough on that one (even during the height of the pandemic).
    So, now that most in-office business has resumed, a company would likely need to show SBA documentation of direct support for such long-distance management. And I am not saying it is impossible to run a VSB company from afar. SBA’s VSB control rules are not intended to target instances where such virtual/long-distance control is truly present. Rather, the rules are intended to weed out situations where a Qualifying Veteran is publicly positioned as the “face” of the company, while non-qualifying people or entities (Non-Qualifying Veterans) are really pulling all the strings. Such is often referred to as a “Rent-a-Vet” scheme. The VSB protest process plays a crucial role in detecting such schemes, helping to maintain integrity and fairness in the VSB Program. In fact, our next reason why to protest a VSB status relies on many of these same rules and policies–as well as others.
    2. The Qualifying Veteran has a “side hustle.”
    Even if you focus solely on the rules already discussed above, you can still likely see why a Qualifying Veteran’s “side hustle” or secondary employment could give rise to VSB control concerns. But SBA’s regulations take it one step further. The same rule requiring “full-time management” (covered above) also specifically prohibits the Qualifying Veteran holding the highest officer position in the company from engaging in any outside employment that would “prevent [them] from devoting the time and attention to the concern necessary to control its management and daily business operations.”
    Generally, SBA’s determination whether any such employment “prevents” the required full-time management and control is intensely fact-specific. Sure, some secondary employment obligations can truly and completely be handled outside of normal working hours. Some are not too demanding or time consuming. And some in no way interfere with a Qualifying Veteran’s required control of their VSB company. In fact, there have been a decent number of SBA decisions finding VSB eligibility despite outside employment–but common to many of those decisions is the fact that the Qualifying Veteran can show their outside employment obligations can be met: (a) with less-than-full-time hours; and (b) at any hour of the day or night and/or during weekends. So, naturally, SBA has been less likely to allow it where the outside employment company; (a) operates during the same or similar business hours as the VSB company; and/or (b) requires more involvement than a veteran/SDV (that manages their VSB full-time) can reasonably dedicate.
    As you can see, SBA’s decisions on Qualifying Veteran outside employment are incredibly fact-specific. Obviously, discovering that a Qualifying Veteran appears to be “splitting time” between two or more companies could lead to a reasonable and strong status protest. But a status protest may still be warranted (and even, have a good chance of success) where there are less obvious concerns with SBA’s outside employment rule. An SBA compliance investigation initiated by a status protest has the potential to reveal facts not typically considered public information–nor willingly provided to a VSB’s competitors–that may be relevant to the VSB’s: (1) noncompliance with SBA’s outside employment limitations; and/or (2) noncompliance with other applicable control, ownership, or general eligibility rules. That’s why we selected outside employment as one of our reasons to file a VSB status protest. Our next reason, too, goes to SBA’s control requirements.
    3. A Non-Qualifying Veteran’s history and involvement with a Qualifying Veteran or their VSB company raises control concerns.
    Now, we kept this reason to file a VSB status protest quite broad for a reason; it covers a lot of different provisions and limitations from SBA’s VSB eligibility regulations.
    SBA’s VSB control regulations don’t just detail strict rules and standards a Qualifying Veteran must follow to show the required control. They don’t just discuss the level of involvement and dedication a Qualifying Veteran must demonstrate. Sure, they do all of those things (as we detailed above). But they, again, go one step further.
    SBA’s regulations also place strict limitations on any Non-Qualifying Veterans that have a history with or are involved with the Qualifying Veteran and/or the VSB. Notably, SBA’s rules don’t exclude Non-Qualifying Veterans completely. In fact, SBA’s rules expressly state that a “non-qualifying-veteran may be involved in the management of the concern, and may be a stockholder, partner, limited liability member, officer, and/or director of the concern.” But SBA does have a wide variety of provisions in its control regulations that it enforces to keep any involved Non-Qualifying Veterans “in check,” if you will.
    These various provisions prohibit all Non-Qualifying Veterans from exerting control over a VSB or its business operations. They restrict the financial support a Non-Qualifying Veteran may provide to a VSB and prohibit any financial dependence or influence. And they create certain presumptions or assumptions a VSB must overcome where there is: prior employment history between the Non-Qualifying Veteran and the Qualifying Veteran; or where a Non-Qualifying Veteran receives too much compensation from a VSB.
    SBA’s VSB control rules say that a Non-Qualifying Veteran must not:
    These first four regulatory limitations are pretty self-explanatory–all aiming to prevent any control over a VSB by a Non-Qualifying Veteran and even any power to control a VSB based on financial dependence or influence. SBA’s VSB control regulations go on to say that a Non-Qualifying Veteran may not:
    Notably, the last two provisions don’t just give SBA the right to “raise an eyebrow” where the facts apply. They also set forth the method by which a compliant and eligible VSB can demonstrate to SBA that the required control and pure intentions are still there–specifically, where a Non-Qualifying Veteran (1) used to employ a Qualifying Veteran ready to venture out on their own, or (2) makes more money at the VSB than the Qualifying Veteran because it will truly benefit the company.
    The provisions of SBA’s regulations discussed in this third reason–limiting certain aspects of Non-Qualifying Veteran involvement, rather than requiring certain aspects of Qualifying Veteran involvement–serve the same underlying policies as the control rules discussed in the first two reasons. So, this fourth and final reason to file is no exception.
    4. The VSB has a franchise-type or affiliate agreement with another entity or individual.
    We will keep this last reason to file a VSB status protest brief–especially since you can read all about it here. In a nutshell, consistent with all of the control rules and limitations we discussed above, anytime you discover that a VSB has a franchise-type or affiliate agreement with another person or entity, it could also be worth a status protest. At a minimum, SBA needs to closely review any such agreements to ensure there are not provisions limiting the Qualifying Veteran control–or allowing any Non-Qualifying Veteran control. So, the very existence of such an agreement could lead to a successful SDV status protest: (1) if SBA has not already had the chance to review it; or (2) if an SBA deep-dive into the agreement demonstrates that another entity or individual has control over (or the power to control) certain aspects of the SDV’s operations (e.g., marketing, websites, sales, or other day-to-day operations or long-term decisions).
    * * *
    Though the four reasons to file an SDV protest discussed above cover a wide variety of facts–they all rely on the same underlying goals and policies. Essentially, SBA only wants to certify VSBs and allocate VSB-designated contracting dollars where there is meaningful SDV involvement and sufficient SDV authority. SBA only aims to restrict the involvement of other entities and individuals to prevent anyone from exercising too much authority over a Qualifying Veteran or its VSB. This, again, is vital in preventing the infamous “Rent-a-Vet” schemes you see in the news. And so is the VSB status protests process.
    Questions about this post? Email us. Needing 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 VOSB or SDVOSB Status Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  15. Koprince Law LLC
    Happy Friday! We hope you had a productive week. We are slowly exiting the deep freeze that we have been enduring the past few weeks, here in the midwest. We’ve had snow, ice, rain and sub degree temperatures! Not fun! We are looking forward to seeing the sun again and warmer days. Hope you are doing well and looking forward to a nice weekend.
    This week in federal government contracting news saw some interesting stories, including a push to streamline contracting and GSA not following procurement rules.
    Contracting Vehicles: Understanding GSA Schedules, IDIQs, and Beyond Bipartisan bill strives for ‘more nimble and meaningful’ federal contracting Federal ‘neurodiversity’ initiatives slowly getting off the ground GSA hosts roundtable with business leaders on advancing equity in federal contracting Can a data environment actually improve federal procurement? Study: Growing Indian middle class on Nebraska reservation defies odds GSA Purchased Chinese-Manufactured Videoconference Cameras and Justified It Using Misleading Market Research DoD’s new memo puts stricter requirements on cloud providers Protests restart over CIO-SP4 It’s time to rethink GovCon pricing to align with post-pandemic reality Technology Modernization Fund announces targeted investments to improve customer service and security United States Files False Claims Act Complaint Against Department of Energy Prime Contractor Alleging Millions of Dollars in Fraudulent Overcharging The post SmallGovCon Week in Review: January 22-26, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  16. Koprince Law LLC
    Back in 2020, we discussed an SBA Office of Hearings and Appeals (OHA) decision stating that the managing venturer must control every aspect of the joint venture. This position, which we questioned in that article, has changed since that time, and we explored the changes to the regulatory language in question not long thereafter. But this regulatory language was still vague. Since that time, there has been much case law development. The Court of Federal Claims (COFC) held in 2022, “[a] minority owner’s control over “extraordinary” actions, such as actions intended to protect the investment of minority shareholders, will not result in a finding of negative control” and applied this idea to a populated joint venture. Swift & Staley, Inc. v. United States, No. 21-1279, 2022 WL 1231428 (Fed. Cl. Mar. 31, 2022), aff’d, No. 2022-1601, 2022 WL 17576348 (Fed. Cir. Dec. 12, 2022). It now appears, fairly established at this point, that non-managing venturers can have a say in what can best be described as “extraordinary actions.” These are the sorts of decisions that can completely change the trajectory of the joint venture. But contractors must still be very careful in giving the non-managing venturer a say in the joint venture’s decisions. As one firm learned the hard way in a recent COFC case, a joint venture with too many actions controllable by the non-managing venturer may end up ineligible for set-asides. Here, we explore this decision.
    The Case
    In 2023, the COFC heard an appeal of the SBA’s determination that LS3, LLC, (LS3), a mentor-protégé joint venture comprised of LUKAYVA—the protégé and SDVOSB—and its mentor, Systems Application & Technologies, Inc. (SA-TECH), was not an eligible SDVOSB joint venture. LS3, LLC v. United States, No. 23-1392, 2023 WL 8638647 (Fed. Cl. Dec. 14, 2023). LS3 was awarded a contract for engineering support services for the Navy, and a competitor filed a combined size and status protest with the SBA, alleging that LS3 both was not small under the regulations and further lacked eligibility for SDVOSB contracts. SBA OHA found that LS3 was not eligible for SDVOSB eligibility, and then dismissed the size protests as moot since LS3 was already found ineligible. The appeal to the COFC thus specifically concerned the allegation that LS3 lacked SDVOSB eligibility.
                    OHA based its decision on four simple considerations: (1) LS3’s operating agreement established a management committee; (2) the Management Committee held decisional power over LS3’s actions; (3) management committee actions required a majority vote of the members of the committee; and (4) SA-TECH and LUKAYVA had equal representation on the committee, providing SA-TECH with the ability to block any management committee actions. The COFC stated that the question on appeal then was whether “OHA’s action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law and, if so, whether the error is prejudicial.”
    LS3 essentially argued that OHA was wrong because it found that LUKAYVA did not have unequivocal control over LS3. However, this overstated OHA’s position. COFC observed that “OHA took issue with the type of negative control SA-TECH could assert via the Management Committee and the breadth of activities it could control.” As the SDVOSB member of the joint venture, “LUKAYVA needs to be in the driver’s seat when it comes to day-to-day management and administration of the business operations.”
    While LS3 argued that OHA was saying SA-TECH could have zero negative control, the COFC observed this was not the case. “OHA’s decision is specific to SA-TECH’s ability to assert negative control in the day-to-day management and administration of the contractual performance by virtue of its fifty percent representation on the Management Committee. That is, OHA’s decision is limited to who can control the breadth of LS3’s day-to-day management and administration of contract performance.” This was the problem with LS3’s agreement. It didn’t just let SA-TECH have a deciding say in those “extraordinary actions.” It gave SA-TECH and LUKAYVA 50% of the vote each. And because a majority of the vote was required for any action, essentially, SA-TECH could block any vote of LUKAYVA, be it on an extraordinary action OR a day-to-day matter. As a result, the operating agreement created a situation that went well past any extraordinary action exception to the requirement that the managing venturer control the joint venture. SA-TECH had essentially complete power to block all decisions by LUKAYVA.
    As such, contractors need to keep in mind that, while this extraordinary action exception is useful, it is not unlimited. You must be very careful to ensure non-managing venturers for socioeconomic joint ventures and mentor-protégé joint ventures only have say on extraordinary actions. But that raises the question: What is and is not extraordinary?
    Extraordinary Actions v. Day-To-Day Actions
    13 C.F.R. 125.8(b)(2)(ii)(A) states:
    “The managing venturer is responsible for controlling the day-to-day management and administration of the contractual performance of the joint venture, but other partners to the joint venture may participate in all corporate governance activities and decisions of the joint venture as is commercially customary. The joint venture agreement may not give to a non-managing venturer negative control over activities of the joint venture, unless those provisions would otherwise be commercially customary for a joint venture agreement for a government contract outside of SBA’s programs.”
    What is meant, however, by “commercially customary” regarding extraordinary actions? There is no hard rule it appears. The case law is what must be looked at. There appear to be some generally agreed ideas. “Adding new members and dissolving the concern has been found to be an extraordinary action.” Strategic All. Sols. LLC, SBA No. VET-277, 2022 (Sept. 22, 2022).  The same SBA decision held “[s]elling or otherwise disposing of the firm’s assets, admitting new members, amending the JVOA in any manner that materially alters the rights of existing members, or filing for bankruptcy all constitute extraordinary actions that may require the minority shareholder’s input, but do not create negative control.” Id.
    The same decision also helpfully points out some examples of day-to-day actions. “Conversely, OHA has characterized a number of actions as essential to the daily operation of the company, and therefore granting a minority owner the power to block such actions does in fact constitute negative control. A minority member who has control over the budget, has the power to hire and fire officers, and sets employee compensation, has control over the daily operations of a concern.” Id. This helps give at least some sense of what is and is not an extraordinary action. This post also discusses a recent joint venture agreement that provided do much daily control to the non-managing venturer.
                    However, keep in mind with all this that this area of law is still rapidly developing, and some of this may change. One thing that can be safely said: Take drafting your joint venture agreement and joint venture operating agreement very seriously. Little mistakes can cause serious consequences. The language you choose is crucial. We always recommend at least having an attorney look over your joint venture agreement before you prepare to bid on that first contract.
    Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook
    The post Extraordinary Actions v. Day-to-Day Decisions for Joint Ventures: A Cautionary Tale first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  17. Koprince Law LLC
    It’s Friday and time for another week in review. The kids are finishing up the school year, so get ready parents! There are lots of activities happening in town and as I drive by our local ice cream shop it seems to be constantly filled with kids as they celebrate the beginning of summer. We hope you are looking forward to a lot of fun summer activities, as well. Enjoy the weekend!
    This week in federal government contracting included updates on veteran-owned and WOSB contracting, as well as concerns about the ranks of DoD contracting officers getting thin.
    Federal Contracting by Veteran-Owned Small Businesses: An Overview and Analysis of Contemporary Issues Women-Owned Small Business Federal Contract Program Updates and Clarifications Department of Labor Recognized by SBA for Excellence in Procurement Practices to Support Small Businesses White House procurement office releases data circular as it celebrates 50th anniversary Defense Agencies Strategic Outlook for 2024-2025 Military movers urge DoD, Congress to pause household goods contract Legislation would create program for veteran-owned small businesses to win federal contracts Senate approves FAA Reauthorization bill DoD’s acquisition workforce is stretched thin FedRAMP board launched to support safe, secure use of cloud services in government White House procurement office marks 50 years Markup Wrap Up: Committee Advances Legislation to Secure Biotechnology Data, Safeguard Taxpayer Funded Projects, Federal Grants, and More Contractors Agree to Pay $273,100 Over Failure to Deliver Telescope to the Air Force Unique Entity ID is Here The post SmallGovCon Week in Review: May 13-17, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  18. Koprince Law LLC
    Touted as a “game-changer” when it was first introduced in 2016, the U.S. Small Business Administration’s All Small Mentor-Protégé Program isn’t new anymore. Known now as simply the “SBA Mentor-Protégé Program,” it is still extremely useful for large and small contractors alike.
    View Preview
    Please join me and Gregory Weber as we explain the ins and outs of the SBA Mentor-Protégé Program, covering the program’s eligibility requirements, its potential benefits (including the ability to form special mentor-protégé joint ventures), the application process, and common misconceptions and pitfalls. Additionally, we will provide an introduction to the even older DoD Mentor-Protégé Program, which set the stage for the SBA’s program, and compare the two programs.
    Register here.
    The post Free Event! SBA & DoD Mentor Protégé Webinar hosted by MST Contract Opportunities Center APEX Accelerator, El Paso: January 23, 2024, 10:00-11:30am MST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  19. Koprince Law LLC
    Happy Friday! Boy, were we hit with a major snowstorm this week with very cold temperatures sweeping in from the north! We dug out just in time for a cold blast to arrive today and our Kansas City Chiefs have a playoff game at home this weekend, with the high expected to be a balmy 6 degrees! Brrr. I’ll be watching from my climate-controlled living room. Go Chiefs!
    This week in federal government contracting news saw some White House initiatives for better contracting, as well as updates on cybersecurity and AI in the federal space.
    Welcome to a Very Busy New Year in Federal Contracting! White House Reveals Better Contracting Initiative Procedures for reporting on veteran-owned small businesses need improvement, according to GAO GSA finds federal tech accessibility challenges driven by lack of staff, resources Federal Real Property: Improved Data and Access Needed for Employees with Disabilities Using Secure Facilities SBA Marks One-Year Anniversary of Veteran Small Business Certification Program What a cybersecurity company thinks of the new DoD cybersecurity rule How Contractors Can Secure a Spot on NASA’s SEWP VI Contract Pentagon’s Military AI Effort Project Maven Could Begin Contracting in 2024 Trade Group Criticizes Regulatory Change to Federal Acquisitions Rules Bidders for this massive professional services vehicle have to provide finer details on their rates, a move one protestor is opposing in court and is detailed in this denial by the Government Accountability Office. SAP to Pay Over $220M to Resolve Foreign Bribery Investigations Improving government capacity is key for AI deployment, experts tell Congress Proposed FAR Amendment Addresses Procurement & Nonprocurement Procedures on Debarment, Suspension The post SmallGovCon Week in Review: January 8-12, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  20. Koprince Law LLC
    Tomorrow is Veterans Day and SmallGovCon would like to thank our veterans for their service.
    Here are some interesting historical facts about Veterans Day. It was on November 11, 1921, an unidentified American soldier killed in the war was buried at Arlington National Cemetery. The US Department of Veterans Affairs holds a ceremony each year in Arlington National cemetery, to honor and thank all who served in the US Armed Forces. The first celebration using the term Veterans Day occurred in Birmingham, Alabama, in 1947. You can read more about the history of Veterans Day here.
    If you are not a veteran, please reach out and take a moment to thank those veterans in your life. We hope you will consider attending a Veterans Day event in your area to thank them for their service and honor their sacrifice.
    And now, this week in federal government contracting news included a new contracting initative, increased use of AI, and cyber security updates.
    FAR: Small Business Development Centers Army to set up digital contracting center of excellence Contract spending is set to grow across the board in 2024 FACT SHEET: Biden-⁠Harris Administration Announces New Better Contracting Initiative to Save Billions Annually AI Adoption Transforming Government Contracting General Services Administration hosts Native American Industry Day for Native American-owned businesses and tribal government leaders Bank of America doubles support for Veteran Loan Fund to Aid Growth of Veteran-Led Small Businesses throughout Texas Honoring Our Veterans : Retired Fighter Pilot, 96 year old continues to run Business The White House launches a contractor initiative centered on better data and performance Biden wants better deals from contractors Why did bid protests to GAO rise sharply in fiscal 2023? President Biden Selects HUD’s Small Business Director for Prestigious Presidential Rank Award Former Defense Contractor in Tomah Receives 15-Month Prison Sentence & $10,000 Fine For Wire Fraud GE Aerospace Agrees to Pay $9.4 Million to Resolve Allegations of False Claims Act Violations OSTP director stresses importance of AI talent search following executive order NIST releases revised cyber requirements for controlled unclassified information Defense firms can take steps now to comply with enhanced cyber standards, industry officials say The post SmallGovCon Week in Review, November 6-10, 2023, A Salute to Our Veterans! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  21. Koprince Law LLC
    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
  22. Koprince Law LLC
    In Mckenna Brytan Indus. LLC, SBA No. VSBC-334, 2023 (Feb. 8, 2024), the U.S. Small Business Administration (SBA) Office of Hearings and Appeals (OHA) sustained the Service-Disabled Small Business (SDVOSB) status protest of BTNG Enterprises, LLC (BTNG). In its decision, OHA reiterated the two current regulatory options for calling yourself an “SDVOSB” concern: the first, is having your SDVOSB application officially approved by the SBA and your company listed in the SBA’s Veteran Small Business Certification Program (VetCert) data base; and the second, is having submitted your complete application to SBA through VetCert prior to December 31, 2023, and be currently waiting for approval or denial. Here, OHA was unable to conclude that BTNG had done either of those things–despite looking for evidence of eligibility from the SBA and from BTNG itself.
    McKenna Brytan is a significant protest. It is one of the first OHA decisions to discuss enforcement of SBA’s regulatory SDVOSB grace period that began January 1, 2024 (actually it appears it may be the first protest). McKenna Brytan concerned a Defense Logistics Agency (DLA) Request for Quotations (RFQ) for portable dehumidifiers, set aside for SDVOSBs under North American Industry Classification System (NAICS) code 333415, Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing. It had a corresponding size standard of 1,250 employees. The RFQ specifically stated: “[i]f no qualified SDVOSB offers are received, it is possible other small businesses can be considered.” And
    DLA announced the award to BTNG on December 6, 2023. In its proposal, BTNG offered a fixed unit price of $330 per unit and represented to DLA that it was a WOSB concern and an SDVOSB concern.
    McKenna Brytan filed a timely SDVOSB status protest of the awardee with DLA’s Contracting Officer for the RFQ. It alleged: its quotation should have been found superior to BTNG’s; and its quotation would more likely have been awarded if BTNG had not falsely claimed SDVOSB status. As required, the Contracting Officer forwarded the status protest on to OHA requesting: “a formal SDVOSB status determination be accomplished for BTNG.” Along with the referral letter, DLA also told OHA that BTNG was only the lowest quote among those representing SDVOSB status and “was not the lowest quote in relation to the quotes submitted by [non-SDVOSBs].”
    To investigate BTNG’s represented SDVOSB status and eligibility, OHA issued a Notice and Order for the Director of SBA’s Office of Government Contracting (D/GC) to submit a BTNG Case File to OHA. But after “a comprehensive search,” the D/GC told OHA there was no record of BTNG being SDVOSB certified by SBA–and in fact, no record of BTNG even applying for SDVOSB certification with SBA. So, without an SBA case file, OHA issued an Order to BTNG itself to prove its qualification as an SDVOSB, noting: “As the protested firm, BTNG has the burden of proving its eligibility as an SDVOSB by a preponderance of the evidence. 13 C.F.R. § 134.1010.”
    In perhaps one of the most interesting parts of this protest, BTNG’s response to the protest and OHA’s Order openly admitted that BTNG was not 51% owned nor fully controlled by one or more service-disabled veterans. Rather, in OHA’s words:
    OHA’s analysis of this protest rightfully began with an explanation of the relevant date for determining SDVOSB eligibility, noting, “In an SDVOSB status protest pertaining to a procurement, OHA determines the eligibility of the protested concern as of the date of its initial offer or response which includes price. 13 C.F.R. § 134.1003(e)(1).” OHA therefore determined it would analyze BTNG’s eligibility as of the date it submitted its quotation to DLA.
    OHA then turned to the question of BTNG’s SDVOSB eligibility as of the date it submitted its proposal. Because there was no debate that BTNG was not a VetCert registered SDVOSB, OHA focused on SBA’s regulatory option for previously self-certified SDVOSBs to continue to self-certify if they qualify for SBA’s SDVOSB grace period. OHA said:
    OHA then said, although BTNG represented it was an SDVOSB in its quotation, OHA and SBA found no record of BTNG ever applying for SDVOSB certification before December 31, 2023. And as noted above, OHA even gave BTNG the chance to prove its eligibility regardless of this finding. But BTNG didn’t even argue that it was service-disabled veteran owned or run.
    If you’re familiar with the Veteran Certification Programs’ rules–both SBA’s and, previously, the Department of Veterans Affairs (VA) Center for Verification and Evaluation’s (CVE)–you likely know that two of the main requirements are:
    “To qualify as a SDVOSB, one or more service-disabled veterans must unconditionally and directly own at least 51 percent of the concern[,]” (13 C.F.R. § 128.202); and “To be an eligible SDVOSB, the management and daily business operations of the concern must be controlled by one or more service-disabled veterans . . . [which] means that one or more qualifying veterans controls both the long-term decision-making and the day-to-day operations of the Applicant or Participant.”13 C.F.R. § 128.203. But no worries if you are not familiar with the Veteran Certification Program or rules, you can read more about them here.
    So, because BTNG wasn’t officially SDVOSB certified, allowed to self-certify under the grace period, or even eligible under the SDVOSB rules, OHA found:
    Finally, OHA briefly addressed BTNG’s argument that offerors on the RFQ were not required to be SDVOSBs. On that front, OHA said:
    As a result of BTNG’s misrepresentation of SDVOSB eligibility–deemed relevant to DLA’s selection of an awardee for the RFQ, as the RFQ gave clear priority to SDVOSBs over small business offerors–OHA sustained the protest.
    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.
    This post updates an earlier post on SmallGovCon.
    The post OHA Sustains Status Protest: Self-Proclaimed SDVOSB Awardee Not Certified by VetCert, Not Eligible For SBA’s Grace Period, And Not Veteran Owned or Controlled first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  23. Koprince Law LLC
    As federal contracts attorneys, we often get questions about what happens in the event of an acquisition of a small business. Reporting requirements, whether before or after an acquisition, tend to vary from one type of small business socioeconomic program to another. And there are other considerations such as whether the small business in question is the one being acquired or the one acquiring another small business and the timing with regard to proposal submission, contract performance, task orders,  and other variables. Taking those together, and it can be, well, confusing, to say the least. In the case of Forward Slope, Inc., SBA’s Office of Hearings and Appeals (OHA) took a look at some of these variables to determine how an acquisition can affect the size of a concern awarded a multiple award contract.
    Background
    In July 2021, the U.S. Department of the Navy awarded Forward Slope a place on the Seaport-NxG Multiple Award Contract (MAC). For those unfamiliar with Seaport-NxG, it is both a set of Indefinite Delivery Indefinite Quantity (IDIQ) MACs and the platform used by the Navy to solicit, award, and administer task orders under those IDIQ MACs. Once on the MAC, on November 29, 2022, Forward Slope, a self-certified small business, submitted its response to an RFQ for Seaport-NxG. Following Forward Slope’s response to the RFQ, the Navy made an award to Forward Slope on the 100% small business set aside task order.
    Following award, SBA’s Area Office received a protest regarding Forward Slope’s size, alleging that Forward Slope was an “other than small” business. This led to the Area Office issuing a size determination stating that Forward Slope was, in fact, other than small and therefore it was ineligible for award. How did this happen, if Forward Slope was small when it was awarded a place on the MAC?
    One word: acquisition.
    You see, sometime between when Forward Slope was awarded the MAC and when it submitted its offer for the task order, it was acquired by another entity . And 13 C.F.R. § 121.404(g)(2)(i) states:
    Therefore, according to 13 C.F.R. § 121.404(g)(2)(i), the Area Office determined Forward Slope was required to recertify its size status to the procuring agency or inform the procuring agency that it was other than small. Forward Slope did not, it was found to be other than small, and any subsequent options or orders would not count towards the Navy’s small business goals.
    Size Appeal
    Fast forward to July 2023, when Forward Slope filed the appeal at issue here. The underlying MAC stated that it would be competed on the following bases: unrestricted or set-aside for small businesses, service-disabled veteran-owned small businesses (SDVOSB), women-owned small businesses (WOSB), 8(a) participants, or HUBZone participants. In its appeal, Forward Slope asserted that offerors on task orders set-aside for SDVOSBs, WOSBs, 8(a), and HUBZones were required to qualify as small at the time of offer submission, as stated in the MAC. But there was no similar requirement included for small business set-asides, nor was there in the task order solicitation. Therefore, according to Forward Slope, it was not required to recertify its size following its acquisition by the other company. So, who was right?
    Forward Slope, but not for the reason they were arguing.
    It is a longstanding policy (as we discussed here) that a concern that certifies itself as small, at the time it submits its initial offer, remains small for the life of the contract per 13 C.F.R. 121.404(g). However, contracting officers are also permitted to request recertification of size, if desired, at the time of the task order offer. In that case, the size of the offeror at the time of the initial offer, including price for the task order, will be the size that applies.
    In this situation, the contracting officer never requested recertification. In fact, that was even affirmed by the contracting officer during the Area Office’s investigation. However, the Area Office incorrectly applied 13 C.F.R. § 121.404(g) when it determined that Forward Slope’s size was to be determined at the time of its submission in response to the RFQ for the task order. There was no requirement that offerors for small business set-asides recertify at task order bid submission—whether in the MAC or in the task order RFQ—and SBA policy does not require recertification to the procuring agency (here, the Navy) unless the contracting officer requests recertification.
    But wait, there’s more!
    The regulation clearly states that after a merger or acquisition that affects size, the contractor must recertify its size. So how can a contractor be required to recertify, but not have the new size, if other than small, apply to the rest of the contract?
    Well, there is a rule that both parties seemed to overlook. Way down in 13 C.F.R. § 121.404(g)(4), it states,
    The distinguishing point here, and the point that OHA’s decision turned on, was that the requirement to recertify as a result of a merger, sale, or acquisition, per 13 C.F.R. § 121.404(g)(2) is not the same as a contracting officer’s request for size recertification for a task order under a MAC, as discussed in 13 C.F.R. 121.404(g)(4). 13 C.F.R. § 121.404(g)(4) only requires recertification on a MAC when the contracting officer requests. Therefore, because SBA rules allow an awardee to count as small for the first five years following the initial offer for the MAC, Forward Slope was still considered small for award eligibility purposes. This meant that Forward Slope would be eligible for small business awards under the MAC for five years from initial offer. A very interesting—and important—distinction to keep in your back pocket.
    So, what have we learned?
    You can be eligible for small business task order awards on MACs, even when the agency cannot count the contract as one to a small business; and Task orders on MACs will continue to count as awards to small businesses following an acquisition, unless the contracting officer requests a recertification in relation to a task order under the MAC. Questions about this post? Email us. Needing 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 Shopping for a New Small Business: How Acquisitions Affect Size Status for Multiple-Award Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  24. Koprince Law LLC
    A NAICS code appeal can be a powerful tool for altering the competitive landscape of a bid by changing what size of business is allowed to submit a bid and thereby either increasing or decreasing the potential competitor pool. This post explores some of the important reasons for considering filing a NAICS code appeal. While NAICS codes appeals are not that common, they have a fairly high rate of success.
    What is a NAICS Code?
    A NAICS code is a six-digit code that is assigned to various categories of industries under the North American Industry Classification System (NAICS), a standard used in classifying business establishments. The North America part in the name, means these codes are also used in Mexico and Canada, meaning revisions to the codes have to get approval of all three countries. The codes are assigned by the US Census Bureau for “business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.” The NAICS manual lays out the system for assigning NAICS codes. The manual has convenient search form to use to look up the descriptions for each code.
    For our purposes, it’s important that the SBA assigns a different size standard to each NAICS code based on dollar number of receipts or number of employees. SBA publishes a table of all the size standards. Here’s an example.
    NAICS code 541511 is for Custom Computer Programming Services and has a size standard of $34 million per year. The NAICS manual describes this code as follows: “This U.S. industry comprises establishments primarily engaged in writing, modifying, testing, and supporting software to meet the needs of a particular customer.”
    So, if an agency assigns 541511 to a solicitation, then only contractors whose average receipts are under $34 million per year can bid on the procurement.
    1. The Solicitation Description of Work Does Not Match the NAICS Code Description
    A contracting officer must assign the proper NAICS code based on what best describes the principal purpose of the product or service being acquired in light of the industry descriptions in the NAICS Manual and the description in the solicitation. The key to having a good NAICS appeal is to show that, based on clear examples from the solicitation’s scope of work and level of effort, the NAICS code assigned doesn’t match the main purpose of what the agency is purchasing. Look at the majority of work under the solicitation, as well as past examples of similar work (or possibly even the incumbent work) being procured under a different NAICS code.
    In one example we blogged about, a solicitation at the time of its posting was assigned NAICS code 561311, Employment Placement Agencies, which carried a $30 Million size standard. In the NAICS manual examples of businesses under that code may include employment registries, babysitting bureaus, and employment agencies. The work, as described, called for at least 8 supervisory medical support assistants, and over 150 full-time employees. These employees would conduct general administrative functions, perform a variety of technical support that will help the work of medical staff, cover general administrative staff on leave, and help cover vacancies, among other duties. 
    The protester argued that the RFQ calls for “100% administrative services” and that there is no requirement for the agency to “purchase the suppliers of the administrative services.” Consequently, the protester proposed that NAICS 56110, Office Administrative Services, would be a better fit for this RFQ. The NAICS manual provides examples of businesses under that code such as, administrative management services, management services, managing offices of physicians and surgeons, and medical office management services. SBA agreed and sustained the appeal.
    2. The Largest Dollar Amounts in the Solicitation Do Not Correspond to the Chosen NAICS Code
    The NAICS code must match the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being acquired. Say that 90% of the dollar value of a contract is for work under a contract that does not match the NAICS code. Based on those dollar amounts, it appears the government may have used the incorrect NAICS code.
    That would be a good candidate for a potential NAICS code challenge.
    3. The NAICS code size standard doesn’t allow you to bid.
    The NAICS code is based on the type of work performed. But it has an important impact on the size of businesses that can bid on a solicitation. Going back to our earlier example, say that a solicitation had a NAICS code 541511 for Custom Computer Programming Services and has a size standard of $34 million per year. If your company has average receipts of $10 million per year, it would be competing with companies potentially more than three times as big.
    In that situation, it might make sense to consider a NAICS code appeal, if there was a reasonable basis for one.
    4. The Agency Recently Updated the NAICS Code in a Solicitation
    These appeals must be filed within 10 calendar days after issuance of the solicitation or amendment to the solicitation affecting the NAICS code. This, of course, differs from the ordinary rule for protesting a defect in a solicitation. At the GAO and Court of Federal Claims, protests of other solicitation defects ordinarily are timely if filed before the due date for initial proposals. So, if you see that a solicitation was recently amended to change the NAICS code, you may want to examine why the agency changed it. Otherwise, however, you must challenge the NAICS code within 10 days of the initial issuance of a solicitation. Many appeals are dismissed for being untimely. Counting just those NAICS code appeals decided on the merits, about 45% were granted, per a GAO report. 
    * * *
    These are reasons why your small business might consider a NAICS code appeal. A NAICS code appeal can be a powerful way to change the competitive nature of a procurement. But you must act fast and have a logical basis for suggesting the agency’s chosen NAICS code does not fit. If both of those are true, a NAICS code appeal can be a good bet.
    Questions about this post? Need help filing or responding to a size protest of your own? Or need additional government contracting legal assistance? Email us.
    Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook.
    The post Why File: A NAICS Code Appeal first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  25. Koprince Law LLC
    In 2019, the Department of Defense (DoD) announced the development of the Cybersecurity Maturity Model Certification (CMMC) Program, which was then implemented in 2020 as an interim rule. We blogged about that way back in 2020. This program was designed to give a certification to contractors based on the depth and effectiveness of their cybersecurity systems to help ensure that contractors implement required security measures. As DoD put it, “[t]he CMMC model consists of maturity processes and cybersecurity best practices from multiple cybersecurity standards, frameworks, and other references, as well as inputs from the broader community.” In late December 2023, the DoD issued proposed changes to the CMMC program for “CMMC 2.0,” a plan that DoD began work on back in 2021. In this post, we will take a general look at these proposed changes.
    FCI and CUI
    It might be helpful for context to give an idea of what the CMMC Program protects. After all, many might wonder what there is to protect if the information is unclassified. The CMMC Program aims at protecting two kinds of information: Federal Contract Information (FCI) and Controlled Unclassified Information (CUI). FAR 52.204-21 defines FCI as “information, not intended for public release, that is provided by or generated for the Government under a contract to develop or deliver a product or service to the Government, but not including information provided by the Government to the public (such as on public Web sites) or simple transactional information, such as necessary to process payments.” Essentially, it’s information that comes from a contract that isn’t marked for public release.
    CUI, per 32 C.F.R. § 2002.4, “is information the Government creates or possesses, or that an entity creates or possesses for or on behalf of the Government, that a law, regulation, or Government-wide policy requires or permits an agency to handle using safeguarding or dissemination controls.” Essentially, CUI is information that, while unclassified, agencies must or are permitted to safeguard or otherwise control the dissemination of. The National Archives provides a good rundown of the difference between FCI and CUI.
    The CMMC Program, then, basically is aimed at ensuring the information that falls in between “classified” and “meant for public release” is properly protected. This program became all the more crucial with the rise of electronic data creation, collection, and processing. “Classified information” generally has to do more with information that must be protected for national security reasons. Just because information is unclassified, that does not mean it is meant to be disseminated to the public. Personal data and financial information all might well be unclassified, yet still improper to disseminate publicly. This is what the CMMC Program seeks to protect.
    Current CMMC
    Under the current CMMC program, federal contracts have five levels of security requirements. For CMMC Level 1, contractors and applicable subcontractors must follow FAR 52.204-21, which has 15 security requirements for the transfer of FCI outside the government. For CMMC Level 2, contractors and applicable subcontractors must follow DFARS 252.204-7012, which has 65 of 110 security requirements for the transfer of CUI outside the government by its reference to the National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations,” along with 7 CMMC practices and 2 CMMC processes. CMMC Level 3 consists of all 110 security requirements from NIST SP 800-171, 20 CMMC practices, and 3 CMMC processes. CMMC Level 4 consists of all 110 security requirements from NIST SP 800-171, 46 CMMC practices, and 4 CMMC processes. Finally, CMMC Level 5 consists of all 110 security requirements from NIST SP 800-171, 61 CMMC practices, and 5 CMMC processes.
    CMMC 2.0
    If implemented, CMMC 2.0 would add 32 C.F.R. Part 170 to the CFR if implemented. It would create a number of new requirements for assessment and affirmation that requirements are being met for CMMC Levels 1 and 2. For CMMC Level 1, contractors and applicable subcontractors would need to verify they are meeting the security requirements through self-assessment and affirm the same annually. For CMMC Level 2, program contracts will either include a self-assessment requirement or a certification assessment requirement at what appears to be the discretion of the contracting officer, the latter of which would involve assessment of contractors and applicable subcontractors by a third-party on whether they are meeting the CMMC Level 2 security requirements. In either case for CMMC Level 2, the contractor and applicable subcontractors would need to affirm continuing compliance after each assessment.
    However, the biggest change with CMMC 2.0 is that it appears it would simplify the leveling system and make CMMC Level 3 the highest level. Per the proposed rule, it would eliminate Levels 2 and 4, and rename the remaining three CMMC Levels as follows:
    Level 1 will remain the same as CMMC 1.0 Level 1 (15 security requirements for the transfer of FCI outside the government); Level 2 will be similar to CMMC 1.0 Level 3 (110 security requirements from NIST SP 800-171); and Level 3 will be similar to CMMC 1.0 Level 5 (110 security requirements from NIST SP 800-171. But, furthermore for CMMC Level 3, contractors and applicable subcontractors would  also be required to implement 24 selected security requirements (outlined in what will be 32 C.F.R. § 170.14) from NIST SP 800-172, “Enhanced Security Requirements for Protecting Controlled Unclassified Information: A Supplement to NIST Special Publication 800-171.” Under CMMC Level 3, contractors and applicable subcontractors would need to verify through a DoD-conducted assessment that they are meeting the Level 3 requirements. They would then get a certification that is valid up to three years. Naturally, the contractor and applicable subcontractors would also be required to affirm compliance after the assessment and then annually thereafter until the next assessment.
    It is worth noting that this CMMC Program applies to defense contracts, and that the implementation will be a phased rollout. Specifically, the proposed rule states: “The DoD is implementing a phased implementation for the CMMC Program and intends to introduce CMMC requirements in solicitations over a three-year period to provide appropriate ramp-up time. The Department anticipates it will take two years for companies with existing contracts to become CMMC certified.” As such, it would seem it should not apply to existing contracts but will apply over time to more and more new solicitations until all such DoD solicitations incorporate this program.
    Summary
    CMMC 2.0 expands upon the CMMC Program in multiple ways, such as simplifying the  security requirement level structure, assessment requirements, and affirmation requirements. No doubt there will be further tweaks to the program in the years to come even if CMMC 2.0 is implemented, but contractors should be aware of the potential for this new program. As of this posting, comments are still welcome on the CMMC 2.0 proposed rule and will be until February 26, 2024. It seems safe to assume that CMMC 2.0 will be implemented in some form or another, so familiarization now may help prevent headaches down the road.
    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 CMMC 2.0 and You: A Look at the Department of Defense’s Proposed New Cybersecurity Rules first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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