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  1. When it comes to calculating a company’s receipts for size purposes, the procedure for is (or at least was) pretty simple: Look at the company’s tax returns. Indeed, it has long been SBA’s position that they can only consider tax returns, as noted in Nordstrom Contracting & Consulting Corp., SBA No. SIZ-5891 (Mar. 7, 2018) (“[T]here is no authority for an area office to consider any evidence apart from tax returns…when calculating a firm’s average annual receipts.”) among other cases. In other words, if something was not mentioned in a tax return, it couldn’t be considered by SBA. The only exception was if the tax returns were not filed, in which case SBA will review financial statements or similar information in lieu. 13 CFR § 121.104. Therefore, other than that exception, a contractor only needs to rely on the information in its tax return when making its size representation. But the U.S. District Court of the District of Columbia (DDC) thinks otherwise. On May 18, 2023, it entered a decision on opposing motions for summary judgment in a size protest that had become a False Claims Act case. In this decision, it concluded the opposite: Contractors must in some cases consider information outside their tax returns. Let’s take a deeper dive. United States ex rel. Bid Solve, Inc. v. CWS Mktg. Grp., Inc., 678 F. Supp. 3d 53 (D.D.C. 2023) began as a standard size protest back in 2018. At first, the matter was simple enough: CWS Marketing Group’s (CWS) size was protested, it submitted its tax returns, and SBA sided with CWS over the protester, Bid Solve, Inc. (Bid Solve) after reviewing those returns. However, Bid Solve apparently knew there was something more going on and filed a False Claims Act case with the DDC against CWS. Bid Solve alleged that CWS had misreported its receipts by improperly subtracting expenses that it shouldn’t have subtracted. If these expenses were not subtracted, then CWS would be over the size standard. Proving this would necessarily require looking at information that wasn’t in CWS’ tax returns, and here is where the question arose: Was CWS justified in only relying on the information in its tax return? The DDC said “no” in light of 13 C.F.R. § 121.104: Defendants misread the regulation: They were not allowed to rely solely on CWS’s tax returns. And because of that, they should have never subtracted “flowthrough income” from CWS’s total revenue. … § 104(a) provides a clear formula: receipts are “all revenue … reduced by returns and allowances,” and “the only exclusions from receipts are those specifically” listed in § 104(a). Tax returns may be used to calculate receipts, but they cannot override § 104(a)’s basic rules. Looking at CWS’ argument, the DDC further explained why it was rejecting it: Defendants disagree, proposing a different reading. They urge that a subsection—§ 104(a)(1)—required them to use only CWS’s tax returns when calculating its receipts. That provision states that “The Federal income tax return and any amendments filed with the IRS on or before the date of self-certification must be used to determine” whether a business is small…(i)n other words, if they plugged in numbers from CWS’s tax returns, then they are in the clear, no matter if that calculation flouts other parts of the regulation. The DDC then noted that, basically, CWS was using the “only tax returns” argument to justify the fact that they violated the provision that “reimbursements for purchases a contractor makes at a customer’s request” may not be excluded from receipts. CWS’ position would basically make it impossible to enforce the rest of the regulation if the contractor in question made an inaccurate tax return (unintentionally or otherwise). The DDC then further explained how CWS’ position does not make sense. “For example, 13 C.F.R. § 121.1009(b) says that when making a size determination, the SBA will mostly rely on the information a bidder provided but ‘may use other information and may make requests for additional information.’” It would not make sense for the rule to be that others can submit other information but the contractor itself need only rely on its own tax returns. After all, the contractor would have the most access to its own information. Impact on SBA Rule Quite frankly, we think the DDC’s ruling here is just common sense. It does not stand to reason that a contractor could file inaccurate tax returns and then rely on those same inaccurate tax returns to its own benefit, or that tax returns could allow subtractions from receipts that SBA rules do not allow. It would completely undermine the size determination process. With that, we turn to the fact that, as we noted above, SBA has historically stated that area offices will only rely on tax returns, when filed, in making size determinations. Thus far, it does not appear any SBA decision has cited to the DDC’s decision, either to accept it or attempt to get around it (technically, the DDC did not overturn any SBA precedent, this was a False Claims Act case). That said, we think it would make sense for SBA to adopt the DDC’s ruling as its own standard for size determinations. However, that is basically something that SBA will have to do on its own, although we could see SBA continuing to rely on tax returns in the interest of efficiency. For it would have to be an odd situation indeed for a protester to have enough evidence about an awardee’s internal finances to be able to say that the awardee’s own tax returns are wrong. Generally, such an assertion is going to be pure speculation on the part of the protester, which means that a request that the protested firm provide additional information would be rejected by SBA. SBA will not act on requests or protests based on speculation alone. As such, it is going to be on SBA to change its own standard and ask protested firms to provide more than just their own tax returns in these protests. Whether it will do so remains to be seen. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Beyond Tax Returns: Federal District Court Says Contractors Must Include Information Outside Tax Returns in Calculating Size first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  2. Happy Friday everyone! Here in the Midwest we are enjoying some nice spring weather. But along with the beautiful flowers comes the allergies for some folks. In contracting news this week legislators in Washington have been working on bills in an attempt to make it easier for small businesses to work with the government and there is continued movement on cybersecurity for federal contractors. You can read more about that in the articles below as well as other contracting news. Have a great weekend. Former Veterans Affairs Procurement Supervisor Sentenced to Seven Years in Prison for Pocketing Kickbacks Readout of Roundtable on Project Labor Agreements for Large Federal Construction Projects Breaking Down the DOD’s New Defense Industrial Base Cybersecurity Strategy Accenture Federal Services acquires major federal contractor How legislators could make things a little easier for those companies working with the government Congressional minority caucuses call for data on government spending on contractors Investigating the US Army’s FY2025 Budget Proposal Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million Virginia-Based Defense Contractor Pleads Guilty to Bribery Conspiracy Involving Government Contracts Worth More Than $100 Million House Committee on Small Business Unanimously Reports Seven Bipartisan Bills Favorably to the House Ensuring Prevailing Wages: A Closer Look at the Davis-Bacon Act Former Federal Contract Employee Sentenced to 18 Years for Child Pornography US Department of Labor Recovers $34K in Back Wages, Benefits for 9 Workers Misclassified by Subcontractor on Federal Project in District of Columbia The post SmallGovCon Week in Review: April 15-19, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  3. Please join us for an in-depth exploration of past performance management in government contracting. Gain valuable knowledge to leverage your past successes for future growth and competitive advantage. Past performance management holds significant weight in the success of government contractors. Government agencies now place a premium on a contractor’s ability to deliver on promises, emphasizing the adage that “actions speak louder than words.” Contractors with a strong track record of past performance gain a competitive edge in the government contracting arena. Nicole Pottroff and Greg Weber, will discuss the essential components of past performance crucial for building a solid foundation for success. Register here. The post Govology Webinar: Past Performance: A Critical Factor For Success in the Government Marketplace (2024 Update), April 25, 2024, 1:00-2:30pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  4. The Rule of Two is the federal contracting rule requiring agencies to set aside a solicitation for competition only between small businesses when there are at least two small businesses that could do the work for a fair price. But that rule does have some exceptions. These exceptions can make it difficult to know the situations that would justify filing a Rule of Two protest. Read on to find out. First, a primer on SBA’s Rule of Two. Note that this particular post relates solely to the SBA’s Small Business Rule of Two. The Department of Veterans Affairs has its own Rule of Two for service-disabled veteran owned businesses. For more information on the VA’s SDVOSB Rule of Two, visit our post here. FAR 19.502-2(a) requires that all acquisitions for supplies or services that have an anticipated dollar value above the micro-purchase threshold ($10,000 at the time of this post) but not over the simplified acquisition threshold or SAT ($250,000 at the time of this post) be set aside for small businesses. That is, unless the contracting officer does not have a “reasonable expectation” that it would receive offers from two or more responsible small businesses that were competitive in terms of fair market prices, quality, and delivery. The rule in FAR 19.502-2(b), which pertains to acquisitions above the simplified acquisition threshold, is worded a little differently. As noted in the prior paragraph, acquisitions between the micro-purchase threshold but below the SAT must be set aside for small businesses unless the contracting officer does not have a reasonable expectation that it would receive offers from two or more small businesses. In contrast, those over the SAT must be set-aside for small businesses when there is a reasonable expectation that offers will be obtained from at least two responsible small business concerns and award will be made at fair market prices. (In practice, both formulations should typically result in small business set-asides under the same circumstances). However, an acquisition should not be a total small business set-aside unless such a reasonable expectation exists. Otherwise, the acquisition may be partially set-aside under FAR 19.502-3. This leads us to the question of how a contracting officer will know whether there is a reasonable expectation or not? Well, that is a decision that the contracting agency must make if market research shows at least two small businesses that meet the criteria. When should you file a Rule of Two protest? Now that we have the background out of the way, what situations are appropriate to file a Rule of Two protest? Rule of Two protests are filed in situations where the protester believes that a procurement should have been set-aside for small businesses, but it was not, or those in which the protester believes the procurement was improperly set-aside for small businesses, when it should not have been. Simple, right? In nearly all GAO Rule of Two protests, no matter which way you argue it, the protest will be won if GAO determines that the agency’s basis for its decision is inadequate. Such decisions are generally based on market research. Sometimes market research will include issuing a sources-sought notice, internal meetings, conducting research (generally, online searches looking for capable potential offerors), market surveys, looking back at prior procurements for the same or similar products or services, speaking with small business analysts, and more. Though there is no specific method that must be used in market research, the basic rule is that the decision “must be based on sufficient facts so as to establish its reasonableness.” (See Mountain West Helicopters, LLC). In some capacity, the market research must examine the capabilities of the potential offerors to determine not only whether two or more small businesses will submit offers, but whether they are capable of performing the contract requirements. You can read more about that in this previous SmallGovCon blog post. Therefore, if your company is a small business that can do the work on a solicitation that is unrestricted, and you know of at least one other company that can do the work, you have the basis of a small business Rule of Two protest. Other Important Details Remember how I said that it’s up to the contracting agency to determine whether a small business set-aside is appropriate? Well, in a protest, GAO will not second guess unless there has been an abuse of discretion, which it is up to the protester to show. (See Nordic Sensor Tech., Inc.). Unfortunately, it doesn’t matter if the protester is a small business protesting because it believes that an unrestricted solicitation should have been set aside for small business competition, or whether the protester is a large business protesting the fact that a solicitation is limited to small business offerors only. The requirement that the protester prove a clear abuse of discretion when protesting a set-aside (or unrestricted) solicitation is the same. GAO has sustained a protest and held that a contracting officer should conduct additional research into the existence of additional firms that could meet the Rule of Two. In that decision, GAO held that an Agency must contact firms that meet requirements of a set-aside if it is aware of any. (See SWR, Inc.). Additionally, because a protest involving the Rule of Two is an issue with the solicitation, most Rule of Two protests must be filed before bid submissions are due. 4 C.F.R. § 21.2(a)(1). This covers situations when you believe there was a mistake in setting a contract aside, or not setting a contract aside, for a small business. This covers most Rule of Two protests. Therefore, if you think that there was a mistake in setting aside, or not setting aside, a procurement, raise the protest early! Otherwise, you may miss the opportunity. If you think you may have grounds for a protest, it’s best to act early in the solicitation process. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Why File: A Rule of Two Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  5. Happy Friday, readers. Around these parts, we’ve been enjoying some nice spring weather as we try to fill the void left by the end of March Madness. But it will be heating up soon, so enjoy the spring weather while you can and have a great weekend! Here are some recent updates from the world of federal contracting, including some new congressional initiatives to streamline federal contracting processes, as well as create new cyber standards for federal procurement. SBA Recognizes 2024 Government Contractors and 8(a) Graduate of the Year Wyden bill requires new cyber standards in federal tech procurement Evaluation of DoD Financial Responsibility Reviews on Prospective DoD Contractor FACT SHEET: Vice President Kamala Harris Launches Call to Action to Bring the Benefits of Space to Communities Across America Technology Modernization Fund announces targeted investments to improve security at NASA, Department of Labor Mace sponsors bill to ban educational requirements for government contractors Senate Bill Introduced to Streamline Federal Procurement Processes How Government Contractors Can Plan for a Bright Future by Forecasting the Right Metrics Lawmakers push skills-based hiring for federal contractors Highlights from the Defense-Wide FY 2025 Unclassified IT Budget Request General Services Administration announces $23.8 million for projects to improve federal facilities and benefit local communities as part of President Biden’s Investing in America agenda Libby woman admits stealing mail while working as a contract carrier Disadvantaged Business Enterprise and Airport Concession Disadvantaged Business Enterprise Program Implementation Modifications The post SmallGovCon Week in Review: April 8-12, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  6. SBA’s Service-Disabled Veteran-Owned Small Business (SDVOSB) rules include one particular component dealing with the working hours of a service-disabled veteran owner of an SDVOSB business, often called the full-time devotion rule. SBA has recently reviewed its full-time devotion requirement in an SDVOSB protest, and found that the company in question did not establish that a service-disabled veteran met the requirement. In Marathon Indus. Equip., LLC, SBA No. VSBC-342-P (Mar. 14, 2024), a protester challenged the SDVOSB status of Gilk and Sons, LLC (Gilk and Sons) in connection with a DLA solicitation set aside for SDVOSBs. A competitor can challenge the SDVOSB status of a proposed awardee on SDVOSB set-aside contracts. In this case, the protester argued that the veteran owner (Mr. Gilkison) worked at a different company (PacTec) that was the supplier of the products under the Solicitation. As part of the initial SDVOSB application, Gilk and Sons explained that Mr. Gilkison “works for Gilk and Sons Monday to Friday from 8:00am to 5:00pm” and he is “finishing up some consulting work with PacTec that will be completed by the end of the year … [w]hen I consult it is outside of the business hours for Gilk and Sons … [t]his does not conflict with my normal working hours.” SBA regulations prohibit the key service-disabled veteran for SDVOSB status from being engaged “in outside employment that prevent[s] [him or her] from devoting the time and attention to the concern necessary to control its management and daily business operations.” 13 C.F.R. § 128.203(i). Normally, the service-disabled veteran “must devote full-time during the business’s normal hours of operations”. Id. As part of the protest, OHA (which processes these sort of protests) “required Gilk and Sons to clearly state Mr. Gilkison’s current working hours at both Gilk and Sons and PacTec. The Order also required Gilk and Sons to specify Mr. Gilkison’s duties at Gilk and Sons and at PacTec.” OHA then reviewed the response and determined that Gilk and Sons had not met the full-time devotion requirement. SBA OHA pointed out that Gilk and Sons did not properly respond to the request for more information. The response to OHA fails to clearly state just what Mr. Gilkerson’s working hours are both at Gilk and Sons and at PacTec. The Response fails to describe what Mr. Gilkerson’s duties are at Gilk and Sons and at PacTec. It does not describe how Mr. Gilkerson handles his duties at Gilk and Sons while also performing his duties at PacTec. Because of the failure to respond, OHA assumed “that disclosure would be contrary to the interests of the party failing to make disclosure.” 13 C.F.R. § 134.1011. So, OHA assumed that Gilk and Sons “failed to establish that Mr. Gilkison devotes himself to the concern full time during normal business hours. The big takeaway from this case is that SBA is still enforcing the full-time devotion requirement for SDVOSBs (and the rule is also present in the 8(a) Program regulations). If an SDVOSB company veteran owner works a second job, pains must be taken to explain (1) current working hours at both companies, (2) the duties at each job, and (3) how the veteran owner devotes sufficient time to the SDVOSB necessary to control its management and daily business operations. As a side note, it is always important to fully respond to questions from SBA or other federal government agencies. As we noted on the blog, SBA made some comments that it wanted to introduce more flexibility into some of these rules, including the full-time devotion requirement. However, we have yet to see a published decision where SBA has demonstrated this flexibility. Should you face a similar situation, reach out to our firm. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA: Full-Time Devotion Still Matters for SDVOSBs first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  7. Happy April! We hope everyone had a great week. Yet another beautiful spring Friday for us at SmallGovCon! And you guessed it, it’s time for your week in review. We’ve included some fascinating articles on what’s happening in the federal government contracting world we think you will enjoy. These included how contractors may be impacted in an election year, as well as a bill to reduce red tape in procurement. Have a wonderful weekend! Small Business Research Programs: Increased Performance Standards Likely Affect Few Businesses Receiving Multiple Awards Women-owned small businesses win record $25.5B in federal contracts How election years affect federal contracting WSU’s Kansas APEX Accelerator surpasses $1 billion in government contract awards Some federal agencies want to make IT security contracting rules simpler to find Army Posts Draft Solicitation for Follow-On Space and Missile Defense Command Support Contract Disabled veterans who own small businesses target lucrative government contracts Senate bill looks to chop through red tape in procurement ABC Submits Comments Opposing Ban on Federal Contractors Considering Salary History During Hiring DOD is looking to grow its marketplace for speedy acquisitions of innovative tech Federal Government Employee Arrested for Conspiracy to Defraud the District of Columbia to Benefit His Private Company Coast Guard salutes outstanding contracting and procurement professionals with annual Head of the Contracting Activity Awards FAR Case 2023–021, “Pay Equity and Transparency in Federal Contracting” Federal Acquisition Regulation: Establishing Federal Acquisition Regulation Part 40 The post SmallGovCon Week in Review: April 1-5, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  8. If federal contracting had a proverbial town square, it would be SAM.gov. So much federal contracting activity flows through or starts there. A large portion of SAM is contractor information. Contractors are required to be on SAM and are expected to keep their profiles on SAM updated. A “hot off the presses” GAO ruling has confirmed that the timing of SAM registration can make or break a contractor’s winning bid. In TLS Joint Venture, LLC, B-422275 (Comp. Gen. Apr. 1, 2024) GAO heard a protest focused on the timing of an awardee’s SAM registration renewal. At the center of the protest is FAR 52.204-7, which lays out the requirements for SAM registration when bidding on a federal procurement. FAR 52.204-7 states: “An Offeror is required to be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award, during performance, and through final payment of any contract, basic agreement, basic ordering agreement, or blanket purchasing agreement resulting from this solicitation.” This FAR provision also warns offerors: “Processing time should be taken into consideration when registering. Offerors who are not registered in SAM should consider applying for registration immediately upon receipt of this solicitation.” In this case, the awardee submitted its renewal information on SAM prior to the expiration of its current SAM registration, but the processing of its renewal did not complete until after the expiration date. The protester argued that the awardee’s SAM registration had lapsed for that short period of time between expiration and active status, and that the agency was required to ensure a contractor’s SAM registration is “active.” The agency argued back that since the renewal was submitted prior to expiration, the awardee’s registration did not lapse. GAO sided with the protester. GAO first analyzed FAR 52.204-7 and found that the text of the FAR provision requires offerors to maintain SAM registration throughout the evaluation period (i.e., the time between proposal submission and the award of any contract). GAO also noted that the United States Court of Federal Claims recently held in Myriddian, LLC v. United States, 165 Fed. Cl. 650 (2023), that FAR 52.204-7 “requires offerors to maintain their SAM registrations without lapses during the solicitation period” (which we blogged about here). In this case, GAO found that this FAR provision was unambiguous, and even though an agency monitoring an offeror’s SAM registration throughout the evaluation period may be burdensome, it is not GAO’s job to weigh the pros and cons of a procurement regulation. GAO pointed to FAR 52.204-7’s definition of “Registered” in SAM as partially determinative. This definition states a four step process to be “Registered” on SAM: “(1) The Offeror has entered all mandatory information, including the unique entity identifier and the EFT indicator, if applicable, the Commercial and Government Entity (CAGE) code, as well as data required by the Federal Funding Accountability and Transparency Act of 2006 (see subpart 4.14) into SAM; (2) The offeror has completed the Core, Assertions, and Representations and Certifications, and Points of Contact sections of the registration in SAM; (3) The Government has validated all mandatory data fields, to include validation of the Taxpayer Identification Number (TIN) with the Internal Revenue Service (IRS). The offeror will be required to provide consent for TIN validation to the Government as a part of the SAM registration process; and (4) The Government has marked the record ‘Active.'” GAO stated that this definition places requirements on both the contractor and agency to take actions to make sure a contractor is registered on SAM. The offeror “must enter all mandatory information and complete the representations and certifications,” and the agency “must validate all information and mark the offeror’s record as ‘Active.'” All this must be completed for an offeror to be considered “registered” on SAM. GSA (who essentially manages SAM) explained to GAO that a contractor’s SAM registration expires within one year of when the contractor last submitted registration information. GSA sends reminder emails to contractors so they don’t miss this annual renewal date. After a renewal is sent in by contractors on SAM, GSA and and other agencies, such as the IRS, review the information. So there is a delay between submission of the information, and approval of “active” status on SAM. Here, the awardee did submit their renewal prior to their expiration date of December 11. But the processing of its renewal information to achieve “active” status did not complete until December 12. So for about a day, the awardee was not “active” on SAM, during the evaluation period for the subject procurement. GAO found that this is a lapse in SAM registration, and thus violated FAR 52.204-7. GAO, with this decision, has essentially issued a warning to all contractors; stay on top of your SAM registration, or risk losing award. GAO also placed on agencies a requirement to proactively check SAM statuses for any offerors during the evaluation period. While it may seem a simple and quick action to confirm SAM information or do quick updates to your SAM profile, the timing of when these occur can be critical. Here, there was a very short lapse between expiration and “active” status. But that short time cost the contractor an award. Contractors need to make sure to not delay SAM registrations or updates, and anticipate that any submission has to be bounced around multiple agencies prior to being approved for “active” status. Cutting SAM renewal close to a deadline could cost you an award. Need legal assistance with a government contracting matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Don’t Slip Up on SAM Registration, Even for One Day first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  9. In this webinar, John Holtz and I will discuss the most important legal developments for federal contractors in 2023 and the first part of 2024. Specifically, we will discuss important new small business rules, updates to the 8(a) rules and application procedures, joint venture changes, updated SDVOSB certification requirements, key provisions of the recent National Defense Authorization Act, recent cases pertinent to federal contractors, and more. Register here! The post Free Webinar! Regulatory Updates in Government Contracting hosted by El Paso APEX Accelerators, April 11, 2024, 10:00-11:30am MDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  10. We hope you had a great week and are enjoying some nice spring weather. Here are some happenings from the federal government contracting world this week, including more updates on the funding package, upcoming information on complying with labor regulations, and new policies on AI. Enjoy your weekend! DoD’s approach to fix its computers is function over form Biden signs $1.2 trillion funding package after Senate’s early-morning passage ended government shutdown threat Contractors wonder which of two procurement systems applies to them Government contracting helps tribal economies diversify Labor Department to Open Contractor Portal for Affirmative Action Certification in April Small Business Works 2024: A.C.T.S. on Maximizing Small Business Opportunities FACT SHEET: Vice President Harris Announces OMB Policy to Advance Governance, Innovation, and Risk Management in Federal Agencies’ Use of Artificial Intelligence Peaceful protests, lawful assembly can’t be sole reason for DOJ facial recognition use under interim policy GSA’s commercial platforms program to grow by five providers Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence Recission of “Treatment of Nontraditional Defense Contractors” Memorandum Defense Federal Acquisition Regulation Supplement: DoD Mentor-Protégé Program Defense Federal Acquisition Regulation Supplement: Trade Agreements Thresholds Submission for OMB Review; Federal Acquisition Regulation Part 3: Improper Business Practices and Personal Conflicts of Interest Rep. Scott Franklin eyeing public-private partnerships as his House AI task force work kicks into gear DoD seeks single point of entry, new governance to boost vendors’ cyber defenses The post SmallGovCon Week in Review: March 25-29, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  11. If you are a small business government contractor who ever utilizes subcontractors to complete federal set-aside contracts, knowing what a “similarly situated entity” is for a given contract is vital to your success. So, let’s take it back to the basics of “similarly situated entities.” Even if you are not sure where this term comes from, don’t fret, a great place to start is this other Back to Basics blog on limitations on subcontracting. Because as you guessed it, the term comes from the SBA’s limitations on subcontracting. And since you can read-up on those at the links above, I will keep my explanation of the limitations on subcontracting pretty simple. For work that the federal government sets aside for any small business concerns–including those in the 8(a) Business Development Program, the Veteran Small Business Certification Programs (SDVOSB/VOSB), the Historically Underutilized Business Zones (HUBZone) Program, or either of the Woman-Owned Small Business Programs (WOSB/EDWOSB)–provided such contract exceeds the simplified acquisition threshold (which is currently $250,000.00 under FAR 2.101), there are limitations on how much the prime can subcontract out to whom. There are different sections of the SBA rule dedicated to–and thus, different limitations for–the various types of federal contracts as follows: A 50% limitation for services contracts and contracts for supplies or products (other than from a nonmanufacturer); An 85% limitation for general construction contracts; and A 75% limitation for specialty trade contracts. Note: the Nonmanufacturer Rule may be applied instead to contracts for supplies from a nonmanufacturer, but such is not relevant here; so, check out this other Back to Basics blog on it if you would like more information. Since all three of the limitations listed above utilize essentially the same language in regard to “similarly situated entities,” we will use services contract limitations to explain it. For those, SBA’s limitations on subcontracting rules state: (a) General. In order to be awarded a full or partial small business set-aside contract with a value greater than the simplified acquisition threshold (as defined in the FAR at 48 CFR 2.101), an 8(a) contract, an SDVOSB contract, a VOSB contract, a HUBZone contract, or a WOSB or EDWOSB contract pursuant to part 127 of this chapter, a small business concern must agree that: (1) In the case of a contract for services (except construction), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated. Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded. In a nutshell, whatever this “similarly situated entity” is can actually help the prime contractor reach its 50% subcontracting limitation on a services contract. So, now we just need to fully understand that term. SBA’s definitions section of its government contracting regulations says the following: Similarly situated entity means a subcontractor that has the same small business program status as the prime contractor. This means that: For a HUBZone contract, a subcontractor that is a certified HUBZone small business concern; for a small business set-aside, partial set-aside, or reserve, a subcontractor that is a small business concern; for a SDVOSB contract, a subcontractor that is a certified SDVOSB; for a VOSB contract, a subcontractor that is a certified VOSB; for an 8(a) contract, a subcontractor that is a certified 8(a) BD Program Participant; for a WOSB or EDWOSB contract, a subcontractor that is a certified WOSB or EDWOSB. In addition to sharing the same small business program status as the prime contractor, a similarly situated entity must also be small for the NAICS code that the prime contractor assigned to the subcontract the subcontractor will perform. Crystal clear right? Ok, if not, I will break it down a bit. A “similarly situated entity” is a subcontractor that directly qualifies for: (a) the prime contract’s set-aside designation; and (b) the size standard assigned to the NAICS code for that prime contract. It is as simple as that, folks. Yes, by default, if a subcontractor meets (a) and (b) here, it will also have “the same small business program status as the prime contractor.” But again, since that should be inevitable if (a) and (b) are met–assuming the prime contractor was directly eligible for the prime contract’s set-aside and size standard to get the award–I think it is best to focus on (a) and (b). Here’s an example. Let’s say the government sets aside a contract for event planning services under NAICS code 812990, All Other Personal Services, with a corresponding size standard of $15 million, for the SBA’s SDVOSB Program. The prime contractor who received the award is “Blake Anderson Events, Inc.”–an SDVOSB with $10 million in annual receipts (thus, eligible for the prime contract). Blake Anderson Events, Inc., has two subcontractors for the prime contract: “DeVine Events & Services, LLC,” an SDVOSB with annual receipts of $12 million, and “Anders Activities & Events, Inc.” an SDVOSB with annual receipts of $20 million. Are these subcontractors “similarly situated entities” for the prime contract? Now, you might be tempted to say, “Yup, they are both SDVOSBs”–and move on. But remember it is a two-pronged qualification. The only “similarly situated entity” here for the prime contract awarded to Blake Anderson Events, Inc., would be DeVine Events & Services, LLC–meeting both the prime contract’s SDVOSB designation and its $15 million size standard (just like Blake Anderson Events, Inc.). Anders Activities & Events, Inc., is considered large under the prime contract’s $15 million size standard–and thus, doesn’t meet both prongs for qualification. As a quick side note, if you are at all wondering how this is possible, the SDVOSB rules (like some of the other SBA Program rules) allow an SDVOSB to be considered a small business for the purpose of participating in the SDVOSB Program generally if the company “meets the size standard corresponding to any North American Industry Classification System (NAICS) code listed in its SAM profile[.]” But they also note: “At the time of contract offer, a VOSB or SDVOSB must be small within the size standard corresponding to the NAICS code assigned to the contract.” And this second part of the rule is exactly what the two pronged approach to being a “similarly situated entity” is based on. To read up on all the SBA’s Program’s size qualifications, check out this blog. Finally, what does all this mean for Blake Anderson Events, Inc.? This simply means that any work Blake Anderson Events, Inc., subcontracts to DeVine Events & Services, LLC, will count toward the 50% minimum for Blake Anderson Events, Inc.’s, limitation on subcontracting for the prime contract here. But any work Blake Anderson Events, Inc., subcontracts to Anders Activities & Events, Inc., will count against the 50% minimum for Blake Anderson Events, Inc.’s, limitation on subcontracting for the prime contract here–or rather, it will count toward the 50% maximum that can be paid out to subcontractors for the prime contract. *** Understanding and complying with the SBA’s limitations on subcontracting is no easy feat. And the consequences can be dire for noncompliance. So, if you have rule application or compliance concerns, never hesitate to reach out for assistance–you are certainly not alone. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: Similarly Situated Entities first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  12. Please check out the new release from my friend, federal contracting expert Michael LeJeune. Bestselling author and GovCon expert, Michael LeJeune is releasing his new book, “I’m New to Government Contracting – Where Should I Start?” on March 26th. Michael’s new book has all that a growing federal contractor needs to get started on a path to success. I was especially struck by the emphasis on avoiding shortcuts. As a GovCon attorney, we sometimes hear about get-rich-quick schemes involving federal contractors. Michael puts those to bed. For instance, you have to read his takedown of the middleman strategy if you have heard about that online. But he also provides time-tested strategies for getting into government contracting and for growing your business. As one example, there is a nice overview of how to do an evaluation of your business and examine how your processes will translate to government contracting. The book also has great explanations and concrete checklists for things like 9 core marketing tools and 7 key ways to build your pipeline. Register here to get a special 60% discount link on the day of launch: https://mailchi.mp/f3520f7e9b0a/5snc8wdmhp. The post Michael Lejeune’s New Book Now Available! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  13. As we often tell people, language in a teaming agreement is important for a federal contract. But so is complying with the terms of a solicitation. A recent GAO decision hinged on a very specific portion of the language in a teaming agreement that was required as part of a solicitation. Because the contractor did not include the required language in a teaming agreement, it lost out on an award. In Global Patent Solutions, LLC, B-421602.2 (Feb. 23, 2024), GAO looked at a solicitation from the Patent and Trademark Office (PTO or USPTO) for professional services to assist the PTO in reviewing international patent applications. Protester Global Patent Solutions, LLC (GPS), challenged award under the solicitation to CPA Global, Inc. (CPAG). The protest argued that CPAG was not evaluated properly under Factor 4, Small Business Participation. Here, the solicitation required large business offerors to submit a small business subcontracting plan, and provided that an offeror’s plan “shall comply with all elements of FAR Subpart 19.704 (Subcontracting Plan Requirements) and FAR Clause 52.219-9 (Small Business Subcontracting Plan).” In particular, there was a requirement that “[t]he extent of small business participation shall equal or exceed the minimum requirement” of at least 10 percent with a goal of reaching at least 25 percent. In addition, “[t]o receive credit under this factor, an enforceable teaming agreement must be in place with one or more small businesses (unless the Prime Offeror is a small business) and a copy of each signed agreement shall be included with the Offeror’s proposal as an attachment.” Finally, an “Enforceable agreement” was defined as one “signed by both parties committing to a teaming arrangement if the contract is received and identifying the percentage of the total contract to be subcontracted.” As far as the evaluation, small business subcontracting plan would “be evaluated to the extent the Offeror complies with all elements of FAR Subpart 19.704 . . . and FAR Clause 52.219-9″ and proposals would “be evaluated to ensure it meets or exceeds the Government’s minimum requirement that at least ten percent (10 [percent]) of the annual order value be directed to small business for each of the five ordering periods,” and that the teaming agreements would “be reviewed to ensure compliance.” The small business teaming agreement for CPAG stated that the small business “Partner will accept and perform a subcontract for the services for up to [DELETED] [percent] of awarded volumes.” In reviewing this language, the agency initially determined that the subcontractor teaming agreements submitted by CPAG “do not specify any percentages of work to be contracted.” The evaluation team also noted that it was “impossible for the USPTO to evaluate exactly how much is guaranteed to go to small business” and “CPAG’s proposal also neglected to state what the percentages were as a portion of the subcontract value as required by FAR 52.219-9.” That FAR provision, FAR 52.219-9, in part states that a subcontracting plan should express small business subcontracting goals “as a percentage of total planned subcontracting dollars.” Ultimately, the agency weighed the missing information in the teaming agreement against the historical performance by the awardee when it comes to small business subcontracting and concluded that “CPAG’s flaws” in the small business participation “area were mostly procedural and not substantive.” GAO disagreed. GAO ultimately found that the agency did not follow its own solicitation rules: Specifically, under the small business participation factor, the solicitation established a material requirement that a minimum of 10 percent of the annual order value be subcontracted to small businesses. RFP §§ L‑M at 12. The solicitation was clear and unambiguous that, for an offeror to receive credit under this factor, it must submit “enforceable teaming agreements” that were signed by both parties and identified “the percentage of the total contract to be subcontracted.” In the evaluation record, all statements by the USPTO found “CPAG’s teaming agreements and the firm’s overall subcontracting plan to be lacking.” This included the contract specialist, who found that the agreements “do not specify any percentages of work to be contracted[.]” Similarly, the TET stated that CPAG’s teaming agreements failed to include “firm commitments with guaranteed minimum percentage[s] as specified in the [solicitation][.]” Finally the SSA found that the teaming agreements “did not represent a guaranteed amount of work to be subcontracted.” GAO concluded that “the evaluators’ and SSA’s conclusions were inconsistent with the solicitation’s material requirement for offerors to demonstrate through the use of enforceable teaming agreements that a minimum of 10 percent of the annual order value would be subcontracted to small businesses.” The agency tried to get a little sneaky in its argument, saying that the solicitation requirement for “the percentage of the total contract to be subcontracted” could mean any range of percentages, rather than a specific number. Again, GAO didn’t buy it–“the percentage” meant a specific percentage, not a range. GAO sustained the protest because USPTO did not follow its own solicitation requirements in evaluating a teaming agreement. But the take home message for contractors is that, if a solicitation asks for a specific number, even if it is in a teaming agreement, the contractor should include a specific number, or risk losing an award. Need legal assistance with a government contracting matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Small Business Teaming Agreement Must Follow Solicitation Guidelines first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  14. 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
  15. Hope you are having a good week readers, and enjoying some March Madness. While it looks like spring in our neck of the woods, in this part of the country the weather can change quickly. We joke around that we must always have every type of coat or jacket at the ready on any given day. Never a dull moment! Speaking of never a dull moment, the NCAA tournament has started and there certainly have been some great games in the first round! How’s your bracket doing? We hope you had a great week and are enjoying some nice spring weather as well as some exciting basketball. Here are some happenings from the federal government contracting world this week. Interesting updates include an update on OASIS+ timing and enhancing whistleblower protections for DoD contracts. Enjoy your weekend! Busted! Is your March Madness bracket breaking government ethics rules? GSA’s Tiffany Hixson Offers Advice for New Providers Breaking Into the GovCon World Supreme Court rules public officials cannot block critics on social media, even from personal accounts GAO Urges DOD to Implement Better Monitoring of Procurement Administrative Lead Time Data Contracting Brief: AI Funding Plans Spread Across Budget Request GSA Targets Summer for Initial OASIS+ Small Business Awards Senators Coons, Kennedy introduce bill to help small businesses compete for federal contracts Women’s History Month 2024: Celebrating a vital business force US Department of Labor Nearly $200K for Workers Underpaid by Massachusetts Subcontractor at Rhode Island Worksite Whistleblower Protections in Defense Contracts Aventura Technologies, Inc. Pleads Guilty to Wire Fraud and Illegal Importation for Reselling Chinese Goods as U.S.-Made Washington State Man Sentenced to Federal Prison for Marketing and Selling Low-Quality Ballistic Protective Equipment Produced in China to Dozens of Law Enforcement Agencies and the U.S. Military The post SmallGovCon Week in Review: March 18-22, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  16. Have you ever wanted to learn more about the advantages of the SBA’s Mentor-Protégé program? Join Allisa Young, CT APEX – Procurement Specialist, along with the subject-matter experts from Koprince McCall Pottroff LLC to learn how the SBA Mentor-Protégé program can help leverage your business in regards to government contracting opportunities. We will discuss the eligibility criteria for both the “Mentors” & “Proteges”, along with information about how to apply. Stephanie Ellis, Attorney for Koprince McCall Pottroff LLC, will be on hand to answer questions for the Q&A session. Register here. The post Webinar Event! SBA’s Mentor-Protégé Program hosted by Connecticut APEX Accelerators, March 21, 2023, 11:00am EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  17. Steven Koprince, Govology Legal Analyst and retired founder of Koprince McCall Pottroff will be presenting this webinar to help you understand the applicable rules and regulations in government contracts and the Federal Acquisition Regulation. These rules can be lengthy and complex–and contractors may also need to follow rules outside the FAR, such as those found in FAR supplements and the regulations of the U.S. Small Business Administration. Please join Steve as he walks you through the process. Register here. The post Govology Webinar: Navigating Government Regulations in Solicitations and Contracts, March 27, 2024, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  18. This post was written by our friend and colleague, Nick Bernardo, president of MyGovWatch, a bid notification and intelligence website offering a free trial to government contractors in more than 200 industries. Over the years, MyGovWatch has accumulated tens of thousands of buyer email addresses, from Federal government buyers in the DC Beltway all the way down to the tiniest school districts in the remote American hinterlands. In January, we decided to conduct our first-ever survey among buyers to create a dataset to help our users and the govcon community, at large, to better understand how buyers view certain aspects of the source selection process. (You can download a copy by visiting this page and filling out the form.) In broad strokes, the MyGovWatch survey was intended to shed light on the significance of name recognition and incumbency during source selection in absolute terms. Will buyers still pick you if they never heard of you before the bid process, or if you’re not an incumbent? To what extent should you let these drive bid/no bid decisions? For example, we asked buyers: How often are you involved in purchasing decisions where you had no awareness of the company selected until the bid process started? (The data around these questions may shock you!) This is the crux of the MyGovWatch survey, with fascinating data points that have already surprised a few who have accessed the full report as described below. (This post is intended as a primer, offering a sneak preview of sorts by providing data in a couple of key areas while letting people know how to get access to the full survey report in one of three ways.) For our purposes here, the MyGovWatch survey asked buyers two things designed to let them speak to the govcon community. These two questions encouraged respondents to give suppliers advice and to disclose areas of emergent and hard-to-fill needs for which it’s not always easy to find qualified suppliers. It’s important to note here the MyGovWatch survey respondents were not solely Federal buyers; they comprised of state and local folks also. The first of these questions was: What advice would you offer as a seasoned purchasing professional to companies that would like to do business with government agencies? The MyGovWatch survey asked this as an open-ended question by design, not wanting to limit what might come back. What came back was varied. When studied closely and after removing vague or ambiguous comments, the rest generally fell into seven categories, as follows. Understand the Procurement & RFX Process A clear majority of respondents (62.3%) gave simple advice: invest time in understanding the buyer’s procurement rules and the RFX process (where “RFX” can mean RFP, RFQ, ITB, etc.). Don’t simply show up for the bid process without any knowledge of how the process works or what rules the buyer must follow. More than anything else, buyer frustration with the supplier community around this idea appears to color much of how buyers perceive specific suppliers, invariably leading to lower evaluation scores within an RFX process if the buyer views the supplier’s understanding of procurement rules and processes as inadequate. This advice therefore tops the list of what buyers encourage suppliers to know more about to foster greater success. Bid on Relevant RFXs An astonishing 21% of respondents, or more than one in five, gave suppliers the straightforward advice of simply identifying and bidding on relevant RFX opportunities. They did this in various ways, mentioning identifying bids and knowing when and where bids are posted. One simply commented suppliers should, “register on all government platforms,” not realizing that suppliers would need to identify and monitor thousands of individual websites daily and weekly to do the job a platform like MyGovWatch does for users – sending relevant RFX opportunities to each user’s inbox daily. Network with Government Buyers A cohort of 11.5% of respondents gave suppliers the sage advice of networking with government buyers as a means of growth in govcon. This tried-and-true approach undoubtedly yields personal contact with buyers in way that fosters not only recognition of your company’s name in any resulting RFX process, but also the inside scoop on what pain points motivate buyers in a way that’s not always discernible in a statement of work. It’s no surprise many respondents mentioned this piece of advice; however, it may surprise some that respondents were nearly twice as likely to mention simply bidding on relevant RFXs than they were to mention traditional networking with decision makers, who often have neither the time nor the interest in networking with as many suppliers who would like to do the same if given the chance. Everything Else Between 1%-5% of respondents mentioned one or more of the following steps suppliers should take to experience greater success in govcon markets.  Price RFXs Competitively: Respondents pointed out suppliers should do more research around pricing for their products or services in govcon markets to have greater success. (Incidentally, you can obtain competitor and contract pricing information through open records requests after RFX awards, whether on your own or through tools available on MyGovWatch, to research pricing.)  Publish Good Marketing Materials: A gaggle of respondents said suppliers could have better success with better marketing materials, mentioning anything from websites to capability statements, from proposal documents to handouts, as an additional focus area.  Research Competitors: A bunch of respondents said suppliers should spend more time investigating who they are competing with (which can also be learned by completing open records requests for copies of RFX winning proposals as described above, mainly in state and local markets.)  Take Advantage of Government Procurement Resources: A handful of respondents encouraged suppliers to take advantage of resources government agencies themselves offer to support supplier success. Notably, many Federal respondents mentioned APEX Accelerator resources, which are geared toward small businesses pursuing Federal buyers. The second open-ended question the MyGovWatch survey asked buyers was: What are any emerging or growing areas of need where it is difficult for purchasing professionals to identify and contract with qualified vendors? Many had nothing to offer related to this particular question and left it blank. However, among those who did answer, buyers overwhelmingly mentioned technology in its myriad forms, mainly citing ongoing needs for developers and software. One buyer wrote, “While it is not an emerging or growing area of need, we’re finding it to be increasingly more difficult to hire software specialists at competitive prices. Industry is starting to price out the government in a lot of software-related fields.” There were a number of other notable fields where government buyers feel they are underserved. To read about those, we encourage you to get access to the MyGovWatch survey report in full. How to Access the Full MyGovWatch Survey Report Interested govcon suppliers may obtain a copy of survey results in one of three ways. MyGovWatch Trial: Start a free, 14-day trial at MyGovWatch and request a copy via chat on the website post sign up. You can get a copy by visiting this location and filling out the form. (Current MyGovWatch users need only request a copy via chat or to support@mygovwatch.com to obtain one.) SmallGovCon: If you are a subscriber to the email newsletter at www.smallgovcon.com, forward a copy of a recent issue to support@mygovwatch.com and you will receive a copy by reply. RSM Federal Book Pre-Release: Sign up to hear about the release of Michael Lejeune’s upcoming book, which will feature a chapter exploring survey results to include critical analysis, at this location, then email us from the same address to support@mygovwatch.com with subject line GovCon Survey Results Request. Media requests for a copy of the survey results should go to media@mygovwatch.com. The post First Annual MyGovWatch Buyer Survey Results May Surprise You first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  19. Please join federal government contracts attorneys Nicole Pottroff & Greg Weber for this informative webinar on SBA certifications hosted by Catalyst Center for Business & Entrepreneurship. Participants will get an overview about the Small Business Certifications including: 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. Please Register here. The post Webinar! Small Business Certifications, March 20, 2024, 10:00-11:00 am CDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  20. Happy Friday and happy, early Saint Patrick’s Day. We hope you have some fun things planned for the weekend. Here, in Lawrence, Kansas, preparations are underway for the annual St. Patty’s Day parade. It seems the whole town comes out to celebrate and it’s a very fun and festive spectacle. I think more than anything, people are just ready to get outside to enjoy the warmer temperatures. Before you head into your weekend activities, here are a few articles on what’s happening in the federal government contracting world. Enjoy the weekend and don’t forget to wear green! Top Government Contracting Events for 2024 GovCon Index Snaps 4-Day Win Streak but Marks Another Winning Week Shreveport Man Convicted in Recent Trial Pleads Guilty to Additional Charge of Theft of Government Funds Biden administration requests $3B for federal AI application development, procurement and integration in 2025 budget Statement by GSA Administrator Robin Carnahan on the President’s Fiscal Year 2025 Budget Contract losses have defense contractors saying no to their biggest customer: the DOD Navy civilian worker, contractor indicted in alleged bribery scheme Argus Information & Advisory Services Agrees to Pay $37M to Settle Allegations that it Misused Data Obtained Under Government Contracts OMB Announces Pilot to Better Leverage Federal Acquisition to Strengthen America’s Critical Supply Chains Incurred cost submission best practices for government contractors Women-Owned Contracting Trends for 2024 Defense Contracts: Better Monitoring Could Improve DOD’s Management of Award Lead Times The post SmallGovCon Week in Review: March 11-15, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  21. Contractors will often enter into mentor protégé relationships and joint ventures to leverage the experience and skills of multiple parties for various reasons. SBA regulations dictate how the capabilities, past performance, and experience of a mentor-protégé joint venture will be evaluated. But at the end of the day, what matters is, whether agencies will follow those regulations in their small business set-aside solicitations and evaluations thereunder. A recent GAO case addressed this issue, providing further guidance on the interplay of solicitation terms for experience evaluations and SBA’s rules for evaluating mentor-protégé joint ventures’ experience. SBA regulations dictate that when evaluating a joint venture’s experience, capabilities, and past performance, on a “contract set aside or reserved for small business,” the agency “must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously.” Additionally, an agency “may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” The joint venture as a whole must “demonstrate the past performance, experience, business systems and certifications necessary to perform the contract.” Basically, if a mentor-protégé joint venture bids on a small business set-aside procurement, the agency must evaluate the members, as well as the joint venture as a whole. But, an agency can’t require the protégé member to meet the same requirements as other contractors. GAO in Akima Data Management, LLC; Absolute Strategic Technologies, LLC, B-420644.7, B-420544.8 (Comp. Gen. 2024) looked at terms under the Polaris small business pool solicitation. This is quite the well known procurement around federal contracting. So, unsurprisingly, there is some bid protest history with this procurement. In fact, the disputes in Akima revolve around agency action taken after a Court of Federal Claims (“COFC”) case. Prior to this case at GAO, the solicitation in Akima, was protested at the COFC for its terms related to submitted experience for a mentor and protégé, which stated: “a minimum of one Primary Relevant Experience Project or Emerging Technology Relevant Experience Project must be from the Protégé or the offering Mentor-Protégé Joint Venture,” and “[n]o more than three Primary Relevant Experience Projects may be provided by the Mentor.” The COFC found that these terms meant that the same evaluation criteria was was applied to all experience projects, regardless of whether the project is submitted by a protégé or not. As you recall, the SBA regulations state that the protégé will be separately evaluated from other offerors (or rather is not required to meet the same conditions as other offerors). Due to the COFC decision, the terms were updated. However, these updates were also protested, this time at GAO, bringing us to this current case, Akima. These terms protested at GAO still required a “minimum of one Relevant Experience Project” from the protégé or the mentor-protégé joint venture. However, the terms were also updated in response to COFC’s orders, to state this requirement could be met by “submitting ‘a Primary Relevant Experience Project’; ‘an Emergency Technology Relevant Experience Project’; or–new and specific to MJPVs–‘a Protégé Capabilities Relevant Experience Project'” to be evaluated on a pass/fail basis rather than on a scoring table that other offerors used. In connection with this change, effected offerors could revise portions of their proposal, including removing or replacing the projects impacted by the term change submitted by a protégé or by a mentor-protégé joint venture. If an effected proposal didn’t have one of these project experiences from a protégé or mentor-protégé joint venture, then offerors must submit a protégé capability experience project from the protégé or the mentor-protégé joint venture. Akima protested this update, stating that the solicitation should allow all offerors to update or substitute projects for experience. Absolute (the other protester), among other arguments, argued that the updated terms violated SBA regulations because it “unreasonably limits protégés from taking advantage of the experience of their MPJVs and precludes members of MPJVs from demonstrating past performance and experience to perform the contract ‘in the aggregate.'” GAO held that only mentor-protégé joint ventures were required to submit projects for protégés or mentor-protégé joint ventures, and the updates limit revisions to projects from the protégé or mentor-protégé joint venture. GAO also held that the updated terms do not violate SBA regulations because the regulations simply require agencies to “consider the work and qualifications of the individual members of the MPJV as well as the MPJV, itself, and provides that ‘partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract.'” GAO interpreted the updated terms as providing mentor-protégé joint ventures with flexibility, through the ability to “replace any experience project from the protégé or the MPJV with one from the mentor or a subcontractor–while still providing details about the protégé’s capabilities.” Thus the terms meet the requirement to evaluate a mentor-protégé joint venture “based on the abilities of the joint venture and its members” as a whole. This case provides some great insight on: 1) the type of evaluation terms that GAO and other reviewers will see as acceptable related to mentor-protégé joint ventures; and 2) the advantages placed on mentor-protégé joint venture experience evaluations. Contractors bidding on a procurement through a mentor-protégé joint venture need to be on the look out for experience evaluation terms. If the solicitation’s terms place requirements on protégés that are the same as other offerors, or don’t consider the mentor-protégé team as a whole, then it may be seen as violating SBA rules. Additionally, mentor-protégé joint ventures (and really all contractors) should be careful to examine the effects of any corrective action or amendment to a solicitation, to ensure it meets regulatory expectations. Finally, this case serves as a great reminder to all contractors who are interested in, or are involved in the SBA’s mentor-protégé program, that the SBA’s regulations can provide significant experience advantages to joint ventures formed under SBA’s Mentor Protégé Program (such as permitting protégés to be held to different experience standards than other offerors). Need legal assistance with a government contracting matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO Says: SBA’s Rules for Mentor-Protégé Joint Venture Experience Evaluations May Limit Solicitation Terms first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  22. 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
  23. It is no doubt that the SBA’s 8(a) Business Development Program is a first-class program: there is a reason that some of us around here tend to say that it is one of the most important of federal government contracting programs. And in the past year, there has been a flurry of activity surrounding the 8(a) Program. For the most part, this uptick in activity has had to do with the requirement that all applicants prove they are socially disadvantaged in light of the the Ultima decision that we’ve discussed on the blog. As you may know, applicants must also prove that they are economically disadvantaged, though the requirements to qualify as such are a little more objective. But then there is the requirement that the applicant firm must be able to prove that it has the potential for success. Today we take a closer look at the potential for success requirement’s two year business revenue rule, and delve into whether there is any way around it. Potential for Success: A Mile High View If you are new here, I’ve included a short primer on potential for success to bring you up to speed. You can also go here to read more in-depth about it. SBA requires that 8(a) Program applicants demonstrate “reasonable prospects for success in competing in the private sector if admitted to the 8(a) BD program,” which is reasonable in light of the additional benefits 8(a) Program participants receive. Benefits like business development assistance and priority on many federal contracting opportunities. Makes sense, right? The SBA wants to make sure your business has a chance at making it before it will let you take advantage of the 8(a) Program benefits for up to nine years. Therefore, by looking at a number of criteria, the SBA evaluates the applicant’s potential for success. And, because this is arguably the most important of SBA’s socioeconomic programs, the program that every federal contractor wants a piece of, that isn’t always an easy thing to do. Two Years in Business Rule Turning to the two-years in business rule, it requires the applicant to demonstrate that it has “been in business in its primary industry classification for at least two full years immediately prior to the date of its 8(a) BD application[.]” To demonstrate this, the applicant must submit its income tax returns for the prior five tax years (if possible), two of which must show “operating revenues in the primary industry in which the applicant is seeking 8(a) BD certification.” Essentially, SBA is looking at whether you have been in business for at least two years, in your primary NAICS code identified on your 8(a) application, and whether you have generated revenues in that amount of time for that NAICS code. Two years in business is relatively easy to demonstrate, but the NAICS code and revenue requirements have potential to cause problems. You want to make sure that your primary NAICS code identified on your tax returns matches your primary industry identified in your 8(a) application, as experience has shown is it far easier to have it correct from the get-go than to have to field any number of questions from SBA reviewers about why the two don’t match up. Additionally, revenue is straight forward: there either was revenue in those two years or there was not. Does this mean that not having revenue in those two years is an automatic disqualification? Will you be denied if your NAICs codes don’t match? Will applicants that have been in business less than two years be immediately denied? Is there a minimum amount of revenue? The answer to those questions is every attorney’s favorite response: it depends. Waiver There is a waiver for the two-years in business rule, but it’s not very often that such a waiver is granted. It is entirely understandable that a business that is eligible for the 8(a) Program in every other way would want to get into the program without waiting the two years. But the bar to get over to be granted a waiver is very high and contains five separate conditions, each of which must be met to qualify. Those conditions are: (i) The individual or individuals upon whom eligibility is based have substantial business management experience; (ii) The applicant has demonstrated technical experience to carry out its business plan with a substantial likelihood for success if admitted to the 8(a) BD program; (iii) The applicant has adequate capital to sustain its operations and carry out its business plan as a Participant; (iv) The applicant has a record of successful performance on contracts from governmental or nongovernmental sources in its primary industry category; and (v) The applicant has, or can demonstrate its ability to timely obtain, the personnel, facilities, equipment, and any other requirements needed to perform contracts as a Participant. Seems easy, right? Not so fast. This waiver doesn’t allow the applicant to just check off each of the boxes. Instead, it must be able to provide evidence that it meets the requirements. That means evidence of current and completed “governmental and nongovernmental” contracts (including letters of reference or past performance reports) to establish its history of successful contract performance. Information demonstrating performance of work in the industry in which it is seeking 8(a) certification. Bank statements. Letters of recommendation. Documents showing availability of capital. Generally, the more documentation you have that can account for each of the five requirements, the better your chances of receiving a waiver. That said, SBA doesn’t hand out such waivers all willy-nilly. It can be incredibly difficult to have a waiver request granted. Unfortunately, denial of an 8(a) applicant because of a lack of potential for success is not a denial reason that can be appealed per 13 C.F.R. § 124.206. This means there is little information publicly available due to a lack of decisions that often come from appeals, which is where we would look to determine the finer details of waivers, such as what is “adequate capital to sustain its operations” and what amount of experience is considered “demonstrated technical experience to carry out its business plan,” are unknown. And SBA doesn’t release numbers on how many waivers it grants. But SBA officials have said that granting waivers is something that SBA does only in rare circumstances. * * * Moral of the story: requesting a waiver of the two year business revenue rule can be a valid path towards 8(a) Program participation if you are able to meet the five requirements for a waiver and have plenty of evidence to back it up, but it is by no means an easy one. Regardless, it might be worth a try. After all, the worst that can happen is a denial and, although you cannot appeal on account of potential for success, you can always re-apply 90 days later. Need legal assistance with applying to or navigating the SBA’s 8(a) Program or another government contracting legal matter? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post 8(a) Program’s Two Years in Business Rule: Requirement or Suggestion? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  24. Back in 2021, GAO came down with a clear decision on whether Department of Defense (DoD) agencies could require a joint venture (JV) to have its own facility clearance level (FCL) if its component members held the required FCL themselves. Infopoint LLC, B-419856 (Aug. 27, 2021). That decision was “no,” and it was based on a very strong foundation: The 2020 National Defense Authorization Act (2020 NDAA), an act of Congress, contained a provision, Section 1629, expressly forbidding DoD agencies from doing such. We in fact did a blog post on this GAO decision and litigated this very matter. Despite this, in October 2023, the DoD quietly released a memorandum describing how they think they can still require JVs to have their own FCL. Today, we look at this memorandum to see what DoD is saying. The 2020 NDAA and InfoPoint Back in 2019, when Congress passed the 2020 NDAA, it contained a provision specifically prohibiting the DoD from requiring a JV to have its own FCL if its component members held the FCL required for the solicitation: “TERMINATION OF REQUIREMENT FOR DEPARTMENT OF DEFENSE FACILITY ACCESS CLEARANCES FOR JOINT VENTURES COMPOSED OF PREVIOUSLY-CLEARED ENTITIES. A clearance for access to a Department of Defense installation or facility may not be required for a joint venture if that joint venture is composed entirely of entities that are currently cleared for access to such installation or facility.” On top of this, SBA amended 13 C.F.R. § 121.103, the regulation governing affiliation rules, to include the following: “A joint venture may be awarded a contract requiring a facility security clearance where either the joint venture itself or the individual partner(s) to the joint venture that will perform the necessary security work has (have) a facility security clearance.” Despite this fairly straightforward language, many DoD procurements continued to include a requirement that a JV hold its own FCL even if the component members of the JV held that FCL. This was in spite of the fact that a JV is really just the JV members working together: If the JV members each have the requisite FCL, that would mean that all those working as part of the JV meet the FCL requirement. It took a few GAO protests, led by the Infopoint protest, to put an end to this. In InfoPoint, GAO observed that “section 1629 of the NDAA specifically states, and the plain meaning of the statute leads us to conclude, that it unambiguously prohibits DOD from requiring that a joint venture hold a facility clearance if the members of the joint venture hold the required facility clearances.” It further noted that 13 C.F.R. § 121.103 was “consistent with the 2020 NDAA,” and that “the relevant inquiry is whether the joint venture itself, or the individual partners that make up the joint venture, hold a facility security clearance.” October 2023 DoD Memorandum Despite the holding in InfoPoint, in October 2023, DoD issued a memorandum stating it was going to allow its agencies to require for a given contract that joint ventures hold their own or entity eligibility determinations or EEDs (the term the memo uses for FCLs, we’re going to stick to FCL), regardless of whether their members have their own FCL or not. The memorandum starts off by noting it is needed “in light of the recent Small Business Administration (SBA) rule (Oct. 16, 2020), which addresses JVs under the SBA’s programs, and a subsequent Government Accountability Office (GAO) decision (Aug. 27, 2021) that interpreted the SBA rule without addressing NISP requirements and 32 CFR 2004 or how the two interconnect, thus adding to the confusion.” It appears that DoD is referring to a requirement in 32 C.F.R. § 2004.32 stating: “The CSA must ensure that all entities needing access to classified information as part of a legitimate U.S. or foreign government requirement have or receive a favorable eligibility determination before accessing classified information.” DoD thinks that JVs don’t have to have this clearance when they bid, only by the time they begin performance. Furthermore, DoD recognizes one exception to its requirement: “[I]f the JV is established by contract (not a separate legal entity), is unpopulated (no employees of the joint venture itself will be performing work connected with classified information), or other similar situations, and thus will not be involved with or otherwise influencing performance on the security work accessing the classified information,” then it does not need its own FCL. However, a joint venture that is formed as a separate legal entity (which, in our experience, is most joint ventures), will need its own FCL by the time it begins performance. Adding to the confusion, DoD stated: “A JV formed as a separate legal entity may be awarded a classified contract and may hold an EED in its own right, although as with any U.S. legal entity, it is not required to hold an EED in order to be awarded the classified contract.” Similarly, DoD recognizes that a “prime JV offeror cannot be required to already hold an EED in order to submit an offer on a classified contract.” To summarize its view, DoD finishes: As envisioned by the SBA, all work involving classified information under the SBA programs covered by 13 CFR 121.103 will be performed by one or both of the individual partners to the JV and by their employees, not by the JV entity itself. Under the NISP, a NISP CSA will assess the business structure of the legal entity awarded the classified contract to determine the entity’s eligibility for an (FCL) or an appropriate exclusion from classified information under NISP rules at 32 CFR 2004.32(a)(1). The SBA rule does not change this. However, if the legal entity awarded the classified contract is an unpopulated JV formed pursuant to this SBA regulation, the NISP CSA will exclude the JV from access to classified information (rather than determining its eligibility for access) unless the JV’s structure or potential influence, access, or control over the classified information/contract indicates it must also have an (FCL). Thoughts It appears that DoD is arguably saying that it is going to allow its agencies to require separate legal entity JVs to have their own FCL since the SBA rule in 13 C.F.R. § 121.103 doesn’t conflict with such a requirement, and their own regulations require such. (DoD could certainly be clearer in describing its policy). DoD appears correct that 13 C.F.R. § 121.103 only is concerned with requirements that the JV have its own FCL at award and is silent on whether the JV can be required to have its own FCL at start of performance. However, while we understand DoD’s interest in security here, we feel there’s a major problem in its analysis. InfoPoint was not solely based on 13 C.F.R. § 121.103. In fact, it was primarily based on the 2020 NDAA, which is a federal statute. That statute, which then trumps any conflicting federal regulation, plainly states: “A clearance for access to a Department of Defense installation or facility may not be required for a joint venture if that joint venture is composed entirely of entities that are currently cleared for access to such installation or facility.” While it might be arguable that the DoD’s reading of 32 C.F.R. § 2004.32 does not conflict with the SBA’s regulations, that doesn’t change or resolve the issue that it appears to directly conflict with a federal statute. The language in the NDAA does not distinguish between award or performance. We admit that we are a bit confused by DoD’s insistence on maintaining this requirement where the JV is already entirely made up of entities that have the required FCL. What does requiring the JV to have its own FCL in such an instance do to further security? All involved already have the required clearance. This was the issue with the old system that InfoPoint did away with. One thing contractors can consider is that if you make a JV that doesn’t involve a separate legal entity (until now, this has not been the norm, but it may arise more in light of this), the FCL requirement won’t be applied. As for challenging this position, it appears a protest of this to GAO or COFC for a given procurement wouldn’t work, as the requirement only that the JV must hold the FCL by the time performance starts. That means it isn’t technically a requirement to bid on a procurement, so it isn’t suitable for protesting. That said, there are routes to challenge agency actions during a contract itself. This would go to a Contract Disputes Act matter, and it may be worth considering if getting the FCL by the time of award appears prohibitive. Again, while we get DoD’s interest in security, we are hopeful that DoD may consider revisiting this plan to prevent needless issues down the road. If this is not what DoD intended, then it needs to amend or reissue its guidance to make it clearer how small business joint ventures can comply. There’s no real need for it to play Dr. Frankenstein here. 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 Playing Dr. Frankenstein: DoD Memo Tries to Revive Joint Venture Facility Clearance Requirements first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
  25. 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
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