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Happy Friday! The sun is shining here in the Midwest and after several days of rain, June is upon us. Time to get the lawn mower started this weekend. We hope you have some fun plans for the summer, other than mowing the lawn, with friends and family. This week in federal government news, catch up on a potential small business rule of two statute, additional contract-cutting, and GSA becoming a central contracting power player. Protecting Small Business Competitions Act of 2025 Trump’s contract-cutting blitz rattles a once-flourishing DC industry Trump administration moves to cut $100 million in federal contracts for Harvard GSA has been given more of the government’s contracting authority OPM tries again to modernize HR systems with new RFP Bluster or brilliance: Browsing the FAR 2.0 rewrite DOGE receipts for SBA fall billions short of administrator’s cost-savings claim District judge further enjoins Trump’s reductions in force at federal agencies Homeland Security cuts off access to ChatGPT and other commercial AI Trump team looks to end $37B program designed to help minority business saying it violates the Constitution Justice Department Establishes Civil Rights Fraud Initiative DoD ends ‘what you did last week’ email, asks civilians for ideas to cut waste GAO raises concerns about behavioral health services for veterans from community providers The post SmallGovCon Week in Review: May 26-30, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article -
The United States Court of Federal Claims (COFC) produced another decision focused on SAM registration and related FAR updates. We previously discussed the changes to the FAR no longer requiring constant SAM registration to be awarded a contract. We have also blogged on a recent COFC decision regarding solicitation amendments based on the new FAR rule. But, what happens if the old FAR rule, such as one regarding SAM registration, is still in a solicitation and the agency does not amend the solicitation? In Analysis, Studies, and Training International, LLC (ASTI) (April 14, 2025), the COFC builds off of the recent Zolon decision we wrote about regarding SAM registration FAR updates. The procurement was a WOSB set aside to train United States Air Force drone pilots. The solicitation was created before the recent updates to the FAR regarding SAM registration, and thus, had the old version of FAR 52.204-7 incorporated as a solicitation requirement. As you may know, the old version of FAR 52.204-7(b)(1) stated that offerors were “required to be registered in SAM when submitting an offer or quotation, and shall continue to be registered until time of award.” In comparison, the FAR 52.204-7(b)(1) version currently in effect in 2025 states: “An Offeror is required to be registered in SAM when submitting an offer or quotation and at time of award.” The new FAR simply focuses on the SAM registration being current as of the time of offer, and at time of award, rather than the previous requirement of continuous SAM registration. Under the current regulation, an offeror could accidentally have a very short SAM registration lapse between offer and award, and so long as the SAM is current again at time of award, the offeror should not lose its award. Unfortunately for ASTI, the solicitation did not have the new FAR regulation incorporated. The Solicitation in this ASTI case required submission of printouts of SAM registration, which would show WOSB status. The Solicitation also included the previous FAR 52.204-7 version that required continuous SAM registration to receive award. ASTI had what it framed as a mechanical error that didn’t show WOSB status, and SOFIS (another protester) had a short lapse in SAM registration. Due to these issues, both ASTI and SOFIS were not selected for award. Both offerors protested, generally basing their arguments on interpretation of the Solicitation’s SAM registration terms. In regards to ASTI, COFC found that the failure to mark WOSB on SAM registration was a material error. This of course is a good reminder to always check that all your representations and certifications are accurate. However, the ruling regarding SOFIS has a broader take away for contractors. SOFIS argued that it had submitted revised proposals that fixed the lapse in SAM registration and that the new FAR 52.204-7 retroactively applies, negating any issues in SAM registration lapses. In its ruling, the COFC clarified that at the time of the SAM registration lapse, the FAR mandated continuous SAM registration, and a revised submission didn’t change that requirement. In fact, the COFC cites to Zolon, stating that the old FAR 52.204-7’s registration clock is not “triggered” by the latest offer submitted, but rather, simply when “an offer” is submitted. Thus, the continuous SAM registration requirement was triggered by SOFIS’ initial offer, and was unaffected by subsequent revisions. Additionally, the COFC clarified that “[g]enerally, FAR amendments are not retroactive” unless the FAR explicitly states such. Therefore, changes to FAR 52.204-7 only apply to solicitations issued on or after its effect date in November 2024. Consequently, SOFIS could not take refuge in the new FAR language and had to maintain continuous SAM registration. Since SOFIS had a lapse in SAM registration, COFC found in favor of the agency. While, on the surface, contractors could look at this decision and simply think it was about SAM registration, but that would be missing the bigger picture. This case is a reminder to all contractors to keep an eye on FAR updates, and what FAR provisions are incorporated into a solicitation and at what time. Here, during an evaluation and ongoing protests related to a solicitation, the FAR was updated to directly negate or address the issue at the center of the case. However, since the Solicitation did not make an amendment to change the FAR provision, and the FAR update does not directly state that it is retroactive, it means that the FAR update does not retroactively apply. With large changes to the FAR planned under the so-called “FAR 2.0” this is a lesson for contractors to keep in mind for future procurements. The FAR may change, but if the procurement already had offers submitted, such changes may not have effect unless there is explicit language to the contrary. Of course, contractors should also make sure their SAM registration continues to be up to date and current to avoid issues felt by SOFIS and ASTI. If you find yourself questioning contract terms or FAR provisions, make sure to reach out to a federal contracting lawyer such as ourselves to help. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Be Careful, FAR Updates Generally Not Retroactive, Says COFC first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Ah, the Federal Acquisition Regulations, or FAR. Quite numerous and complex, yes, but they provide a standardized set of rules and procedures that govern federal government procurements. Regardless of what contract you’re dealing with (other than a few exceptions such as the FAA, which is not subject to the FAR), you can be sure that the rules of the FAR govern it. Unfortunately, that last statement is not true. Since 1989, the Department of Defense (and as time has passed, more and more other agencies) has held an interesting form of contracting authority. One that is not subject to the FAR or other such federal regulations. This unusual authority is referred to quite simply as “Other Transaction Authority” (OTA), and any government contractor that encounters it needs to understand that OTA procurements are a whole different beast from regular federal procurements. Background As noted above, OTA isn’t necessarily new, it has been around for over 30 years. But its usage has increased greatly since then, particularly in recent years. Initially limited to use by the DoD, it is now used by agencies such as the Department of Energy, the Department of Health and Human Services, the Department of Homeland Security, NASA, the FAA, and even the Department of Transportation. OTA is primarily used by these agencies for research work, although the DoD, NASA, and the Department of Homeland Security use it for prototype development as well. For this post, we’re going to focus on the DoD’s use of OTA as they use it the most and have the most expansive authority to use it. DoD’s authority here specifically comes from 10 U.S.C. § 4002 and 4003. These statutes note that the DoD and military may use OTA for research projects and for “prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel” (in other words, weapons). So? Federal law treats DoD research projects and prototype development as distinct from federal procurements that most government contractors are used to. In fact, they are not even considered “procurements” by the COFC, as SpaceX learned the hard way in 2019 in Space Exploration Technologies, Corp. v. United States, 144 Fed. Cl. 433 (Aug. 26, 2019). In one case, GAO explained: “GAO’s audit reports to the Congress have repeatedly reported that ‘other transactions’ are ‘other than contracts, grants, or cooperative agreements that generally are not subject to federal laws and regulations applicable to procurement contracts.’” MorphoTrust USA, LLC, B-412711 (Comp. Gen. May 16, 2016). This is expressly stated in 32 C.F.R. § 3.2, in fact. Wait, wait, wait…”generally are not subject to federal laws and regulations?” Yes, you read that correctly. OTA-based agreements are not subject to the FAR, in addition to many other federal rules that don’t apply. Additionally, this lack of status as a “contract” means that OTA transactions are not subject to Court of Federal Claims or GAO jurisdiction, except where it would impact the award of a contract that is subject to such jurisdiction. See Space Exploration Technologies, Corp. Additionally, offerors can challenge the use of OTA where such authority is improper if the protest is made before bids are submitted. Blade Strategies, LLC, B-416752 (Comp. Gen. Sept. 24, 2018). Limitations on Use Well, this is certainly concerning for research contractors that work with the DoD. (Although if you are on the receiving end of an OTA award, you may appreciate that the award is difficult to protest.) If agencies can use OTA for such work and OTA isn’t governed by most federal law or hearable in the COFC or GAO, what’s to stop DoD from using it indiscriminately to get around the rules? If you perform research work for the DoD or military, it would appear the answer is “nothing.” 10 U.S.C. § 4002, which authorizes the use of OTA for research projects, does not appear to contain any limitations on the use of that authority, besides that it must only be used for research projects and that OTA cannot be used if similar research is being conducted under existing DoD programs. For those who develop actual weapons systems and such for the DoD, fortunately, there are some substantial limitations on the use of OTA. OTA for prototype work is authorized by 10 U.S.C. 4003. This statute notes that OTA can only be used for such prototypes if one of the following conditions exists: At least one nontraditional defense contractor or nonprofit research institution is participating significantly in the project. Here, nontraditional defense contractor means “an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to the full coverage under the cost accounting standards prescribed pursuant to Section 1502 of title 41 and the regulations implementing such section,”All significant participants in the transaction are small businesses or nontraditional defense contractors,At least one third of the total cost of the project is being provided by sources outside the federal government, orThe senior procurement executive for the agency finds exceptional circumstances justify the use. Furthermore, OTA may only be used for projects that, combined with any follow-on production contract, is at least $100 million in expected cost. As you may have noticed, these sorts of arrangements allow for award of follow-on production contracts, which do not have to utilize competitive procedures if competitive procedures were used for the prototype award and the awardee successfully completed the project. In any event, at least with prototype projects, OTA authority is somewhat limited. That said, the last potential condition “exceptional circumstances” is obviously quite vague. Concerns In recent years, the use of OTA has expanded greatly. The Center for Strategic & International Studies noted in 2020 that the Army’s use of OTA has increased by 416 percent since 2016. As the Center observes: “The evidence suggests that there is a paradigm shift ongoing in DoD as OTAs have become a core element in DoD’s approach to technology acquisition over the last five years. This is clearly seen in the mid-to-late stages of the development pipeline for major weapon systems where OTAs are increasingly replacing contracts. Between FY 2015 and FY 2019, OTAs rose from just 3 percent of DoD’s total R&D portfolio to 18 percent of DoD’s R&D portfolio.” While the need for flexibility with these sorts of projects is understandable, we, as well as other observers, are concerned with the increased use of OTA. Indeed, DoD internal oversight has noticed that contracting personnel utilizing OTAs have often not properly tracked awards through such a system or consistently awarded using OTA in accordance with applicable laws. The fact that DoD has made such observations gives us hope, however, that the government is recognizing that the balance between flexibility and oversight may have shifted a bit too much towards flexibility, and needed oversight may be coming soon. Questions about this post? Or need help with a government contracting legal issue? 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 Other Transaction Authority? What Other Transaction Authority? – A Look at OTA first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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When an agency restricts a solicitation to a single brand-name, the agency must appropriately justify its decision, even where the solicitation is competed among holders of a governmentwide acquisition contract. In a recent case, the GAO sustained a protest, holding that an agency violated the FAR by failing to properly justify its brand-name restriction. The GAO’s decision in Westwind Computer Products, Inc., B-420119 (Dec. 8, 2021) involved a USDA solicitation seeking enterprise business solutions licenses and software assurance support. The solicitation was issued to holders of the NASA SEWP V GWAC. The solicitation specified that vendors were to propose only Microsoft products. In justification of the restriction, the solicitation stated that “USDA has standardized on Microsoft Office, email and cloud and has been using these tools for over 20 years.” The agency also stated that “Microsoft products are essential to the government’s need to provide software and security support necessary to meet operational, mission, Executive and Legislative requirements.” Westwind Computer Products, Inc. filed a protest challenging the terms of the solicitation. Westwind , which wished to offer Google Workspace software, argued that the USDA had failed to properly justify the brand-name restriction to Microsoft products. The GAO wrote that, under FAR 16.505(b)(1), “[a]gencies that issue orders under multiple-award indefinite-delivery, indefinite-quantity contracts must provide all contract holders a ‘fair opportunity to be considered’ for the issuance of all orders in excess of $3,500. In addition, the GAO continued: An agency ‘shall not’ use a brand-name justification unless two conditions are met: (1) “the particular brand-name, product, or feature is essential to the Government’s requirements”; and (2) “market research indicates other companies’ similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency’s needs.” A justification for a brand-name restriction must be in writing, set forth the basis for using the exception, and be approved by the appropriate agency official. In this case, although the USDA claimed that Microsoft products were essential to the government’s needs, the USDA did not provide any market research indicating that other companies’ similar products, or products lacking a particular feature essential to the government’s requirements, do not meet, or cannot be modified to meet, the agency’s needs. The GAO rejected the USDA’s implicit assertion that the “particular feature” of Microsoft is that “it is already in use by USDA.” The GAO wrote that this assertion was “unpersuasive, where the FAR requires that agencies demonstrate, through a comparison of ‘particular feature[s],’ why only one product can meet the agency’s needs.'” Further, nothing in the agency’s market research included a comparison of Microsoft to Google Workspace, the software Westwind wished to offer. The GAO sustained the protest, holding: In sum, USDA’s justification does not state that the product or services USDA requires are offered only by Microsoft or that other companies’ similar products, or products lacking a particular feature, do not meet, or cannot be modified to meet, the agency’s needs, the agency has not met the FAR section 16.505(a)(4)(i) requirements for justifying a brand-name restriction. The GAO recommended that the agency either go back to the drawing board and attempt to satisfy the FAR’s requirement (something the GAO seemed skeptical that the agency could accomplish in this case), or recompete the requirement without the brand-name restriction. The GAO also recommended that the USDA reimburse Westwind’s reasonable protests costs, including attorneys’ fees. The Westwind Computer Products decision is a good reminder that the FAR disfavors brand-name-only acquisitions and requires agencies to follow certain steps to justify them, even under a GWAC like SEWP V. As the decision demonstrates, even if an agency has been using a particular brand for a long time, this alone may not be enough to justify a restriction to only that brand. 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 GAO Sustains Protest Where Agency Fails to Properly Justify “Brand Name Only” Requirement first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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The proposed OCI rule implementing the Preventing Organizational Conflicts of Interest in Federal Acquisition Act has just dropped. We started discussing the Act back in early 2023 after it was passed in late 2022, and I outlined my predictions at the Court of Federal Claims judicial conference. This 108-page rule will propose some major changes for organizational conflicts of interest. Here is a summary of some of the big changes proposed in this new rule. Stay tuned for more updates on SmallGovCon. The proposed rule was published on January 15, 2025 with comments due on March 17, 2025. Here are some initial thoughts on some of the important changes proposed in this rule, as well as a recap of the original statute and my earlier predictions. The OCI Statute The Preventing Organizational Conflicts of Interest in Federal Acquisition Act was made effective on December 27, 2022. The entire law, however, was less than two pages. It focused on a few key aspects: Examples. Congress would really like the FAR to focus on additional examples Definitions. the FAR must update “definitions related to specific types of organizational conflicts of interest, including unequal access to information, impaired objectivity, and biased ground rules.” OCI Disclosures and Procedures. New rules were requested to “update such procedures as needed to address agency-specific conflict of interest issues.” As well as add more procedures to require contractors “to disclose information relevant to potential organizational conflicts of interest.” Private Sector. The law specifically required “an example of the awarding by a Federal regulatory agency of a contract for consulting services to a contractor if employees of the contractor performing work under such contract are permitted by the contractor to simultaneously perform work under a contract for a private sector client under the regulatory purview of such agency.” Professional Standards. One other specific update was for the new rules to “take into consideration professional standards and procedures to prevent organizational conflicts of interest to which an offeror or contractor is subject.” Predictions for New Rules Here was my earlier prediction on some ways in which the FAR Council might implement these updates. Definitions. Incorporating definitions of the various categories of OCIs from existing case law. Private Sector. The current examples in FAR 9.508 don’t address the specific issue of work involving a “private sector client.” One likely update is that agency OCI solicitation clauses will now specifically require disclosure and mitigation of potential conflicts involving private sector clients. And there should be additional examples dealing with this type of scenario, as the current examples only refer to a specific licensing situation. Professional Standards. Current FAR 9.506 simply commands contracting officers to review OCIs, but with little guidance for agencies. While it’s hard to know exactly what Congress is referring to, it could mean professional standards such as those established by industry groups including public accounting rules. Those standards are already applicable to review of certain financial statements for publicly traded companies under 17 C.F.R. § 210.10-01. Other sources of standards could include business standards, legal, IT, and other professional groups. Will the proposed rule specifically list examples, or will it leave it up to federal contractors to address how professional standards fit into their OCI mitigations plans? The New Proposed OCI Rule Revamping of the FAR and General Policy Interestingly, there was a proposed OCI issued back in 2011, but it was withdrawn ten years later due to “the amount of time that had passed since publication of the proposed rule.” This rule proposes to move the entire OCI regulatory scheme from current FAR subpart 9.5 to a new subpart in FAR part 3. It will also change the title of the part from “Improper Business Practices and Personal Conflicts of Interest” to “Business Ethics and Conflicts of Interest.” While OCI “requirements are applicable to most procurements, acquisitions below the simplified acquisition threshold (SAT) and those for commercial products are exempt, as well as subcontracts for commercial products or commercial services.” Interestingly, the “rule directs contracting officers to explore all available methods to address an OCI based upon unequal access to information before selecting disqualification of an offeror to alleviate unfair competitive advantage. The rule will note that “Incumbent contractors may have a natural advantage that is not unfair when competing for follow-on contracts because of knowledge and expertise developed during contract performance.” Definitions The proposed rule will expand the list of definitions to include definitions of ““unequal access to information, impaired objectivity, and biased ground rules” and these will generally follow the accepted definitions from the case law. These definitions will be added to the general FAR definition section in FAR 2.101. We predicted this, and it makes sense for contractors not to have to sift through examples and case law to find the pertinent categories of OCIs. There is a new definition for firewall, stating: Firewall means a barrier against the unauthorized flow of information. Firewalls may consist of a variety of elements, including organizational and physical separation; facility and workspace access restrictions; information system access restrictions; independent compensation systems; and individual and organizational nondisclosure agreements. Examples The rule will provide “illustrative examples” for potential OCIs that could result from “relationships of contractors with public, private, domestic, and foreign entities” at new section 3.1204. The rules will focus on impaired objectivity and unfair competitive advantage. Unequal access to information and biased ground rules are both subsets of unfair competitive advantage. Many of these examples look quite similar to the existing examples found in FAR 9.508. The old rule had 9 examples and the new rule has about 15 examples. Here are a few that appear different from the old ones: “A contractor is assisting an agency in developing policies or regulatory procedures and the contractor or one of its affiliates may, at some future point, be governed by or subject to (or be a subcontractor or consultant to an entity governed by or subject to) such policies or regulatory procedures.” “A contractor is providing consulting services to an agency that is responsible for regulating an industry and the contractor is performing work under a contract for a public or private sector client that is regulated by that agency. Organizational conflict of interest is more likely to occur if the contractor’s employees are simultaneously performing work under both contracts.” “A contractor is providing support to an agency involving a subject area or issue while it is also performing work for other entities with a competing interest involving the same subject area or issue. For example, a contractor assisting an agency with implementing legislation or regulations may have a conflict if the contractor is also assisting industry with compliance on that same legislation or regulations.” “A contractor is providing enforcement support to an agency (e.g., cost recovery, litigation) while also assisting or representing parties subject to those activities. In addition, when a contractor supports enforcement activities for an agency, and those enforcement activities continue beyond the life of the contract, such conflicting client relationships could continue to jeopardize enforcement actions for a time even after the contract ends, especially if the contractor had access to sensitive information about the agency’s enforcement or litigation strategy.” “A contractor is conducting research for an agency, but that contractor or its researchers has financial or non-financial ties to a foreign entity that seeks capability or advantage related to the topic of that research and is likely to exert undue influence on the contractor. Undue influence in this context describes a situation in which an entity that is not party to a contract, through financial support, position of authority, or other ties, persuades the contractor to take actions that it would not have taken otherwise, such as taking the research in a certain direction or engaging in unauthorized information-sharing with other parties.” “A contractor is providing services to an agency related to national security or foreign policy matters, but that contractor is also providing similar services to a foreign government or other foreign entity (e.g., foreign state-owned or private enterprise) with a competing or opposing interest in those matters, which could result in the foreign entity having undue influence on the contractor’s performance on the contract.” “A contractor is providing a product or service to the Government and employs a former Government employee who was involved in developing the requirement for the product or service as part of such employee’s Government job.” Methods and Responsibilities The FAR council describes methods to address OCIs: “OCIs and their associated risks may be addressed by means of avoidance; limitations on future contracting; mitigation; and/or the Government’s assessment that the risk inherent in the conflict is acceptable.” Drafting the solicitation can help to avoid OCIs: “such as developing a statement of work that does not require contractors to utilize subjective judgment and, when required, soliciting advice from more than one contractor rather than relying on the advice of a single contractor.” Limitations on future contracting to address OCIs can be needed when “the contractor’s work on a current contract could be impaired by virtue of its expectation of future work” but there should be a “reasonable duration” and “a specific end date for the limitation.” A new requirement is for mitigation plans to become part of a contract, and the proposed rule will require that “the offeror-submitted and Government-approved mitigation plan be incorporated into the contract.” “The mitigation plan should provide sufficient details commensurate with the complexity of the organizational conflict of interest and the value of the acquisition.” Mitigation techniques can include things like Using a team member to perform some portion of work but there must be “controls to ensure that the entity with the organizational conflict of interest has no input or influence on how the party without the organizational conflict of interest performs the work.” Use of “structural or behavioral barriers, internal controls, or both.” “However, a firewall intended to limit the sharing of information may not adequately address an organizational conflict of interest regarding an affiliate.” Where an agency weighs the risk of an OCI, it must “assess whether some or all of the performance risk is acceptable because the risk is outweighed by the expected benefit of having the offeror perform the contract, and whether the performance risk is manageable.” For the contracting officer, there are guidelines for evaluating OCIs and managing them. “While existing case law requires the contracting officer to determine that a conflict has been adequately mitigated, the proposed rule allows the contracting officer to accept a risk when the conflict results from impaired objectivity and the risk to performance is low.” A contracting officer will have to consider OCIs at time of award and when issuing an order. The CO may review aspects such as (1) “extent to which the contract requires the contractor to exercise subjective judgment and provide advice”; (2) “whether it is expected to occur only once or twice during performance or to impact performance throughout the entire contract”; (3) agency oversight controls; (4) “risk of awarding to a contractor with significant financial ties to or other interests in that same industry”; (5) how “how professional standards or the contractor’s operating procedures” can reduce OCI but that professional standards are not sufficient by themselves. Clauses A new FAR clause at at FAR 52.203-XX, Potential Organizational Conflict of Interest—Disclosure and Representation, will “provide notice to offerors that the nature of the work described in the solicitation is such that OCIs may result from contract performance.” The clause will require an offeror to: (1) Disclose all relevant information regarding any OCI (including active limitations on future contracting and specific clients or industry relationships that may create OCI if identified by the contracting officer); (2) Disclose any professional standards to which it is subject, or any procedures it has in place, to prevent OCIs; (3) Represent, to the best of its knowledge and belief, that it has disclosed all relevant information regarding any OCI; (4) Explain the actions it intends to use to address any OCI ( e.g., submit a mitigation plan if it believes an OCI may exist or agree to a limitation on future contracting); and (5) Update their disclosure(s) for new information not previously disclosed or if there is a change to any relevant facts relating to a previously disclosed OCI. There will also be clauses for Postaward Disclosure of Organizational Conflict of Interest. Mitigation of Organizational Conflicts of Interest. Limitation on Future Contracting. Unequal Access to Information—Representation, “which requires the offeror to identify, prior to submission of its offer, whether it or any of its affiliates had unequal access to any information that could provide an unfair competitive advantage.” It will be interesting to see how these rules are implemented and how courts interpret them. Be sure to comment by the March 17 deadline if you have concerns. Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post New OCI Rule Contains Big Changes first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday, SmallGovCon readers! Hope you had a great week and have some nice plans for the long weekend. Memorial Day, originally known as Decoration Day, originated in the years following the Civil War and became an official federal holiday in 1971. Unofficially, it marks the beginning of the summer season. To all those that served and or on active duty, thank you for your service! Have a wonderful weekend. This week in federal government contracting news, there are updates on an increase in government buying, cutting costs for large software vendors, and the federal budget. Judge bars Trump administration from shutting peace institute that sought to end violent conflicts Former Contractor of USAID-Funded Program Extradited to the United States, Convicted and Sentenced for Conspiracy to Obtain Grant Money Through Fraud GSA inks deal with Salesforce to lower price of Slack 90% for agencies GSA, Salesforce Collaboration Cuts Costs for Government, Slack to Provide Real-Time, AI-Powered Efficiency It will take more than a new policy to get certified SBOMs Retired four-star admiral found guilty of bribery after accepting $500K-a-year job in exchange for lucrative Navy contract MyGovWatch Numbers Show 6.5% Increase in Federal Government Buying in Trump’s First 100 Days Gerry Connolly, congressional champion of federal IT reform, dies at 75 VA eyes AI to improve software license management Federal budget plans still in limbo as Memorial Day approaches SBA Launches Onshoring Portal to Advance America’s Economic Comeback The post SmallGovCon Week in Review: May 19-23, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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This past November, we observed a change in the rules regarding SAM registration requirements for procurements. Prior to this rule change, both GAO and the Court of Federal Claims (COFC) had found that the FAR requires offerors to maintain SAM registration throughout the evaluation period for a procurement. With the rule change, FAR 52.204-7 (the regulation at issue) now only requires that an offeror be registered at the time of offer submission and at the time of contract award. A lapse in SAM registration in between those events, in other words, would not be fatal to an offeror’s proposal. Unfortunately for one company, this resulted in a COFC case that essentially reversed its victory at a prior COFC protest. Today, we’ll look at this second case and what happened. A brief summary of the prior protest is needed here. Back in 2023, Zolon PCS II, LLC (Zolon), brought a case to the COFC regarding the National Geospatial-Intelligence Agency’s (NGA) CLOVER contract. Under then-standing COFC precedent, an offeror had to maintain SAM registration from the date they submitted an offeror to the date they received award to be eligible for award under FAR 52.204-7. When the NGA attempted to create a deviation from this rule and award to offerors whose registrations lapsed during that period, Zolon brought its protest. On August 29, 2024, the COFC agreed with Zolon under the established precedent and found that NGA’s deviation was an attempt to amend the solicitation to make those particular awardees eligible for award. This rendered the deviation unreasonable and therefore improper. The NGA prepared its corrective action, promising to make new awards after re-evaluation. The FAR Council (The DoD, NASA, and GSA), concerned about this ruling and the others like it, decided to change FAR 52.204-7. On November 12, 2024, they issued the rule change. Now, under FAR 52.204-7, an offeror need only be registered at the time of offer submission and at the time of contract award. The NGA picked up on this rule change and issued an amendment, Amendment 12, to the CLOVER procurement incorporating the new language, with offers due January 10, 2025. The NGA also then terminated the original awards. Zolon again protested the amendment, arguing that the NGA was just trying to change the rules to favor the original awardees, making the amendment improper. It also argued that the rule didn’t apply retroactively, and because the NGA already made awards, it couldn’t amend the rules now. The COFC noted that, under FAR 1.108, contracting officers have the discretion to include changes to the FAR made after the solicitation was issued but before award. Specifically, the language says “[c]ontracting officers may, at their discretion, include the FAR changes in solicitations issued before the effective date, provided award of the resulting contract(s) occurs on or after the effective date.” While the NGA had made awards under the solicitation and did not terminate them until after the amendment, it had also said it was going to make new awards. In other words, the amendment applied only to the planned new awards, not the terminated awards. Those new awards were the “resulting contracts,” and as they had not occurred yet, the NGA could make the amendment. As the court put it: “Those awards will ‘happen as a consequence’ of Amendment 12, incorporating the new SAM registration rule, after the effective date of the new rule.” Furthermore, the fact the NGA didn’t specifically say it was relying on the rule change to make the amendment was irrelevant. With the rule change, the NGA had the complete discretion to make the amendment. The NGA was not deviating from FAR rules to favor an offeror, it was following what the FAR permitted. Nonetheless, Zolon still argued that the amendment was impermissibly retroactive, and that the earlier precedent still applied. The court observed that the question came down to whether the law took away or impaired existing rights, or created a new obligation, with respect to things that already occurred. Here, no new obligations were created. As the court noted, “[i]f anything, the new rule makes it easier for offerors to maintain compliant SAM registrations.” Likewise, the rule change didn’t deprive Zolon of any rights. Zolon remained just as eligible for award now as it did before. It is true that other offerors would not be allowed to compete against Zolon. But Zolon had no right to avoid such competition, nor did it have a right in maintaining the old version of FAR 52.204-7. Finally, Zolon argued again that the NGA was trying to favor the offerors. Again, the court observed that wasn’t an issue here. The problem in the earlier protest was that the NGA was deviating from FAR requirements. Here, it was simply following the new FAR language. As the court put it: “Again, this is not a scenario where the Agency is attempting to side step a FAR rule so that best-value offerors survive in the competition, it is attempting to follow a FAR rule that was specifically changed so that best-value offerors are not unnecessarily eliminated. That reasoning is neither arbitrary nor capricious.” With that, the COFC ruled against Zolon. One has to sympathize with Zolon here. It went through all that trouble and won, only for the government to change the very FAR provision it won on. That being said, the ability for an agency to amend its solicitation if the FAR permits it is very broad. The key thing here is that the agency was following the FAR this time around, whereas before, it was essentially trying to violate the FAR. That made all the difference, and is a good lesson here on federal agency discretion in amending solicitations. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Switcheroo – FAR Change Allows Agency to Amend Solicitation to Broaden Eligibility for Procurement first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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As our SmallGovCon readers might know, the SBA’s 8(a) Business Development Program is often thought of as the golden goose of federal government contracting, at least for small businesses. And it’s true, in some respects. While it is the most difficult of the SBA’s socioeconomic programs to gain admittance to, if admitted, you stand to reap large benefits such as access to competitive and sole-source contracts. And another SBA rule limits the ability to move contracts away from 8(a) Program set-asides. In that scenario, a contract that had been restricted to 8(a) Program Participants is recompeted as a set-aside for small businesses generally or a different socioeconomic category (SDVOSB, WOSB, HUBZone). Less frequently, it might not set aside for small businesses at all. If that happens, what should you do? Well, you should be familiar with what is commonly referred to as the “once 8(a), always 8(a)” rule as well as when to protest a violation of that rule. The Once 8(a), Always 8(a) Rule (as it’s often called) states that, “where a procurement is awarded as an 8(a) contract, its follow-on requirement must remain in the 8(a) BD program unless SBA agrees to release it for non–8(a) competition.” 13 C.F.R. § 124.504(d)(1). That means that once a procurement is awarded as an 8(a) set aside, any follow-on procurement must be solicited and awarded to an 8(a) Program participant from that point forward. Seems easy enough, right? Yes and no. 13 C.F.R. § 124.504(d) and FAR 19.815(e) convey that the Once 8(a), Always 8(a) Rule applies anytime a procurement contains work currently performed under one or more 8(a) contracts. This includes situations in which the procuring agency believes the requirement is new and that the contract should not be considered a follow-on requirement. In such a case, the procuring agency must still coordinate with the SBA District Office servicing the 8(a) incumbent firm and the SBA Procurement Center Representative assigned to the contract to ensure that removing the work from the 8(a) Program is appropriate. Such notification must be in writing, must identify the scope and dollar value of any work previously performed through another 8(a) contract, and must include the scope and dollar value of the contract determined to be new. When determining whether to release a procurement from the 8(a) Program, the SBA will consider a number of factors, including “(i) Whether the agency has achieved its [small disadvantaged business] goal; (ii) Where the agency is achieving its HUBZone, SDVO, WOSB, or small business goal, as appropriate; and (iii) Whether the requirement is critical to the business development of the 8(a) Participant that is currently performing it.” There are also limited situations in which the SBA may decline to keep a procurement in the 8(a) Program “to give a concern previously awarded the contract that is leaving or has left the 8(a) BD program the opportunity to compete for the requirement outside of the 8(a) BD program.” Though, in our experience, this is a rare occurrence. However, it is possible if the following criteria are met: (A) The procurement awarded through the 8(a) BD program is being or was performed by either a Participant whose program term will expire prior to contract completion, or by a former Participant whose program term expired within one year of the date of the offering letter; (B) The concern requests in writing that SBA decline to accept the offer prior to SBA’s acceptance of the requirement for award as an 8(a) contract; and (C) The concern qualifies as a small business for the requirement now offered to the 8(a) BD program. 13 C.F.R. § 124.504(d)(2)(i). If SBA receives a request to release a requirement to a soon-to-graduate participant or former participant, SBA will also weigh the participant’s business development needs against the business development needs of qualified current participants. Additionally, SBA will not release a requirement from the 8(a) Program unless the agency agrees to solicit the procurement as a small business, HUBZone, SDVOSB, “or WOSB set-aside or otherwise identifies a procurement strategy that would emphasize or target small business participation.” 13 C.F.R. § 124.504(d)(3). Now, you may be thinking “I thought this blog was about the Once 8(a), Always 8(a) Rule.” And you would be right, it is! But it is important to understand what situations justify removing a requirement from the 8(a) Program to understand what situations potentially call for a protest. So, what can you do if a procurement is removed from the 8(a) Program without following the requirements of 13 C.F.R. § 124.504? You can protest a violation of the Once 8(a), Always 8(a) Rule, of course. Protesting an agency’s violation of the Once 8(a), Always 8(a) Rule is considered a protest of solicitation terms, or pre-award protest. As discussed in more detail here, a pre-award protest is a challenge to the terms of a solicitation under 4 C.F.R. § 21.2(a)(1). Just like you would protest a violation of the VA’s Rule of Two, or a patent ambiguity in a solicitation, you must file a Once 8(a), Always 8(a) protest before the deadline for proposal submissions. Once proposals are submitted and that deadline passes, you are out of luck and can no longer file a Once 8(a), Always 8(a) protest. If you are looking to protest, look closely at the definition of “Follow-on requirement or contract” in 13 CFR 124.3: The determination of whether a particular requirement or contract is a follow-on, includes consideration of whether the scope has changed significantly, requiring meaningful different types of work or different capabilities; whether the magnitude or value of the requirement has changed by at least 25 percent for equivalent periods of performance; and whether the end user of the requirement has changed. As a general guide, if the procurement satisfies at least one of these three conditions, it may be considered a new requirement. However, meeting any one of these conditions is not dispositive that a requirement is new. In particular, the 25 percent rule cannot be applied rigidly in all cases. Conversely, if the requirement satisfies none of these conditions, it is considered a follow-on procurement. Any such protest must allege that the contract is indeed a follow-on, based on these criteria. If you notice that work, that was previously acquired through the 8(a) Program, is no longer being solicited through the 8(a) Program (rather it is being solicited to a different type of small business, or is other than small business) a pre-award protest of a violation of the Once 8(a), Always 8(a) Rule might be in order. It is important to act sooner rather than later, because the GAO will dismiss any protest that is untimely, which, in this situation, a timely protest is one that is filed prior to the deadline for proposal submissions. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Why File: A Once 8(a), Always 8(a) Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! You’ve made it through another week, and your reward is the Week in Review. This week saw some interesting stories: VA is getting a new top watchdog, there is a new budget proposal, and GAO is highlighting over $100M in potential savings from consolidating IT systems. You can read more about these topics in the articles below. Have a great weekend! Trump picks senior VA advisor to serve as top department watchdog White House budget plan gives 4% boost for VA amid other agency cuts Consolidating IT systems can lead to over $100M in cost savings, GAO finds GSA expands efforts to reshape federal consulting contracts Office of Federal Contract Compliance programs lays off 90% of workforce Praetorian Shield and Two Individuals Agree to Pay $221,000 to Resolve False Claims Act Allegations Connected to Fraudulently Obtained Small Business Contracts and Kickbacks Government Contractor NORESCO Agrees to Resolve Allegations of Overcharging Federal Agencies WIFCON PODCAST #1 THE FAR REFORM PROJECT Agencies explore post-quantum cryptography in acquisitions SBIR/STTR awards remain vulnerable to foreign influence The post SmallGovCon Week in Review: May 12-16, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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SBA has indicated that it will be holding a tribal consultation meeting in June. Among the topics to be discussed will be the 8(a) Program and SBA Mentor-Protege Program and joint ventures. This request is interesting because it reveals a little bit about what the SBA is thinking with regards to the Mentor-Protégé Program and joint venture issues. While it is especially relevant for entity-owned 8(a) Program firms, it is also revealing for other small businesses. Here are a few key components from the SBA’s notice. SBA stated that it “has found that certain practices may be negatively impacting entity-owned firms’ ability to receive awards. For example, contracting officers may consider entity-owned firms to be affiliated with each other when several appear on the same webpage.” This comments seems to implicate the exception to affiliation for common ownership, management, and common administrative services that applies to tribal and ANC entities. As we discussed here, this affiliation exception is quite broad under SBA’s case law. Although “other factors” may still lead to affiliation between tribal companies, those other factors must be unrelated to common ownership and management–if such a thing is possible. Here is what SBA had to say regarding joint ventures: SBA is interested in receiving comments and input on whether protégé firms can truly direct and manage mentor firms when performing a joint venture mentor-protégé joint venture project. It has come to SBA’s attention that some mentors that have pre-existing relationships with certain procuring agencies do not include protégé firms in critical meetings with those agencies, despite the protege being the project manager of the joint venture. SBA believes that this is contrary to the intent of the mentor-protégé program. Here, SBA is specifically concerned with mentors in joint venture arrangements that have too much power or influence with the contracting agency. This could lead to proteges being excluded from meetings. SBA’s concern is quite specific. While this is an 8(a) notice for consultation with tribal entities, this same power dynamic does come up in other types of small business joint ventures. In our experience, SBA is reluctant to get involved in joint venture administration and contract performance issues. This notice could signal a change in SBA’s approach. Perhaps SBA will be more willing to get involved in discussions or disagreements between mentors and proteges. These are important concerns and it’s good that SBA is examining them. It’s unclear, though, what SBA will do with this information. I imagine a proposed rule could be under consideration that puts a little more scrutiny on mentor-protege firms. That might be helpful for SBA to be more active in monitoring and working with mentors and proteges. We will keep a close eye on this inquiry by SBA, and will be sure to update our readers with any updates. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Help Please: SBA Asking for Input on Mentor-Protege and Joint Venture Issues first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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The world of Artificial Intelligence (AI) is a growing topic that many are eager to share their opinions on. There are people excited to witness this advancement of technology and are eager to implement AI programs into their lives and/or businesses to optimize efficiency. Others are uneasy about the advancements of AI, fearing replaceability or changes in the workforce. Or, there are those who have read one too many science fiction novels and believe that this is the beginning of the end. A recent decision prompted GAO to weigh in on the use of AI in the realm of federal contracting. Specifically, should companies use AI to draft legal pleadings such as bid protests? In Raven Investigations & Security Consulting, LLC, B-423447 (Comp. Gen. May 7, 2025), Raven Investigations & Security Consulting, LLC (Protester) filed a protest for the Department of Homeland Security, U.S. Immigration and Customs Enforcement’s (Agency) issuance of order No. 70CDCR25FR0000032 (Order), under request for quotation (RFQ) No. 70CDCR25Q00000007, for administrative processing support services. Following the Protester’s filing, the Agency and intervening party requested dismissal. After the Protester responded to these requests for dismissal, the Agency terminated the Order. As a result, GAO dismissed the protest as academic. While this appeared to be an open-and-shut case, irregularities found in the Protester’s response to the requests for dismissal prompted GAO to weigh in on the use of AI in the realm of federal contracting. In GAO’s review of the Protester’s responses, GAO found several irregularities in the case citations. There were cases the Protester cited that GAO struggled to locate in legal databases. The Protester cited other GAO decisions that, upon further review, did not contain the same legal principles for which the Protestor was citing them. Additionally, the Protestor incorporated direct quotations from GAO decisions that did not exist. GAO sought clarification from the Protester on these irregularities. In response, the Protester stated that the Protester’s representative was not a licensed attorney, and that he had utilized “public databases, [artificial intelligence (AI)]-assisted tools, online case repositories, and secondary legal research summaries to guide [his] understanding of GAO precedent.” The Protester admitted that the irregularities “arose from reliance on these automated or secondary tools, which misrepresented or misattributed certain case law and statutory language.” As AI has just recently made its way into the court systems, GAO looked to the U.S. Court of Federal Claims’ recent response to the growing use of AI-tools in legal briefs. The court noted that there was a current trend of both attorneys and pro se litigants drafting legal briefs that cited non-existent cases. In response, courts have started sanctioning attorneys and pro se litigants who cite non-existent, AI-generated case law through the court’s rules of procedure. Yes, you read that right, sanctions for using AI. GAO notes that the rules of procedures by other courts do not apply to GAO. However, GAO points to its own precedent to enforce similar sanctions, stating the following, Our Office necessarily reserves an inherent right to dismiss any protest and to impose sanctions against a protester, where a protester’s actions undermine the integrity and effectiveness of our process. GAO notes that the protester used AI-tools to draft responses “without engaging in any review of the material for accuracy.” Likely, the Protester assumed the case citations would be overlooked, so long as the cases stated the correct legal basis. The AI-program probably did provide a response that was well written and addressed the Protester’s key arguments in a grammar-free, easy-to-read-format. However, the legal arguments are just as (if not) more important than the factual arguments. GAO rightfully explains that the use of non-existent cases “wastes the time of all parties and GAO, and is at odds with the statutory mandate that [GAO’s] bid protest forum provide for ‘the inexpensive and expeditious resolution of protests.’” 31 U.S.C. § 3554(a)(1). Since the protest was dismissed as academic, GAO chose not to sanction the Protester. Rather, GAO used this as a warning for future parties appearing before GAO: “The submission of filings with citations to non-existent authority may result in the imposition of appropriate sanctions.” Whether you love, hate, or even fear it, AI cannot effectively represent you in front of GAO. ChatGPT may not send you an invoice at the end of the month for its time, but the repercussions for using it in a GAO filing could be far more costly. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post ChatGPT is Not Your Lawyer (Even If it Sounds Like One), Recent GAO Case Confirms first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Hello! It’s Friday and time for another week in review. This time of year brings both the ripping up of March Madness brackets and the opening day of baseball–hope springs eternal! And for non-sports ball folks, we hope that spring is bringing all of our readers both renewed energy and productivity. This week saw a number of interesting stories, including proposed consolidating of procurement with GSA and changes to GSA schedules, along with updates on termination of some contracts. GSA’s overhaul of FedRAMP contingent on automation Federal Contracting Undergoes Biggest Overhaul Yet GSA issues major changes to Multiple Awards Schedule program Navigating the Government Marketplace in Disruptive Times NASA terminating $420 million in contracts Defense contractor president pleads guilty to bribery scheme involving $16 million in small business government contracts White House pushes for greater OPM authority over federal employees’ suitability FEMA set for elimination, Noem says, amid bipartisan House reform proposal Contractors face new setback in getting paid for their work Federal contractor watchdog office seeks to ‘deter DEI’ at firms working with agencies My Vision for GSA – Stephen Ehikian DoD shepherds CMMC through Trump deregulatory initiative Ten years later, agencies still making gains on category management The post SmallGovCon Week in Review: March 24-28, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday and Happy Mother’s Day weekend! Mother’s Day is a time to celebrate the incredible strength, love, and dedication that mothers show every day. Take a moment to say thank you, share a memory, or simply let her know how much she means. This week in federal government contracting news included stories about the upcoming federal budget and updates to the National Defense Strategy. White House eyes reconciliation to get 2026 budget increase The Latest: White House unveils Trump’s 2026 proposed budget SBA Announces New Grant Funding to Support Made in America Manufacturing White House budget plan gives 4% boost for VA amid other agency cuts GAO, USPS IG make their case for 2026 budget increases Trump administration releases first wave of acquisition regulation changes A new National Defense Strategy is on the way ‘Biohazard’: Forest Service employees warn cuts having devastating, and disgusting, impacts GSA, OMB, NASA, DoD Launch Revolutionary FAR Overhaul Website U.S. court system eyeing AI use cases for access to justice, cost savings The contractor community tries to make sense of Trump’s first 100 days SBA Celebrates National Small Business Week Following White House Proclamation The post SmallGovCon Week in Review: April 5-9, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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An advantage of being a HUBZone Program contractor is the aptly-named HUBZone price evaluation preference. The possibility of utilizing that price preference has been a great reason for contractors to form joint ventures with HUBZone businesses. However, contractors need to be aware that SBA has effectively eliminated the usage of price preference within certain joint ventures. The HUBZone Program is one of the many socioeconomic certifications administered by the SBA, with many advantages (for more info on the HUBZone program check out our Back to Basics post on the program). The most well-known perk of the HUBZone Program is likely the so-called “price preference.” What this boils down to is that under 13 C.F.R. § 126.613, in a full and open competition (meaning not set-aside for small business) the Contracting Officer: “must deem the price offered by a certified HUBZone small business” to be lower than the price offered by a large business (what SBA calls other-than-small), if the large “business initially is the lowest responsive and responsible offeror, and the price offered by the certified HUBZone small business concern is not more than 10% higher than the price offered by the other than small business.” Basically if the HUBZone offeror is within 10% of the lowest price offer, and that offer is from a large business, then the HUBZone business will be treated as the lowest price offeror. Logically, if you meet the joint venture requirements of 13 C.F.R. § 126.616, and properly form a HUBZone joint venture, then that joint venture should be able to claim that price preference. However, SBA’s regulations now state that is not always the case. Avid readers of SmallGovCon will be aware that the HUBZone Program has had lots of released potential changes over the past year or so (here are just some of our recent HUBZone blogs). One change that took effect in early 2025 was that the HUBZone price preference regulation (13 C.F.R. § 126.613) was updated and added a section “(e)”, which states: “The HUBZone price evaluation preference applies only to a joint venture consisting of a certified HUBZone small business concern and a small business concern that complies with the requirements of § 125.9. The HUBZone price evaluation preference does not apply to a joint venture consisting of a certified HUBZone small business concern and its other than small mentor.” As indicated by the italics above, SBA has now made it clear that if you form a HUBZone mentor protege joint venture with a mentor who is not small, then that joint venture does not get the HUBZone price preference. The only type of joint venture that can utilize the HUBZone price preference is one between two small businesses (whether mentor and protege or not) SBA, formulating this rule, wrote that “[s]everal commenters requested further clarification regarding the application of the HUBZone PEP to mentor-protégé joint ventures, particularly when a large business mentor is performing a significant portion (e.g., 60%) of the contract.” “SBA agrees that one large business should not be receiving a PEP against another large business.” This change of course removes quite an incentive to many other than small businesses who wish to mentor and venture with a HUBZone protege. This rule would still seem to allow for a HUBZone prime contractor to subcontract to a large business, as that is not addressed in the rule. It is also quite the change that many contractors need to be aware of prior to forming a mentor protege agreement and subsequent joint venture if the protege is a HUBZone participant. As always, it is probably best to double check with federal government contracting lawyers such as ourselves when forming joint ventures and taking other federal government contracting actions. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post No More HUBZone Price Preference for Most Mentor-Protege Joint Ventures first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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SBA and the FAR contain rules governing a situation where a small business is purchased by another entity and becomes a large business. SBA has recently updated those rules in a new regulation found at 13 C.F.R. § 125.12. In particular, there is a special scenario where a small business has submitted an offer on a small-business procurement and then is acquired within 180 days after that offer. But how does SBA define an “offer”? A recent SBA decision answers that question. In Secise, LLC, SBA No. SIZ-6337 (2025), SBA OHA considered an appeal of a size protest of a Navy small business procurement for systems engineering support. The solicitation was assigned NAICS Code 541715 — Aircraft, Aircraft Engine and Engine Parts with a corresponding 1,500 employee size standard. Secise, LLC (Appellant or Secise) argued that Sabre Systems, LLC (Sabre) was not a small business because Sabre was purchased by a private equity firm within the 180-day period after submitting its offer on the procurement. Initial proposals were due October 2, 2023. Final proposal revisions for the solicitation were due on May 17, 2024. Sabre was acquired on September 26, 2024, which was within 180 days after submitting final proposal revisions. The general rule is that SBA determines a company’s size as of its initial offer date including price, and then that company is considered small throughout the life of the contract. 13 C.F.R. § 121.404(a). There are some exceptions, such as a contract going over 5 years or if a task order explicitly requests recertification. Under current rules, there will also be an exception if there is a triggering event such as an acquisition, but that rule is not going into effect until January 2026, as explained in our post here. However, there is another exception when a company merges or is acquired by another company after offer but before award. SBA’s concern, as noted in the federal register commentary, was “that if a merger or acquisition causes a firm to recertify as an other than small business concern between time of offer and award, then the recertified firm is not considered a small business for the solicitation.” SBA set the time period for examining mergers or acquisitions after offer to 180 days, hence we often call this the “180-day rule.” Under SBA regulations in effect at the time of this decision, the rule stated: If the merger, sale or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award. If the merger, sale or acquisition (including agreements in principle) occurs within 180 days of the date of an offer relating to the award of a contract, order or agreement and the offeror is unable to recertify as small, it will not be eligible as a small business to receive the award of the contract, order or agreement. If the merger, sale or acquisition (including agreements in principal) occurs more than 180 days after the date of an offer, award can be made, but it will not count as an award to small business. 13 C.F.R. § 121.404(g)(2)(iii) (Effective: May 30, 2023 to January 15, 2025). This rule has now moved to the new regulation at 13 C.F.R. § 125.12(e), but the language is similar in that it refers to “within 180 days after the date of an offer.” OHA noted: “The primary purpose of the regulation is to prevent firms which become other than small through merger or acquisition from benefiting from small business set-asides.” However, the key term at issue in this appeal was “offer”. Specifically, what counts as an offer. Appellant argued that term offer, under its plain meaning, “must not be limited to initial offers, but include final proposal revisions.” It relied on the definition of “offer” in FAR 2.101: “[A] response to a solicitation that, if accepted, would bind the offeror to perform the resultant contract.” OHA rejected this definition, because “it would lead to absurd results” and was contrary to the regulatory comments from SBA. The absurd result was that a company would have a new 180-day period after each proposal revision, and there could be many such revisions. “Every new offer made during a long procurement would create another 180-day period during which, if a sale or merger occurred, the concern would no longer be eligible for award.” In this case, the result would be that “Sabre would have been eligible for award in April 2024, and until May 16th, but the submission of its final proposal revisions would have rendered it ineligible for another 180 days.” As for SBA’s intent based on the federal register commentary, OHA said: The language of the preamble shows SBA’s concern over the need of businesses for some certainty, and an appreciation of their need for planning, and the changes in a business’s conditions that can arise over a long, drawn-out procurement process. The rule is meant to provide some certainty and leeway to grow for small businesses while dealing with the procurement process. OHA concluded that “SBA clearly meant that the word ‘offer’ in the regulation meant a concern’s initial offer and that would create one single 180-day period within which a merger or acquisition which rendered the concern other than small would also make it ineligible for award.” This decision creates some certainty for small businesses that an offer, for purposes of the 180-day rule, is the initial offer, not subsequent revisions. A company would do well to keep this in mind as it reviews timing of offer submissions, if there is a potential acquisition that could be on the way. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Defines “Offer” for Purposes of 180-Day Rule After Small Business Acquisition first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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For small business set-aside contracts, including socioeconomic set-asides like the 8(a) program, a federal contractor must meet the SBA’s size standards. These size standards vary by industry and solicitation and are based on either average annual receipts or the number of employees. But size alone doesn’t tell the whole story. Many small businesses are surprised to learn that they could be deemed affiliated with other entities based on factors such as ownership, management, family relationships, or subcontracting. If the SBA finds companies affiliated, it will combine the receipts or employees of the various companies, which can disqualify a company from small business programs. In this training, you will learn: How the SBA determines business size using receipts or employee counts When and how size standards apply in federal contracting Common size determination pitfalls small businesses face The SBA’s concept of affiliation and why it matters (and doesn’t always match up with common sense) The various SBA rules governing affiliation, and what does not trigger affiliation How sharing resources, including subcontracts, in certain contexts could trigger affiliation Examples of affiliation inspired by actual situations Tips for avoiding unintended affiliation and staying compliant What happens if you’re found “other than small”—and how to respond Whether you’re new to federal contracting or looking to grow your small business through set-aside opportunities or partnering with small businesses, this session will give you the tools to know about small business size standards, affiliation, and positioning your company to play by these rules. Hope you can join us! Register here. The post Govology Webinar Announcement! Small Business Size Standards and Affiliation: Lessons for Every Federal Contractor, May 15, 2025, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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There are many questions facing contractors during this time of change and disruption based on new initiatives from the Trump Administration and the impact on the federal government’s role buying from federal contractors. One of the biggest questions is what can be done if the government modifies a contract, cancels work, or reschedules the performance of work. In that situation, it’s important to understand both the impacts on the prime contractor and any subcontractors. Here are some steps to take to deal with this type of situation. Depending on the facts at hand, it might make sense to perform these steps in the order listed. In other situations, it may be helpful to reach out first, get the temperature of the government and subcontractors, and then review the prime contract and subcontract. Changes to how contracts are managed is something that contractors have dealt with in other situations, and we’ve had recommendations on these types of issues in the context of government shutdowns and COVID-19 over the years. Review the Prime Contract. One important step is to closely review your contract with the government. This will lay out the circumstances under which the government is entitled to modify the contract. Some common clauses to look out for include FAR 52.243–1 Changes—Fixed–Price. The version of this clause for services contracts allows a contracting officer to “make changes within the general scope of this contract” for issues such as The description of services to be performed. Time of performance (i.e., hours of the day, days of the week, etc.). Place of performance of the services. The supplies version of the clause allows similar changes to “[d]rawings, designs, or specifications” for supplies specially manufactured for the government. Other clauses with similar terms include FAR 52.243–2 Changes—Cost–Reimbursement; FAR 52.243–3 Changes—Time-and-Materials or Labor–Hours; and FAR 52.243–4 Changes. Be sure to check the specifics of the clause in the prime contract as each pertain to different types of contracts. Pay close attention to the notice provisions of these clauses. For instance, the fixed-price changes clause requires a contractor to notify the contractor within 30 days after receipt of the change order from the contracting officer to request an equitable adjustment. But the government can vary this 30-day period per contract. It’s possible the change to the scope of work might not be covered by these clauses. For instance, consider a contract for assistance setting up events. The government may simply not hold a certain event. Rather than modifying the contract, reality dictates that there is less work for the contractor to do. Taking a close look at the prime contract scope of work can reveal where the government may make these sort of alterations or opt not to request certain services. One other thing. If you think that the government’s alteration has amounted to a change under the contract’s Changes clause, be sure to provide written notice to the contracting officer as soon as possible. A contractor has a responsibility to notify the government of a change that has not been identified in writing. FAR 43.104(a); FAR 52.243-7(b). Even if the contractor thinks the government has made an unofficial change, the contractor “shall diligently continue performance of this contract to the maximum extent possible.” FAR 52.243-7(c). Some things to include in a notification to the government of a change are: Date, nature, and circumstances: Who’s involved, any communications Basis of acceleration of scheduled performance Elements to seek adjustment: Line items effected; Adjustments to price, delivery, other; Labor or material added or deleted Delay or disruption caused Estimate of how long government can take to respond without contractor incurring additional costs Review the Subcontract. Make sure you are familiar with the subcontract terms for whether it will allow modifications. For instance, some subcontracts may allow changes based on whether the government modifies the prime contract. Other subcontracts may include a schedule of performance, scope of work, task order, or similar section that sets out the work the subcontractor will perform under the subcontract. Review those sections to determine if the government’s alteration of performance impacts the work to be performed by the subcontractor. Next, review the subcontract’s modifications section. What requirements does it contain for modifying the subcontractor’s scope of work? Are there notice requirements? Can the prime contractor unilaterally modify the subcontract or does it need to be done with the agreement of the subcontractor? These are important facts to determine and can vary from subcontract to subcontract. Reach Out. Make sure lines of communication are open with both the contracting officer and the point of contact with all subcontractors whose work could be affected. Talk with the government early and often to stay informed about what the contracting officer is planning to do. Keep the subcontractor informed so that the subcontractor knows what to expect and how to plan for it. These are just some of the things to be aware of when it comes to government changes or alterations of prime contracts. Your mileage may vary because it depends on the type of work being performed (e.g. construction contracts may move forward while event planning or office work is curtailed), as well as the particulars of the prime contract and subcontract. Regardless of the specifics, reviewing the pertinent agreements and staying in communication with the government and subcontractors is paramount. Questions about this post? Email us . Need legal assistance 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 Dealing with Contract Alterations and Modifications Due to Changes in the Administration first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Maybe it’s happened to you: your company receives a notice of unsuccessful offeror, and your eyes pop. You can’t believe that the winner’s price is so low. “There’s no way they can successfully perform for that,” you say. But before you file a GAO bid protest, you should carefully check the solicitation’s evaluation criteria. As one unsuccessful offeror recently learned the hard way, GAO often won’t listen to an argument that “the other guy’s price is too low.” GAO’s decision in Unico Mechanical Corp., B-419250 (Oct. 29, 2020) involved a Department of the Interior small business set-aside solicitation seeking a contractor to replace the intake tower cylinder gate stem assemblies at Hoover Dam. The solicitation called for the award of a single fixed-price contract. Award was to be made on a “best value” basis, considering price and four non-price factors. With respect to the price evaluation, the solicitation stated that “proposed prices would be evaluated for reasonableness and to check for ‘any instances of unbalanced pricing.'” Unico Mechanical Corporation submitted a proposal. Unico proposed a price of approximately $48.3 million. Marine Diving Solutions, LLC also submitted a proposal. MDS’s proposed price was approximately $36.3 million. After evaluating proposals, the agency selected MDS for award. Unico then filed a GAO bid protest. Among its allegations, Unico contended that MDS’s “substantially lower” price meant that MDS’s “underlying cost estimate is flawed.” Unico argued that the agency improperly failed to determine whether MDS’s proposed price was realistic to allow it to perform the work. GAO noted that the solicitation “provided that the agency would evaluate proposed prices for reasonableness and balance.” GAO then reiterated the very important (but often misunderstood) difference between price reasonableness and price realism: An agency’s concern in making a price reasonableness determination focuses on whether the offered prices are too high, rather than too low. Arguments that the agency did not perform an appropriate analysis to determine whether an awardee’s proposed price was too low, such that there may be a risk of poor performance, concern price realism, not reasonableness. GAO then explained that, in the context of a fixed-price acquisition, an agency’s ability to evaluate price realism depends on the terms of the solicitation: Generally, when a solicitation contemplates award of a fixed-price contract, an agency may conduct a price realism analysis for the limited purpose of assessing whether an offeror’s low price reflects a lack of technical understanding or risk, but it may do so only when it has advised offerors in the solicitation that such an analysis will be conducted. Absent a solicitation provision advising offerors that the agency intends to conduct a price realism analysis, agencies are neither required nor permitted to conduct such an analysis when awarding a fixed-price contract. While GAO didn’t discuss the policy rationale for this rule in the Unico Mechanical decision, it has previously written that below-cost prices are not “inherently improper” when offerors are competing for a fixed-price contract. Indeed, there sometimes may be a good reason to submit a below-cost bid, such as trying to get a “foot in the door” and build past performance with a particular agency or contracting office. Therefore, “firms must be given reasonable notice that a business decision to submit a low-priced quotation may be considered as reflecting on their understanding of the contract requirements or the risk associated with their approach.” In this case, GAO wrote, “Unico does not argue, nor does the record reflect, that the solicitation required or provided for a price realism analysis. Therefore, the agency “was neither required nor permitted to conduct such an analysis, and Unico’s arguments that the agency failed to consider whether the awardee’s price was too low fail to provide a valid basis of protest.” GAO dismissed this argument, and denied the remainder of Unico’s protest. It can be extraordinarily frustrating to lose a contract to a company whose low price may suggest that the awardee doesn’t fully understand the work, and that frustration can lead an unsuccessful offeror to consider a GAO bid protest. But when the solicitation is for a fixed-price contract, and doesn’t inform offerors that the agency will evaluate price realism, a protest argument that “the other guy’s price is too low” is likely to fail. Questions about this post? Or need help with a government contracting legal issue? 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 Here's Why "The Other Guy's Price Is Too Low" Often Fails As a GAO Bid Protest Argument first appeared on SmallGovCon - Government Contracts Law Blog. View the full article
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For SDVOSBs and VOSBs, June 16, 2016 was a monumental day. That morning, the U.S. Supreme Court issued its unanimous decision in Kingdomware Technologies, Inc. v. United States, holding that the VA must follow the law by putting “veterans first” in VA contracting. Koprince Law LLC was honored to submit an amicus brief to the Supreme Court supporting Kingdomware, and my colleagues and I were thrilled with the Court’s 8-0 decision. Click here to check out my post from June 16, 2016 proclaiming “Victory!” for SDVOSBs and VOSBs in this watershed case. The Kingdomware decision didn’t (and couldn’t) solve every problem that some SDVOSBs and VOSBs have had with VA’s contracting practices, but five years later there is no doubt in my mind that the Court’s decision has been the driving force behind a large increase in VA’s SDVOSB and VOSB contracting. Happy anniversary! The post Happy Anniversary, SDVOSBs: The Supreme Court’s Kingdomware Decision Was Five Years Ago Today first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Federal contracting rules and laws are complicated, and the rules aren’t always intuitive. Many contractors make legal mistakes routinely, involving everything from completing SAM profiles to calculating small business size to communicating with government contracting officers. Federal government contracts attorneys, Shane McCall & Annie Birney of Koprince McCall Pottroff, will discuss the top 21 most common legal mistakes that contractors make time and time again. You will learn what these common mistakes are and how to avoid them. Please join us for this free webinar hosted by our friends at The Catalyst Center for Business & Entrepreneurship. Please Register here. The post Webinar Event! Top 21 Legal Mistakes in Federal Government Contracting, April 9, 2025, 11:00-12:00pm CDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Size and status protests, which are reviewed by the SBA’s Office of Hearings and Appeals (OHA), are far less common than GAO protests which protest an evaluation aspect of a solicitation or award. But when they are used they can be a powerful tool to keep contracting dollars intended for small businesses to stay with small businesses. In the case of Winergy, LLC, OHA takes a look at an award intended for SDVOSBs, to determine if the awardee is in compliance with the ostensible subcontractor rule or if it is subcontracting out the primary and vital parts of the contract. The lesson? If you want to keep an award, be sure that you, or a similarly situated subcontractor, will be performing the primary and vital parts of the contract and that you can support that assertion with evidence. For those unfamiliar with the ostensible contractor rule, here is a quick rundown. An ostensible subcontractor is a subcontractor that is not a similarly situated entity that performs the “primary and vital” parts of the contract or an order or is a subcontractor that the prime contractor is unusually reliant upon. 13 C.F.R. 121.103(h)(3)(i). SBA will find that a prime contractor on a set-aside contract is not violating the rule when it can demonstrate that it and any of its similarly situated subcontractors will meet the limitations on subcontracting found at 13 C.F.R. 125.6. And how is compliance with the limitations on subcontracting determined? By looking at the contracting dollars received by the prime contractor from the government as compared to the dollars paid to non-similarly situated entities. Why is this important? Well, if a small business prime contractor is found to have an ostensible subcontractor, the prime and subcontractor are found to be affiliated, and their sizes will be combined for the contract at issue. This affiliation could lead to the small business exceeding its size for the procurement/contract. But size isn’t the only aspect that can be affected by the ostensible subcontractor rule. As Winergy, LLC, SBA No. VSBC-424-P, 2025 (Feb. 11, 2025) shows, it is not the size that is being challenged, it is the awardee’s status as an SDVOSB. The solicitation at issue was set aside for SDVOSBs under NAICS code 541690 and a size standard of $19 million. The contractor was to provide “all parts labor, transportation, parts, equipment, supervision, and expertise to perform on-site bi-annual inspections and certifications of Government-Owned Fume Hoods, Ventilation Devices, Biological Safety Cabinets (BSC), Laminar Flow Devices, Isolators, Biosafety Hazard Hoods, Sterile Workbenches, Radiation Safety Hoods, Buffer, Ante spaces, and Pharmacy Clean Rooms.” One of the terms of the solicitation required the contractor personnel, performing the certification services, to be “fully accredited and certified to conduct tests, evaluations and certifications of the equipment.” This required contractor personnel to “have validated Certificate of Accreditation from National Sanitation Foundation (NSF) International: Biohazard Cabinet Field Certifier Accreditation Program.” Awardee, Atlantic First Industries Corporation’s (AFIC) proposal stated that it “is a compliance and facility inspection services company that specializes in healthcare, commercial, and manufacturing projects.” The proposal did not make mention of use of planned subcontractors and throughout the proposal there was language stating that “our technicians” would be performing the work. The proposal stated that it would include a “team of four highly trained technicians [who] are accredited by NSF” and that these technicians “collectively possess over 55 years of experience in delivering testing and certification services, ensuring we can provide the prompt and professional service required by the [VA] Greater Los Angeles Healthcare System.” Additionally, “[w]ith six technicians located within a 50-mile radius, we can respond to emergencies within 48 hours’ notice.” According to the proposal, AFIC “maintain[s] an extensive network of distributors for prompt access to replacement parts.” Finally, the proposal included copies of its technicians’ certifications from NSF. On those, all three technicians are identified as employees of Controlled Environment Management, LLC (CEM), a subsidiary of Technical Safety Services LLC (TSS). Protester filed a protest challenging AFIC’s service-disabled veteran owned small business status three days after the award to AFIC. The protest was based on the solicitation’s requirement that the contractor utilize NSF-certified technicians, but AFIC was not listed in the NSF certification system nor does it have any NSF-certified employees. If true, that would mean that AFIC would have to subcontract out the work that protester claims is the primary and vital requirements of the contract. And, because AFIC was located in New York, while this work would be performed in California, protester pointed out that any overseeing by AFIC would happen from across the country. This would, in turn, make NSF unduly reliant on subcontractors. Further, the likely subcontractor, TSS, was not an SDVOSB. AFIC, in its response, claimed the protester was abusing the protest process by filing “frivolous and unfounded protests” against AFIC. AFIC believed that the protester essentially had it out for them, as it had filed three unsuccessful bid protests against AFIC and a SDVOSB status protest that was dismissed as untimely. About a month later, OHA issued an Order requesting AFIC to respond to the claim that TSS was its ostensible subcontractor. More specifically, AFIC was required to address whether it would self-perform the primary and vital aspects of the procurement, because the proposal indicated that the certified personnel that would be performing the inspections were employees of TSS or its subsidiary, not AFIC. As noted by OHA, AFIC did not respond to the merits of the protest, but rather focused on protester’s previous protests against AFIC in its initial response. AFIC then addressed the claims and provided payments that AFIC had made, or would make, to TSS for this procurement and nine other procurements. AFIC was sure to point out that its payments to TSS would not exceed 50% of the total contract dollar value. Why 50%? Well, that just so happens to be the limitation on subcontracting relevant for the work to be provided via the contract. AFIC asserted that it was not in violation of the ostensible subcontractor rule because it meets the standard in 13 C.F.R. § 128.401(g)(2). That states: In the case of a contract or order for services, specialty trade construction or supplies, SBA will find that a prime VOSB or SDVOSB contractor is performing the primary and vital requirements of the contract or order, and is not unduly reliant on one or more subcontractors that are not certified VOSBs or SDVOSBs, where the prime contractor can demonstrate that it, together with any subcontractors that are certified VOSBs or SDVOSBs, will meet the limitations on subcontracting provisions set forth in § 125.6 of this chapter. However, OHA found that the record did not show that AFIC had demonstrated that it would comply with the limitations on subcontracting. AFIC didn’t identify tasks that it would self-perform, nor did it identify any of its own employees that would be involved in contract performance. Although AFIC claimed that it intended to pay TSS less than 50% of the contract price, there were no sworn statements, subcontracts, or other information that supported that claim. In the end, OHA determined that AFIC failed to meet the burden of proof. And without additional documentation and support, AFIC was unable to show that it was performing the primary and vital parts of the contract in contravention of the ostensible subcontractor rule. So, what are the important takeaways here? Small businesses must ensure that they, or a similarly situated subcontractor, will be performing the primary and vital parts of a contract, and must be able to support that assertion with evidence. Here, the subcontractor was not an SDVOSB, but it would be performing the primary and vital parts of the contract, while the prime contractor/SDVOSB oversaw the performance from across the country. Had AFIC been located in closer proximity to the worksite, or had TSS been an SDVOSB, the outcome may have been different. Questions about this post? Email us . Need legal assistance 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 OHA Says: Show me the Money! (in Ostensible Subcontracting Review) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Spring! It’s been a long, cold winter here in the Midwest. But we are starting to see many signs of spring this week. I just got back from a spring break trip to Gulf Shores and Fort Morgan, Alabama and this picture was taken on the beach there. It was a great time to recharge the batteries so I could get back to staying up to date on federal contracting news. This week in federal government contracting news saw stories including consolidating a number of multiple award contracts under GSA and cutting spending at both DoD and SBA. Trump executive order consolidates federal IT contracting under GSA DOD to Cut $580 Million in Spending Draft EO would make GSA the center of most common buys DOD Contracting: Opportunities Exist to Improve Pilot Program for Employee-Owned Businesses Whitehouse Statement: Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement Small Business Administration Announces Agency-Wide Reorganization White House rescinds federal contractor minimum wage Trump administration removes ban on ‘segregated facilities’ in federal contract Government contracting for space companies: the new (old) frontier VA cuts support work for new EHR, after canceling hundreds of contracts OPM looks to limit federal unions’ role in coming RIFs SBA Sets Dates for Free National Small Business Week Virtual Summit GSA sets May deadline for more staff cuts through layoffs and incentives Pentagon is cutting up to 60,000 civilian jobs. About a third of those took voluntary resignations VA secretary defends dismissal of veterans from government jobs in WTOP interview Officials shed light on ‘active process’ to shrink DOD’s workforce by more than 50,000 personnel The post SmallGovCon Week in Review: March 17-21, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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The duty of good faith and fair dealing in contract law is, admittedly, a bit poorly named. It does not require that a party act in bad faith to breach it. You do not need to act nefariously to run afoul of it. But then the question arises: What is it? How does one breach it? This was (among other things) a question explored in a recent Court of Federal Claims decision regarding an Small Business Innovative Research (SBIR) contract. We will look at that decision’s review of the duty of good faith and fair dealing here in a 2-part series. Read more: A Look at the Duty of Good Faith and Fair Dealing (Part 1) In Sunrez Corp. v. United States, No. 21-568, 2025 WL 731834 (Fed. Cl. Mar. 7, 2025), Sunrez Corporation (Sunrez) was a company that had regularly had SBIR contracts with the federal government. It received another such contract from the USAF in 2014 to develop composite pallets for cargo deployment. At the same time, the USAF issued a similar contract to the University of Dayton regarding a separate pallet. The USAF approve of the university’s pallet, but did not move forward with Sunrez’s pallets as its pallets did not pass initial testing. Further, the USAF determined Sunrez’s technical data package (TDP) didn’t comply with contract requirements. Under the contract, the USAF obtained data rights to all technical data generated and included in a TDP, with the exception of previously developed technology. There the government only gets limited rights (provided the contractor properly discloses and marks the same). Apparently, at some point, the USAF determined that it was seeking data that went beyond its rights, but still needed Sunrez’s TDP before it could award a higher level contract like Sunrez wanted. A dispute arose, and this was resolved by a clause granting the USAF only limited rights in the data to placate Sunrez’s concerns. All the same, the USAF, upon receiving the TDP, determined it did not accurately reflect the final product or include information on the pallet’s core, as it was lacking detail. Sunrez then submitted a claim to USAF, seeking $132 million under the Contract Disputes Act. Part of Sunrez’s reasoning for this was its claim that the USAF “engaged in numerous breaches designed to hinder Sunrez’s performance of the Contract and impermissibly retaliate against Sunrez for refusing to give up its rights.” In other words, a claim of breach of the duty of good faith and fair dealing. Sunrez’s claim was essentially that the USAF breached the duty of good faith and fair dealing in requiring the TDP, its lack of testing of the pallets, its decision not to move forward with Sunrez for a next level SBIR contract, and its lack of communications with Sunrez. Due to the length of the decision and to help keep things clearer, we don’t note the background of these claims now, but will go over them for each claim below. COFC Overview In its analysis, the court first noted the basic principles of the duty of good faith and fair dealing. The duty of good faith and fair dealing is implied in every contract on each party to the contract. It is inherent to the contract. The duty can also be described as a duty not to hinder and a duty to cooperate. Under the same, parties are required not to interfere with another party’s rights under the contract. A party fails to abide by this duty when it interferes and acts so as to destroy the other party’s reasonable expectations regarding the benefits of the contract. An example of such a breach is when the government awards a contract with some substantial benefit to entice a contractor, only to then eliminate that benefit after awarding the contract. The idea is that a breach involves actions that go against the spirit of the contract. Things like lack of diligence, willfully providing imperfect performance, not reasonably cooperating with another party’s reasonable requests under the contract. Technically, the contract may not speak to such actions, but when one looks at the facts, it becomes apparent what’s going on. A breach of the duty of good faith and fair dealing doesn’t need to involve a breach of the express provisions of the contract. In essence, the principle can be summed up as follows: When considering the facts, did the alleged breaching party act in a manner that basically undermined the contract in some way? The TDP The first question was the TDP. Sunrez argued that USAF undermined Sunrez’s data rights by requiring delivery of the TDP. Sunrez argued that the level of detail in the TDP that the USAF wanted would essentially undermine its data rights by having to give over too much information. It based this on a policy directive regarding the SBIR program. The court rejected this argument as, while a breach of the duty of good faith and fair dealing need not involve a breach of a provision of the contract, the breach has to involve undermining some actual right under the contract. The contract required the delivery of a level III TDP if Sunrez wanted a next level award. The fact some outside evidence on SBIR policy exists was not relevant to this consideration since the contract was clear and unambiguous. Testing of Pallets Sunrez’s second argument on the duty of good faith and fair dealing was that the USAF breached this duty by not testing Sunrez’s prototype pallets. Essentially, because Sunrez had not provided the TDP, the USAF refused to submit the pallet designs for airworthiness certification and to move to Phase III of the SBIR. The court again disagreed with Sunrez’s claim. Here, there was nothing in the contract that promised such testing would occur. The government never had to perform testing under the contract, in fact the only obligation was on Sunrez to provide pallets that would meet the testing requirements if it was tested. Furthermore, the government did in fact conduct testing, and the pallet prototype failed the test. Summary There are more matters to go over with this case as it touched on many issues, to say nothing of the fact there are still good faith and fair dealing issues to go over. We will go over those in a subsequent post, but, for now, here’s some observations: Sunrez’s main issue here was that the contract clearly required that they provide the level III TDP despite their protestations. The government insisting that Sunrez fulfill its express obligations under the contract is not going to be a strong argument that the government is breaching the duty of good faith and fair dealing. If anything, the government arguably could have argued that it was Sunrez that was breaching the duty of good faith and fair dealing by not providing a properly detailed TDP in an attempt to protect its data rights. We will go into further detail on our thoughts on this case and the duty of good faith and fair dealing in our next post on this decision. Questions about this post? Email us . Need legal assistance 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 A Look at the Duty of Good Faith and Fair Dealing (Part 1) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday. Hope everyone had a great week. We wanted to share an announcement this week that WIFCON.com is back. Posted from the website: “Wifcon.com was created by Robert (Bob) Antonio 26 years ago. Operated and maintained solely by him and at his own expense, the website has provided a free, reliable, and invaluable source of information and means of communication and commentary to the acquisition community, both public and private for 26 years. Sadly, Bob died on November 24, 2024, after a brief illness, leaving no operational successor.” Now, “a small group of volunteers, has purchased the site from his heirs and will continue to provide the same free service under the same name, Wifcon.com.” We truly appreciated Bob’s commitment to the GovCon community. He created a great resource for us here at SmallGovCon and provided very helpful information that we used weekly in our Week in Review blogs. Thank you, Bob, for your dedicated service, and for the new operators of this very helpful site. Please visit the website at WIFCON.com. And now this week in federal government contracting news, check out stories about new changes to contracting at various agencies including possibly having GSA do more of the contracting for other agencies, as well as changes to DoD workforce and regulations. GSA considers takeover of contracting work at other agencies amid reorganization Contractors spend the week getting ready for a government shutdown DHS brings back one of its federal advisory committees White House nominates top leaders for CISA, other DHS components House passes bill to fund federal agencies through September, though prospects unclear in Senate Better data, not a review, new systems will fix acquisition Confusion, fear as changes whipsaw Defense workforce Military Readiness: Implementing GAO’s Recommendations Can Help DOD Address Persistent Challenges Across Air, Sea, Ground, and Space Domains DoD no longer requires Equal Employment Opportunity clauses in contracts How 2016 NDAA transformed OTAs into key defense contracting tool Federal News Network Letter to the editor: 46 former GSA executives say cuts to cause ‘irreversible damage’ The post SmallGovCon Week in Review: March 10-14, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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When contractors think of protests or litigation related to federal contracting, likely their thoughts go to a bid protest or a size protest. Additionally, when thinking of protesting prior to bids being due, the focus generally is on the wording and provisions of a solicitation. However, contractors should not forget how powerful a tool a NAICS code appeal could be for small business procurements. A recent brief decision in a NAICS code appeal serves as reminder of how useful a simple NAICS code appeal can be for contractors. In order to discuss the recent SBA OHA decision, a quick refresher on NAICS and NAICS code appeals is needed (for a more in depth discussion of NAICS code appeals, check out the NAICS Code Appeal entry in our Why File series). A NAICS code is a six-digit code that is assigned to various categories of industries under the North American Industry Classification System (hence, NAICS), a standard used in classifying business establishments. The SBA assigns a different size standard to each NAICS code based on dollar number of receipts or number of employees. SBA publishes and regularly updates a table of all the size standards assigned to NAICS codes. Agencies must assign a NAICS code to a procurement based on the type of work involved and to establish the business size limit for the contract (if set-aside for small business or a small business certification). Contractors can file a NAICS code appeal with SBA’s Office of Hearings and Appeals (OHA) within 10 days of a solicitation being posted (or an amendment to a solicitation affecting the NAICS code). These can be filed for a multitude of reasons, but generally, a NAICS code appeal is filed because the NAICS assigned to a solicitation simply does not make sense with the work called for in the solicitation. There are also strategic concepts behind NAICS appeals which would advantage a contractor, such as restricting the pool of offerors, or shifting the NAICS to one which a contractor can bid under as small (reminder, check out our entry on NAICS Code Appeals in the Why File series) NAICS code appeals are quite rare, but historically, NAICS code appeals can be relatively successful compared to other federal contracting protests or litigation. GAO stated in 2017 that “in calendar years 2014–2016, OHA dismissed 35, denied 15, and granted 12.” This means a good amount were straight out successes for the appealing contractor during that time, and as you will see below, not all dismissals truly mean the appellant didn’t get the desired outcome. In the recent NAICS code appeal of CueBid Technologies, SBA No. NAICS-6339, 2025 WL 754045 (March 5, 2025), contractors are reminded of just how swift and powerful a NAICS code appeal can be. The subject solicitation involved “hauling and transportation services, forklift/crane operations, fuel, and labor to move containerized and non-containerized military equipment within Fort Cavazos.” It was set aside for SDVOSBs and included NAICS code 532490 (Other Commercial and Industrial Machinery and Equipment Rental and Leasing) which had a size standard of $40 million. CueBid Technologies in its appeal argued that NAICS code 484110 (General Freight Trucking, Local) with its $30 million size standard, would be a better fit. Now, most contractors would expect a drawn out briefing process and litigation as the next step. However, the agency went ahead and changed the Solicitation’s NAICS to the one argued by CueBid Technologies. Thus, SBA OHA dismissed the appeal before it was completed, since it made the appeal moot (i.e., irrelevant). This highlights just how effective a good NAICS code appeal can be. While the SBA filing resulted in a dismissal, it is a successful dismissal from the contractor’s perspective because the agency took the action sought by the appellant contractor. Reading between the lines of this brief decision from SBA OHA, there are some great takeaways and reminders. It appears that a well formed, logical NAICS code appeal can still result in a “victory” for the contractor. Here, the agency acted before the end of the appeal to adjust the NAICS code. Presumably, the appeal filed by CueBid exhibited how its suggested NAICS code better fit the work under the Solicitation. The agency, rather than going through lengthy briefings and legal battles, simply took action after realizing CueBid’s strong position. This appeal led to an efficient, quick, and logical conclusion. This shows that a NAICS code appeal can be quite an effective tool for contractors, and efficient for the government as well. While rare, NAICS code appeals are still a powerful tool in a federal government contractor’s toolbox. If you find yourself looking at a newly posted solicitation and feel puzzled about the assigned NAICS, do not hesitate to consider a NAICS code appeal. While rare, these are often quite powerful tools for contractors, leading to effective and efficient conclusions. Of course, each case is unique and there are legal nuances to any NAICS code appeal. So, be sure to reach out to a federal contracting attorney, such as ourselves, if you feel a NAICS code appeal may be needed. 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 NAICS Code Appeal Still a Powerful Tool first appeared on SmallGovCon - Government Contracts Law Blog.View the full article