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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 -
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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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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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
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When an SBA approved mentor and protégé create a joint venture to pursue contracts set-aside for small businesses, SBA requires the mentor-protégé joint venture agreement to contain the requirements found in 13 C.F.R. § 125.8(b)(2). But how closely does the joint venture agreement have to match the language of these required provisions in order to be found complaint? In DecisionPoint-Agile Defense JV, LLC, OHA considered whether the language in a joint venture’s operating agreement (OA) can be considered alongside the joint venture agreement (JVA) when determining if a JVA meets all the regulatory requirements. Background GSA issued a Small Business Pool Request for Proposals (RFP) for IT services and posted a pre-award notification of successful offerors. DecisionPoint-Agile Defense JV, LLC (Appellant) was one of the successful offerors. Appellant was a joint venture owned 51% by a small business and 49% by an other than small business. The two businesses were in a mentor-protégé relationship. The contracting officer filed a size protest, arguing Appellant’s JVA did not comply with the provisions required by 13 C.F.R. § 125.8(b)(2). The Area Office issued a size determination finding Appellant other than small because the JVA did not contain several of the regulatory provisions required by SBA. Even though several of the missing provisions were stated in the OA, the Area Office claimed the language of the regulation requires the JVA to contain the provisions. Appellant appealed the size determination, arguing that the Area Office erred in limiting its analysis to just the JVA and refusing to include the OA in its consideration. Discussion OHA agreed with Appellant, finding the Area Office erred in failing to consider Appellant’s OA when determining whether Appellant met the JVA regulatory requirements. OHA noted that it has “consistently considered a concern’s operating agreements together with its joint venture agreement in judging a concern’s compliance.” Further, OHA stated that whether an operating agreement is explicitly incorporated into the joint venture agreement is irrelevant. The only requirement is that the documents were executed prior to the date on which the size of the joint venture was determined. With this consideration in mind, OHA reviewed Appellant’s JVA and OA together to determine whether the regulatory requirements were satisfied. Managing Venturer and Responsible Manager Designating a small business as the managing venturer of the joint venture, and designating a named employee of the small business managing venturer as the manager with ultimate responsibility for performance of the contract (the “Responsible Manager”). See 13 C.F.R. § 125.8(b)(2)(ii). The Area Office argued that Appellant’s JVA failed to clearly designate that the manager would have ultimate responsibility for contract performance. As the small business, DPC was designated as Managing Venturer and the JVA stated that DPC’s CEO would be the Managing Director responsible for supervising the employees. Even though the JVA clearly designated someone to supervise the employees, the Area Office claimed this did not indicate ultimate responsibility over contract performance. OHA concluded that the regulation never explicitly requires the JVA contain the exact language used in the regulation. OHA said “the regulation does not mandate particular language” and “SBA has stated that no specific format is required for a joint venture agreement.” The JVA had clearly designated DPC’s CEO as the Managing Director and provided a description of his duties. Additionally, the CEO’s responsibility in matters related to contract performance was provided in the OA. Thus, the small business was designated as the Managing Venturer and an employee was designated as the Responsible Manager with ultimate responsibility over contract performance. Major Equipment, Facilities, and Other Resources Itemizing all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value of each, where practical. If a contract is indefinite in nature, such as an indefinite quantity contract or a multiple award contract where the level of effort or scope of work is not known, the joint venture must provide a general description of the anticipated major equipment, facilities, and other resources to be furnished by each party to the joint venture, without a detailed schedule of cost or value of each, or in the alternative, specify how the parties to the joint venture will furnish such resources to the joint venture once a definite scope of work is made publicly available. See 13 C.F.R. § 125.8(b)(2)(vi). The JVA only stated that the Venturers would contribute property and share responsibility. For an indefinite quantity contract, the regulation only requires a general description of the anticipated major equipment, facilities, and other resources. Even though this was an IDIQ contract, the Area Office concluded that the JVA did not provide a general description. The OA, however, did contain a description of resources that would be furnished by each Venturer, noting, The Managing Venturer was to contribute $5,100 for registration fees, legal services and other expenses, and other resources by mutual agreement, included to support specific task orders. The Partner Venturer will contribute $4,900 for registration fees, legal services and other expenses. Also $15,000 for website development and maintenance, $5,000 per annum for office supplies, and $5,000 for marketing and public relations support. Therefore, Appellant met the requirement by providing a general description of the resources in the OA. Ensured Contract Performance Obligating all parties to the joint venture to ensure performance of a contract set aside or reserved for small business and to complete performance despite the withdrawal of any member. See 13 C.F.R. § 125.8(b)(2)(viii). Appellant’s JVA provided, “all parties to the Joint Venture are required to complete contract performance.” The Area Office argued this did not include the language “despite the withdrawal of any member.” Appellant’s OA did include this language, stating, “[a]ll parties to the Joint Venture are obligated to complete contract performance despite the withdrawal of any party to the Joint Venture.” OHA found that the provision in the JVA alone satisfied the obligation, noting that the language presented “a flat, absolute requirement with no exceptions.” Further, the OA contained the exact regulatory language the Area Office wanted. Additionally, there were regulatory provisions that were not included in Appellant’s JVA but were explicitly stated in the Operating Agreement, including Original Records and Performance of Work Statements. OHA found Appellant compliant because they were included in the Operating Agreement. Key Takeaways This case provides some comfort in OHA’s flexibility, and knowing that OHA doesn’t require joint ventures agreements to follow the regulation language verbatim, at least in some cases. But this case also serves as a lesson that it might be the better choice to simply include the regulatory language in your joint venture agreement anyway. Here, the Appellant faced an adverse size determination because the required regulations were in the OA and not explicitly stated in the JVA. An easy fix to avoid this would be starting with the language used in the regulation and then adding in the specifics. For example, clearly designate the Responsible Manager “as the manager with ultimate responsibility for performance of the contract.” Then feel free to list the specific areas the Responsible Manager will oversee, “this includes reviewing documents, supervising employees, payroll, etc…” 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 Spell it Out for Me: OHA Finds Joint Venture Agreement Compliant When Reviewed with Operating Agreement first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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For companies trying to break into the government market for the first time, past performance can seem a bit like the old chicken-and-egg conundrum. Sometimes it can appear like a company can’t win a government contract without a strong record of past performance–but can’t build a past performance record without contracts! And with the government’s continued movement away from lowest-price, technically acceptable evaluations, past performance seems increasingly important. But that doesn’t mean the government always has to consider past performance as an evaluation factor. Instead, as a recent GAO bid protest decision confirms, procuring agencies have broad discretion to omit past performance in appropriate cases. GAO’s decision in Pathfinder Consultants, LLC, B-419509 (Mar. 15, 2021) involved a VA Request for Proposals seeking a contractor to provide communications strategies and support services. The RFP was issued as a commercial item acquisition under the procedures set forth in FAR Parts 12 and 15. The RFP stated that award would be made on a best-value tradeoff basis, considering just two factors: technical merit and price. A potential bidder, Pathfinder Consultants, LLC, filed a pre-award bid protest with GAO, challenging the terms of the solicitation. Among its arguments, Pathfinder contended that it was unreasonable for the VA to decline to include past performance as an evaluation factor. The GAO explained that, as a general matter, “[t]he determination of a contracting agency’s needs and the best method of accommodating them are matters primarily within the agency’s discretion.” Further, FAR 15.304(c)(3)(iii) provides that “[p]ast performance need not be evaluated if the contracting officer documents the reason past performance is not an appropriate evaluation factor for the acquisition.” In this case, GAO held, the VA–acting within its considerable discretion–had properly documented the reasons why it was unnecessary to consider past performance: Here, the VA documented its determination and adequately explained why it concluded that evaluating past performance was not appropriate for this solicitation. When drafting the solicitation, the VA noted that the types of communication services to be acquired were not particularly complex or difficult, and that therefore only assessing each offeror’s proposed technical approach would provide sufficient indication as to the likelihood of successful performance. Further, the VA explained that reviewing past performance information for communication services that are generally performed favorably was unnecessary and would not yield significant date for evaluative purposes. The protester has provided no basis for us to question the agency’s conclusion. GAO denied Pathfinder’s protest. As we’ve discussed on this blog, new entrants to the federal marketplace have options when it comes to past performance–like, in some cases, submitting past performance acquired as a member of a joint venture, or submitting the past performance of a subcontractor. But another strategy is to look for solicitations without past performance as an evaluation factor. As the Pathfinder Consultants case demonstrates, they’re out there, even in some services NAICS codes. 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 Past Performance Isn’t Always a Required Evaluation Factor, Says GAO first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Hello, blog readers and happy Friday. Can you believe it’s already March? In just a few short weeks, spring will (finally) be here! Hooray! With all the snow we had, we are definitely looking forward to warmer temperatures and to getting outside more. We hope that you’re gearing up for a nice weekend. But before you do, let’s take a look at the-week that was. In this edition of the Week in Review, articles discussed the continued reshuffling and closing of government agencies and offices and the importance of GSA. Whitehouse: Addressing Risks from Perkins Coie LLP 18F shutters, leaving agencies without a key partner in digital transformation; GSA tells agencies to terminate contracts with top-10 consulting firms The Big Government Contracts DOGE Hasn’t Touched As DOGE lease terminations hit Indian Country, concerns mount about vital services GSA lists agency headquarters among 440 ‘non-core’ assets for possible disposal Once again, GSA finds itself in the center of a hubbub What nearly a billion in canceled federal contracts could mean for education National Science Foundation rehires half of employees fired two weeks ago OPM tells agencies it’s not directing probationary firings Defense Pricing, Contracting, and Acquisition Policy Office Issued Class Deviation 2025-O0003 The post SmallGovCon Week in Review: March 3-7, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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A recent bid protest decision examines the effect of a novation on a pending procurement. After a complicated procedural history, GAO said that an agency must take into account a corporate transaction and novation, even if the agency wasn’t aware of the novation at time of proposal submission. In DecisionPoint Corporation- f/k/a Emesec Inc., B-422245.5 (2024), the Air Force sought cyber protection and engineering support under the GSA VETS II contract. The solicitation required proof of a level III Capability Maturity Model Integration (CMMI) certification for the “prime contractor providing the CPT support services.” DecisionPoint Corporation, known at the time of proposal submission as EmeSec Inc. (EmeSec), submitted a proposal on May 1, 2023 under the name EmeSec. EmeSec submitted its proposal saying that it was a subsidiary of DecisionPoint. Because EmeSec did not have its own CMMI certification, it included “DecisionPoint’s level III CMMI certificate, along with a meaningful relationship commitment letter (MRCL).” Before proposal submission, EmeSec merged into DecisionPoint. Then, after the proposal submission date, but before award, on June 26, 2023, “DecisionPoint entered into a novation agreement with GSA that recognized DecisionPoint as EmeSec’s successor in interest.” In December 2023, EmeSec received award, and only then did it reveal the novation agreement to the Air Force. As part of an earlier protest, GAO explained that “that the MRCL did not clearly describe how the resources of the parent would be available for performance.” As a result, the Air Force took corrective action and contacted the “entity that issues the CMMI certificates–i.e., the Information Systems Audit and Control Association (ISACA)–for information regarding how ISACA issues its certificates.” After reviewing this information and seeking clarity from DecisionPoint, the Air Force found DecisionPoint ineligible “because it failed to submit proof of any level III CMMI certification for the prime contractor providing the CPT support services as required by the solicitation.” DecisionPoint protested. DecisionPoint argued that “that the Air Force’s decision that DecisionPoint was ineligible for award because it failed to include proof of any level III CMMI certification for the prime contractor providing the CPT support services was unreasonable because the Air Force ignored EmeSec’s merger into DecisionPoint and the novation of the VETS II contract from EmeSec to DecisionPoint” prior to the proposal submission date. The agency responded that, at proposal submission, EmeSec was the prime contractor and it did not have the required CMMI certification–only the parent DecisionPoint had the certification. GAO held that “that the agency’s determination that DecisionPoint’s proposal was ineligible for award because it failed to include proof of any level III CMMI certification for the prime contractor providing the CPT support services is not consistent with the terms of the solicitation or supported by the record.” Furthermore, “as a result of the merger between DecisionPoint and EmeSec, which was effective January 1, 2023, the prime contractor is now DecisionPoint.” “While the agency did not know that DecisionPoint was the prime contractor at the time of its initial evaluation, the agency was aware of this fact when it conducted its post-corrective action evaluation.” GAO said that the agency did not properly account for the effect of the merger. This means that “the record shows that at the time the agency conducted its post-corrective action evaluation, the prime contractor (DecisionPoint) included proof of its level III CMMI certificate in its proposal as required by the solicitation” This decision is interesting for a couple reasons. First, it may encourage protesters to take another shot at protesting. While the initial decision found in favor of one protester, the later protest basically found in favor of the opposite protester. Second, on the substance, while it is always better to have a thorough explanation to provide an agency when it comes to things like mergers and corporate structure, the protest process may allow a chance to have an independent reviewer take a look at the agency’s decision and question it. And that may be enough for the protester to get another shot at the award. The decision seems to recognize that a novation is retroactive back in time to the point of the corporate transaction, even if it’s approved later. And agencies also must recognize the substance of the corporate transaction that precipitates a novation. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Agency Must Recognize Novation as Part of Pending Offer first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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The National Center for American Indian Enterprise Development (NCAIED) is going Beyond Boundaries for the 2025 Reservation Economic Summit. The event features tribal leaders, members of Congress, federal agency representatives, state and local officials, and top CEOs on a national platform. Our very own federal government contracts attorney and SmallGovCon contributor, Nicole Pottroff, is scheduled to be a panelist on the topic of Building and Maintaining a Compliant Company, at this year’s conference in Las Vegas on Monday, March 10. This panel will discuss ways organizations can identify compliance issues across business units, while standardizing and improving processes. If you are planning on attending this conference, please stop by and say hello to Nicole. Please use this link for more information about the conference and registration. The post Res 2025: Beyond Boundaries Conference, Las Vegas, Nevada, March 10-13, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! Tomorrow is the first day of March and you know what that means if you are a college basketball fan. March Madness! Start thinking about your bracket strategy and let the games begin! Have a great weekend. This week in federal government contracting saw GSA deviations to procurement policies, canceled contracts, and a new SBA administrator. GSA Announces ‘Deviations’ in Procurement Policies Presidential Memo Calls for More Disclosure on Canceled Spending Changes to GSA Federal Acquisition & Procurement Practices on Hold White House Seeks to Promote Foreign Investment While Protecting Nat’l Security SBA Administrator Loeffler Issues Memo on Day One Priorities EPA moves to seize $20B in clean energy grants, including $1.5B for Native communities Legion, SBA team up to assist current, prospective veteran small business owners Nearly 40% of contracts canceled by Musk’s DOGE are expected to produce no savings A vague Pentagon memo has some contractors on edge OPM procurement processing fully halted following agency layoffs, internal email says GAO High-Risk Series: Heightened Attention Could Save Billions More and Improve Government Efficiency and Effectiveness Oversight of EPA and DOE Spending: Implementing Remaining GAO Recommendations Could Help Address Identified Challenges The post SmallGovCon Week in Review: February 24-28, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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One of the rules we get asked about the most as government contracts attorneys is what’s known as the nonmanufacturer rule, 13 C.F.R. § 121.406 (So much so that we felt it wise to go over the rule in one of our “Back to Basics” posts to help clear some things up). It’s pretty understandable why: It has numerous provisions, exceptions, and requirements that can make it pretty difficult to follow. It also shows up in two different regulations: 13 C.F.R. § 121.406 as mentioned above, as well as FAR 19.505. Unfortunately, this often leads to contractors getting tripped up by the rule, either not realizing it applies where it does or, as we’ll explore here, thinking it applies where it doesn’t. Recently, SBA addressed a size protest that asserted the awardee didn’t meet the requirements of the nonmanufacturer rule, and noted to the unfortunate protestor that the rule didn’t apply for the procurement anyways. Read more: Confusion About the Nonmanufacturer Rule: When Does it Apply? In Mission Analytics, LLC, SBA No. SIZ-6325, 2024 (Dec. 12, 2024), the protester filed a size protest on an award of a contract to upgrade camera systems for the Air Force. This procurement was issued under NAICS code 561621, Security Systems Services (Except Locksmiths). The protester asserted that the awardee was not a manufacturer of the products the procurement sought and thus had to meet the nonmanufacturer rule to be eligible for award. In particular, the protester asserted that FAR 19.505(a)(2) applies the nonmanufacturer rule to all awards under FAR Subpart 19.14. The protest was dismissed by the SBA area office (and we’ll get to why in just a moment here). Raising the same issues in the size appeal, the protester again asserted that the nonmanufacturer rule applied to the procurement. However, the protester was mistaken. SBA pointed out that the procurement was issued under a services NAICS code. 13 C.F.R. § 121.406(b)(3) states: “The nonmanufacturer rule applies only to procurements that have been assigned a manufacturing or supply NAICS code, or the Information Technology Value Added Resellers (ITVAR) exception to NAICS code 541519.” In other words, the nonmanufacturer rule wasn’t applicable here because this was a services contract. This was why the area office had dismissed the protest in the first place. We aren’t going to stop here, though. It’s worth exploring further what the protester argued in this case. The protester was aware of 13 C.F.R. § 121.406(b)(3). However, the protester argued that this regulation was overruled by FAR 19.505(a)(2). To be sure, that part of FAR 19.505 does give the impression that the nonmanufacturer rule applies to all awards under FAR subpart 19.14. The protester then asserted that this was a problem recognized by the government in revisions made to the FAR back in 2021. However, the protester made a few mistakes here. First, those revisions were to the limitations on subcontracting, not the nonmanufacturer rule. These rules are similar in some respects, so let’s make some clarification here. One question the nonmanufacturer rule in 13 C.F.R. § 121.406 asks is, who is the actual manufacturer of the end item? When it comes to determining whether a company is the manufacturer, one factor that is considered under the rule is how much value the company adds to the end product in question as compared to the total value of that product. The limitations on subcontracting also require a calculation of value, but not in the same way as the nonmanufacturer rule. Instead, the limitations on subcontracting limit how much a contractor for a set-aside can pay out to its subcontractors. For example, under 13 C.F.R. § 125.6 for a set-aside services contract, the contractor cannot pay more than 50% of the contract value to subcontractors (that aren’t similarly situated). We go over the limitations on subcontracting in more detail here. The protester also made another error. FAR 19.505 clearly states that the nonmanufacturer rule doesn’t apply to services contracts, just like 13 C.F.R. § 121.406: “Any concern, including a supplier, that is awarded a contract or order subject to the nonmanufacturer rule, other than a construction or service acquisition…is required to…” FAR 19.505(c)(1). As such, the area office’s decision to dismiss was correct, and SBA concluded accordingly. With all this said, we admit some sympathy for the protester in this one. FAR 19.505(c)(1) could really use some better wording, it lacks clarity. It also really doesn’t help that there’s so many different regulations that essentially include the entire nonmanufacturer rule instead of simply having one regulation with the rule and referencing that regulation where needed. SBA was correct in its decision, to be sure. After all, it doesn’t make sense to have a rule about what must be done if a company isn’t a manufacturer of the desired product when the contract is for services. But all the same, we think this case could serve as some impetus to further clean up the FAR and SBA regulations to make things clearer for everyone. 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 here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Confusion About the Nonmanufacturer Rule: When Does it Apply? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Joint ventures pursuing a contract under any of the SBA’s socioeconomic programs (Woman-Owned Small Business Program, Service-Disabled Veteran-Owned Small Business Program, 8(a) Program, and HUBZone) all have requirements beyond the general requirements that a non-joint venture prime contractor must meet to be eligible for those types of set-asides. The joint venture must be considered small, which may take into account the size of both venturers, and the joint venture agreement itself must contain specific information. But what happens when the regulatory text isn’t exactly clear on how those two requirements fit together? And how are unsuccessful offerors, contracting officers, and the SBA itself supposed to challenge the status of those joint ventures if the regulatory text doesn’t explicitly provide for the means to do so? Read ahead to see how the decision in Chenega Base and Logistics Services, LLC to find out! In August 2024, the Army awarded DPG Services JV LLP a contract for facilities support services. The joint venture consisted of an 8(a) Program participant and a small business. Size Protest Following award, Chenega Base and Logistics Services (Chenega) protested the size of DPG. In September 2024, the SBA Area Office found that DPG was a small business for procurement. Notably, the joint venturers were found to be affiliated because the joint venture was awarded its first contract more than two years prior to proposal submission. The joint venture’s first award was in February 2019, and it submitted its final offer including price for the procurement at issue, in July 2023. This meant that the joint venture far exceeded the time limit allowed under the two-year rule at 13 C.F.R. § 121.103(h). This states, “a specific joint venture generally may not be awarded contracts beyond a two-year period, starting from the date of the award of the first contract, without the partners to the joint venture being deemed affiliated for the joint venture.” Regardless, the Area Office determined joint venture was eligible for award because the joint venture was still considered small even with the venturers sizes being combined due to their affiliation. Appeal Appellant, in October 2024, appealed to SBA’s Office of Hearings and Appeals (OHA). Appellant acknowledged that the venturers individually appeared to be small, but contended that together, and including their respective affiliates, they exceeded the procurement’s size standard. Additionally, Appellant argued that the joint venture could not be compliant with 13 C.F.R. § 124.513(c) and (d). 13 C.F.R. § 124.513(c) requires every joint venture agreement for an 8(a) set-aside to describe all major equipment, facilities, and other resources to be contributed by each member of the joint venture. Further, the joint venture agreement must identify the respective responsibilities of the members as to negotiation of the contract, source of labor, and contract performance, which Appellant asserted the joint venture agreement lacked. 13 C.F.R. § 124.513(d) requires the 8(a) partner to an 8(a) joint venture to perform at least 40% of the work performed by the joint venture and that it must bring some value to the joint venture agreement. Appellant claimed that the Area Office erred by not considering whether the joint venture met the requirements in 13 C.F.R. § 124.513(c) and (d), pointing out that 13 C.F.R. § 121.103(h)(2)(i) states: For a competitive 8(a) procurement, a joint venture between an 8(a) Participant and one or more other small business concerns (including two firms approved by SBA to be a mentor and protégé under § 125.9 of this chapter) must also meet the requirements of § 124.513(c) and (d) of this chapter as of the date of the final proposal revision for negotiated acquisitions and final bid for sealed bidding in order to be eligible for award. This requirement applies to “any 8(a) contract” and “[e]very [JVA] to perform an 8(a) contract.” Therefore, the Appellant argued that even if the joint venture is small for the procurement per 13 C.F.R.§ 125.8, it didn’t meet the requirements of 13 C.F.R. § 124.513, which applies to 8(a) joint venture requirements, including the addendum requirements that require a joint venture to “create an addendum to the joint venture agreement setting forth the performance requirements for each additional award.” And the Area Office erred in not evaluating the joint venture agreement to determine whether it met those requirements. OHA’s Decision OHA agreed with the Appellant that the Area Office improperly ignored applicable SBA joint venture rules that applied because the procurement was set-aside entirely for 8(a) Program participants. 13 C.F.R. § 121.103(h)(2)(i) states that a joint venture “must also meet the requirements of § 124.513(c) and (d) of this chapter as of the date of the final proposal revision for negotiated acquisitions … in order to be eligible for award.” Accordingly, OHA pointed out that size is not the only consideration and that the Area Office should have looked at whether the joint venture agreement met the requirements of 13 C.F.R. § 124.513(c) and (d). But there was still the issue of how a disappointed offeror, Contracting Officer, or the SBA may raise such a concern. As noted in the decision, agencies were previously required to evaluate offerors’ joint venture agreements prior to award to ensure the joint venture agreement meets the 8(a) Program joint venture requirements. But when that requirement was removed, there was no existing way to protest whether an 8(a) joint venture met the joint venture requirements in 13 C.F.R. § 124.513. The Federal Register commentary that accompanied the rulemaking of 13 C.F.R. § 121.103(h)(2)(i) noted that, even though SBA removed the requirement that SBA review 8(a) joint venture agreements prior to award, SBA did not intend to allow 8(a) joint ventures that did not meet the requirements in 13 C.F.R. § 124.513 to be awarded competitive 8(a) set-asides. SBA intended the size protest process to work to ensure compliance with formal 8(a) joint venture agreement requirements. In practice, the size protest process did not work as intended in situations where the joint venture is between an 8(a) Program participant and another small business. Such a joint venture would still be considered small under 13 C.F.R. § 125.8, which states that any joint venture between two small venturers will be considered small for the procurement. But the joint venture agreement may not meet the 8(a) joint venture rules in 13 C.F.R. § 124.513, such as the 8(a) venturer being the Managing Venturer. Thus, OHA held that the only path to protesting an 8(a) joint venture’s status, thereby ensuring the 8(a) joint venture meets the 8(a) joint venture requirements in 13 C.F.R. § 124.513, is through the size protest process. Here, OHA remanded the case back to the Area Office to review the joint venture agreement in accordance with 13 C.F.R. § 124.513, concluding that it is not only the responsibility of an 8(a) joint venture to be considered small, but to also meet the joint venture requirements for any 8(a) competitive procurement. Thus, there is a method to question the joint venture compliance of an 8(a) joint venture. Please reach out to our firm should you seek to do so. If you have questions, please email us. If you 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 Reminder: Ensure all Joint Venture Requirements are Met to have a Successful JV first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Here is your Week in Review as you head into the weekend. We are still attempting to get through this second artic blast here in the Midwest this week. I think it’s safe to say we are all looking forward to those warmer temperatures that are returning next week. Enjoy the weekend! This week in federal government contracting news includes a new SBA administrator, updates on federal workforce reductions, and new guidance from GSA. Senate confirms Kelly Loeffler, former Georgia senator, to lead Small Business Administration SBA Administrator Kelly Loeffler Issues Statement Federal firings: You couldn’t make this up Hegseth directs Pentagon to find $50 billion in cuts this year to fund Trump military priorities GSA announces FAR class deviations, guidance for contracting officers Major Opportunities on the Horizon with CISA FY26 Contract Recompetes White House Memo: Radical Transparency About Wasteful Spending Federal Contracts Are Highly Coveted—What Happens When There’s a Fight Over Them? Pentagon’s $96M wearable contract sparks protest, accusations of vendor preference Black Business Leaders Call for Bigger Structural Change Amid Anti-DEI Surge Procurement List; Additions and Deletions Senate confirms Kelly Loeffler to lead Small Business Administration A comprehensive look at DOGE’s firings and layoffs so far The post SmallGovCon Week in Review: February 17-21, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Winning a government contract requires more than just submitting the best proposal—your company must also be deemed “responsible” by the federal government. Responsibility in government contracting goes beyond technical capabilities and pricing; it encompasses financial stability, past performance, ethics, compliance with laws, security clearances, and overall business integrity. Failure to meet responsibility requirements can lead to a contract award being denied, even if a company submits the most competitive bid. In this webinar, government contracts attorneys, Nicole Pottroff and Stephanie Ellis of Koprince McCall Pottroff LLC, will provide a comprehensive breakdown of responsibility determinations and what they mean for government contractors. You’ll gain insights into how contracting officers evaluate responsibility, what documentation and evidence contractors can provide to strengthen their case, and key actions businesses should take to avoid responsibility-related issues. Additionally, this session will explore the special rights that small businesses have to challenge negative responsibility determinations through the SBA’s Certificate of Competency (COC) process. Understanding how and when to leverage this option can be the difference between losing a contract and securing a valuable government opportunity. Whether you’re a new contractor or an experienced one looking to solidify your compliance and competitiveness, this webinar will equip you with the knowledge, tools, and strategies needed to meet responsibility requirements and position your company for long-term success in the federal marketplace. Register here. The post Govology Webinar Announcement! The Concept of “Responsibility” in Government Contracting (2025 Update), March 6, 1:00pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article