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Diving into the National Defense Authorization Act (“NDAA”) has become something of an annual tradition in federal contracting. There seem to always be some sections that impact federal contracting, pushing for changes in processes or procurements. Part of 2025’s NDAA suggests fee shifting when there is a GAO protest of a Department of Defense (“DoD”) procurement. Basically, the 2025 NDAA suggested that if a bid protest of a DoD procurement is unsuccessful, the protester would be required to pay certain costs. Unsurprisingly, the GAO emphatically objected to this proposed change to its bid protest process. The most recent version of the NDAA, the “Servicemember Quality of Life Improvement and National Defense Authorization Act for Fiscal Year 2025, Pub. L. No. 118-159 (Dec. 23, 2024) (“FY2025 NDAA”) partially takes aim at the GAO bid protest process. Consequently, GAO in mid July this year has released a “response” to section 885 of the FY2025 NDAA, working in coordination with the Secretary of Defense. It is worth a read to see the full picture of how GAO responded, but what is likely most interest to those reading this blog would be the portion of GAO’s response to the FY2025 NDAA suggesting losing protesters pay costs on a DoD bid protest. GAO wisely first points out that bid protests at GAO have dropped 32% over the last decade, and over that same time, DoD bid protests at GAO (in particular) have dropped 48% (see the post we have on last year’s GAO bid protest stats here for more information on GAO bid protest numbers). According to GAO, only 1.5% of DoD procurements are actually protested at GAO. GAO also notes that DoD itself said tracking such protest cost data would cost more than its potential benefits. GAO makes it clear that at this time, DoD does not collect the data necessary to allow unsuccessful offerors to pay costs. And GAO raises the following logical concerns as potential negative consequences of such a fee-shifting requirement: It creates a chilling effect on the participation of firms in government contracting; It stifles transparence and accountability in the federal procurement system; It reduces competition, which in turn drives up prices; Any fee-shifting may result in an inequitable distribution of fees; Any fee-shifting and allocating process will add additional time, complexity and cost to the bid protest process; and Fee-shifting would inevitably push away small business which “represent the majority of protesters” at GAO. GAO also provides a plethora of charts, graphs, and other data showing just how rare a DoD GAO bid protest already is–further explaining these GAO bid protest trends. Because of this, GAO concluded, “we do not endorse creating a fee shifting process for bid protests because existing statutory authorities and bid protest procedures are sufficient to efficiently resolve and limit the adverse impacts of protests filed without a substantial legal or factual basis.” GAO instead suggested two alternatives (if Congress is just determined to have some form of fee-shifting). Option one would be to consider including terms in all DoD contracts reserving the right for “DOD to recoup–or otherwise withhold–profit or fee where the incumbent contractor files a protest that is subsequently dismissed as legally or factually insufficient or for otherwise being procedurally infirm.” This option would take aim squarely at facially frivolous bid protests only–discouraging (and hopefully reducing) such protests to make more room for more meritorious protests. Option two would be having Congress consider authorizing GAO to require a protester whose protest is “dismissed as legally or factually insufficient or for otherwise being procedurally infirm” to reimburse DoD for protest costs as well as any lost profits incurred by the awardee whose contract was stayed. Once again, GAO is trying to point any sort of punishing fees or costs at the bid protest which, on their face, are just wholly insufficient. Both of these options present a limited situation in which potential fees or costs may be placed on a protester, as sort of a middle ground. Of course, option one or two would require congressional changes to statutes, and changes to GAO’s bid protest processes and regulations. But is not as stark as the fee-shifting proposed by the FY2025 NDAA. At the end of the day, GAO wants to really limit any sort of fee-shifting, as seen by their lengthy response and data rebutting the FY2025 NDAA’s suggestions. Rather, it is apparent GAO has taken a stance supporting its current processes. Indeed, GAO feels the current processes and regulations for bid protests efficiently resolve protests and discourage so-called “frivolous as filed” protests. GAO sees such fee-shifting as basically just a penalty for protesting. And as GAO points out, the very process of determining such fees would eat up additional (unnecessary) time and resources. Simply put, GAO does not agree with the FY2025 NDAA fee shifting proposal. GAO instead views it as quite the threat to taxpayer funds, small business contractors, and bid protests as whole–all of which are necessary parts of government contracting and crucial to promoting agency accountability and procurement transparency. As of now, GAO’s bid protest processes remain unchanged on this front. And it seems like any proposed change will face some stout pushback from GAO. Of course, if you are considering a bid protest at GAO, make sure to reach out to your federal government contracting firm–like ours–to discuss your options, GAO’s bid protest process, and the costs and benefits of the same. 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 GAO Pushes Back on 2025 NDAA’s Fee Shifting Suggestion first appeared on SmallGovCon - Government Contracts Law Blog.View the full article -
In some circumstances, it is in the best interest of the government customer to require a specific item made by a specific manufacturer. Though it doesn’t use this technique often, the government can achieve this by soliciting the contract using a “brand name or equal” basis. But the government can’t just decide that it wants a Hoover over a Bissel vacuum. No, there is a process that must be followed, and circumstances must warrant such a requirement. FAR 11.104 describes situations which are permissible to procure a brand name item. But the regulatory provision nonetheless confirms, even though there are circumstances that may warrant the use of a brand name or equal procurement, it is not the preferred method. Rather, FAR 11.104 states that the “use of performance specifications is preferred to encourage offerors to propose innovative solutions.” This is conveyed in FAR 11.105 as well. There, it states “[a]gency requirements shall not be written so as to require a particular brand name, product, or a feature of a product, peculiar to one manufacturer, thereby precluding consideration of a product manufactured by another company.” So, while there are situations that may call for a brand name or equal, they aren’t exactly encouraged. Now that we addressed the situations that warrant the use of a brand name or equal procurement, what information must the agency provide to justify the use of a brand name or equal procurement process? FAR 11.104 also includes a list of information that the agency must include in a solicitation if a brand name or equal requirement will be applied: Brand name or equal purchase descriptions must include, in addition to the brand name, a general description of those salient physical, functional, or performance characteristics of the brand name item that an “equal” item must meet to be acceptable for award. Use brand name or equal descriptions when the salient characteristics are firm requirements. As you can see, even if the agency wants a specific brand name, it must still consider other brands with items that have the same characteristics. Now let’s switch to FAR 52.211-6. Whereas FAR 11.104 describes the situations in which a brand name or equal procurement may be used and the information that an agency must provide if it uses a brand name or equal requirement, this regulation tells us what is required of an “equal” product to be awarded. To be considered for award, offers of “equal” products, including “equal” products of the brand name manufacturer, must— (1) Meet the salient physical, functional, or performance characteristic specified in this solicitation; (2) Clearly identify the item by— (i) Brand name, if any; and (ii) Make or model number; (3) Include descriptive literature such as illustrations, drawings, or a clear reference to previously furnished descriptive data or information available to the Contracting Officer; and (4) Clearly describe any modifications the offeror plans to make in a product to make it conform to the solicitation requirements. Mark any descriptive material to clearly show the modifications. Thus, if an offeror wants to submit an “equal” product, there is a fair amount of information that they must include in their proposal. And this is something that offerors should take seriously and provide as much information as possible because the onus is on the offeror to provide the information needed for evaluation. In fact, FAR 52.211-6(c) even states that “the Contracting Officer is not responsible for locating or obtaining any information not identified in the offer,” so make sure you include all necessary information so the agency can thoroughly evaluate your equal product. Now, an offeror who plans to provide an equal product must provide a product that matches the specifications of name brand item, right? After all, FAR 52.211-6 says an equal product must “meet the salient physical, functional, or performance characteristic specified in [the] solicitation.” Well, not exactly. Technically, yes, an equal product must meet the salient characteristics of the brand name product, but an agency has the discretion to waive those requirements “if the award will meet the agency’s actual needs without prejudice to other offerors.” Glem Gas S.P.A., B-414179 (Feb. 23, 2017). Any potential protester must prove that it has been competitively prejudiced by its own equal product not being accepted, “or where the protester would be able to alter its quotation to its competitive advantage if given the opportunity to respond to the relaxed term.” Thus, the pertinent question in an award to an equal product that is not technically equal, is “whether the protester would have submitted a different offer that would have had a reasonable possibility of being selected for award had it known that the requirement would be waived.” Name brand or equal procurements are a rarity in the overall grand scheme of federal government contracting. However, there are requirements that both the agency and offeror must satisfy, and in the case of any protests, that the protester must as well. 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 Back to Basics: Brand Name or Equal first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! And happy August! The cool Fall weather is slowly, but steadily making its way to the Midwest. Let us tell ya’, we at SmallGovCon are quite excited for more double-digit temperatures (as 100+ degrees is nothing rare for a summer in Kansas). And as you can see from all the happenings in the federal government contracting world this week, the winds of change sure do affect more than just the weather. Between a bold executive order and the first ever government chief AI officer, Artificial Intelligence sure is continuing its journey deeper into our federal procurement system–with even more haste (and apparently, more certainty) than the promise of sweater-weather in the Midwest. Also, this week: SBA released an important reminder to federal contracting agencies about maintaining fairness and integrity in federal contracting and reporting concerns regarding the same; GSA introduced its new GO.gov federal travel management solution; GovCon experts discuss the recent OMB initiatives encouraging agencies to consolidate and streamline how they buy their goods and services; and oh, so much more. Read all about it in some of our favorite articles of the week. OMB Updates Plans on Consolidating Federal Procurement GSA Unveils GO.gov: A New Era for Federal Travel Management GAO Tells DOE to Improve Budget Estimates for Division Conducting Contract Incurred Cost Audits Trump’s order to remove ‘woke’ AI from government may have ‘downstream impacts,’ experts worry Pentagon to Expand Cloud Competition Under JWCC Next Contract No ‘AI agreement’, no government contracts: ACTU White House: REMOVING BARRIERS TO AMERICAN LEADERSHIP IN ARTIFICIAL INTELLIGENCE What happens when the federal government tries to centralize how it buys everything? SBA Issues Letter of Warning to Federal Contracting Officers The US government has its first federal chief AI officer The post SmallGovCon Week in Review: July 28-August 1, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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It is safe to say that every federal contractor, at one time or another, has felt the terms of a solicitation were unfair or otherwise didn’t make sense. Federal agencies are comprised of people, and people make mistakes. Sometimes, then, mistakes make it into the solicitation. Unfair or erroneous terms in a solicitation are a valid grounds for a protest, but it is crucial to know when such a protest is timely. In most cases, if the time for bids has passed, any protest of the terms of the solicitation, be it at GAO or the Court of Federal Claims, will be untimely. There are rare exceptions, but, in general, a protest of terms of the solicitation must be brought before bids are due to be timely. Untimeliness equals dismissal. In this post, we will explore a protest GAO dismissed for this very reason. In Quantum Ventura, Inc., B-423603 (Comp. Gen. Jun. 23, 2025), the protester, Quantum Ventura, Inc. (QV), bid on a broad agency announcement (BAA) by the Department of Defense (DoD) for the Small Business Technology Transfer (STTR) program. For this sort of work, it is typical that the offeror will work with a non-profit research or educational institution. Further, work in the STTR is performed in phases. In the BAA, DoD expressly required that offerors perform at least 40% of the work and that at least 30% of the work be performed by a non-profit institution. In a later statement, DoD stated that proposals that do not comply with the requirement that 40% of the work be performed by the offeror and 30% be performed by the institution would be deemed not responsive. The cost volume template for the procurement provided several worksheets, four of which were a materials worksheet, equipment worksheet, travel worksheet, and Other Direct Costs (ODC) worksheet. The first worksheet, a “general” worksheet, stated “ENTER FULLY LOADED BURDEN RATES EXCEPT FOR EQUIPMENT AND TRAVEL WHERE NO PROFIT OR INDIRECTS SHOULD BE INCLUDED.” QV submitted a proposal for $209,757, of which, 51% was to go to the institution and 49% to QV. However, the cost volume template QV submitted reflected a total proposed cost of $150,626. QV did not propose costs for materials, equipment, travel, and ODCs. With the costs proposed in the template, then, QV would only perform 31.5% of the work. DoD informed QV that its proposal was non-compliant, and QV protested. In QV’s protest, it argued that QV complied with the requirements and that the issue was with deficiencies in the agency’s cost spreadsheet. It claimed that the spreadsheet omitted columns necessary for accurately representing labor overhead, general & administrative (G&A) expenses, and profit. The agency moved to dismiss the protest as an untimely challenge to the terms of the procurement. QV argued that the absence of certain items in the cost template was a latent ambiguity, and that it was reasonable to break down its indirect costs elsewhere in the proposal. It stated that in most STTR competitions, offerors will itemize direct labor and material costs as well as indirect costs like overhead, G&A, and profit. As such, not having sections for overhead, G&A, and profit were unusual. QV further argued that the solicitation did not define “fully loaded” or prohibit offerors from separately identifying indirect costs. As such, QV understood the term to mean something more in the custom of STTR, and didn’t realize it had to put its indirect costs and profit in the labor rate figures until in received the rejection notice. GAO was not sympathetic to QV’s argument. Citing to 4 C.F.R. § 21.2(a)(1), GAO observed that its “timeliness rules specifically require that a protest based upon alleged solicitation improprieties that are apparent prior to the closing time for submission of proposals must be filed before that time.” In other words, if you think there’s something wrong with the solicitation terms, you must protest before the bid deadline. There is an exception for latent ambiguities, that is, where terms in the solicitation are ambiguous but not obviously so. But here, the terms weren’t ambiguous at all. QV simply didn’t read the BAA as a whole. OV acknowledged that “the cost volume template’s instructions required offerors to submit fully loaded burden rates and also acknowledge[d] that the template did not include columns for offerors to enter indirect costs such as overhead, G&A, and profit.” GAO observed that, looking at the instructions as a whole, “the instruction to propose fully loaded rates coupled with the templates’ distinct lack of columns for entry of indirect costs, clearly indicated that offerors were to include all indirect costs in their proposed labor rates–i.e., to submit fully loaded rates.” As such, there was no ambiguity. GAO also observed that even were it ambiguous, QV failed to breakdown its indirect costs anywhere else in its proposal. Even if its interpretation that offerors could detail their indirect costs was found reasonable, it wouldn’t matter as QV didn’t do that. Key Lesson The key lesson is one we can’t emphasize enough: If you have an issue with the terms of a solicitation, you must file your protest by the deadline for submissions. If you think the terms are ambiguous, file your protest before proposals are due. If you think the terms are improper, file the protest before proposals are due. This isn’t just the case with COFC. The Court of Federal Claims applies the same rule. Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007). There are exceptions but they really rely on you being unable to know about the issue prior to the bid submission deadline. Bottom line: If you have an issue with the terms of a solicitation, get your protest in before bids are due. If that time has passed, it will be highly difficult to make such a protest unless you can really show you couldn’t have known about the issue at the time bids were due. 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 Timing is Everything: GAO Dismisses Post-Bid Protest of Solicitation Terms as Untimely. first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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When exploring the world of SBA socioeconomic programs, the Historically Underutilized Business Zone (HUBZone) Program isn’t always the first program on a business’ radar. One reason for this could be the distinct eligibility requirements an applicant must meet to qualify for HUBZone certification. This is the only socioeconomic program where SBA requires a company’s principal office and employees to reside in a designated area, i.e., a HUBZone. SBA provides a HUBZone map showing the areas designated as a HUBZone. Keep in mind that this map is reevaluated every five years, so it’s important to stay up-to-date on any updates made to the map. We have previously covered the basics and overall benefits of the HUBZone Program. Here, we’ll go through the eligibility requirements more in-depth. There are four main requirements to qualify for HUBZone certification: Ownership Small Business Principal Office Employees This blog will focus primarily on the last two criteria as they are unique to the HUBZone Program and more complicated. But to learn more about each criteria, the HUBZone qualifications can be found under 13 C.F.R. § 126.200. Ownership HUBZone certified concerns must be at least 51% owned (but not necessarily directly owned) by one or more of the following: U.S. citizens Alaska Native Corporations (ANC) or a wholly owned business entity of an ANC Indian Tribal Governments or a corporation that is wholly owned by one or more Indian Tribal Governments Certified Development Company (CDC) Small agricultural cooperatives organized or incorporated in the United States; or Native Hawaiian Organization (NHO) Size Like the other socioeconomic programs, a concern seeking HUBZone certification, including its affiliates, must qualify as a small business concern under SBA’s size regulations. Principal Office SBA regulation explains that “[i]n order to be eligible for HUBZone certification, a concern’s principal office must be located in a HUBZone.” Often, potential applicants have a lot of questions about the qualifications for a principal office. What if I work from home? What if my job requires working at different job-sites? In today’s world, “principal office” can look different for everyone. Lucky for us, SBA defines principal office in the regulation. What qualifies as a principal office? Principal Office means the location where the greatest number of the concern’s employees at any one location perform their work. The regulation notes that “[i]n order for a location to be considered the principal office, the concern must conduct business at this location.” 13 C.F.R. § 126.103. What if a company conducts business at more than one location? When an employee works at more than one location, SBA will use the location where the employee spends more than 50% of their time. The employee will not be deemed to work in a HUBZone location if the employee doesn’t have a specific location where they spend more than 50% of their time, and one of those locations is not located in a HUBZone. For companies whose “primary industry classification” is in services or construction, SBA applies a different principal office determination: [T]he determination of principal office excludes the concern’s employees who perform more than 50% of their work at job-site locations to fulfill specific contract obligations. If all of a concern’s employees perform more than 50% of their work at job sites, the concern does not comply with the principal office requirement. The regulations give an example of how this is applied: Example 1. A business concern whose primary industry is construction has a total of 78 employees, including the owners. The business concern has one office (Office A), which is located in a HUBZone, with 3 employees working at that location. The business concern also has a job-site for a current contract, where 75 employees perform more than 50% of their work. The 75 job-site employees are excluded for purposes of determining principal office. Since the remaining 3 employees all work at Office A, Office A is the concern’s principal office. Since Office A is in a HUBZone, the business concern complies with the principal office requirement. Long-term investments SBA will recognize long-term investments that participants have made in properties that are in a HUBZone. If the concern has purchased a building or entered a long-term lease of at least 10 years for property in a HUBZone, then the concern may be deemed to have its principal office located in a HUBZone. The long-term investment can satisfy the principal office requirement for up to 10 years from the date the building was purchased, or the lease was signed, “as long as that building or property qualifies as the concern’s principal office and continues to qualify as the concern’s principal office, and as long as the firm maintains the long-term lease or continues to be the sole owner of the property.” 13 C.F.R. § 126.200(c)(1)(i). SBA refers to this as the 10-year principal office long-term investment protection period. If the investment was made prior to the HUBZone’s certification, the 10-year period starts on the concerns HUBZone certification date. If the investment was made after the concern’s HUBZone certification, then the 10-year period starts on the date of investment. Before deciding on making a long-term investment for HUBZone certification, be aware that the following do not qualify under the long term investment rule: An office located in a Redesignated Area or Qualified Disaster Area at the time of initial HUBZone certification; An office that is shared with one or more other concerns or individuals; Any location being used as a personal residence; or An investment made within 180 calendar days of the expiration of an area’s designation as a Qualified Census Tract, Qualified Non-Metropolitan County, Governor-Designated Covered Area, or Qualified Base Closure Area. Tribally-Owned Concerns For concerns owned in whole or in part by one or more Indian Tribal Governments, a different principal office requirement applies. The concern must either (1) Maintain a principal office located in a HUBZone and ensure that at least 35% of its employees reside in a HUBZone or (2) Certify that when performing a HUBZone contract, at least 35% of its employees engaged in performing that contract will reside within any Indian reservation governed by one or more of the Indian Tribal Government owners, or reside within any HUBZone adjacent to such Indian reservation. HUBZone Resident Employees In order to be eligible for HUBZone certification, SBA requires at least 35% of a concern’s employees must qualify as HUBZone resident employees. When determining the percentage of employees that must reside in a HUBZone to meet the 35% HUBZone residency requirement, if the percentage results in a fraction, SBA rounds to the nearest whole number, except for a firm with only one employee. For firms with only one employee, that one employee must reside in a HUBZone. 13 C.F.R. § 126.200(d)(1). Who qualifies as an “employee?” Like “principal office,” SBA defines “employee”: Employee means an individual employed on a full-time, part-time, or other basis, so long as that individual generally works a minimum of 10 hours per week during the four-week period immediately prior to the relevant date of review. SBA may permit an individual to count as an employee if that individual works less than 10 hours in any week during the four-week period immediately prior to the relevant date of review provided the individual works at least 40 hours during that four-week period and the concern demonstrates a legitimate business reason for that work schedule. SBA considers the following employees: Individuals hired through temporary employment agencies, leasing firms, unions, or co-employment agreements An individual with ownership in the company who works at least 10 hours per week, even if unpaid An owner working under 10 hours per week if no one else manages and directs the company’s employees Reservists or National Guard members called to active duty Individuals on paid leave (sick, maternity, or annual leave) SBA does not consider the following employees: Unpaid non-owners of the company Individuals whose pay is deferred Independent contractors paid via IRS Form 1099 Subcontractors Legacy HUBZone Employees What happens if a concern meets the 35% requirement of HUBZone resident employees, but one of those employees later moves to a non-HUBZone location? Or, what if the employee’s residence is in an area that no longer qualifies as a HUBZone? SBA may still consider the employee a HUBZone resident employee, if the employee qualifies as a Legacy HUBZone Employee. The individual must remain in a HUBZone for at least 180 days after the certification date and maintain continuous employment status without interruption. A certified HUBZone company is allowed up to four legacy HUBZone employees at one given time. But the company must have at least one other HUBZone employee for SBA to count the legacy employees as HUBZone employees. SBA excludes legacy HUBZone Employee status for anyone who either (1) originally qualified by living in a Redesignated Area or Qualified Disaster Area, or (2) works fewer than 30 hours per week. 13 C.F.R. 126.200(d)(3)(v). While most of SBA’s socioeconomic programs share similar eligibility requirements, the HUBZone Program has two distinct requirements that may feel unfamiliar or daunting to navigate at first. But if your company does meet these criteria, the benefits of the program far outweigh the time spent trekking through the regulations. 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 Back to Basics: HUBZone Eligibility first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! It’s been a busy week in the federal government space, with leadership changes and sweeping workforce shifts making headlines. For one, the State Department’s deputy secretary has stepped in as acting head of the GSA. Contractors should also keep a close eye on changes ranging from the NDAA to SBA rules, with new OMB guidance urging agencies to consolidate procurement. You can read more about these topics in the articles below. Have a great weekend! State Dept deputy secretary takes over as new acting GSA leader Trump withdraws VA CIO nominee amid plans to shrink IT workforce OPM on track to eliminate 1,000 positions by the end of the year GAO releases its annual FraudNet program report Army Futures Command pushes to streamline requirements amid acquisition reform From NDAA to SBA, there’s a lot for government contractors to keep their eye on OMB Issues Guidance for Agencies to Consolidate Federal Procurement Activities Over 24,000 VA positions face potential downgrade, as classification review expands USDA to relocate more than half of D.C. area employees under reorganization plan Congress pushes right to repair provisions in 2026 defense bill The post SmallGovCon Week in Review: July 21-25, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Once a year the SBA publishes its scorecard which rates how well federal agencies have met their small business contracting goals. The purpose? To provide a sense of how strong the federal government’s small business contracting initiatives are performing on an annual basis. And for 2024, the overall federal contracting dollars paid to small businesses looked good. However, the agency-specific numbers were not consistently as promising for small businesses. First, a short primer for those unfamiliar with the SBA scorecard before we get into the specifics making up this record-breaking achievement. In case you have never heard of these scorecards in the past, the annual scorecard details information on the various categories of small businesses recognized by the SBA. Specifically, the scorecard is used to assess “how well federal agencies reach their small business and socio-economic prime contracting and subcontracting goals,” to “provide accurate and transparent contracting data,” and “report agency-specific progress.” Congress sets annual goals for federal agencies to meet when awarding contracts and subcontracts to small businesses. These goals include governmentwide goals, as well as agency specific goals, which are determined pursuant to 15 U.S.C. § 644(g). The administration can also set or choose not to set agency-specific goals or exceed the statutory goals through things like executive orders. To determine these goals, each included agency submits proposed goals based on SBA’s review of agency year-to-date performance prior to the beginning of the fiscal year. SBA then evaluates each agency’s proposal, and either notifies the agency that its proposal is acceptable, or negotiates with the agency to reach a goal that is acceptable. In total, there are 24 agencies. You can find a list of all included agencies as well as more detailed information on how the process works here. Following each fiscal year, SBA reviews information from the various agencies to determine whether goals were met and assigns each agency a “grade” based on how well it performed. So, what did the federal small business contracting landscape look like in fiscal year 2024? Overall, $183.5 billion of federal contracting dollars were directed toward small business prime contractors. This exceeded the 2023 achievement by $4.9 billion, creating a new all-time high with 28.76% of all federal contracting dollars being spent on small business prime contracts. The 2024 small business contracting goal was set at 23%. This number includes all of the additional small business contracting programs, such as WOSB, VOSB, HUBZone, and 8(a), but it is encouraging to see over one quarter of all federal contracting dollars going to small businesses of any variety. Hats off to the federal government for exceeding its goal and setting a new record! As for the smaller, more specific categories that fall under the small business category, the largest subcategory in both goal and prime contracting dollars is that of small disadvantaged businesses, including those in the 8(a) Program. The goal for this category in 2024 was 13%. Unfortunately, this year, the government missed the mark, only achieving 12.27% of its goal, with $78.3 billion. Regardless, that is an achievement to be noted. Next up was service-disabled veteran owned small businesses (SDVOSB). Notably, 2024 was the first year that SDVOSB goals were set at 5%, as it had previously been set at 3%, and the goal was met with 5.14%, or $32.8 billion. WOSBs, if you thought 2024 was your year to finally achieve the 5% goal for prime contracts, I’m sorry to tell you that did not happen…again. But, on the bright side, 2024’s achievement of 4.97%, or $31.7 billion just barely misses the mark. The HUBZone prime contract goal was also missed. The HUBZone goal is set at 3% and Agencies awarded 2.75% of overall contracting dollars to HUBZone small businesses, or $17.6 billion. Not a huge difference, and in a dollar to dollar comparison with the 2023 numbers, the dollar amount had actually increased meaning more contracting dollars went to HUBZones, but it was a small portion of the overall contracting dollars spent. Now, looking at small business subcontracting goals, small business, small disadvantaged business, and WOSBs all exceeded their goals, showing that although WOSBs didn’t quite meet the mark for prime contracts, the WOSB subcontracting business is going strong. In contrast, both SDVOSBs and HUBZones failed to meet their subcontracting goals, with each category receiving just a touch over their goals of 5% and 3%, respectively. In general, the total number of small business prime contractors seems to be holding steady. Though there was a small decrease of 347 overall, that continues a trend of consolidation in the market. Overall agency performance had another strong year, though not as strong as 2023. 2023’s lowest scoring agency came in at 97.95% and only two agencies received a score lower than 100%. In 2024, the highest score was achieved by the Department of Treasury, which achieved a score of 130.74%, and the lowest score was 87.44% for the U.S. Agency for International Development. All in all, seven agencies received what is considered an A+, meaning they achieved 120% or more of their goal. An additional fourteen agencies received an A, which is defined as meeting 100% to 119% of their goal. Two agencies received a B, and one agency received a C. Although 2024’s scores were lower than many of those from 2023, the contracts awarded to small businesses in general have grown showing a strong industry. What is ahead for 2025? That’s a great question! As I blogged about recently, disadvantaged small business contracting goals were decreased by EO 14151 to their statutory requirement. This decreases the goals for small disadvantaged, meaning 8(a) participants and self-certified small disadvantaged businesses. WOSB and SDVOSB continue to be set at 5%, HUBZone at 3%, and the overall small business contracting goals continue to stay at 23%. It will be interesting to see how this change shapes the future of contracting for 8(a) Program participants. To learn more, see the scorecard in full here, and the agency specific numbers here. Questions about this post? Email us. Need legal assistance? Call 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 FY2024 Small Business Scorecard Shows Strong Small Business Federal Contracting Numbers first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! We’ve finally received some much-needed rain this week in the Midwest, after a very warm couple of weeks. It seems there has been quite a lot of rain around the country, as well. We hope you are staying cool, dry, and safe out there. It’s also been another busy week in the federal government contracting arena. We have included some articles below that we thought were particularly newsworthy, including small business scorecards and increased use of AI in the federal government. Have a wonderful weekend! Federal Register: Defense Federal Acquisition Regulation Supplement: 8(a) Program SBA: Scorecard details – Government-Wide Performance 2024 Agencies, contractors must modernize procurement to meet consolidation push Pentagon awards multiple companies $200M contracts for AI tools Elon Musk’s Grok is now working with the US government GSA softens tone with consulting contractors, but long-term goals of effort remain vague Trump admin focuses on ‘zero trust 2.0,’ cybersecurity efficiencies Agencies set all-time high for small business awards in 2024 GSA tech services arm violated hiring rules, misused recruitment incentives, watchdog says Some agencies face significant budget cuts under House appropriations package The post SmallGovCon Week in Review: July 14-18, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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In recent months, the revamping of the FAR has been a big topic of discussion for federal contractors and those who work with them. This project is referred to as FAR 2.0 or the Revolutionary FAR Overhaul or simply RFO. An executive order got the ball rolling, setting forth the mandate to create FAR 2.0 within 180 days from April 15, 2025, which puts the deadline as October 12, 2025. The GSA has described its goals with the FAR overhaul by using some interesting metaphors. It says the FAR overhaul will be like a renovation of an old apartment building, taking things down to the studs while preserving the structural integrity of the original design. GSA acknowledged the inevitable growing pains for this adaption process using another metaphor—the “wobbly” phase of learning to ride a bike. As noted in the GSA post: “Let’s be honest—there will be an adjustment period, and it might be uncomfortable. This discomfort is normal. In fact, it’s a necessary part of growth. Remember learning to ride a bicycle? The wobbly phase was frustrating but essential to eventually riding with confidence.” In this post, we’ll take a look at some of the proposed new parts (and missing old parts) that will be present in the proposed FAR revision. The idea behind this overhaul is to get the FAR back to its statutory roots, simplify the procurement process, and make things easier for all participants in the federal acquisition system. Those awaiting this update are, however, understandably anxious about what this means for a process that, while complicated, is familiar to them. We’ll dig into the motivating concepts and functions of the overhaul process itself, and then give some examples of proposed updated language to give readers a sense of what’s to come. Overview of FAR Overhaul As discussed in this post, FAR 2.0 is a result of Executive Order 14275, Restoring Common Sense to Federal Procurement. The goal with these changes is a clearer, more navigable FAR that streamlines the disparate FAR regulations that evolved piecemeal as individual situations were addressed in isolation. Language that isn’t based in statutory rules (or Executive Orders) will be removed and instead synthesized into non-regulatory buying guides that are designed to provide guidance to Contracting Officers and contractors while providing both more freedom to structure their requisitions and proposals as they see fit. According to FAR Council Deviation Guidance, the FAR Council will issue model deviation guidance to kickstart the FAR streamlining on a rolling basis. Agencies will be required to adopt this language using their own individual processes until all of the proposed language can be formalized at once through the formal rulemaking process. Agencies will be expected to adopt and apply model deviation text within 30 days of when the FAR Council issues it and then to send the deviations to their contracting workforce. “Agencies must request approval from the Council before issuing RFO class deviations that use FAR text that differs from the Council’s class deviation text.” However, it doesn’t appear that this 30-day window is being strictly enforced—SBA, for instance, is not listed as having adapted any of the model deviations yet, despite some of them having been issued in early May. However, many agencies, ranging from State to DOJ to Peace Corps, are listed as having adopted at least some of the deviations. It remains to be seen how this rollout timeline will actually go. The OMB memo regarding FAR 2.0 states that “Most nonstatutory regulations will be replaced with OFPP-endorsed buying guides that highlight proven innovative buying techniques for different phases of the acquisition lifecycle as well solutions and manageable procurement pathways for different types of common goods and services recognized by category management.” It notes that there will be a formal rulemaking after all model language has been released on the website. “Agencies are encouraged to conduct tests where deviations or strategies in buying guides present ways of doing business that are new to the agency and share the results to SAGTesting@gsa.gov.” Parallel Tracks The RFO is being implemented through two parallel tracks. Track 1 involves the rewrite into “plain language,” removing non-statutory and unnecessary content, and generally simplifying the FAR to make it more accessible. There is an emphasis on principle over procedure, as the folks behind this update seem to believe that the latter inhibits the former. Thus, this track will rely on the expertise of acquisition professionals to generally do what they think is best, with an eye towards fairness and efficiency, and a baked in distrust of step-by-step instructions. Track 2 will involve the development of the non-mandatory guidelines mentioned earlier. These will include things like Practitioner Albums designed to “help contracting workforce apply the streamlined FAR in real-world buying scenarios.” While it’s easy enough for these drafters to speak about how removing detailed instructions and rules will make things easier for the professionals to simply do what they know is best, those professionals currently awaiting the new language may be concerned that getting rid of step-by-step instructions could confuse things instead of clarifying them. With that said, the proposed language to this point is not quite as “revolutionary” as it purports to be so far. Here are some examples of how the FAR is proposed to be changed to this point. Part 43 – Contract Modifications FAR Part 43’s update seems to be complete based on this Practitioner Album. As that helpful guidance notes, the content remains virtually unchanged, with the biggest change being a renumbering of the subparts. By comparing the updated language to the previous language, it’s clear to see that the FAR Council thought starting the subsection numbering at “0” wasn’t plain enough, bumping each subsection up a number so that it starts at one (e.g., what was FAR 43.000 has become 43.100, 43.1 has become 43.2, and so on). The statutory requirements for FAR part 43 have been preserved, including but not limited to requirements for valid obligations of appropriated funds (31 U.S.C. § 1501), prohibition against obligations in excess of available funds (31 U.S.C. § 1341), and procedures for resolving contract disputes (41 U.S.C. §§ 7101-7109). More substantively, several individual clauses have been removed from various subsections. The individual sections removed can be seen here. Referring to their numbering, these removed sections are as follows: 43.000(a). Referring to “Orders for supplies or services.” 43.104(b). Referring to FAR 52.243-7, Notification of Changes. 43.106. This clause was reserved and empty. 43.203(a). Referring to contractors’ “possible need to revise their accounting procedures.” 43.204(b)(2),(3), and (5) (as well as the last sentence of (b)(4)). Mainly dealing with “contract administration office” and coordination with contracting officers, as well as “field pricing review of requests for equitable adjustment.” Everything else in Part 43 has survived into the proposed model language. These deletions mostly accomplish a slight narrowing of the scope of the part and the elimination of some notification requirements. The load has been lightened to some extent for contracting officers, who have fewer hoops to jump through if they want to negotiated equitable adjustments or adjust contracts. The removed content comes down mostly to specific procedures expected of contracting officers for the change order process, which is consistent with the stated goal of lending more discretion to acquisition professionals. The full model deviation text can be found here. Part 52 – Solicitation Provisions and Contract Clauses This part’s updates seem to be a bit more extensive (understandable given that it’s a larger part than 43). As more parts are updated, the corresponding clauses are updated as well. As such, it’s still a work in progress—there is some proposed model deviation text, but the full part has yet to be officially issued by the FAR Council. Looking at just section 52.243-1 as an example, we can see similar changes to those made in Part 43. In the previous iteration of the FAR, section 52.243-1 referred to a prescription by 43.205(a)(1). As that section received the renumbering described above, 52.243 has been updated to now refer to 43.305(a)(1). The focus on making the regulatory language plainer and more accessible is also observed here. “The 30-day period may be varied according to agency procedures” has become “Agency procedures may vary the 30-day period.” The subsequent six subsections of 52.243 feature similar revisions, updating the referenced subsection in Part 43 and slightly streamlining the phrasing—the substance of the provisions remains basically unchanged, however. Takeaways In summary, the RFO is spearheaded by the FAR Council with the aim of eliminating clunky or unnecessary restrictions and rewriting language to make it plainer and clearer. This is being done in phases, with proposed language issued and adopted by agencies until the whole update can be executed through a formal rulemaking process. As of yet, however, the changes don’t seem to be quite as revolutionary as anticipated. There has been some substantive elimination of content, granting contracting officers greater discretion to act as they see fit in carrying out the acquisition principles of fairness and efficiency. But for the most part the updates we’ve seen have been renumberings and minor changes to regulatory language. Nonetheless, contractors and other acquisition professionals will want to keep an eye out as more model deviation text is issued. It will also be important to track which agencies have made the required implementation of that language, as some have been quicker to do so than others. This page is a handy reference for what’s been issued and which agencies have adopted it. Additionally, as we get further into the process and more language is issued, it’s likely that questions may arise. This helpful FAQ page is a great place to look first. As always though, specific or consequential questions are best reserved for counsel. And last but not least, keep an eye out here—as new updates are issued, we’ll be reading through them to discuss any major changes. If we see something big, we’ll let you know about it. Editor’s Note: Special thanks to our wonderful legal clerk Will Orlowski for putting together this blog post. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post A Wobbly Bike: Some Initial Thoughts on FAR 2.0 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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SBA has announced that it will be auditing the 8(a) Program in a recent press release entitled: “Administrator Loeffler Orders Full-Scale Audit of 8(a) Contracting Program.” 8(a) Participants and former Participants should be aware that SBA will be focusing on a review of contracts issued under the 8(a) Program. The announcement from SBA cites to a news story highlighting a massive bribery scandal at USAID. SBA intends to “immediately initiate a full-scale audit of the agency’s awarding officers back to 2010.” The USAID case involved “a decade-long bribery scheme involving at least 14 prime contracts worth over $550 million in U.S. taxpayer dollars.” The SBA administrator noted: “We must hold both contracting officers and 8(a) participants accountable – and start rewarding merit instead of those who game the system.” The announcement states that: One 8(a) contractor, despite being officially flagged by USAID as lacking “honesty or integrity,” went on to receive an additional $800 million in federal contracts to evaluate “issues affecting the root causes of irregular migration from Central America. The SBA announcement also links to an article from the Daily Wire discussing the 8(a) contractor and its contracts at USAID. That article states: Vistant’s criminal scheme relied on joint ventures to exploit a DEI policy called 8(a) contracting, which lets the government award contracts with no or limited competition when the recipient is a racial minority or a small business. It formed a joint venture with a larger company —which was bribing Watson and would actually do the work — so Watson could use Barnes’ status as a black man to steer the contracts to him, rather than being obligated to go through an open competitive process. While the exact parameters of the audit are not found in this press release, here a few details. Who will lead. The SBA’s Office of General Contracting and Business Development, in “collaboration with various federal agencies that award contracts to 8(a) participants.” This office at SBA is the same office responsible for the 8(a) certification and contract review process, as well as various other small business federal contracting programs such as size determinations. Scope. Focus on “high-dollar and limited-competition contracts.” Timeframe. The audit will look at contracts over a period of fifteen years, back to 2010. Enforcement. Cases will then be investigated by SBA Office of Inspector General and DOJ. This audit could have a large impact on the 8(a) Program, as it seeks to review 15 years of contracts and possibly recover funds. It’s also possible the result of the audit could be used to enact changes to the 8(a) Program. However, changes to the 8(a) Program are not specifically mentioned in this press release. 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 SBA Announces an Audit of 8(a) Program Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Welcome to another edition of the SmallGovCon Week in Review. We hope that our SmallGovCon readers have a great and relaxing weekend. While the kids may be out of school, the government sure isn’t, and it pays to stay on top of the latest in federal contracting. This week in federal government contracting, key stories included the continued consolidation of work with GSA, including cancellation of two large IDIQ procurements in order to utilize GSA vehicles instead. GSA announces new Oracle OneGov agreement Small Business Investment Company (SBIC) Regulatory Amendments VA on track to cut nearly 30K jobs by end of fiscal 2025, eliminating need for widespread RIF Agencies plan to decommission hundreds of .gov websites following GSA review Trump Orders Spark Government-Wide Acquisition Overhaul DHS terminates two contracts, moving work to GSA Administrator Loeffler Orders Full-Scale Audit of 8(a) Contracting Program SBA Interagency Task Force on Veterans Small Business Development to Host Public Meeting on July 15 What contractors are looking at in the DoD and DHS budget submissions Defense companies not ‘exiting’ market at such a fast rate FAR overhaul targets risk-averse acquisition culture Baroni Center Releases First Government Contracting Trends and Performance Index The post SmallGovCon Week in Review: July 7-11, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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In recent years, the Small Business Administration’s small business contracting goals have been on an upswing, with the requirements growing beyond the statutorily required minimums in an effort to encourage federal agencies to increase awards to small businesses, especially disadvantaged businesses. That is, until now. With the current administration’s focus on “Ending Radical And Wasteful Government DEI Programs and Preferencing,” or Executive Order 14151, there has been a sharp decrease to the small disadvantaged business contracting goals set for federal agencies, but an increase to many of the agencies’ overall small business contracting goals. Read on to learn more about these changes, as well as some potential impacts of the new small business contracting goals. As mentioned, EO 14151 aims to terminate, “to the maximum extent allowed by law,” all DEI and DEIA offices and positions, equity action plans, equity actions, initiatives, or programs, and equity related contracts. What, exactly, is the “maximum extent allowed by law?” That’s a great question and thankfully, 15 U.S.C. § 644(g)(1)(A) makes it easy to answer that question because it contains the statutory minimums for small business goals. The statutory minimums are as follows: Small Businesses Generally: 23% Service-Disabled Veteran Owned Small Business: 5% HUBZone Small Business: 3% Woman-Owned Small Business: 5% 8(a) Small Business: 5% Thus, the statutorily required minimums are now the goal. Notably, this change does not affect the SDVOSB, HUBZone, and WOSB contracting goals, as they were already set at the thresholds set forth in 15 U.S.C. § 644. But it was a huge decrease for 8(a) Program participants, which the former administration had set to increase up to 15% starting in 2021. It only stands to reason then that these decreases will have the greatest negative impact on contracts set aside for participants in the 8(a) Program. After all, between SBA’s socioeconomic programs, the Small Disadvantaged Businesses category (including the 8(a) Program), was the only category that shrunk. With lower contracting and subcontracting goals for small disadvantaged businesses, there will naturally be fewer contracts reserved specifically for 8(a) Program participants. This will, in turn, likely result in 8(a) Program participants having more competition for winning awards. Does this foreshadow the future of the 8(a) Program? It’s hard to say. It’s well known that new administrations come with new policies and new areas of focus. Currently, that focus is on removing DEI-type initiatives. And the SBA’s 8(a) Business Development Program—a program exclusively reserved for small businesses owned by socially and economically disadvantaged individuals—could be viewed as related to the DEI focus. Looking at the increases, many of the agencies that are subject to the small business procurement goals have slightly higher prime small business contracting goals in 2025 than they had in 2024. Many agencies’ goals have increased a small amount. For example, the General Services Administration’s small business contracting goal increased from 22.43% to 23.17%. The Department of Education’s goal increased from 16% to 17%. The Department of Health and Human Services’ goal increased from 23% to 24.5%. And the Department of Veterans Affairs’ goal increased from 27% to 29%. But other agencies, such as the Social Security Administration, National Science Foundation, and Department of State have had much more significant increases, increasing from 28% to 37%, 24% to 30.82%, and 26% to 34.5%, respectively. These numbers tell us that agencies still see value in contracting with small businesses, even if there is a reduced focus on specific types of small businesses, as the small business contracting goals are a number that the SBA reaches with input from each agency. That said, it will be interesting to see how goals for 2026 shake out and whether general small business contracting goals continue to trend upward. 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 Small Business Contracting Goals: Current State of Agency Goals first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Recently, and with very little fanfare, the SBA released its Small Business Search system (SBS), replacing the Dynamic Small Business Search (DSBS) system that had been in use for a number of years. Per the SBA, existing business profiles have been migrated to this new platform. However, it is a good idea to take a look and see what has been transferred over to be sure that all information for your company has been properly moved over. We’re going to take a quick look at this new system and how to address some common issues. Small Business Search Looking at the new system, while it differs in appearance from DSBS, the information it contains (or at least should contain) looks to be very similar to DSBS. If you go to your business’ entry, it should list seven separate tabs on the left: “Profile overview,” “Organization & ownership,” “Certifications,” “NAICS codes,” “Service information,” “Performance history,” and “Export information.” You should see that all this information is actually on the same home page, those tabs just let you jump to those sections. Otherwise, you should find the information contained in your page very familiar if you’ve ever visited DSBS. Information like a company’s UEI and CAGE codes, address, point of contact, certifications, and NAICS codes are present on this site. Potential Issues We have heard some rumblings that some contractors are finding that certain information is missing from their new SBS entries. We can’t really confirm the same, but in any case, SBA does provide some guidance on how to update your information, as well as what to do if your business isn’t showing up in a search. Editing Information Any business that you’re allowed to edit should be listed on your account once you create your SBS account. Once you click your name to open the account menu, an option should appear titled “Edit (Insert Business Name Here).” You will then need to sign and date a Small Business Certification Statement in order to proceed, so be sure to read this statement carefully. We have looked carefully for more information on this statement and what it states, but have yet to see any further guidance. As such, if you are unsure whether your business is a small business, it might be prudent to reach out to a government contracts attorney to discuss this further before proceeding. After this, you will be able to edit information in for the business profile. Looking at the guidance, it appears the process should be self-explanatory at this point. If Your Business Isn’t Showing Up in Search If your business isn’t showing up in SBS, there are some potential explanations. First, only businesses with an active SAM registration will show up in SBS. If your SAM registration has expired or is otherwise inactive, the first thing you should do is renew that registration. Lacking an active SAM registration can prevent you from receiving federal contract awards. Check on this regularly. If you have an active SAM registration but are still not showing up, you should also consider if your business is listed small for your chosen NAICS codes. As SBA notes: “Small Business Search gets this information from SAM and will only include businesses that SAM indicates are ‘small’ for at least one of the chosen NAICS codes.” Of course, if you aren’t small for those NAICS codes, you should not change it to indicate you are small, but, otherwise, correcting this in SAM should fix the issue. Consider also whether you have properly noted that your purpose for registration on SAM is “All awards” and that your entity structure is properly listed and not tax exempt. Finally, there is an option in SAM to opt your business out of SBS when you register. SAM will ask you at that time whether you would like to opt out of being listed for public searches. If you select yes, your business will be hidden from SBS search results. In all cases, it can take up to 10 business days for SAM to update based on renewed registration, so, if you make changes to SAM and don’t see them immediately reflected in SBS, don’t panic! 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 Introduces its New Small Business Search System first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Many individuals who have gone through SBA’s 8(a) Business Development Program (the 8(a) Program) will tell you that the application process is not for the faint of heart. One of the most time-consuming, and often frustrating hurdles of the application is the Social Disadvantage Narrative (or SDN). Applicants are asked to revisit painful moments where they experienced discrimination. Sharing these deeply personal experiences is what makes it so upsetting for an applicant when SBA pushes back on their narrative – or worse, when SBA questions the bias, finding “legitimate alternative grounds” for the mistreatment. Under the regulations, “SBA may disregard a claim of social disadvantage where a legitimate alternative ground for an adverse employment action or other perceived adverse action exists and the individual has not presented evidence that would render his/her claim any more likely than the alternative ground.” 13 C.F.R. § 124.103(c)(3)(ii). For many applicants it can feel like their most personal moments are being put on trial. In The CTS Grp. LLC, Petitioner, SBA No. BDPT-621, 2025 (Apr. 29, 2025), SBA’s Office of Hearings and Appeals (OHA) considered SBA’s termination of a former 8(a) Program participant after determining the company’s SDN did not demonstrate social disadvantage. The CTS Group LLC (Petitioner) was an 8(a) Program participant whose eligibility had previously been based on the reliance of the presumption of social disadvantage. After the Ultima decision (read our blog about it here), SBA required all current 8(a) participants who had been admitted based on this presumption to submit an SDN establishing social disadvantage. The Narrative Petitioner’s owner, Calvin L. Scott Jr. (Mr. Scott), submitted an SDN on behalf of the company. The narrative described an experience Mr. Scott had in the federal contracting industry as a black man. Upon initial review, SBA sent the SDN back to Petitioner for additional revisions, stating the following, [T]hat one incident presents no instance of chronic and substantial bias, prejudice, and discrimination catalyzing negative impact. You [Mr. Scott] mention that all of the individuals involved were Caucasian. However, you fail to mention any names and any speech/action that evidences bias. The mere fact that those you were dealing with are Caucasian is not sufficient in meeting the preponderance standard. SBA gave Petitioner the following guidance for revisions to the narrative, In order to successfully meet the preponderance of the evidence standard SBA need[s] to clearly see that you have suffered chronic and substantial bias, prejudice, and discrimination based upon one or more objective distinguishing features (i.e., what others see about you when you “walk into a room”) which has had a negative impact upon your entry into or advancement in the business world. After several back-and-forth exchanges, Petitioner’s final revised SDN described two experiences where Mr. Scott had been subjected to discrimination: The first incident detailed Petitioner’s experience serving as a subcontractor. Mr. Scott had reached out to the prime contractor about the ability to add employees to the Petitioner’s subcontract: “Despite demonstrating exceptional expertise and contributing significantly, [Petitioner’s] efforts to expand our role on the contract and add more value were unjustly denied. [Three officials of the prime contractor] denied me the opportunity to add employees under the contract.” The officials “specifically cited [Mr. Scott’s] age and [Petitioner’s] relative lack of past performance as reasons for denying the expansion” of the subcontract agreement.” “At the time I felt [the prime contractor] as a worldwide large contractor was bias[ed] against a young black owned business striving to grow within a competitive landscape dominated by established contractors.” The second incident described a time when Petitioner was not the successful offeror on a contract. Petitioner had met the requirements of the solicitation, even being informed by the contracting officer that Petitioner “was more than likely to win the new contract.” However, despite checking all the boxes, the Petitioner was not the awardee. Mr. Scott later learned that two employees of the procuring agency had labeled Mr. Scott “the new guy” and based their decision on this factor. The SDN provided the following: “This decision was influenced by discrimination, prejudice and bias against [Mr. Scott] as young, qualified, minority owned business striving to grow within the government contracting arena. The contract award was clearly racially bias[ed] by awarding a prime contract based on their personal relationships rather than merit.” SBA Acting Associate Administrator for Business Development (AAA/BD) ultimately found that Petitioner’s final revised SDN insufficient, making the following findings: The first example is unpersuasive to show social disadvantage. The AAA/BD noted that, “Petitioner did not demonstrate that the prime contractor’s decision not to enlarge Petitioner’s subcontract stemmed from any racial or ethnic prejudice or cultural bias.” Legitimate Alternative Ground: The prime contractor may have perceived Mr. Scott’s actions as an attempt to circumvent the prime contractor by directly “soliciting [the] Prime’s customer for work.” 2. The second example is conclusory. The AAA/BD noted that, “the mere fact that Petitioner did not win a particular contract does not establish that “racial bias played a part in the decision.” Legitimate Alternative Ground: The agency could have been motivated to “award to a firm it was familiar with rather than a relative newcomer.” Therefore, SBA terminated Petitioner’s participation in the 8(a) Program because Petitioner’s SDN did not demonstrate the company was owned and controlled by one or more disadvantaged individuals. Holding OHA denied the appeal, ultimately finding the SBA decision was reasonable. In accordance with SBA’s guidance for the SDN, Mr. Scott was required to present facts and evidence that alone established that Mr. Scott had suffered social disadvantage that negatively impacted his entry or advancement in the business world. Under the regulations, SBA may find an SDN insufficient when a “legitimate alternative ground” for the negative outcome exists, and the individual fails to provide a preponderance of evidence that would render their social disadvantage claim more likely than the alternative ground. Here, OHA concluded that the two examples in the SDN did not present evidence that the negative outcome described was attributable to bias rather than the legitimate, non-discriminatory reasons that were raised by the SBA reviewers. As such, OHA denied Petitioner’s appeal. Key Takeaways Submitting a compelling social disadvantage narrative can be a difficult process that requires applicants to relive painful experiences. It’s made even more difficult when an applicant’s personal narrative is met with SBA’s skepticism. Knowing in advance what SBA is looking for can help applicants avoid facing SBA’s suggestions of alternative grounds. Cases like this one, as well as other resources, can help applicants create a narrative that details their personal experiences while meeting SBA’s regulatory demands. Check out these blogs for additional insight for drafting the SDN: Demonstrating 8(a) Social Disadvantage and What SBA is Looking For. Note that SBA may be transitioning to a new review process, so be sure to review all guidance from SBA as you work on the SDN. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA OHA Says: Claiming Social Disadvantage? Prove it! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy 4th of July! We hope that our SmallGovCon readers have a happy and safe holiday. This is a good time to remember that this country would be a far different place had we not achieved independence from the United Kingdom in the manner that we did. And maintaining the independence of this country takes everyone working together and the strength of our government to support the people’s independence and sovereignty. Federal government workers and contractors are crucial to maintaining our country. So raise a glass to them this holiday! The post Happy Independence Day from SmallGovCon! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday and happy summer, everyone! Things are really heating up here in the Midwest as well as the rest of the country. But the heat does not mean the WIR takes a week off. Rather, the news is just as hot off the press as is the weather. This week in federal government contracting saw updates on a GAO budget cut, AI led budget cuts, and increased review of contracts by agency heads. New sole-source thresholds gives a bigger piece of pie to Tribals and ignores small businesses GAO faces nearly 50% budget cut, less oversight of withheld funds in budget plan A deep dive into government contracting Lawmakers demand review of VA’s AI-driven contract cuts A Snapshot of Government-Wide Contracting for FY 2024 (interactive dashboard) GSA and Elastic Partner to Deliver Significant IT Cost Savings Across Federal Government What happens when the agency secretary starts reviewing grants and contracts A new working group wants to make federal procurement more efficient New DoD memo outlines review process for IT consulting contracts Contractor to Pay $1 Million to Settle Allegations of Overcharging U.S. Air Force at Cannon Air Force Base Hanford Contractor, Washington River Protection Solutions (WRPS), Agrees to Pay $6.5 Million to Resolve Allegations of Fraud Meeting of the Interagency Task Force on Veterans Small Business Development The post SmallGovCon Week in Review: June 23-27, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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SBA requires that, for 8(a) Program construction contract set-asides, the contractor must have a “a bona fide place of business in the applicable geographic area.” 13 C.F.R. § 124.501. In 2021, SBA suspended the enforcement of this requirement in light of the COVID-19 pandemic. On June 17, 2025, SBA announced that this moratorium is coming to an end. In this post, we’ll look at the rule and what the end of this moratorium means for 8(a) construction contractors. The Bona Fide Place of Business Requirement The “bona fide place of business” requirement is one we have explored in the past. In fact, in 2023, despite the ongoing moratorium, SBA made a few amendments to the rule for clarification. Essentially, the idea is that, in order to receive an 8(a) set-aside construction contract, the contractor must have an actual place of business in the area the work will be performed. Specifically, 13 C.F.R. § 124.3 defines a “bona fide place of business” as “a location where a Participant regularly maintains an office within the appropriate geographical boundary which employs at least one individual who works at least 20 hours per week at that location.” Basically, SBA is looking for a permanent office (although if you’re presently performing a federal contract in a given state, SBA will say you have a bona fide place of business solely for that state for the duration of that contract). Home offices will count. You can have more than one bona fide place of business too, so this isn’t like the principal office requirement with HUBZone. Furthermore, a contractor has to submit their claimed bona fide place of business for approval to the SBA district office for that location under 13 C.F.R. § 124.501(k)(2). This can be done with regards to a specific procurement or just in general. SBA has to approve of the bona fide place of business before award can be made. That said, a contractor can still submit an offer on the assumption it was approved if it has been waiting for over 15 working days since SBA received the request (five working days from a site visit if SBA conducts one) and hasn’t got a response. Of course, this leaves one question: What area does the bona fide place of business cover? First, the regulation notes that “[a] Participant with a bona fide place of business within a state will be deemed eligible for a construction contract anywhere in that state (even if that state is serviced by more than one SBA district office).” So, if you have a bona fide place of business in, say, Los Angeles, that will be sufficient for any 8(a) construction contracts to be performed in California. Of course, many companies have places of business that are near the border with other states. With regards to locations outside the state, it is essentially up to the SBA area office’s determination. The regulation does give some general guidance on what area the bona fide place of business will be found to cover: “This will generally be the geographic area serviced by the SBA district office, a Metropolitan Statistical Area (MSA), a contiguous county (whether in the same or different state), or the geographical area serviced by a contiguous SBA district office to where the work will be performed.” Essentially, then, unless the location of the contract is in the same state as your already SBA-approved bona fide place of business or you have otherwise gotten SBA’s approval that your place of business is within the area of the contract, you need to submit the bona fide place of business to the SBA area office for the contract site for approval. Oh, one last thing on contracts where work in multiple locations is required: If it’s a single-award contract, you have to have a bona fide place of business where the majority of the work (as determined by dollar value of the work) will be performed. If it’s a multiple-award contract, as long as you have a bona fide place of business at any location where work is to be performed, that will suffice. End of the Moratorium As noted above, SBA suspended this requirement in 2021. Therefore, if you receive an 8(a) set aside construction contract in the past few years, you should not be alarmed that you did not submit a bona fide place of business approval request for the contract. However, on June 17, 2025, SBA announced the moratorium is ending. The good news is you have an upcoming bid is that the moratorium did not end as of the date of that announcement. To give contractors time to adjust, the moratorium will end on September 30, 2025. After that time, the bona fide place of business requirement will apply again. From that date on, you will need to have an established bona fide place of business in the area of the contract for all 8(a) construction set asides. 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 End of the Bona Fide Place of Business Moratorium first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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There is an old saying that the only thing constant is change. While true in a broad sense, it is especially true in federal contracting. At some point a federal contractor will find itself facing a change to its contract or performance, costing it money or time. Inevitably, that leads to the question of whether an REA should be pursued, or if a claim should filed. One of the most common responses to that question is actually another question: what’s the difference between an REA and a claim? Let’s answer that question here. The answer to what’s the difference between an REA and a claim really goes back to the procedure for each. While both actions pursue compensation from the agency related to a contract, an REA is less formal than a claim, while a claim triggers formal legal rights and appeals possibilities. But that only scratches the surface. An REA . . . REA is short for “Request for Equitable Adjustment.” An equitable adjustment, despite its common usage within the FAR, is not defined specifically in the FAR. Courts have defined it as “. . . a remedy payable only when unforeseen or unintended circumstances, such as government modification of the contract, differing site conditions, defective or late-delivered government property or issuance of a stop work order, cause an increase in contract performance costs.” Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1577 (Fed. Cir. 1995). So, at the most basic level, an REA is used to simply ask the agency to compensate you for a change to the contract, performance, timing, or other issue present in the contract. The FAR recognizes the opportunity for an REA in multiple situations, but the most common situations are when there is a change or partial termination of a contract. For example, the oft-used FAR 52.243-4 Changes provision mentions “equitable adjustment,” and sets forth the following standard in part of section (d): “If any change under this clause causes an increase or decrease in the Contractor’s cost of, or the time required for, the performance of any part of the work under this contract, whether or not changed by any such order, the Contracting Officer shall make an equitable adjustment and modify the contract in writing.” There is a similar clause in the Fixed Price Contract changes FAR Provision and even the DFARS has a section dedicated to REAs. The concept of REAs is found in many federal regulations, but to boil it down: if there was a change in the contract, there is the possibility for the contractor to ask the agency for an equitable adjustment to the contract so they may be compensated under the contract due to the effects of that change. (For a good run down on why one should file an REA, check out our entry in our Why File series on REAs). Note that we state they can “ask.” A hallmark of REAs are that they represent more of a negotiation or discussion with the agency. While the FAR says the CO “shall” make an equitable adjustment based on an increase (or decrease) in costs, it really depends on what changed, and what costs the contractor puts forth for compensation and negotiation. As REAs are seen as a negotiation, this also allows for the possibility of requesting attorneys fees related to the REA under FAR 31.205-33. In general, REAs are less adversarial. While REAs do have certain varying deadlines for the contractor to meet to request an equitable adjustment (such as the FAR provisions discussing partial contract termination), REAs are not as rigid as a claim. However, this flexibility can also be a downside, as agencies could delay responses to an REA or be less cooperative in the REA process, as compared to a claim, despite many of the FAR provisions stating an equitable adjustment “shall” be conducted. . . . Versus a Claim So, what is a claim? A claim is dictated by FAR 52.233-1 and is defined under this disputes clause as: “. . . a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract.” Right away, it is clear this is a much more formal process than an REA. Note that it is a “written demand” that is asserting a right, where an REA is more of a back and forth request for review. Claims must be in writing, and generally must be submitted within 6 years after the “accrual of the claim” occurs. In contrast, some REA deadlines that are spelled out in FAR clauses, are often measured in days. Once a claim is filed with the CO, it starts the clock on a required response from the CO which is typically 60 days, while REAs don’t have a required response deadline for the agency. Once the CO makes a decision on a claim, it is the final decision of the CO. There is no negotiation or back and forth at that point. If the contractor is not satisfied with that final decision of the CO, it can then be appealed to a board of contract appeals or the United States Court of Federal Claims. An agency is not required to respond to an REA. And, if denied, an REA has no direct appeal process. Of course, something that is initially submitted as an REA could subsequently be turned into a formal claim, as claims typically have a 6 year window. Claims also could require certain certifications of costs. Both an REA and claim focus on payment or compensation under a contract due to some issue under the contract, but claims are more formal, even containing deadlines for the agency’s response. Both REAs and claims could be sent to ADR under FAR 33.214 and contractors are expected to continue diligently with performance while the REA or claim is processed. REAs and claims, while potentially seeking the same compensation, vary in their procedure, formality, and underlying FAR provisions. Therefore, a quick answer to the FAQ of “what’s the difference between an REA and a claim” is: REAs are less formal negotiations for compensation under a change in the contract, while claims are formal demands for payment that could result in appeals in front of a court or tribunal. As shown, there is much more to that answer, but in general, both have their advantages and disadvantages. Often REAs will precede a formal claim, but REAs and claims are distinctly different avenues for contractors to pursue compensation due to changes in their contracts with the government. Of course, the decision of which one to pursue, or if these are even possibilities under the contract, is something that is fact specific and should be discussed with a federal government contracts attorney. If you find yourself still scratching your head on which avenue may be best, or even wanting to discuss more of the nuanced differences between an REA and claim, reach out to a federal government contracts attorney, such as the attorney-authors at SmallGovCon. 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 GovCon FAQs: What is the Difference Between an REA and a Claim? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! Juneteenth, celebrated on June 19th, marks a powerful moment in American history—the day in 1865 when enslaved people in Galveston, Texas, learned they were free, more than two years after the Emancipation Proclamation. It stands as a celebration of freedom, resilience, and the ongoing struggle for equality. Have a wonderful weekend! This week in federal government contracting news, keep your eyes on increased review of contracts at DHS, GSA’s plans for tech resellers, and reversals of some cuts at DOE. GAO finds Trump administration’s second violation of federal spending law You’re Invited: Live Demo of Procurement Co-Pilot – See It in Action! SBA Reinstates Rule to Return Federal Contractors to Work ‘Absolutely nuts’: DHS secretary to review all contract and grant awards over $100k Pentagon cancels multibillion dollar household goods moving contract GSA plans to ‘flip’ the role of tech resellers with OneGov strategy Army promises detailed transformation plan to Congress within 10 days Energy secretary signals reversal of some cuts to national labs Lawmakers press DoD officials on MILCON budget: ‘What’s that $900 million for?’ OpenAI awarded $200M DOD prototype contract Former USAID official, three contractors plead guilty in $550M bribery scheme The post SmallGovCon Week in Review: June 16-20, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Joint ventures created between a small business protégé and a large mentor are without a doubt a very alluring and popular aspect of the SBA’s Mentor-Protégé Program. It provides an incentive to potential mentors to share their connections, resources, experience, and industry knowledge with small businesses, many of whom are not only small, but participants in one of the various SBA programs such as the 8(a) Program and Woman-Owned Small Business Program, to name a couple. But, as appealing as mentor protégé joint ventures are, a recent decision demonstrates (yet again) there are a number of joint venture requirements that must be met if you want to experience their benefits. And failure to do so can result in some undesirable consequences. Multimedia Environmental Compliance Group, JV, SBA No. SIZ-6354 (May 12, 2025) considered a size determination in which the joint venture agreement (JVA) was found deficient because the non-managing venturer had negative control over actions that were considered day-to-day contract administration, which is improper under 13 C.F.R. § 125.8(b)(2)(ii). That regulation states that a small business joint venture agreement must have a provision: Designating a small business as the managing venturer . . .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”). (A) The managing venturer is responsible for controlling the day-to-day management and administration of the contractual performance of the joint venture, but other partners to the joint venture may participate in all corporate governance activities and decisions of the joint venture as is commercially customary. The joint venture agreement may not give to a non-managing venturer negative control over activities of the joint venture, unless those provisions would otherwise be commercially customary for a joint venture agreement for a government contract outside of SBA’s programs. A non-managing venturer’s approval may be required in, among other things, determining what contract opportunities the joint venture should seek and initiating litigation on behalf of the joint venture. Also relevant here, SBA’s small business joint venture rules require a provision “[o]bligating 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” per 13 C.F.R. § 125.8(b)(2)(viii). Background There is a lot of background information included in this decision, so I will try to keep this information short and sweet. Multimedia Environmental Compliance Group, JV (the MECG JV) is a joint venture between Nicklaus Engineering, Inc. (NEI or protégé) and Wood Environment and Infrastructure Solutions, Inc. (WEIS). Additionally, NEI and WEIS were participants in the SBA’s Mentor-Protégé Program, with NEI being the small business protégé and WEIS as the large mentor. In addition to the MECG JV, NEI, the protégé, had many other joint ventures. The MECG JVA As relevant here, the JVA stated: “[e]ach RFP and proposal will be reviewed by the Responsible Manager, an NEI employee, and the Program Manager, a WEIS employee.” NEI’s President was identified as the Responsible Manager. The Program Manager remained unnamed. The Responsible Manager and Program Manager were tasked with the “ultimate responsibility for contract performance and will supervise the Task Order Managers who will report to her” and would “administer the ordinary day-to-day business of the Joint Venture.” The Responsible Manager and Program Manager would “jointly lead contract negotiations.” Additionally, NEI was appointed as the Managing Party, which was “responsible for conducting the Joint Venture’s business affairs.” The JVA also created an Executive Committee for “certain designated matters,” which would have one member from each venturer, each with an equal vote, and all decisions must be unanimous. The Executive Committee was responsible for the following actions, including: (i) To make decisions on general policy matters related to the Joint Venture which are not specifically delegated to the Managing Party or the Responsible Manager or the Program Manager, as defined in Subsection 6, hereof; (ii) To approve any extraordinary extension to the Scope of Services; (iii) To receive and review reports on the progress of the Services. The Responsible Manager and/or Program Manager shall meet with the Executive Committee when requested by said Committee; (iv) To approve all expenditures of the Joint Venture not billable to NAVFAC; (v) To provide other services as set forth elsewhere in this Agreement; (vii) To issue any public release or advertisement regarding this Agreement or the Contract such approved public release or advertisement shall mention both Parties; and Further, the JVA stated that if either party defaults its obligations under the contract, the remaining party may, if it elects to, complete performance of the contract. OHA Opinion The Area Office determined that MECG’s JVA met the requirements of 13 C.F.R. § 125.8(b) and (c). Following the size determination, Acacia7, the protester turned appellant, appealed the Area Office’s decision at the SBA’s Office of Hearings and Appeals. The appeal argued that the MECG JVA did not meet the joint venture regulatory requirements in 13 C.F.R. §125.8(b) because the non-managing venturer/mentor was a part of the Executive Committee. And not just any part of the Executive Committee. Acacia7 pointed to 13 C.F.R. § 125.8(b)(2)(ii), stating that the JVA failed to designate the small business as the managing venturer responsible for controlling the day-to-day management and administration because WEIS’s position in the Executive Committee granted it negative control of the joint venture. Finally, Acacia7 asserted that the JVA did not obligate parties to ensure performance if a contract set aside for small businesses despite the withdrawal of a member of the joint venture as required by 13 C.F.R. § 125.8(b)(2)(viii). Analysis OHA found that MECG’s JVA complied with 13 C.F.R. § 125.8(b)(2) in all aspects but two. First, OHA held that the Area Office erred when finding that the JVA complied with 13 C.F.R. §125.8(b)(2)(viii), which requires the parties to a joint venture to ensure performance despite the withdrawal of any member. MECG’s JVA gave the non-defaulting party the right to elect to complete the contract, not an obligation to do so, which is required per 13 C.F.R. § 125.8(b)(2)(viii). OHA also held that the JVA failed to comply with 13 C.F.R. § 125.8(b)(2)(ii). This requires a JVA to appoint a Managing Venturer and a Responsible Manager who have control of the “day-to-day management and administration of the contractual performance of the joint venture.” Although the JVA did appoint a Managing Venturer and a Responsible Manager, the Executive Committee outlined in the JVA had one representative from both NEI and WEIS, each with an equal vote. Additionally, the Program Manager, a WEIS employee, was given negative control over many of the duties that are generally considered day-to-day management and contract administration, of which the Managing Venturer and Responsible Manager should retain control of. Thus, the JVA failed to comply with the requirements at 13 C.F.R. § 125.8(b)(2)(ii) because the Managing Venturer was required to share authority with the non-Managing Venturer, usurping its control. The Lesson So, what can a non-Managing Venturer have negative control over? Commercially customary actions , which the SBA also confusingly calls extraordinary actions. This decision specifies that the following actions all constitute extraordinary actions that may require the minority shareholder’s input, but do not create negative control: Participate in corporate governance as is commercially customary; Have negative control over certain decisions if those would be commercially customary for a joint venture agreement for a government contract outside of SBA’s programs; Institute litigation; Require approval of which contract opportunities the joint venture should pursue; Have the ability to block certain extraordinary actions via supermajority provisions if those supermajority provisions are crafted to protect the investment of the minority shareholders and do not to impede the majority’s ability to control the concern’s operations or to conduct the concern’s business as it chooses; Dissolve the concern; Approve the addition of any new members or the withdrawal of any old members; To increase or decrease the size of the Board; To increase or decrease the number of authorized interests; To reclassify interests; Sell or otherwise dispose of the firm’s assets; Admit new members; Amend the JVA in any manner that materially alters the rights of existing members; File for bankruptcy. OHA found that actions outside of those listed above fail to comply with the SBA’s joint venture regulations and interfere with the small business’s ability to control the contract administration and day-to-day management of the joint venture. Conclusion The case discussed here is one of vital importance. The SBA’s joint venture regulations contain what can be confusing requirements related to control by the small business or managing venturer. Failure to follow those provisions can result in following these requirements. And recent regulatory updates and administrative decisions make it a subject matter that is still evolving, emphasizing the importance of staying up to date. Questions about this post? Email us Need legal assistance for a federal government contracting matter, give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA’s OHA: A Joint Venture Agreement Can’t Step on the Managing Venturer’s Toes first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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The word “termination” in nearly every context elicits concern. And in federal contracting, such concern may often be warranted. Some terminations are no big deal, resulting in a federal contract–or even just part of one–being ended a bit early for convenience of the government. But other terminations, based on alleged default or deemed “for cause,” can have significant negative impacts (especially on small and disadvantaged businesses). So, one thing remains consistent across the board for federal contract terminations: it is crucial to understand the type of termination you are issued, its legal implications, and your rights and options for resolution. This article provides a general overview of terminations. Future posts will dive in deeper to contractor termination rights and options and settlement proposals. FAR part 49 covers “Termination of Contracts” in the federal government contracting realm. Its scope includes a contracting officer’s authority and responsibility to terminate contracts, an agency’s procedural and notification duties for terminations, settlement agreements, and various other principles applicable to the two main types of federal government contract terminations: (1) terminations for convenience, and (2) terminations for default (also called “terminations for cause” for certain contract types). Terminations for Convenience This refers to the government’s right to end a contract (really) whenever and for whatever reason it wants. It is typically triggered by the applicable contracting officer’s decision that such a termination would be most beneficial to the government and/or taxpayers. And such a decision is generally given strong deference. FAR 52.212-4(i), and related clauses similarly, state: Termination for the Government’s convenience. The Government reserves the right to terminate this contract, or any part hereof, for its sole convenience. In the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination. The Contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. This paragraph does not give the Government any right to audit the Contractor’s records. The Contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided. Indeed, there’s not much a contractor can do to change or prevent an agency’s termination for convenience. It really is entirely up to the contracting officer to decide if finishing out the work is necessary or beneficial–or, for whatever reason, is not. But this is also why the FAR’s termination for convenience cost settlement rules generally allow recovery of a wider range of costs than the other FAR clauses. Nearly every federal government contract incorporates the FAR clause giving the government termination for convenience rights. And there are different termination for convenience clauses for different kinds of contracts. But they work generally the same way. FAR 49.201(a) states the general principles behind compensating a contractor terminated for convenience. But the main takeaway is that there is no hard-and-fast calculation to be done to figure out what is owed. The government is required to work with the contractor to negotiate and settle on fair amount of compensation. FAR 52.249-2(e), the termination for convenience clause for fixed price contracts, (and other, similar FAR clauses) require the contractor to submit a settlement proposal to the contracting officer as soon as possible upon such termination–and no later than a year after such termination’s effective date. As you will see below, ensuring your settlement proposal is considered timely submitted is crucial. Now, what is “on time” or “timely” for each proposal–in my own experience–is not always easy to deduce. Even though the FAR sets a broad timeframe (from ASAP to one year out)–and potentially, any shorter deadline set by the agency could be argued and found contrary to the FAR–many agency’s still set their own “deadlines” for the settlement proposal. In such cases, unless you are ready and willing to litigate, it is often best to just meet such deadlines. And if you simply cannot do so, asking the contracting officer for an extension of the deadline–in writing–is often your best bet. So, now we know contractors must submit settlement proposals on time; the next logical question is “what costs can/should I include?” All these termination for convenience FAR clauses similarly insist that the terminated contractors’ settlements should fairly compensate them for work already done–and for any preparations made for the terminated work, with a “reasonable allowance for profit” factored in. See FAR 49.201(a) for an example of this language. But there are some limitations and boundaries on such compensation too. Indeed, the amount the contractor receives cannot be more than the contract price, minus whatever they’ve already been paid and the price of any work not terminated. But as you may already be thinking, this still leaves a lot of room to negotiate a fairly wide range of costs on many contracts. As such, it can be a generally wise idea to list every such allowable cost the terminated contractor can demonstrate–even with the understanding that the contracting officer will not approve all such costs (and is really most likely to meet in the middle somewhere). And fortunately, the FAR requires the contracting officer to “show its work” in detail when coming to such determinations–ensuring the contractor knows exactly how the decision was made and the compensation was calculated–so it can make an informed decision on whether or not to appeal any such determination. If the contracting officer fails to do this, that alone can be a strong push toward the appeal avenue, given the basic legal duty was not met. Indeed, by law, contractors have the right to appeal such contracting officer determinations if they do not feel they were fairly compensated in accordance with their governing FAR clause–provided they submitted their settlement proposal on time–as you can see from FAR 52.249-2(j) and similar clauses. To bring it full circle here, this is yet another reason it is crucial to timely submit the original settlement proposal to the contracting officer. Indeed, along with losing your right to appeal, failure to submit a settlement proposal on time actually gives the contracting officer the right to unilaterally determine a fair amount to pay you, instead. And it’s probably safe to assume you’ll be walking away with less than what you would have bargained for–sometimes, simply because the contracting officer is not even aware of all allowable costs incurred. Finally, it is not uncommon for contracting officers to also ask contractors what steps they took to mitigate their costs incurred upon being notified they were terminated for convenience. This comes from language in FAR 52.212-4(l), and related clauses, which you read above, to the extent of: “[t]he Contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided.” This is an important piece of the puzzle to keep in mind, as being able to demonstrate with documentation that you indeed took action to mitigate such costs (i.e., tried to rent/sell things that were no longer needed, get out of a lease, etc.) can help support full compensation of the the costs you did incur. So, if you find yourself terminated for convenience, make sure to get those settlement proposals in on time to give your company the best chance to maximize recovery of allowable costs. As long as you do so: your contracting officer must examine your settlement proposal and work with you to negotiate terms; and you retain the right to appeal the contracting officer’s decision if you don’t like it. Notably, there are even some much-less-well-known alternate dispute resolution provisions of the FAR that can be invoked (instead of initiating a full-blown appeal) if you cannot come to an agreement with your contracting officer on things like costs and compensation. Nonetheless, the FAR does say, “[w]hen possible, the TCO should negotiate a fair and prompt settlement with the contractor[,] and “[t]he TCO shall settle a settlement proposal by determination only when it cannot be settled by agreement.” And many times, agreement is reached without issue. Terminations for Default or for Cause Ok, yes, this is the scarier one. Does it mean you lost your contract, your right to certain payments, and maybe even your ability to get future government work? Well, possibly. But on a positive note, the FAR and applicable legal precedent do set the bar pretty darn high for a termination for default or termination for cause (they are essentially the same thing for different types of contracts). Indeed, the Civilian Board of Contract Appeals has repeatedly called it “a drastic sanction which should be imposed (or sustained) only for goof grounds on solid evidence.” And FAR 52.212-4(m), and related clauses similarly, state: Termination for cause. The Government may terminate this contract, or any part hereof, for cause in the event of any default by the Contractor, or if the Contractor fails to comply with any contract terms and conditions, or fails to provide the Government, upon request, with adequate assurances of future performance. In the event of termination for cause, the Government shall not be liable to the Contractor for any amount for supplies or services not accepted, and the Contractor shall be liable to the Government for any and all rights and remedies provided by law. If it is determined that the Government improperly terminated this contract for default, such termination shall be deemed a termination for convenience. So, basically, if you don’t hold up your end of the deal, the government will terminate your contract, negating your right to certain payment, and you will likely have a hard time getting future federal government work too. Again using the FAR clause for termination for default of a fixed price supply and service contract at FAR 52.249-8(f) (and again, there are other, similar clauses for other contract types), the government will still pay the contract price for completed supplies delivered and accepted. But unlike a termination for convenience, there’s no negotiation for future profits or work planned. And importantly, these FAR clauses do include procedures that the agency must follow in order to termination for cause or default, such as the requirement to issue a cure notice or notice of default to the contractor first and allow time to fix the issue. But even then, you only have ten days from the time you receive notice of default to fix the problem or you’re pretty much out of luck, in accordance with FAR 52.249-8(a)(2) and similar related clauses. That said–based on the high bar set by the FAR, the Boards of Contract Appeals, and the courts–there is still recourse available if you can show that the default wasn’t your fault or the high bar was simply not met. Indeed, if any failure to perform is caused by circumstances beyond the contractor’s control (think floods, pandemics, or a Red Dawn situation), such contractor is not liable for excess costs the government incurs in trying to complete the contract and for tracking down all of the supplies and materials that entails. And if you can prove you actually weren’t in default after the contract is terminated, the default was excusable, or the agency’s default termination simply doesn’t meet the required standards of the law, then (as it says in the FAR) your rights and obligations will be the same as if it had been terminated for convenience. And luckily, this means you’ll probably get more money and your reputation will remain intact. Additionally, under the FAR, a notice of a termination for default–alone–gives the terminated contractor the right to immediately appeal to the Board of Contract Appeals or the Court of Federal Claims, as it is considered the final decision of the contracting officer. And in most cases, such appeal is highly recommended if there are any appeal grounds present–as again, a default termination can be a really big deal and major hurdle for contractors seeking future government contracts. —————————————————————————————————————— In summary, knowing your rights is key if your company faces either type of termination. You’ll want to know what kind of termination clause your contract has, what steps the contracting officer has taken to that point, and what kind of termination you’ve been served with in order to mitigate risk and loss and to protect your company. Termination (of any kind) isn’t fun when you’re in the middle of working on a contract. But if you understand what’s happening, what is required, what your rights are, and how to respond to it, you can maximize how much you walk away with and make sure you’re still standing when the next opportunity comes around. Need help dealing with a federal contract termination? Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. The post Back to Basics: Terminations first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Are you a disadvantaged small business owner looking for a leg-up in the federal marketplace? Well, this is your chance! Puerto Rico APEX Accelerators are hosting a FREE webinar to help you understand how the SBA 8(a) Business Development Program can open the door to exclusive contracting opportunities. And in very exciting news, this will actually be our firm’s first ever bilingual webinar! Indeed, our very own Nicole Pottroff will put her years of Spanish education to the test in an effort to maximize accessibility to this valuable information about federal government contracting. Webinar will be presented in English with Q&A to follow in Spanish. What You’ll Learn: How the SBA 8(a) program works and why it matters Key benefits like sole-source contracts and federal mentorship Eligibility requirements and how to apply Common mistakes that can delay or deny certification Live Q&A (*in Spanish) with a top expert in federal contracts law attorney, Nicole Pottroff Tips for starting your application Who Should Attend? Small business owners aiming to grow through federal contracting Government contracting consultants Entrepreneurs seeking new growth avenues Spots are limited – register now to reserve your place! Register here. The post [1st Ever Bilingual] Webinar Announcement: The SBA 8(a) Program, June 26, 2025, 12:30 PM – 2:30 PM CDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Another work week in the books. Hope you had a great one. Happy Father’s Day to all the dads out there and hope they have a relaxing weekend! This week in federal government contracting included stories about DoD fraud, DOGE cost-savings, and GSA centralizing additional work. USDA ended contract for food assistance ‘clearinghouse’ required by law, lawsuit claims Trump’s pick for VA watchdog role promises independence, impartiality VA employees raise concerns over short-staffing, looming cuts at rally DoD fraud detection efforts at ‘starting line,’ watchdog says Two more centralization, cost savings initiatives from GSA GSA Announces Transactional Data Reporting Expansion for Increased Procurement Transparency SBA sticks to DOGE cost-savings claims, though details — and math — remain fuzzy Hearing Wrap Up: Government Procurement Process Must Modernize to Boost Defense Innovation Veterans Affairs Contractor Agrees to Pay $4.3 Million to Resolve Claims of Overbilling for Products Hunger Free America files lawsuit after cancellation of USDA contract Timmons Opens Hearing on Accelerating Defense Innovation The post SmallGovCon Week in Review: June 9-13, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Touted as a “game-changer” when it was first introduced in 2016, the U.S. Small Business Administration’s All Small Mentor-Protégé Program isn’t new anymore. Known now as simply the “SBA Mentor-Protégé Program,” it is still extremely useful for large and small contractors alike. Government contracts attorneys John Holtz and Stephanie Ellis of Koprince McCall Pottroff LLC will explain the ins and outs of the SBA Mentor-Protégé Program, covering the program’s eligibility requirements, its potential benefits (including the ability to form special mentor-protégé joint ventures), the application process, and common misconceptions and pitfalls. Additionally,they will provide an introduction to the even older DoD Mentor-Protégé Program, which set the stage for the SBA’s program, and compare the two programs. Register here. The post Webinar! SBA & DoD Mentor-Protégé Program, June 24, 2025, 10:00-11:30am MDT, hosted by Texas El Paso APEX Accelerators first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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A couple FAR notices have removed proposed SBA rules relating to orders on multiple award contracts. This withdrawal seems to have the affect of decreasing the overall application of the small business Rule of Two, as discussed here. However, it only impacts the application of the rule of two to orders under multiple award contracts that were not restricted to small businesses. So, it’s impact is relatively narrow. Protests of Orders Under Certain Multiple-Award Contracts In this notice, the government is withdrawing a proposed rule dealing with Protests of Orders Under Certain Multiple-Award Contracts. That proposed rule stated: “DoD, GSA, and NASA agree with, and adopts, GAO’s conclusion that ‘the statutory grant of discretion does not require application of the Rule of Two prior to issuing an order, unless the multiple-award contract or task order solicitation expressly anticipated the use of the Rule of Two.’” ITility, LLC, B-419167 (Dec. 23, 2020), 2020 CPD ¶ 412. That proposed rule would have included the following language in FAR 16.505: (iv) In accordance with 15 U.S.C. 644(r), a contracting officer’s decision to set aside or not set aside an order, for small business concerns, is an exercise of discretion granted to agencies and not a basis for protest. However, this does not preclude the filing of a protest of such an order if such a protest would otherwise be authorized on a separate basis recognized in accordance with paragraph (a)(10)(i) of this section. The proposed rule was “expected to deter contractors from submitting protests of decisions to set aside or not set aside orders placed against multiple-award contracts, thereby saving contractors and the Government time and resources.” Interestingly, this rule was designed to reduce protests, but it has now been rescinded. Small Business Participation on Certain Multiple-Award Contracts The proposed rule from January 2025 was designed to “expand the use of small business set-asides for orders against multiple-award contracts.” The “proposed rule would require contracting officers to exercise their discretion to set aside an order for small business if the contracting officer determines that, under an applicable multiple-award contract, there is a reasonable expectation of obtaining offers from two or more responsible small business contract awardees that are competitive in terms of fair market price, quality, capability, ability to comply with the delivery or performance schedule, and past performance.” It would have allowed for exceptions for GSA schedules and for “agencies to establish procedures for contracting officers to exercise agency-specific exceptions.” Withdrawal In withdrawing both rules, the FAR Council said: “E.O. 14148, Initial Rescission of Harmful Executive Orders and Actions, repealed E.O. 14091 on January 20, 2025. As a result, the FAR Council is withdrawing the proposed rules. The FAR Council will focus on reducing the regulatory burden for all small businesses with the goal of increasing small business participation in Federal procurement.” The corresponding SBA proposed rule has not yet been withdrawn, but that is likely to occur. That “proposed rule would clarify the applicability of the Rule of Two to multiple-award contracts by directing that an agency set aside an order under a multiple-award contract for small business contract holders when the contracting officer determines there is a reasonable expectation of obtaining offers from two or more small business contract holders under the multiple-award contract that are competitive in terms of market prices, quality, and delivery.” So, the proposed rule would have required setting aside of certain orders under the Small Business Rule of Two. But now that has been rescinded. While the FAR Council still has the goal of “increasing small business participation,” that will not be done through applying the rule of two to orders. This withdrawal does not impact the basic rule of two regulation, found at FAR 19.502-2. Stay tuned to SmallGovCon to see if that rule may be affected by future changes to the FAR. Questions about this post? Email us Need legal assistance for a federal government contracting matter, 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 FAR Council Removes Rule on Small Business Orders first appeared on SmallGovCon - Government Contracts Law Blog.View the full article