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When it comes to SBA’s many small business socioeconomic certification programs, the 8(a) Business Development Program is often considered SBA’s “golden child”–as its potential benefits are nearly endless. But it certainly wouldn’t be a “golden child” at all if just anyone could get into it. The 8(a) Program has some of the most extensive and strict requirements out there. In this post, we’ll dig into the basic components of one of those requirements: economic disadvantage. But don’t fret, this post is worth a read for our experienced 8(a)-ers and those just learning about the program. For the former, the information below can serve as a refresher on the basics of economic disadvantage–but also, a source for SBA’s most recent economic disadvantage thresholds (as of 2024, as these are updated periodically for inflation). For the latter, we suggest reviewing these basics of economic disadvantage along with our other Back to Basics blogs on the 8(a) Program (this one discussing the program, generally, and this one discussing all the rules for eligibility). What does it mean to be “economically disadvantaged” in the context of 8(a) generally? As you may already know, or may have read about in the other blogs linked above, SBA’s rules for basic 8(a) eligibility require the applicants to be unconditionally owned and controlled by one or more individuals who are both socially and economically disadvantaged. According to SBA, an economically disadvantaged individual is simply a socially disadvantaged individual “whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged.” Per SBA: In considering diminished capital and credit opportunities, SBA will examine factors relating to the personal financial condition of any individual claiming disadvantaged status, including income for the past three years (including bonuses and the value of company stock received in lieu of cash), personal net worth, and the fair market value of all assets, whether encumbered or not. An individual who exceeds any one of the thresholds set forth in this paragraph for personal income, net worth or total assets will generally be deemed to have access to credit and capital and not economically disadvantaged. Now, again, economic disadvantage is just one of several financial/economic based requirements for the 8(a) Program; but it is unique in that economic disadvantage looks at finances of the disadvantaged individual owner(s)/manager(s) who will be qualifying the applicant/participant company for the program (not the finances of the applicant/participant company itself). And this is important to keep in mind as we run through the three thresholds that make up this 8(a) requirement, as it gives rise to some common confusion our experience assisting with the 8(a) Program. What are SBA’s current economic disadvantage thresholds? SBA’s economic disadvantage regulation (found at 13 C.F.R. § 124.204) lays out the “cut-offs” or maximum thresholds for the three different areas of an individual’s finance that SBA will assess. And these are an all or nothing package-deal. SBA will reject an applicant (or graduate/terminate a current participant) if any of its individual owners/managers upon whom eligibility is based fall above any of these three thresholds while applying to or participating in the 8(a) Program. But SBA is not unreasonable when it comes to the constantly changing economy we live in; so, as we’ve written about previously, these thresholds are reevaluated periodically, with the most recent increase occurring in 2022 to account for inflation. First, the disadvantaged individual’s personal net worth must be less than $850,000. This “adjusted net worth” calculation, as we like to call it, excludes a few things, though, including: (1) the individual’s equity in the applicant/participant company; (2) their personal residence; and (3) any investments they hold in an IRA or other retirement account. Notably, one’s equity in their own company may depend on how specifically that company and its finances are valued. So, while this threshold (like the other two) looks at the individual’s finances, there is a crucial interplay with the company’s own finances to keep in mind, as some applicants/participants are able to find different valuations of the company and its assets from different sources. Second, the individual’s personal income must not exceed $400,000 per year when averaged over the three years preceding the application (or the time of the reevaluation, for current participants). In general, if one exceeds this threshold, SBA will presume the individual is not economically disadvantaged. But take note of SBA’s specific language here; this threshold is a bit different than the other two discussed in this post. This one applies a presumption, allowing a bit of wiggle room for special circumstances (while exceeding either of the other two thresholds results in automatic rejection/termination). This presumption may be rebutted if the individual can demonstrate to SBA that their income for a specific period of time considered in the calculation was not typical or unusual–and that it is unlikely to occur again in the future. It can also be rebutted if the individual can show losses commensurate and directly related to the earnings were suffered and should be deducted from the calculation. And it can be rebutted if the individual has an S corporation, LLC, or partnership and can provide documentary evidence showing such income was either reinvested in the company or used to pay the company’s taxes. Third, the fair market value of all assets held by the disadvantaged individual–this time, including their primary residence and equity in their company–must be at or below $6.5 million. Like the first threshold for adjusted net worth, however, this requirement still excludes investments in IRAs or other retirement accounts. But that is about it. As SBA’s rule regarding this threshold states, the “individual will generally not be considered economically disadvantaged if the fair market value of all his or her assets” exceeds this value. What will SBA look at to determine whether an individual is economically disadvantaged under these thresholds? SBA’s economic disadvantage rules require that “[e]ach individual claiming economic disadvantage must submit personal financial information.” This often includes the individual’s tax records, financial statements, and SBA’s own forms covering their finances and assets. The rules also note the following regarding the marital status of the individual being reviewed: When married, an individual claiming economic disadvantage must submit separate financial information for his or her spouse, unless the individual and the spouse are legally separated. SBA will consider a spouse’s financial situation in determining an individual’s access to credit and capital where the spouse has a role in the business (e.g., an officer, employee or director) or has lent money to, provided credit support to, or guaranteed a loan of the business. SBA does not take into consideration community property laws when determining economic disadvantage. Finally, if you are thinking, at this point, how easily one could simply “move money around” to meet these thresholds for economic disadvantage–SBA is one step ahead of you. The economic disadvantage rules also give SBA the authority to “look back” at any transfers within the last two years of the 8(a) application or reevaluation of the 8(a) participant, and with few exceptions, to include such in the calculations. SBA’s rules state: SBA will attribute to an individual claiming disadvantaged status any assets which that individual has transferred to an immediate family member, or to a trust a beneficiary of which is an immediate family member, for less than fair market value, within two years prior to a concern’s application for participation in the 8(a) BD program or within two years of a Participant’s annual program review, unless the individual claiming disadvantaged status can demonstrate that the transfer is to or on behalf of an immediate family member for that individual’s education, medical expenses, or some other form of essential support. The only other exception in the rules is for “any assets transferred by that individual to an immediate family member that are consistent with the customary recognition of special occasions, such as birthdays, graduations, anniversaries, and retirements.” But outside of these clearly stated exceptions, SBA tends to apply this rule quite strictly. * * * So, that is 8(a) economic disadvantage in a nutshell. But again, before you get too excited about your personal financial compliance here, don’t forget about all the other 8(a) requirements, including those looking at the company’s finances. One such rule is the “Potential for Success” rule (covered in this prior blog and this blog), requiring 8(a) applicants/participants to demonstrate “reasonable prospects for success in competing in the private sector.” In other words, SBA wants to be confident your business will make it before they hand you up to nine years of grade-A federal contracting opportunities. And finally, like all of the SBA’s socioeconomic programs, there are still specific size requirements for any company applying to or participating in the 8(a) Program (which you can read about here). But as we have repeatedly assured you all, the 8(a) Program almost always seems to be worth it. 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 Back to Basics: 8(a) Program Economic Disadvantage first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday and we hope you had an enjoyable Juneteenth. Yesterday was the first day of summer and our humidity was a balmy 96% on the first official day! Whew…so hot. I think that everyone here would agree that we hope that won’t be the norm. We hope you have a great weekend and find a nice cool place to read the articles we have included below. Enjoy! This week in federal government contracting news: agencies are cracking down on everything from cybersecurity to discrimination in the federal marketplace; GAO is pushing for faster and more private procurements; Artificial Intelligence continues to make its way into government acquisitions and may even aid in disabled veterans living independently; and GSA schedules and our U.S. Supply Chains continue to grow in strength and popularity. Read about these and other happenings in the procurement world below. GSA Touts Updated New Procurement Services to Agencies Presidential Innovation Fellows launches first cohort focused exclusively on Artificial Intelligence Consulting Companies to Pay $11.3M for Failing to Comply with Cybersecurity Requirements in Federally Funded Contract Biden Administration Establishes Council Tasked With Ensuring Resilience of US Supply Chains SBA announces $30M in funding for Women’s Business Centers GAO Says Pentagon Still Challenged With Slow Contracting Speed GSA contracting officers are driving schedule holders crazy VA looking at ‘smart home’ tech to keep aging, disabled vets living independently SBA pushes back timeline to implement GAO privacy recommendation Combatting Discrimination in Our Nation’s Largest Employer—the Federal Government The post SmallGovCon Week in Review: July 17-21, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We get a lot of questions about federal government contracting as federal government contracting attorneys, which makes sense. One thing we get asked about a lot is the Buy American Act. This is also unsurprising, as the government really did not do the best job in making it clear what this act does. We have talked about the Act before, but now, let’s take a deeper dive into it. Overview The Buy American Act is one of those “more complicated than it looks” laws. It is implemented at FAR § 25.001. The Buy American Act “[r]estricts the purchase of supplies, that are not domestic end products, for use within the United States” unless an exception applies. However, this law does not actually prohibit the acquisition of non-U.S. products. It really just creates a preference for American products for procurements above the micro-purchase threshold (currently $10,000) that aren’t subject to the Trade Agreements Act (most supply contracts above $174,000 and most construction contracts above $6,708,000 for 2024-2025 are subject to the Trade Agreements Act), and, more importantly for many of you, for all small business set asides and sole-source acquisitions. Price Preference For civilian agencies, if the contractor with the lowest priced domestic end product is a large business, then the agency will add a price evaluation penalty to the offeror with the lowest priced foreign end product of 20%. If the contractor with the lowest priced domestic end product is a small business, the penalty is 30%. For Department of Defense procurements, the agency adds a 50% penalty, regardless of the size of the contractor with the lowest priced domestic end product. What is a Domestic End Product? FAR 25.003 defines “Domestic End Product” as, generally, an unmanufactured end product mined or produced in the United States or, if it is manufactured, a product that is commercially-available off the shelf, or where 65% of the cost of its components is made up of components mined, produced, or manufactured in the United States. That 65% will become 75% in 2029. One thing to note, if the end product is wholly or predominantly iron, steel, or both, the cost of any foreign iron or steel must constitute less than 5 percent of the cost of all components in the end product. Keep in mind this is a very general overview of the end product rule, there are further exceptions, for example, that the commercially-available off the shelf exception does not apply if the item is primarily iron or steel (unless it’s a fastener). Exceptions FAR 25.103 provides a number of exceptions to the BAA rule applying. For starters, the agency can simply waive the requirement for public interest (although the language is unclear; it arguably only applies when the agency has an agreement with a foreign government that provides the exception). Also, the BAA doesn’t apply if the agency determines the product really isn’t available in substantial quantities in the United States. A list of these items is at FAR 25.104. Furthermore, the contracting officer for a matter can even determine that for that specific procurement that the item in question isn’t really available in the United States. Further, if the offered cost of a domestic end product is unreasonably low, the contracting officer can find the BAA doesn’t apply. Resales at commissaries also are excepted, as are IT products sold as a commercial item. Also, for Department of Defense procurements, qualifying countries’ products are treated as domestic end products. Summary This is, again, just a very general overview of the Buy American Act, but hopefully it helps clear up many questions on the Act. We always recommend that contractors discuss compliance with the Act with an attorney to be safe for any procurement. The Buy American Act has many moving parts, but, with a little review, compliance can be achieved quite reasonably. 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 Back to Basics: The Buy American Act first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Many contractors utilize a GSA schedule contract to provide the Government with their products and/or services. After all the effort it takes to get on a GSA schedule contract, a contractor would certainly not want to lose its chance at a small business task orders issued under it, just because it’s circumstances have changed since it first got the schedule contract as a small business. In a recent decision, the SBA’s Office of Hearings and Appeals (“OHA”) confirmed that even if a business changes size after being awarded a GSA schedule contract, it can still compete for small business task orders from a Blanket Purchase Agreement (“BPA”) awarded under it. GSA schedule contracts are quite common, but take a lot of work to acquire. Then once on a GSA schedule, contractors can find that their size may change. Of course, small business contractors who have gone from small to “other than small” since their award of a schedule contact would love to still be able to compete for small business task orders after changing size. But is that even possible? In Lintech Global Inc., SBA No. SIZ-6287 (May 26, 2024), a contractor found themselves in that situation, and SBA OHA confirmed their ability to still be awarded small business set-aside task orders. In Lintech the Contractor was awarded a GSA FSS Contract (i.e. schedule contract) in December of 2020, which had a five year base period with three additional five year options. At time of offer, the Contractor self-certified as a small business under NAICS code 541512, which at the time had a size stand of $30 Million. In July of 2021 the EPA issued a RFQ looking to award BPA to holders of schedule contracts, and this BPA was set aside entirely for small business. The Contractor was awarded that BPA by the EPA. Two years after the award of the schedule contract, on December 29, 2022, the Contractor had 100% of its stock purchased and due to this became “other than small.” The Contractor did its duty and notified the GSA and EPA of this purchase in January of 2023. In April of 2023 the EPA issued a task order request for proposals for a task order under the BPAs it had previously awarded. This task order was to be set aside for small businesses, with a size standard of $34 Million. This task order did not require a recertification of size. The Contractor at issue, was awarded this small business task order, and a protest followed. While the protest was dismissed, the SBA decided to conduct a size protest on its own. In December of 2023, the SBA Area Office issued a size determination against the Contractor. The Area Office stated that because the task order was issued under a schedule contract, which is a Multiple Award Contract (“MAC”), the Contractor was no longer small as of the date it recertified as other than small due to its acquisition on its schedule contract, which was January 2023. The Contractor appealed this decision, bringing us to the recent SBA OHA ruling. Upon review of the arguments and regulations, SBA OHA ruled in favor of the Contractor, not the Area Office. SBA OHA found that the Area Office’s interpretation of SBA regulations was incorrect. Everything hinged on 13 C.F.R. 121.404 but specifically section (g). This section (121.404) is all about when the size status of business is determined. The general rule, as OHA put it, is that “a concern that is small at the time a contract is awarded remains small throughout the life of that contract.” But there are special rules for MACs, like schedule contracts. OHA confirmed that “when the underlying MAC was awarded on an unrestricted basis, a contractor must recertify its size if it chooses to compete for an order set aside for small businesses.” But this requirement “is inapplicable to orders under FSS contracts.” So, GSA schedule contracts are exempt from that specific recertification requirement. The task order at issue in this case was set-aside for small business but the underlying MAC (the schedule contract) the Contractor had was unrestricted. Thus, “recertification at the task order level was not required” due to the GSA schedule contract exception. Where the confusion stemmed from was the Area Office’s interpretation of section (g) of 121.404. This section, among other things, discusses what happens when a business is merged or acquired, and how an agency would treat any option or order issued to that company under an already awarded contract. This is exactly the situation the Contractor was in here. The Area Office incorrectly interpreted the regulation as actually barring a business from receiving any more small business orders or options after merging or being acquired and no longer being small. OHA corrected the Area Office. OHA declared that while a contractor is required to recertify when acquired, any issuing of an order or option simply prevents the agency from counting that award towards its small business goals. It does not prevent the agency from awarding said option or task order to the contractor who is no longer small. While GSA schedule contracts are excluded from the task order recertification requirement, if the contractor does change its size it would recertify. Once recertified, if it is now “other than small” it still can compete for the small business set-aside task orders. The agency issuing the options or task orders simply can’t count it towards its small business goals. When to determine size related to task orders or options comes up quite frequently at SBA OHA. In fact we blogged about another similar case related to a GSA contract just a few years ago, and we have discussed how acquisitions can affect size. Often there is confusion about what happens when a contract is awarded to a small business, but circumstances change to make that business no longer small. As SBA OHA noted, if the SBA wanted this to function differently, then the SBA would need to reword the regulation. But as it stands, when a business is sold or is merged, and becomes other than small, it could still receive task orders or options, it is the small business goals of the agency that take a hit. 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 Confirms GSA Schedule-Holders Who Outgrow Size Standard Can Still Get Awarded Set-Aside TOs and Options first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! The weather gave us a taste of summer with a heat index of over 100 degrees here in the Midwest. We are grateful for air conditioning here at SmallGovCon. We hope you have been staying cool and have some fun things planned for the weekend. Enjoy! This week in federal government contracting news there is buzz about AI procurement, supply chain risks, and timing changes on the 8(a) and WOSBS programs from SBA. Accounting software keeps small business out of federal market SBA Announces $30 Million in Grant Funding for New Women’s Business Centers Impact of SDVOSBs on Local Economies and Veteran Employment GSA finalizes single-use plastic packaging rule for Federal Supply Schedule State Department’s R&D approach has industry puzzled Major contracting groups make suggestions for new section of federal acquisition rules dedicated to supply chain Senators look to mitigate risks in AI procurement SBA Announces Extension of Moratorium on 8(a) Eligibility Requirement for Small Disadvantaged Businesses Former Navy Civilian Employee Pleads Guilty to Bribery Involving Government Contracts Worth Hundreds of Millions 1-Year Extension of WOSB Program Recertification Killeen Couple Sentenced for Operating Fraudulent Rideshare Company for Soldiers For GSA, a new step to secure the software acquisition process begins Bill to aid small businesses in federal contracting clears House, heads to Senate Federal Acquisition Regulation: HUBZone Program The post SmallGovCon Week in Review: June 10-14, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

As SmallGovCon readers may recall, SBA has already eliminated the ability to self-certify as a Service-Disabled Veteran-Owned Small Business (SDVOSB) for all prime contracting opportunities set aside for SDVOSBs. This change occurred January 1, 2024 and meant that self-certified SDVOSBs will no longer be eligible for set-aside and sole source contracts. We wrote about the change here. However, the rule change left in place the self-certification ability for self-certified SDVOSBS, but only for subcontracting purposes and government goaling purposes. This will be changing in December 2024. In this direct final rule, SBA is implementing a portion of the National Defense Authorization Act for Fiscal Year 2024 (NDAA 2024) to eliminate SDVOSB self-certification for subcontracts and agency SDVOSB goals. Currently, under SBA rules firms “that meet the VetCert Program eligibility requirements may self-certify their SDVOSB status, receive prime contract or subcontract awards that are not SDVOSB set-aside or sole source contracts, and be counted toward an agency’s SDVOSB small business goals or a prime contractor’s subcontracting goal for SDVOSB awards.” In other words, federal agencies still get credit for awards to self-certified SDVOSBs, even though SBA has not reviewed that the companies in question are proper SDVOSBs. There would be no incentive for anyone to really check on whether the claimed SDVOSB status is proper, because there is no protest process and the agency didn’t rely on the company’s SDVOSB status in making the award. This new rule will eliminate any remaining ability to self-certify as an SDVOSB. The rule creates a grace period so that firms that file a VetCert application by December 22, 2024 may continue to self-certify for these limited purposes, including subcontracts, until SBA makes a final decision. Firms that are not certified and do not have a pending application filed by December 22 cannot self-certify for any purpose after December 22. Here are some of the key regulatory text changes. “A concern must be certified pursuant to § 128.300 to receive a prime contract that is to be counted by a Federal agency for the purposes of meeting participation goals for SDVOSBs or to receive a subcontract from a Federal prime contractor for the purpose of meeting subcontracting goals for SBVOSBs in Federal procurement contracts.” 13 CFR § 128.200. This means that large prime contractors with subcontracting plans will only be allowed to get credit for awarding subcontracts to certified SDVOSBs. “Any small business concern that submits a complete certification application to SBA on or before December 22, 2024, shall be eligible to self-certify for a . . . subcontract that counts towards SDVOSB goaling purposes or SDVOSB subcontracting goals” until SBA makes its decision and any “small business concern that does not submit a complete SDVOSB certification application to SBA on or before December 22, 2024, will no longer be eligible to self-certify[.]” 13 CFR § 128.200. This updated regulation will close the last loophole allowing self-certified SDVOSB status. For those not already certified, please pay close attention to the December 22, 2024 date. After that, SDVOSB self-certification will be eliminated for good. 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 for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Update: SBA Will Eliminate Remaining SDVOSB Self-Certification December 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

It’s Friday, which means it’s time for another week in review. We hope you have had a productive week and are ready for a great weekend. This week saw some interesting news including an SBA rule to eliminate self-certification for service-disabled veteran-owned small businesses that are awarded Federal Government contracts or subcontracts. You can read more in the link below and we will be blogging on this new development, as well. Have a great weekend! Significant Advancement Seen as More Women-Owned Businesses Secure Federal Government Contracts Minority Business Development Agency head discusses court ruling Assessing Contractor Labor Law Violations Responsibility and Debarment Retired Navy Admiral and Business Executives Arrested in Connection with Alleged Bribery Scheme GovCon Index Finished in the Red Last Week Hiding your company’s growth could be more trouble than it’s worth ‘America’s gatekeeper’ has a message for small defense contractors Why most government contractors are feeling confident about 2025 Rise in Construction Contracts Boost Pentagon’s Strategic Goals AVET Project celebrates military women’s 76 years of service Court Blocks Fearless Fund’s Exclusive Grants For Black Women Cybersecurity: Efforts Initiated to Harmonize Regulations, but Significant Work Remains Eliminating Self-Certification for Service-Disabled Veteran-Owned Small Businesses The post SmallGovCon Week in Review: June 3-7, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you’re interested in winning more B2G business through the bid process, but you don’t have all the answers, join this LIVE forum and talk about this market with people who have helped hundreds of companies win BILLIONS of dollars in government contracts. This month’s co-hosts are, our very own Koprince McCall Pottroff LLC’s, Nicole Pottroff and Gregory Weber who will be joining, Angela Seymour, a seasoned procurement and GovCon professional with an impressive background in public service spanning nearly two decades. The event host, Nick Bernardo, President & founder of MyGovWatch.com, has over 20 years of experience helping companies of all sizes figure out how to find, compete for, and actually win government contracts. Sign up now to join this free opportunity to speak with experts, who have actually helped people succeed in GovCon, who can answer ALL your questions. Registration link here. The post Event! MyGovWatch Live: The B2G Roundtable, June 19, 2024, 12:00pm CDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you ask any small business federal government contractor or their attorney for the top complaints about the regulations that apply to the Small Business Administration, inconsistency between the various programs is likely to show up on that list. At first glance, it seems the requirements are pretty standard across the board. However, when you dive deeper, you’ll likely notice that even though the requirements are similar, there are enough small differences in the language you can’t just assume that, say, a requirement for service-disabled veteran-owned small business (SDVOSB) is going to be the same for a woman-owned small business (WOSB) or an 8(a) Program participant. The differences make it crucial to look at the specific regulations for the specific SBA program to ensure compliance. You can’t just assume that they are the same. Thankfully, it looks like the SBA has finally heard our cries for consistency with a recent Notice of Proposed Rulemaking, in which it attempts to align the WOSB Program with the new SDVOSB/VetCert Program and the 8(a) Program. And, as an added bonus, the beginnings of what appears to be a plan to make the WOSB certification process a bit easier if your business is already certified under either the 8(a) program or the SDVOSB program. Outside Employment Previously, the WOSB program stated that the woman or economically disadvantaged woman who held the highest officer position was prohibited from engaging in outside employment that would “prevent her from devoting sufficient time and attention to the business concern to control its management and daily operations.” If a woman devoted fewer hours to the business than its normal hours of operation, it was presumed that she did not control the business, as required by 13 C.F.R. 127.202(c). That presumption could be rebutted by showing she had the “ultimate managerial and supervisory control over both the long-term decision making and day-to-day management and administration of the business.” Now, SBA is expanding that language to make the outside employment requirement in line with those of the SDVOSB Program. The proposed language states: (1) A woman or economically-disadvantaged woman generally must devote full-time to the business concern during its normal hours of operations. The woman or economically-disadvantaged woman who holds the highest officer position of the business concern may not engage in outside employment that prevents her from devoting sufficient time and attention to the business concern to control its management and daily operations. (2) Where a woman or economically disadvantaged woman claiming to control a business concern devotes fewer hours to the business than its normal hours of operation, SBA will assume that she does not control the business concern, unless the concern demonstrates that she has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management and administration of the business. This change will make 13 C.F.R. 127.202(c)(1) and (2) match the SDVOSB language at 13 C.F.R. § 128.203(i). So what does this mean? Essentially, they are changing the rebuttable presumption applied when a woman works outside employment to an assumption. In reality, it doesn’t much change the process because woman owners will still be required to prove their outside employment does not affect their full-time control of the applicant business. The proposed amendment also proposes to add new language at 13 C.F.R. § 127.202(c)(3) that will require the qualifying woman to notify the SBA prior to engaging in outside employment and that they must demonstrate that the outside employment will not prevent her from controlling the WOSB company. This would be a new requirement that is not yet accounted for in either the WOSB or SDVOSB programs but is included in a similar fashion in the 8(a) regulations. These new similarities between the WOSB, SDVOSB, and 8(a) outside employment limitations are emblematic of SBA’s attempts to “provide consistency across the language used in SBA’s other government contracting programs,” an explicit goal stated in the recent Notice of Proposed Rulemaking. Support for WOSB Eligibility Additionally, SBA is supplementing language in the certification process which looks like it will allow women owners seeking WOSB/EDWOSB certification to use their SDVOSB/VOSB and/or 8(a) status as support for their WOSB/EDWOSB application. 13 C.F.R. § 127.303. Much like the attempts to align the language in the outside employment limitations, this represents an effort to address inconsistencies and confusion in navigating the various programs and streamline the ability of participants in one program to gain access to the benefits of another if they qualify. That same notice details the proposed changes to 13 C.F.R. § 127.303, which regulates the required documentation a concern must submit to achieve WOSB certification. 8(a) requirements are far stricter than those of WOSB, so to allow an existing 8(a) participant that is owned and controlled by one or more women to supplement their WOSB application with proof of their 8(a) status is a no-brainer that should simplify a complicated process for small business owners. Adding the ability to supplement a WOSB application with SDVOSB certification documentation lends consistency to the programs and further demonstrates SBA’s attempts to address longstanding confusions and frustrations. Conclusion While contractors and attorneys alike will no doubt continue to face inconsistencies between SBA’s socioeconomic programs, the recent Notice published in the Federal Register is proof that comments and critiques do not have to fall on deaf ears. The proposed changes help to align the programs in areas where it makes sense to streamline them, and brings these regulations up to date in a manner that should hopefully simplify a process important to contractors and lawyers across the country. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Proposed Rule: Make WOSB, SDVOSB, and 8(a) Regulations More Consistent first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! Can you believe that tomorrow is already June? We are getting some rain here in the Midwest to kick off summer, so I’m sure those lawn mowers will be out in full force this weekend. My tomato plants are growing tall and it won’t be long before we have an abundance of summer produce. We hope you have a wonderful weekend and can get out and enjoy some sunshine. This week in federal contracting news, there are new contracts coming out in the telecom and IT sectors, and DoD is looking to update how it deals with data management. National Nuclear Security Administration: Improvements Needed for Overseeing Contractor Workforce Recruitment and Retention Efforts Independent Assessment of Conduct of Operations at the Hanford Site Waste Treatment and Immobilization Plant – May 2024 Defense Federal Acquisition Regulation Supplement: Procurement Technical Assistance Program (DFARS Case 2024-D006) Defense Federal Acquisition Regulation Supplement: Pilot Program To Incentivize Contracting With Employee-Owned Businesses (DFARS Case 2024-D004) How the Intelligence Community Is Getting Serious About Commercially Available Information Billions in Federal Agency Telecom Contracts in Transition Post-Employment Conflict of Interest Restrictions; Revision of Departmental Component Designations FBI’s $8 billion information technology services contract is its largest ever Scrutiny intensifies regarding VA ‘bonus blunder’ CDAO will focus on unlocking data rather than having common operating picture Army lifts curtains on planned $1B software development contract How A Women-Owned UI/UX Design Firm Smashed The Glass Ceiling 33rd Annual Government Procurement Conference U.S. Senator John Kennedy Introduces Bill to Support Disabled Veterans’ Small Businesses Aldi Executive and Southern Illinois Contractor Plead Guilty to Rigging Construction Project Bids Former CIA Officer Pleads Guilty to Conspiracy to Commit Espionage The post SmallGovCon Week in Review: May 27-31, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If you’re a contractor thinking about protesting an award decision to the Court of Federal Claims (COFC), you have to show that the agency’s mistake prejudiced you in some way (the same goes for GAO, as we have explored before). That is, you have to show that there was a substantial chance you would have received contract award if not for the agency’s mistake. In a recent decision by the Federal Circuit Court of Appeals, it appears that the COFC will have to give protesters a good bit of benefit of the doubt on this question going forward. We explore that here. In REV, LLC v. United States, Aptive Res., LLC, 91 F.4th 1156, 1159 (Fed. Cir. 2024), REV, LLC (REV) was a bidder on the VA’s Transformation Twenty-One Total Technology-Next Generation (T4NG) program. The bid process consisted of two steps before a competitive range of potential awardees was chosen. While REV passed the first step, it was eliminated at the second step. REV protested at COFC. COFC dismissed REV’s protest in part for lack of prejudice. The COFC stated that REV couldn’t just assert it was next in line as there was no guaranteed number of awards. In other words, just because one company perhaps shouldn’t have been given the thumbs up by the VA, that doesn’t mean REV should have been given a thumbs up itself. The Federal Circuit noted this analysis was mistaken, the VA had indicated it intended to give seven offerors a passing grade at that second step in the evaluation process, and furthermore that the VA’s decision on who would remain in the process was really based on the offerors’ relative ratings. What’s key for other contractors to understand is the Federal Circuit’s position on what REV needed to show just to meet the prejudice requirement: In assessing whether a party was prejudiced by purported errors in a procurement process, we must assume that the party will, if permitted to proceed with its claim, prevail on the merits. This means that our analysis assumes that REV would be successful in its challenges to the implementation of the Solicitation. In particular, we presume that the six bidders whom REV targets as having been improperly placed ahead of it – for reasons including organizational conflicts of interest, failure to submit signed veterans employment certifications, and making improper substantive changes to submissions – should have instead been excluded from the second competitive range, just as REV claims. This is important as it means that just because it might be unlikely that the protest will be successful on all the issues raised doesn’t mean the court should just dismiss the case for lack of prejudice. Such a dismissal would be akin to a court simply saying, “We just don’t believe you,” without even allowing for the facts of the case to be determined. That is improper. As such, this decision appears to make it far easier to survive a request for dismissal for lack of prejudice at COFC. Essentially, even if it is a longshot that you would actually end up winning on every issue, the court has to presume that you will when deciding on such a dismissal request. Even if there are a bunch of offerors ahead of you in the award decision, if you can make a (reasonable) argument that each one (or some subset of the awardees) should not be ahead of you, the court has to go by that notion at the outset of the case. This makes it more worth taking a chance on bringing a case where you have some reasonable arguments but need to access the record to see if your arguments bear out. So, it is good news for protesters. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post A Better Leg to Stand On: Federal Circuit Court Eases Way for Protesters to Show Prejudice at COFC first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Memorial Day weekend is almost here, which means the unofficial start to summer! Whether you are hitting the road or relaxing at home, I hope you have an enjoyable long weekend while remembering those that have given their lives to protect our country. Of course, a relaxing weekend isn’t complete without some good reading material, and we’ve got you covered. This week in federal government contracting news…. Defense Industrial Base Adoption of Artificial Intelligence for Defense Applications; Notice of Availability Coast Guard still struggling with major acquisition programs U.S. Department of Energy Looks to Support Tribal Energy Generation in Transition to Clean Energy Legislation weighing contractors’ national security risk heads to Senate floor What a blast to work at NASA. Space agency is sky-high again in latest survey of federal employees VA building out career development portal to boost cyber skills Former Construction Contractor Sentenced for Crimes Involving Fort Drum Contracts Felony convictions of 5 retired officers dismissed in Fat Leonard case America’s first Black astronaut candidate goes to space 60 years later Looking ahead to the no-surprise, likely-late 2025 federal spending bills Caterpillar to Pay $800K to Resolve Racial Hiring Discrimination at Decatur, Illinois, Facility Alleged in Federal Compliance Review FedRAMP launches Technical Advisory Group to help guide program decision making MyGovWatch Saves Vet Biz Community Up to $1,000 Per Year to Hear About Government Bids & RFPs US Government Urges Federal Contractors to Strengthen Encryption Army sets stage for broader adoption of digital engineering How 3 Key Contracts Are Advancing US Cyber Goals Former Program Director at the U.S. Department of Agriculture Office of the Assistant Secretary for Civil Rights and Nephew Arrested in Kickback Scheme The post SmallGovCon Week in Review: May 20-24, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The nonmanufacturer rule is one that is commonly misunderstood in the federal government contracting realm. But it is also one we encounter quite often in our role assisting federal contractors. Despite its seemingly straightforward definition, being classified as a “nonmanufacturer” entails more than simply not being the manufacturer. On June 6, please join my colleagues, Nicole Pottroff & Greg Weber, as they dissect the complexities of this rule and answer your questions. The webinar will be hosted by our friends at Govology, and it is easy to register: just click here. The post Govology Webinar: June 6, 2024 – Understanding and Complying with the Nonmanufacturer Rule (2024 Update) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Please join Federal government contracts attorneys John Holtz and Stephanie Ellis for this informative webinar, hosted by the Catalyst Center for Business & Entrepreneurship, on June 5 at 10:00 am CDT. The SBA’s Mentor Protege Program allows two or more businesses to come together and form a joint venture to bid on small business set-aside government contracts. One of the most advantageous aspects of this program is the ability for a large business to mentor a small business through the use of a joint venture. When a large business mentors a small business, the SBA approved joint venture can obtain and perform small business set-aside contracts despite the size of the large business. Join us as we discuss the recent changes in the SBA’s Mentor Protege Program and explore how you can use this program as a tool for scaling your business (whether large or small). Register here. The post Webinar! Mentor Protégé and Legal Aspects To Be Mindful Of on June 5, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

So much of federal contracting discussion is focused on the pursuit of contracts (set-aside certifications, size status, solicitation terms, bid protests etc.). But, what sometimes gets lost in all of that is what happens after. The performance of a contract is where the rubber meets the road in federal contracting, but that doesn’t mean agencies are without limits on what they can do during performance. It is a monumental feat for any contractor to win an award, and it should always be celebrated when it occurs. But, focus should quickly shift to contract performance. As part of that, contractors should be aware of what sort of authority agencies, and their staff, hold during performance. Authority of Agency Staff and Modifications FAR Subpart 1.6 states that Contracting Officers (COs) have authority to “enter into, administer, or terminate contracts.” COs are also expected to ensure performance of the contract, and compliance by contractors with the contract’s terms. Something that arises in this context are modifications to contracts. Under FAR 43.102, COs are the only individuals that can modify a contract (or rather, bind the agency to a modification). But it is important to also remember that modifications or changes to contracts are not always unilateral, meaning that the CO or agency cannot do it without contractor approval. Under FAR 52.212-4, changes to commercial products or services contracts must be agreed to by both parties, requiring most changes to be bilateral. So in those contracts, the CO generally cannot change a contract, without the approval of the contractor. All this indicates that when there are problems, changes, or questions with the performance of a contract, there is one person who can bind the agency to anything. That would be the CO. So, if you are a contractor, be careful of how much you rely on statements from anyone at the agency below the level of the CO, such as Contracting Officer Representative (COR). However, if someone from the agency, other than the CO, like a COR, takes action that the contractor relies on, it does not completely eliminate that action from being binding on the agency. Ratification As you know, the CO has the authority to bind the agency. With that in mind, in certain situations the CO can come in and “ratify” an action by a position that did not have binding authority (like a COR). In that situation, under FAR Subpart 1.6, a CO could review an unauthorized action by someone, like a COR, and retroactively approve it, (i.e. ratify), making such action now binding on the agency. While this is a possible safety net, over reliance on this could lead to something we refer to as the “Ratification Trap.” The Ratification Trap is receiving behind-the-scenes ratifications that could mislead contractors into believing that unauthorized actions were authorized​, and contractors rely on this ratification possibility going forward. Receiving one ratification does not mean that agency will grant future ratifications. To avoid this, contractors should keep in mind the authority limits we discussed earlier and obtain commitment from a CO with actual present authority before proceeding. Duty of Good Faith and Fair Dealing In addition to the authority limits placed on agency contracting staff, there is an inherent duty within all contracts that could also limit an agency’s contracting authority—the duty of good faith and fair dealing. Read into every contract is an implied duty of “good faith and fair dealing.” An agency has an inherent obligation to administer contracts in good faith and in a manner that does not interfere with the contractor’s performance​. For example, the Armed Services Board of Contract Appeals in Relyant, LLC, ASBCA No. 59809 (2018), found that Agency delays in responding to a contractor’s requests could constitute a breach of these implied duties. What this duty boils down to is that an Agency must act reasonably and fairly with regards to any contractor during the performance of a contract. While somewhat subjective, this duty can pop up after multiple issues between a contractor and an agency, and serves as a baseline of how interactions should be between parties. Common Misconceptions and Key Takeaways Some common misconceptions and key takeaways regarding agency officials are: A COR can direct a contractor to do more work. They cannot. Only COs can. A COR can modify a contract. They cannot. Modifications have many requirements, and can only be made binding by the CO. A Government business card must mean they have proper authority. A business card does not indicate proper authority for binding an agency. An agency can treat me however they please, such as ignoring my calls and delaying work since they control the contract. There is an implied duty of good faith and fair dealing that the agency should adhere to. It is important to have a baseline of the limits of what an agency can do during contract performance. This can help avoid performance issues, and could help prevent the need for filing a claim or request for equitable adjustment (more on these in a future back to basics). Of course, all of these issues can change depending on the facts involved, and can be quite complex. So if you find yourself facing a contract authority and administration issue, please reach out to a federal contracting attorney, such as ourselves, to discuss it further. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: Agency Contracting Authority first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The U.S. Small Business Administration (SBA) runs four socioeconomic programs aimed at providing equal opportunity to participate in federal contracting. And one would think that all of them have similar options if a contractor is denied certification. One would be wrong. SBA’s Office of Hearings and Appeals (OHA) recently dismissed an appeal for lack of jurisdiction, showcasing the different options in the various programs. The contractor was decertified from the Women Owned Small Business Program (WOSB). Its owners ran afoul of an important distinction in OHA’s appeals jurisdiction, particularly the substantial difference between appealing a competitor’s protest of a contractor’s SBA certification and the government’s initial denial of a program certification. This provides an excellent opportunity to assess the regulatory differences in appellate jurisdiction between the four programs, with an eye toward successfully navigating future encounters with the OHA. Editor’s Note: Special thanks to our law clerk Will Orlowski for his immense help in drafting this post. As demonstrated in Woods Peacock Engineering Consultants, Inc., SBA No. WOSB-121, contractors cannot appeal a denial by the SBA of WOSB certification. 13 C.F.R. § 134.102 details what kind of cases OHA can hear, and thus necessarily prohibits the OHA from reviewing anything not delegated to it by regulation. Part 134 contains many provisions on various appeals processes for all manner of SBA decisions, including WOSB protests, but crucially, no provision for appealing a WOSB eligibility denial. Section 127.304(i) explicitly states “the decision of the [SBA’s Director for Government Contracting] to decline certification is the final agency decision.” While a failed applicant may reapply for certification ninety days after the date of denial, there is no alternative route to achieving certification following that initial declination. Protests of WOSB status may be appealed to OHA, but an initial eligibility denial is final and unappealable. Which Certification Decisions Can You Appeal? So, this begs the question, when can a contractor appeal a SBA certification decision? Below, we walk through the appeal rights for each of the SBA’s four socioeconomic programs. WOSB. As noted above, you can appeal a WOSB protest related to a specific procurement, but not a WOSB certification decision (denial or termination). HUBZone. The historically underutilized business zone (HUBZone) program lacks the ability to appeal an initial denial of certification for much the same reason as WOSB. Section 134.102 similarly grants appellate jurisdiction to the OHA for HUBZone protests, but HUBZone certification denials are conspicuously absent. Like the WOSB program, HUBZone regulations contain similar language regarding the ninety-day reapplication timeline and leaves out any mention of an appeals process. As we’ve discussed, a HUBZone protest decision can be appealed. Combined with the allowance for HUBZone protest appeals, it becomes clear that HUBZone is another SBA program certification whose initial denial may not be appealed to OHA. On the other end of the spectrum lies the Service-Disabled Veteran Owned Small Business (SDVOSB) program, which does allow for the appeal of an initial denial of program certification. SBA rules under § 134.102(v) grant OHA jurisdiction over appeals of denial of certification in the Veteran Small Business Certification Program, and §§ 128.304 and 134.1102 each allow for an applicant to appeal the SBA’s decision to deny certification. The only caveat is that a denial based on the failure to provide sufficient evidence of the qualifying individual’s status as a service-disabled veteran, is not subject to appeal to OHA. As usual, it is essential to follow regulatory requirements closely to avoid tripping over this pitfall, but assuming an applicant satisfies the standard evidentiary requirements, OHA will hear an appeal. OHA will also directly hear SDVOSB protests. 13 CFR § 134.1001. Falling somewhere between WOSB and SDVOSB programs, 8(a) program certification denials or terminations can be appealed to OHA, but only under certain circumstances. Applicants may appeal denial of program admission to OHA if that denial is “based solely on a negative finding of social disadvantage, economic disadvantage, ownership, control, or any combination of these four criteria. A denial decision that is based at least in part on the failure to meet any other eligibility criterion is not appealable and is the final decision of SBA” (emphasis added). 13 C.F.R. §§ 124.206, 134.401. One of the most important requirements an applicant must satisfy under 8(a) certification is “potential for success” (see our blog here) including assuring that an applicant is “able to perform 8(a) contracts and possess reasonable prospects for success in competing in the private sector.” 13 C.F.R. § 124.107. As the regulations make clear, denials based on failure to satisfy potential for success are not appealable, and those decisions represent the final decision of SBA. Only denials based on the four specific criteria listed in § 124.206 can be appealed to OHA. Interestingly, there is no way to protest 8(a) Program status, unlike the other programs. Conclusion In summary, there is some considerable variation between the four SBA socioeconomic certifications in what can and cannot be appealed to OHA. While SDVOSB denials can almost always be heard, and 8(a) denials may be appealed under limited circumstances, WOSB and HUBZone denials are never appealable to OHA under clear jurisdictional limitations. As demonstrated by this case, these distinctions are important to understand, if not always clear. Failure to comprehend OHA jurisdiction in the initial application for SBA certification can lead to frustrating results, and thus careful consideration and adherence to application requirements is essential. Be sure to consult an attorney if you are not sure. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Somewhat Appealing: Which SBA Certifications Can You Appeal From? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

It’s Friday and time for another week in review. The kids are finishing up the school year, so get ready parents! There are lots of activities happening in town and as I drive by our local ice cream shop it seems to be constantly filled with kids as they celebrate the beginning of summer. We hope you are looking forward to a lot of fun summer activities, as well. Enjoy the weekend! This week in federal government contracting included updates on veteran-owned and WOSB contracting, as well as concerns about the ranks of DoD contracting officers getting thin. Federal Contracting by Veteran-Owned Small Businesses: An Overview and Analysis of Contemporary Issues Women-Owned Small Business Federal Contract Program Updates and Clarifications Department of Labor Recognized by SBA for Excellence in Procurement Practices to Support Small Businesses White House procurement office releases data circular as it celebrates 50th anniversary Defense Agencies Strategic Outlook for 2024-2025 Military movers urge DoD, Congress to pause household goods contract Legislation would create program for veteran-owned small businesses to win federal contracts Senate approves FAA Reauthorization bill DoD’s acquisition workforce is stretched thin FedRAMP board launched to support safe, secure use of cloud services in government White House procurement office marks 50 years Markup Wrap Up: Committee Advances Legislation to Secure Biotechnology Data, Safeguard Taxpayer Funded Projects, Federal Grants, and More Contractors Agree to Pay $273,100 Over Failure to Deliver Telescope to the Air Force Unique Entity ID is Here The post SmallGovCon Week in Review: May 13-17, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Once again, an initial awardee has had its award revoked because of a noncompliant joint venture agreement addendum. We see it happen regularly at SmallGovCon. And the decision in Colt-Sunbelt Rentals JV, LLC is yet another data point highlighting that SBA requires strict adherence to the joint venture agreement requirements in 13 C.F.R. § 125.8. Here, an incomplete joint venture agreement and its addendum resulted in a finding of affiliation which resulted in Colt-Sunbelt losing its small business status for the contract at issue. First, a quick primer on mentor-protégé joint ventures. If a small business and a large business want to create a joint venture to pursue small business set-asides, they must be parties to an SBA approved mentor-protégé agreement (MPA) under 13 C.F.R. § 125.9, and the joint venture agreement must comply with the requirements in 13 C.F.R. § 125.8. This allows the small business and large business to work together as a joint venture while avoiding the danger of affiliation from collaborating as a joint venture. A finding of affiliation will mean the size of the parties will be combined for the procurement. And, as you could guess, affiliation between a small business and a large business for a small business set-aside is not exactly something that you want to happen. Note that, for a socioeconomic set-aside, such as under the 8(a) Program, a joint venture between, for instance, an 8(a) company and a small business must also meet strict joint venture requirements. The Protest Interestingly, the protest in Colt-Sunbelt began as a size protest which, thanks to a reporting error by the SBA, protested Colt-Sunbelt’s size on the belief that Colt-Sunbelt was not an active participant in the SBA’s Mentor-Protégé Program. However, upon Colt-Sunbelt’s production of the SBA approved MPA, that issue was resolved. But the investigation didn’t stop there. While reviewing the size protest, the SBA’s Area Office reviewed the parties’ mentor-protégé joint venture agreement (JVA) and addendums related to the procurement at issue. The addendum submitted with the final offer was an unsigned sample addendum labeled “Ft. Polk Contract Addendum.” Colt-Sunbelt asserted that the JVA submitted with the proposal was “a placeholder until formal award was made.” The joint venture also submitted a “revised Fort Polk Contract Addendum,” which was also not signed. Further, the revised addendum stated that the managing venturer would provide the “Project Manager” and that the non-managing venturer would provide the “Site Manager,” but they provided no name for either role. After reviewing the relevant information, the Area Office found that the JVA was deficient because it did not name a Responsible Manager, as required by 13 C.F.R. § 125.8(b)(2)(ii). The Appeal The joint venture appealed the Area Office’s decision, claiming that the JVA met the requirements of 13 C.F.R. § 125.8(b)(2)(ii). It claimed that the revised addendum referred to the proposal which named the individual “as the Program Manager/Contract Manager and Authorized Negotiator in at least three instances,” and that the Area Office had the information needed to discern that this identified individual fulfilled the duties and tasks as a Project Manager. In the end, OHA confirmed the Area Office’s finding that the JVA, the initial addendum, and the revised addendum all failed to identify the individual named as the “Responsible Manager.” The initial addendum itself was not signed nor dated. The revised addendum was not signed nor dated. And the agency did not have a duty to put the pieces together to identify the individual in the proposal that was intended to be the Responsible manager. Designation of the Responsible Manager in a document that is not a part of a JVA does not meet SBA’s requirements. Without the addendum, the JVA was likely missing other pieces of required information such as a list of major equipment, facilities, and other resources. Conclusion So, what did we learn here? Joint ventures must make sure that all of the information required to be in a joint venture agreement is in the joint venture agreement or an addendum that is specifically incorporated into the joint venture agreement. It can’t be in a separate, unrelated document. You must identify the Responsible Manager by name in the joint venture agreement and they must be designated as the “Responsible Manager,” not some other title that agencies and the SBA must hunt down and deduce. An addendum must be signed and dated to be considered valid, and, if it is not, it will be treated as if it didn’t exist. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Another One Bites the Dust: Incomplete Joint Venture Agreement Fails Once Again first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Steven Koprince, Govology Legal Analyst and retired founder of Koprince McCall Pottroff will be presenting this webinar to help you understand when a small business subcontracting plan is required for a federal prime contractor. Additionally, the course will cover common oversights and mistakes made by prime contractors in connection with establishing and implementing small business subcontracting plans. Please join Steve as he walks you through the process. Register here. The post Govology Webinar: Small Business Subcontracting Plans: What SBLOs Need to Know, May 16, 2024, 1:00pm EDT first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If a contracting officer determines that a small business offeror is not qualified to perform under a given solicitation, that typically means the offeror’s proposal will be rejected. But when the rejection deals with responsibility, the offeror may get a second bite at the apple through the SBA’s Certificate of Competency (“COC”) program. Whether this is news to you, or something you simply wish to understand a bit better, let’s take a look at the basics of the SBA’s COC Program, rules, and procedures. Which laws establish and govern the COC program? The Small Business Act or the “Act” (specifically 15 U.S.C. § 637(b)(7)) introduces us to the COC program. Contracting officers are required to provide small business concerns with reasoning for why they are denied award of a contract. The contracting officer must also refer small business concerns to the SBA if the concern is denied award specifically due to their “capability, competency, capacity, credit, integrity, perseverance, [or] tenacity[.]” The COC process is easiest to understand by reviewing SBA’s own implementing regulations. They establish the regulatory framework for the SBA’s application of the COC program. They also cover offeror eligibility for a COC, review of a COC application, appeals of a COC determination, and effects of a COC. Don’t worry, we dive into most of these a bit deeper below. But the Act and SBA’s regulations are not the only areas of federal law that speak to COCs, so does the FAR, in a subpart titled “Responsible Prospective Contractors.” The FAR instructs contracting officers to make “an affirmative determination of responsibility” prior to any purchase or award. Other sections of this FAR subpart set forth the standards for determining responsibility–which include a review of, among other things, past performance, financial resources, and organizational skills. In the event a purchase or award involves a small business, the contracting officer and small business offeror must also comply with another FAR subpart, covering “Certificates of Competency and Determinations of Responsibility“–which largely mirrors, and in fact defers to, the SBA’s method of managing the COC program. Who is eligible for a COC review? The first requirement is that you must be an actual offeror on the solicitation at issue to be eligible for COC review. The offeror must also “qualify as a small business under the applicable size standard in accordance with” 13 C.F.R. part 121. If applicable, the offeror must also “have agreed to comply with the applicable limitations on subcontracting and the nonmanufacturer rule” for the subject contract. If these steps are satisfied, the SBA will then review the concern, and its principals, to see if any appear in the “Parties Excluded From Federal Procurement Programs” list. Inclusion on this list does not mean you are immediately ineligible for a COC review, but instead, it might be a little tougher; the SBA will make its eligibility determination “on a case-by-case basis.” How does a COC review start? Even if the second-in-line apparent successful offeror is also a small business, SBA requires a contracting officer to start the COC process under any of the following three circumstances: If the contracting officer denies award to an apparent successful small business offeror based on responsibility; If the contracting officer refuses to consider a small business concern for award after evaluating the concern’s offer on a non-comparative basis under one or more responsibility type evaluation factors; or If the contracting officer refuses to consider a small business concern for award because it failed to meet a definitive responsibility criterion in the solicitation. If one of these circumstances is present, the contracting officer must refer its nonresponsibility determination to the SBA. The referral must include the solicitation, the offer at issue, an abstract of all bids, any pre-award survey, the contracting officers written determination of nonresponsibility, the technical data package, and any other justification for its determination. With these items in hand, the SBA would then conduct the COC review. What are the offeror’s responsibilities during the COC review? When the SBA receives a COC referral from the contracting officer, it notifies the offeror and asks whether it wishes to apply for a COC. If the offeror wishes to apply for a COC, it must show the SBA that it is competent. While each case is different, the SBA generally requires the following documents from the offeror: SBA Form 1531 – Application for Certificate of Competency, SBA Form 355 – Application for Small Business Size Determination, SBA Form 74B – Monthly cash flow, and any other specific forms identified by the SBA. As part of its review, the SBA may, among other things, visit an offeror’s worksites and/or contact an offeror’s suppliers, financial institutions, or other relevant third-parties directly to verify any part of the contracting officers determination of nonresponsibility. Throughout the process, the offeror should respond to any communications from the SBA in a timely fashion. Failure to do so may result in the SBA closing its investigation and denying the COC. What if SBA approves or denies a COC? If the SBA issues a COC for the offeror, the next steps are determined based on the value of the contract at issue. For contracts valued at $100,000 or less, the SBA Area Director’s decision to approve or deny a COC is final. There are no rights to appeal. For contracts valued between $100,000 and $25 million, the Area Director’s decision to deny a COC is final. There are no rights to appeal. If the Area Director approves a COC, the contracting officer has a few options. First, the contracting officer may accept the decision to issue the COC and award the contract to the concern. Second, the contracting officer may ask the Area Director to suspend the case to allow for a review period or so the contracting officer may appeal the decision. Third, the contracting officer may appeal the decision to SBA Headquarters. For contracts valued at more than $25 million, the Area Director’s decision to deny a COC is final. There are no rights to appeal. If the Area Director wishes to approve the COC, it must first refer its recommendation to SBA Headquarters. SBA Headquarters then does its own due diligence by contacting the contracting agency at the secretary level and allowing them to review the case file or submit additional evidence. After the contracting agency responds, the SBA’s Associate Administrator for Government Contracting will make a final determination. Regardless of the outcome, the final determination is just that – final. As you can see, there are a lot of moving parts in the COC process. If you are directly or indirectly impacted by a COC determination, and have any questions, contact us via the options below. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Back to Basics: SBA’s Certificate of Competency first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In a recent size appeal, the SBA OHA made it clear that the nonmanufacturer rule has it limits, and will not apply depending on the dollar value of the acquisition. OHA reminded contractors that the nonmanufacturer rule applies only to acquisitions over the simplified acquisition threshold. As avid readers of our blog know, some things that can be quite confusing in small business federal contracting are the limitations on subcontracting, and its counterpart, the nonmanufacturer rule. (Luckily, we have a great blog on the nonmanufacturer rule here, and one on limitations on subcontracting here to help break it down). As such, these rules seem to trip up many people, and can result in contracting compliance issues, or size protests. The nonmanufacturer rule is basically an alternative to the limitations on subcontracting, and to meet this rule it in a supply contract, generally four requirements must be met: The offeror cannot exceed 500 employees; The offeror must be primarily engaged in the retail or wholesale trade and normally sell the type of item supplied; The offeror must take ownership or possession of the item being supplied with its own personnel, equipment, or facilities (in a manner consistent with industry practice); and The item must be manufactured or produced by a small business in the United States (unless this requirement has been waived). The recent SBA OHA appeal, Chartwell Rx, LLC, SBA No. SIZ-6276 (Apr. 8, 2024) focuses on when the nonmanufacturer rule does not apply. This case concerned a procurement for pharmaceutical supplies. The appellant claimed that it was impossible for the awardee to meet the nonmanufacturer rule because appellant was the only United States company that produced the product and didn’t supply the awardee, so the awardee could not meet the element of the nonmanufacturer rule stating that the product must be manufactured or produced by a small business in the United States. The appellant also argued that the awardee could not meet the requirement to take possession of the product, as it would be drop shipped. The CO for this procurement explained how they came to the valuation of the contract at issue, and put its valuation at about $85,000. OHA turned to the language of the nonmanufacturer rule itself, which states it does not apply to simplified acquisition procedures, and does not apply to small business set-aside contracts “with an estimated value between the micro-purchase threshold and the simplified acquisition threshold.” Similarly, the limitations on subcontracting rule does not apply to a “small business set-aside contract with a value greater than the simplified acquisition threshold” although it applies to a socioeconomic set-aside (e.g., 8(a)) at any dollar amount. 13 CFR § 125.6. Generally, the micro-purchase threshold is $10,000, and the simplified acquisition threshold is $250,000. OHA pointed out that this contract falls between those two thresholds, and under the regulation’s clear language, the nonmanufacturer rule would not apply to this contract. Thus, the arguments that the awardee cannot comply with the nonmanufacturer rule are irrelevant and the rule does not apply to this contract. This case serves as a great reminder to contractors to double check the value of the contract at issue when determining whether to utilize the nonmanufacturer rule or not. It also presents a great reminder that all of the limits and exceptions that keep people up at night worrying about compliance, do themselves often have their own limits and exceptions. In this case, it made clear that the nonmanufacturer rule does not always apply, giving contractors much more latitude in selecting suppliers for supplies contracts that fall between the micro-purchase threshold and simplified acquisition threshold. If you have questions about the nonmanufacturer rule or want help figuring out the web of federal contracting regulations, don’t hesitate to reach out to a federal contracting attorney, such as ourselves. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Even Rules have their Limits, Says SBA OHA about the Nonmanufacturer Rule first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday and Happy Mother’s Day! Celebrations of mothers and motherhood can be traced back to the ancient Greeks and Romans, who held festivals. The American incarnation of Mother’s Day was created by Anna Jarvis in 1908 and became an official U.S. holiday in 1914. Did you know that the most phone calls are made in the United States on Mother’s Day? We hope you have a wonderful weekend and please acknowledge all those mothers and mother-figures in your life. Have a nice weekend. And now in federal government contracting news this week, some of the interesting updates included GAO’s look at waste in federal programs (they found some) as well as a push to lift budget caps on the DoD. Acquisition Innovation: From Other Transactions to Fast-Pitch Proposals For contractors, the next few months are all about numbers. Airfield Contractor Denied Costs Stemming From Taliban Takeover United States Sanctions Senior Leader of the LockBit Ransomware Group Judge Upholds Findings That Maryland Subcontractor Denied 55 Workers on Federally Funded Project Their Full Pay, Fringe Benefits, Owes $186K The effect of female leadership on contracting from Capitol Hill to Main Street 6 Actions Policy And Change Makers Can Take To Promote Economic Equity Notice of Initial Determination To Remove Shrimp From Thailand and Garments From Vietnam From the List of Products Requiring Federal Contractor Certification as to Forced or Indentured Child Labor Pursuant to Executive Order 1312 Audit of the Army’s Award of Noncompetitive Contracts in Support of Ukraine (Report No. DODIG-2024-078) GAOverview: Understanding Waste in Federal Programs DoD stands up ‘SWAT team’ to help speed software acquisition Appropriators push to lift budget caps, increase Pentagon budget The post SmallGovCon Week in Review: May 6-10, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

When a government employee moves from a federal agency to a private contractor, this sort of revolving door can lead to concerns that contractor hiring the ex-agency employee is getting special treatment. To avoid this concern, the ex-agency will sometimes bar the contractor from competing. In a recent case, the Navy did just that and a court had to review if the Navy made a reasonable decision. In Raytheon Co. v. United States, No. 23-1657C, 2024 WL 1341079 (Fed. Cl. Mar. 29, 2024), the Court of Federal Claims (COFC) reviewed the decision by the Navy to eliminate Raytheon Company (Raytheon) from a procurement to develop countermeasures against radar-guided missiles for the F/A-18 fighter jet. The Navy based its decision on “Raytheon’s employment of a retired Navy technical expert” that “gave rise to the appearance of impropriety.” The Navy employee is referred to as VK. Appearance of Impropriety Standard COFC relied on the standard set forth in NKF Engineering, Inc., v. United States, 805 F.2d 372 (Fed. Cir. 1986), meaning that “the government may eliminate an offeror from a procurement based on the mere appearance of impropriety” and there is no requirement for showing that the “alleged impropriety had an actual (or even likely) impact on the procurement, or even that the outcome of the procurement suggests that it was tainted or unfair.” This standard is based on the FAR, which notes in several places that the appearance of a conflict should be avoided. For instance, the “general rule is to avoid strictly any conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships.” FAR 3.101-1. Per COFC: “the appearance of impropriety (or conflict of interest), by definition, means that an objective observer might believe there is an impropriety, even where the facts, when fully investigated, would not support a finding of an actual legal violation or impropriety in the procurement.” This is a very deferential standard: “Raytheon cannot win this case unless the Navy’s fact findings lack support in the record or its conclusion based on those facts is arbitrary, capricious, or otherwise contrary to law.” Raytheon attempted to get around this standard and read NKF in a narrow manner, but COFC was having none of it. The court noted that there must be “hard facts,” meaning “that inferences and innuendo will not suffice.” In addition, the standard in NKF means that “[w]hether or not inside information was actually passed from [the former government employee] to NKF, the appearance of impropriety was certainly enough for the CO to make a rational decision to disqualify NKF.” There is no rule “that an agency must find evidence of an actual impact to the procurement,” and a “CO has wide latitude to make a finding of the appearance of impropriety and to exclude an offeror on that basis; as long as such a finding is rational, this Court must uphold it.” A contracting officer has “nearly unlimited discretion to exclude bidders for appearance of impropriety” and the decision must be based on “reasonable factual predicates” and not be irrational. Facts in this Case With respect to the facts, the court found that the Navy did base its finding on the record and came to a logical conclusion, despite Raytheon’s arguments to the contrary. The court would find in Raytheon’s favor if the “facts amount to no more than a hill of beans” but here there was more than a hill. For instance, the employee in question: Helped to “define techniques for a towed decoy” Provided “inputs on the DBD DET Statement of Objectives as well as the scope of testing to be conducted in support thereof” as providing VK “with unique insight regarding the Government’s future DBD requirements.” “VK did not recuse himself from DBD work, did not provide written notice to his supervisors, and clearly violated his NDA during this period.” Accepted an offer from Raytheon, then continued to work for the Navy and “actively participated in secure email chains discussing DBD EMD requirements and how to address those requirements at an upcoming [NARG] event.” The employee, while working at Raytheon, “authored work products . . . [and] proposed changes to the DBD Goals Document, provided contributions to the RFI that resulted in changes to the Government’s documents, and represented Raytheon at a number of recurring and nonrecurring events with the Government[.]” The court summarized it this way: “The fact that VK helped define what the government would be looking for in its DBD effort is reasonably characterized as substantial, important, more-than-minimal involvement, which, combined with the fact of VK’s subsequent employment with a potential offeror on the same procurement, a third-party observer would consider fishy.” Conclusion This case leaves us with two reminders about the appearance of impropriety. First, the standard for review by the government in these cases is very low. If the federal agency finds an appearance of impropriety, that is enough, and no actual impact to the procurement need be found. Second, the decision must be linked to facts showing appearance of impropriety, that is enough. Again no facts showing impact on a specific procurement is necessary. Contractors should take care to be mindful of these prohibitions to avoid the perception of unfairness that can result from government employees moving straight to a federal contractor. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Apparent Conflict: Appearance of Impropriety Enough to Exclude a Contractor from Federal Contract first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday! And just like that, it’s May! Hope you had a wonderful week and have some fun plans this weekend. This week in federal government contracting news included updates about small business federal contracting dollars (see our blog here) as well as new contracting bills coming out of Congress. Ernst Celebrates National Small Business Week White House: Small Businesses Awarded Record-Breaking $179B in FY23 SBA: Federal Government Awarded 28% of FY23 Contracting Dollars to Small Businesses US appeals court upholds Biden’s $15 minimum wage for recreational contractors AbilityOne contracts for workers with disabilities opens to competition IRA update: Federal government works to decarbonize construction materials FTC rule on non-compete employees has contractors worried GSA Issues Resource Guide for Federal Generative AI Tech Acquisition Supreme Court to hear another major veterans benefits case this fall GSA receives A+ rating for 14th consecutive year for working with small business contractors Contracting Bills Pass House; FEMA Workplace Planning Measure Offered in Senate Staffing Company to Pay $2.7M for Alleged Failure to Provide Adequate Cybersecurity for COVID-19 Contact Tracing Data Mentor-Protégé Program Resources Former Defense Contractor Pleads Guilty to Attempted Espionage The post SmallGovCon Week in Review: April 29-May 3, 2024 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

It’s that time of year again! The time of year that all federal government contractors wait for with bated breath to see how well agencies performed in relation to their small business subcontracting goals (or at least how well the metrics show them to be doing). Time for the SBA’s Annual Scorecard. Ok, so maybe it’s not quite that hyped up. But it is informative, nonetheless. And for 2023, it looks like things are looking up with every category making gains from the previous year. Once again, government-wide performance earned an overall score of an “A” by achieving 109.13% of its goal coming in with a whopping $178.6 billion spent with small business contractors. 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). 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. Now, onto the reason everyone is here: the numbers. Overall, there was $178.6 billion of federal contracting dollars directed toward small business prime contractors. The 2023 small business contracting goal was set at 23% and the agencies knocked it out of the park with an all-time high of 28.4%. Wow! This is an increase of $15.7 billion from FY2022. This includes all types of small businesses grouped together, but it is quite the achievement regardless. As usual, the next-largest grouping was small disadvantaged businesses, including those in the 8(a) Program, which received $76.2 billion, or 12.1% of all federal contracting dollars, just barely squeaking past its goal of 12%. Next up was service-disabled veteran owned small businesses (SDVOSB), which also exceeded its 3% goal for the year with $31.9 billion, or 5.07% of all federal contracting dollars. In 2023, the goal for women owned small businesses (WOSB) once again was missed (this has been a recurring theme on these scorecards), but it came much closer to reaching its goal of 5% coming in at 4.91% of all federal contracting dollars, or $30.9 billion. Maybe 2024 will finally be the year that agencies finally give WOSBs the business needed to meet the goal? It has now been over a decade since the WOSB goal was met. Come on, agencies! You can do this! The HUBZone goal was missed, but it did improve over the previous fiscal year. The HUBZone goal is set at 3%. Agencies awarded 2.78% of overall contracting dollars to HUBZone small businesses, or $17.5 billion. In another bit of bad news, the total number of small business prime contractors decreased again. It went from 62,670 in 2022 down to 61,298 in 2023. That has been a worrying trend for years, despite attempts to bring more small businesses into the fold. Overall, 2023 was a very strong year for individual agency performance. While 2022’s lowest scoring agency was the Department of Veterans Affairs with an overall score of 79.88%, 2023’s lowest scoring agency was the Department of Health and Human Services which came in at 97.95%. Not only that, but there was also only one other agency that received a score lower than 100% and that was the Environmental Protection Agency with a score of 98.37%. The highest agency score for 2023 goes to the Department of Commerce reaching 143.48% of its small business contracting goal. Nice going, Department of Commerce! All in all, ten agencies received what is considered an A+, meaning they achieved 120% or more of their goal. An additional 12 agencies received an A, which is defined as meeting 100% to 119% of their goal. And finally, the two that received a B, the Environmental Protection Agency and the Department of Health and Human Services, missed their goals by a small margin. Will 2024 be the year for straight A’s? Only time will tell. To learn more, see the scorecard in full here, and the agency specific numbers here. Questions about this post? Email us. 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 Scorecard: Largest Small Business Federal Contracting Year, Some Goals Missed first appeared on SmallGovCon - Government Contracts Law Blog.View the full article