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The duty of good faith and fair dealing in contract law is, admittedly, a bit poorly named. It does not require that a party act in bad faith to breach it. You do not need to act nefariously to run afoul of it. But then the question arises: What is it? How does one breach it? This was (among other things) a question explored in a recent Court of Federal Claims decision regarding an Small Business Innovative Research (SBIR) contract. We will look at that decision’s review of the duty of good faith and fair dealing here in a 2-part series. Read more: A Look at the Duty of Good Faith and Fair Dealing (Part 1) In Sunrez Corp. v. United States, No. 21-568, 2025 WL 731834 (Fed. Cl. Mar. 7, 2025), Sunrez Corporation (Sunrez) was a company that had regularly had SBIR contracts with the federal government. It received another such contract from the USAF in 2014 to develop composite pallets for cargo deployment. At the same time, the USAF issued a similar contract to the University of Dayton regarding a separate pallet. The USAF approve of the university’s pallet, but did not move forward with Sunrez’s pallets as its pallets did not pass initial testing. Further, the USAF determined Sunrez’s technical data package (TDP) didn’t comply with contract requirements. Under the contract, the USAF obtained data rights to all technical data generated and included in a TDP, with the exception of previously developed technology. There the government only gets limited rights (provided the contractor properly discloses and marks the same). Apparently, at some point, the USAF determined that it was seeking data that went beyond its rights, but still needed Sunrez’s TDP before it could award a higher level contract like Sunrez wanted. A dispute arose, and this was resolved by a clause granting the USAF only limited rights in the data to placate Sunrez’s concerns. All the same, the USAF, upon receiving the TDP, determined it did not accurately reflect the final product or include information on the pallet’s core, as it was lacking detail. Sunrez then submitted a claim to USAF, seeking $132 million under the Contract Disputes Act. Part of Sunrez’s reasoning for this was its claim that the USAF “engaged in numerous breaches designed to hinder Sunrez’s performance of the Contract and impermissibly retaliate against Sunrez for refusing to give up its rights.” In other words, a claim of breach of the duty of good faith and fair dealing. Sunrez’s claim was essentially that the USAF breached the duty of good faith and fair dealing in requiring the TDP, its lack of testing of the pallets, its decision not to move forward with Sunrez for a next level SBIR contract, and its lack of communications with Sunrez. Due to the length of the decision and to help keep things clearer, we don’t note the background of these claims now, but will go over them for each claim below. COFC Overview In its analysis, the court first noted the basic principles of the duty of good faith and fair dealing. The duty of good faith and fair dealing is implied in every contract on each party to the contract. It is inherent to the contract. The duty can also be described as a duty not to hinder and a duty to cooperate. Under the same, parties are required not to interfere with another party’s rights under the contract. A party fails to abide by this duty when it interferes and acts so as to destroy the other party’s reasonable expectations regarding the benefits of the contract. An example of such a breach is when the government awards a contract with some substantial benefit to entice a contractor, only to then eliminate that benefit after awarding the contract. The idea is that a breach involves actions that go against the spirit of the contract. Things like lack of diligence, willfully providing imperfect performance, not reasonably cooperating with another party’s reasonable requests under the contract. Technically, the contract may not speak to such actions, but when one looks at the facts, it becomes apparent what’s going on. A breach of the duty of good faith and fair dealing doesn’t need to involve a breach of the express provisions of the contract. In essence, the principle can be summed up as follows: When considering the facts, did the alleged breaching party act in a manner that basically undermined the contract in some way? The TDP The first question was the TDP. Sunrez argued that USAF undermined Sunrez’s data rights by requiring delivery of the TDP. Sunrez argued that the level of detail in the TDP that the USAF wanted would essentially undermine its data rights by having to give over too much information. It based this on a policy directive regarding the SBIR program. The court rejected this argument as, while a breach of the duty of good faith and fair dealing need not involve a breach of a provision of the contract, the breach has to involve undermining some actual right under the contract. The contract required the delivery of a level III TDP if Sunrez wanted a next level award. The fact some outside evidence on SBIR policy exists was not relevant to this consideration since the contract was clear and unambiguous. Testing of Pallets Sunrez’s second argument on the duty of good faith and fair dealing was that the USAF breached this duty by not testing Sunrez’s prototype pallets. Essentially, because Sunrez had not provided the TDP, the USAF refused to submit the pallet designs for airworthiness certification and to move to Phase III of the SBIR. The court again disagreed with Sunrez’s claim. Here, there was nothing in the contract that promised such testing would occur. The government never had to perform testing under the contract, in fact the only obligation was on Sunrez to provide pallets that would meet the testing requirements if it was tested. Furthermore, the government did in fact conduct testing, and the pallet prototype failed the test. Summary There are more matters to go over with this case as it touched on many issues, to say nothing of the fact there are still good faith and fair dealing issues to go over. We will go over those in a subsequent post, but, for now, here’s some observations: Sunrez’s main issue here was that the contract clearly required that they provide the level III TDP despite their protestations. The government insisting that Sunrez fulfill its express obligations under the contract is not going to be a strong argument that the government is breaching the duty of good faith and fair dealing. If anything, the government arguably could have argued that it was Sunrez that was breaching the duty of good faith and fair dealing by not providing a properly detailed TDP in an attempt to protect its data rights. We will go into further detail on our thoughts on this case and the duty of good faith and fair dealing in our next post on this decision. Questions about this post? Email us . Need legal assistance call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post A Look at the Duty of Good Faith and Fair Dealing (Part 1) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article -
Happy Friday. Hope everyone had a great week. We wanted to share an announcement this week that WIFCON.com is back. Posted from the website: “Wifcon.com was created by Robert (Bob) Antonio 26 years ago. Operated and maintained solely by him and at his own expense, the website has provided a free, reliable, and invaluable source of information and means of communication and commentary to the acquisition community, both public and private for 26 years. Sadly, Bob died on November 24, 2024, after a brief illness, leaving no operational successor.” Now, “a small group of volunteers, has purchased the site from his heirs and will continue to provide the same free service under the same name, Wifcon.com.” We truly appreciated Bob’s commitment to the GovCon community. He created a great resource for us here at SmallGovCon and provided very helpful information that we used weekly in our Week in Review blogs. Thank you, Bob, for your dedicated service, and for the new operators of this very helpful site. Please visit the website at WIFCON.com. And now this week in federal government contracting news, check out stories about new changes to contracting at various agencies including possibly having GSA do more of the contracting for other agencies, as well as changes to DoD workforce and regulations. GSA considers takeover of contracting work at other agencies amid reorganization Contractors spend the week getting ready for a government shutdown DHS brings back one of its federal advisory committees White House nominates top leaders for CISA, other DHS components House passes bill to fund federal agencies through September, though prospects unclear in Senate Better data, not a review, new systems will fix acquisition Confusion, fear as changes whipsaw Defense workforce Military Readiness: Implementing GAO’s Recommendations Can Help DOD Address Persistent Challenges Across Air, Sea, Ground, and Space Domains DoD no longer requires Equal Employment Opportunity clauses in contracts How 2016 NDAA transformed OTAs into key defense contracting tool Federal News Network Letter to the editor: 46 former GSA executives say cuts to cause ‘irreversible damage’ The post SmallGovCon Week in Review: March 10-14, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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When contractors think of protests or litigation related to federal contracting, likely their thoughts go to a bid protest or a size protest. Additionally, when thinking of protesting prior to bids being due, the focus generally is on the wording and provisions of a solicitation. However, contractors should not forget how powerful a tool a NAICS code appeal could be for small business procurements. A recent brief decision in a NAICS code appeal serves as reminder of how useful a simple NAICS code appeal can be for contractors. In order to discuss the recent SBA OHA decision, a quick refresher on NAICS and NAICS code appeals is needed (for a more in depth discussion of NAICS code appeals, check out the NAICS Code Appeal entry in our Why File series). A NAICS code is a six-digit code that is assigned to various categories of industries under the North American Industry Classification System (hence, NAICS), a standard used in classifying business establishments. The SBA assigns a different size standard to each NAICS code based on dollar number of receipts or number of employees. SBA publishes and regularly updates a table of all the size standards assigned to NAICS codes. Agencies must assign a NAICS code to a procurement based on the type of work involved and to establish the business size limit for the contract (if set-aside for small business or a small business certification). Contractors can file a NAICS code appeal with SBA’s Office of Hearings and Appeals (OHA) within 10 days of a solicitation being posted (or an amendment to a solicitation affecting the NAICS code). These can be filed for a multitude of reasons, but generally, a NAICS code appeal is filed because the NAICS assigned to a solicitation simply does not make sense with the work called for in the solicitation. There are also strategic concepts behind NAICS appeals which would advantage a contractor, such as restricting the pool of offerors, or shifting the NAICS to one which a contractor can bid under as small (reminder, check out our entry on NAICS Code Appeals in the Why File series) NAICS code appeals are quite rare, but historically, NAICS code appeals can be relatively successful compared to other federal contracting protests or litigation. GAO stated in 2017 that “in calendar years 2014–2016, OHA dismissed 35, denied 15, and granted 12.” This means a good amount were straight out successes for the appealing contractor during that time, and as you will see below, not all dismissals truly mean the appellant didn’t get the desired outcome. In the recent NAICS code appeal of CueBid Technologies, SBA No. NAICS-6339, 2025 WL 754045 (March 5, 2025), contractors are reminded of just how swift and powerful a NAICS code appeal can be. The subject solicitation involved “hauling and transportation services, forklift/crane operations, fuel, and labor to move containerized and non-containerized military equipment within Fort Cavazos.” It was set aside for SDVOSBs and included NAICS code 532490 (Other Commercial and Industrial Machinery and Equipment Rental and Leasing) which had a size standard of $40 million. CueBid Technologies in its appeal argued that NAICS code 484110 (General Freight Trucking, Local) with its $30 million size standard, would be a better fit. Now, most contractors would expect a drawn out briefing process and litigation as the next step. However, the agency went ahead and changed the Solicitation’s NAICS to the one argued by CueBid Technologies. Thus, SBA OHA dismissed the appeal before it was completed, since it made the appeal moot (i.e., irrelevant). This highlights just how effective a good NAICS code appeal can be. While the SBA filing resulted in a dismissal, it is a successful dismissal from the contractor’s perspective because the agency took the action sought by the appellant contractor. Reading between the lines of this brief decision from SBA OHA, there are some great takeaways and reminders. It appears that a well formed, logical NAICS code appeal can still result in a “victory” for the contractor. Here, the agency acted before the end of the appeal to adjust the NAICS code. Presumably, the appeal filed by CueBid exhibited how its suggested NAICS code better fit the work under the Solicitation. The agency, rather than going through lengthy briefings and legal battles, simply took action after realizing CueBid’s strong position. This appeal led to an efficient, quick, and logical conclusion. This shows that a NAICS code appeal can be quite an effective tool for contractors, and efficient for the government as well. While rare, NAICS code appeals are still a powerful tool in a federal government contractor’s toolbox. If you find yourself looking at a newly posted solicitation and feel puzzled about the assigned NAICS, do not hesitate to consider a NAICS code appeal. While rare, these are often quite powerful tools for contractors, leading to effective and efficient conclusions. Of course, each case is unique and there are legal nuances to any NAICS code appeal. So, be sure to reach out to a federal contracting attorney, such as ourselves, if you feel a NAICS code appeal may be needed. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post NAICS Code Appeal Still a Powerful Tool first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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When an SBA approved mentor and protégé create a joint venture to pursue contracts set-aside for small businesses, SBA requires the mentor-protégé joint venture agreement to contain the requirements found in 13 C.F.R. § 125.8(b)(2). But how closely does the joint venture agreement have to match the language of these required provisions in order to be found complaint? In DecisionPoint-Agile Defense JV, LLC, OHA considered whether the language in a joint venture’s operating agreement (OA) can be considered alongside the joint venture agreement (JVA) when determining if a JVA meets all the regulatory requirements. Background GSA issued a Small Business Pool Request for Proposals (RFP) for IT services and posted a pre-award notification of successful offerors. DecisionPoint-Agile Defense JV, LLC (Appellant) was one of the successful offerors. Appellant was a joint venture owned 51% by a small business and 49% by an other than small business. The two businesses were in a mentor-protégé relationship. The contracting officer filed a size protest, arguing Appellant’s JVA did not comply with the provisions required by 13 C.F.R. § 125.8(b)(2). The Area Office issued a size determination finding Appellant other than small because the JVA did not contain several of the regulatory provisions required by SBA. Even though several of the missing provisions were stated in the OA, the Area Office claimed the language of the regulation requires the JVA to contain the provisions. Appellant appealed the size determination, arguing that the Area Office erred in limiting its analysis to just the JVA and refusing to include the OA in its consideration. Discussion OHA agreed with Appellant, finding the Area Office erred in failing to consider Appellant’s OA when determining whether Appellant met the JVA regulatory requirements. OHA noted that it has “consistently considered a concern’s operating agreements together with its joint venture agreement in judging a concern’s compliance.” Further, OHA stated that whether an operating agreement is explicitly incorporated into the joint venture agreement is irrelevant. The only requirement is that the documents were executed prior to the date on which the size of the joint venture was determined. With this consideration in mind, OHA reviewed Appellant’s JVA and OA together to determine whether the regulatory requirements were satisfied. Managing Venturer and Responsible Manager Designating a small business as the managing venturer of the joint venture, and designating a named employee of the small business managing venturer as the manager with ultimate responsibility for performance of the contract (the “Responsible Manager”). See 13 C.F.R. § 125.8(b)(2)(ii). The Area Office argued that Appellant’s JVA failed to clearly designate that the manager would have ultimate responsibility for contract performance. As the small business, DPC was designated as Managing Venturer and the JVA stated that DPC’s CEO would be the Managing Director responsible for supervising the employees. Even though the JVA clearly designated someone to supervise the employees, the Area Office claimed this did not indicate ultimate responsibility over contract performance. OHA concluded that the regulation never explicitly requires the JVA contain the exact language used in the regulation. OHA said “the regulation does not mandate particular language” and “SBA has stated that no specific format is required for a joint venture agreement.” The JVA had clearly designated DPC’s CEO as the Managing Director and provided a description of his duties. Additionally, the CEO’s responsibility in matters related to contract performance was provided in the OA. Thus, the small business was designated as the Managing Venturer and an employee was designated as the Responsible Manager with ultimate responsibility over contract performance. Major Equipment, Facilities, and Other Resources Itemizing all major equipment, facilities, and other resources to be furnished by each party to the joint venture, with a detailed schedule of cost or value of each, where practical. If a contract is indefinite in nature, such as an indefinite quantity contract or a multiple award contract where the level of effort or scope of work is not known, the joint venture must provide a general description of the anticipated major equipment, facilities, and other resources to be furnished by each party to the joint venture, without a detailed schedule of cost or value of each, or in the alternative, specify how the parties to the joint venture will furnish such resources to the joint venture once a definite scope of work is made publicly available. See 13 C.F.R. § 125.8(b)(2)(vi). The JVA only stated that the Venturers would contribute property and share responsibility. For an indefinite quantity contract, the regulation only requires a general description of the anticipated major equipment, facilities, and other resources. Even though this was an IDIQ contract, the Area Office concluded that the JVA did not provide a general description. The OA, however, did contain a description of resources that would be furnished by each Venturer, noting, The Managing Venturer was to contribute $5,100 for registration fees, legal services and other expenses, and other resources by mutual agreement, included to support specific task orders. The Partner Venturer will contribute $4,900 for registration fees, legal services and other expenses. Also $15,000 for website development and maintenance, $5,000 per annum for office supplies, and $5,000 for marketing and public relations support. Therefore, Appellant met the requirement by providing a general description of the resources in the OA. Ensured Contract Performance Obligating all parties to the joint venture to ensure performance of a contract set aside or reserved for small business and to complete performance despite the withdrawal of any member. See 13 C.F.R. § 125.8(b)(2)(viii). Appellant’s JVA provided, “all parties to the Joint Venture are required to complete contract performance.” The Area Office argued this did not include the language “despite the withdrawal of any member.” Appellant’s OA did include this language, stating, “[a]ll parties to the Joint Venture are obligated to complete contract performance despite the withdrawal of any party to the Joint Venture.” OHA found that the provision in the JVA alone satisfied the obligation, noting that the language presented “a flat, absolute requirement with no exceptions.” Further, the OA contained the exact regulatory language the Area Office wanted. Additionally, there were regulatory provisions that were not included in Appellant’s JVA but were explicitly stated in the Operating Agreement, including Original Records and Performance of Work Statements. OHA found Appellant compliant because they were included in the Operating Agreement. Key Takeaways This case provides some comfort in OHA’s flexibility, and knowing that OHA doesn’t require joint ventures agreements to follow the regulation language verbatim, at least in some cases. But this case also serves as a lesson that it might be the better choice to simply include the regulatory language in your joint venture agreement anyway. Here, the Appellant faced an adverse size determination because the required regulations were in the OA and not explicitly stated in the JVA. An easy fix to avoid this would be starting with the language used in the regulation and then adding in the specifics. For example, clearly designate the Responsible Manager “as the manager with ultimate responsibility for performance of the contract.” Then feel free to list the specific areas the Responsible Manager will oversee, “this includes reviewing documents, supervising employees, payroll, etc…” Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Spell it Out for Me: OHA Finds Joint Venture Agreement Compliant When Reviewed with Operating Agreement first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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For companies trying to break into the government market for the first time, past performance can seem a bit like the old chicken-and-egg conundrum. Sometimes it can appear like a company can’t win a government contract without a strong record of past performance–but can’t build a past performance record without contracts! And with the government’s continued movement away from lowest-price, technically acceptable evaluations, past performance seems increasingly important. But that doesn’t mean the government always has to consider past performance as an evaluation factor. Instead, as a recent GAO bid protest decision confirms, procuring agencies have broad discretion to omit past performance in appropriate cases. GAO’s decision in Pathfinder Consultants, LLC, B-419509 (Mar. 15, 2021) involved a VA Request for Proposals seeking a contractor to provide communications strategies and support services. The RFP was issued as a commercial item acquisition under the procedures set forth in FAR Parts 12 and 15. The RFP stated that award would be made on a best-value tradeoff basis, considering just two factors: technical merit and price. A potential bidder, Pathfinder Consultants, LLC, filed a pre-award bid protest with GAO, challenging the terms of the solicitation. Among its arguments, Pathfinder contended that it was unreasonable for the VA to decline to include past performance as an evaluation factor. The GAO explained that, as a general matter, “[t]he determination of a contracting agency’s needs and the best method of accommodating them are matters primarily within the agency’s discretion.” Further, FAR 15.304(c)(3)(iii) provides that “[p]ast performance need not be evaluated if the contracting officer documents the reason past performance is not an appropriate evaluation factor for the acquisition.” In this case, GAO held, the VA–acting within its considerable discretion–had properly documented the reasons why it was unnecessary to consider past performance: Here, the VA documented its determination and adequately explained why it concluded that evaluating past performance was not appropriate for this solicitation. When drafting the solicitation, the VA noted that the types of communication services to be acquired were not particularly complex or difficult, and that therefore only assessing each offeror’s proposed technical approach would provide sufficient indication as to the likelihood of successful performance. Further, the VA explained that reviewing past performance information for communication services that are generally performed favorably was unnecessary and would not yield significant date for evaluative purposes. The protester has provided no basis for us to question the agency’s conclusion. GAO denied Pathfinder’s protest. As we’ve discussed on this blog, new entrants to the federal marketplace have options when it comes to past performance–like, in some cases, submitting past performance acquired as a member of a joint venture, or submitting the past performance of a subcontractor. But another strategy is to look for solicitations without past performance as an evaluation factor. As the Pathfinder Consultants case demonstrates, they’re out there, even in some services NAICS codes. Need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Past Performance Isn’t Always a Required Evaluation Factor, Says GAO first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Hello, blog readers and happy Friday. Can you believe it’s already March? In just a few short weeks, spring will (finally) be here! Hooray! With all the snow we had, we are definitely looking forward to warmer temperatures and to getting outside more. We hope that you’re gearing up for a nice weekend. But before you do, let’s take a look at the-week that was. In this edition of the Week in Review, articles discussed the continued reshuffling and closing of government agencies and offices and the importance of GSA. Whitehouse: Addressing Risks from Perkins Coie LLP 18F shutters, leaving agencies without a key partner in digital transformation; GSA tells agencies to terminate contracts with top-10 consulting firms The Big Government Contracts DOGE Hasn’t Touched As DOGE lease terminations hit Indian Country, concerns mount about vital services GSA lists agency headquarters among 440 ‘non-core’ assets for possible disposal Once again, GSA finds itself in the center of a hubbub What nearly a billion in canceled federal contracts could mean for education National Science Foundation rehires half of employees fired two weeks ago OPM tells agencies it’s not directing probationary firings Defense Pricing, Contracting, and Acquisition Policy Office Issued Class Deviation 2025-O0003 The post SmallGovCon Week in Review: March 3-7, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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A recent bid protest decision examines the effect of a novation on a pending procurement. After a complicated procedural history, GAO said that an agency must take into account a corporate transaction and novation, even if the agency wasn’t aware of the novation at time of proposal submission. In DecisionPoint Corporation- f/k/a Emesec Inc., B-422245.5 (2024), the Air Force sought cyber protection and engineering support under the GSA VETS II contract. The solicitation required proof of a level III Capability Maturity Model Integration (CMMI) certification for the “prime contractor providing the CPT support services.” DecisionPoint Corporation, known at the time of proposal submission as EmeSec Inc. (EmeSec), submitted a proposal on May 1, 2023 under the name EmeSec. EmeSec submitted its proposal saying that it was a subsidiary of DecisionPoint. Because EmeSec did not have its own CMMI certification, it included “DecisionPoint’s level III CMMI certificate, along with a meaningful relationship commitment letter (MRCL).” Before proposal submission, EmeSec merged into DecisionPoint. Then, after the proposal submission date, but before award, on June 26, 2023, “DecisionPoint entered into a novation agreement with GSA that recognized DecisionPoint as EmeSec’s successor in interest.” In December 2023, EmeSec received award, and only then did it reveal the novation agreement to the Air Force. As part of an earlier protest, GAO explained that “that the MRCL did not clearly describe how the resources of the parent would be available for performance.” As a result, the Air Force took corrective action and contacted the “entity that issues the CMMI certificates–i.e., the Information Systems Audit and Control Association (ISACA)–for information regarding how ISACA issues its certificates.” After reviewing this information and seeking clarity from DecisionPoint, the Air Force found DecisionPoint ineligible “because it failed to submit proof of any level III CMMI certification for the prime contractor providing the CPT support services as required by the solicitation.” DecisionPoint protested. DecisionPoint argued that “that the Air Force’s decision that DecisionPoint was ineligible for award because it failed to include proof of any level III CMMI certification for the prime contractor providing the CPT support services was unreasonable because the Air Force ignored EmeSec’s merger into DecisionPoint and the novation of the VETS II contract from EmeSec to DecisionPoint” prior to the proposal submission date. The agency responded that, at proposal submission, EmeSec was the prime contractor and it did not have the required CMMI certification–only the parent DecisionPoint had the certification. GAO held that “that the agency’s determination that DecisionPoint’s proposal was ineligible for award because it failed to include proof of any level III CMMI certification for the prime contractor providing the CPT support services is not consistent with the terms of the solicitation or supported by the record.” Furthermore, “as a result of the merger between DecisionPoint and EmeSec, which was effective January 1, 2023, the prime contractor is now DecisionPoint.” “While the agency did not know that DecisionPoint was the prime contractor at the time of its initial evaluation, the agency was aware of this fact when it conducted its post-corrective action evaluation.” GAO said that the agency did not properly account for the effect of the merger. This means that “the record shows that at the time the agency conducted its post-corrective action evaluation, the prime contractor (DecisionPoint) included proof of its level III CMMI certificate in its proposal as required by the solicitation” This decision is interesting for a couple reasons. First, it may encourage protesters to take another shot at protesting. While the initial decision found in favor of one protester, the later protest basically found in favor of the opposite protester. Second, on the substance, while it is always better to have a thorough explanation to provide an agency when it comes to things like mergers and corporate structure, the protest process may allow a chance to have an independent reviewer take a look at the agency’s decision and question it. And that may be enough for the protester to get another shot at the award. The decision seems to recognize that a novation is retroactive back in time to the point of the corporate transaction, even if it’s approved later. And agencies also must recognize the substance of the corporate transaction that precipitates a novation. Questions about this post? Email us. Need legal assistance give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GAO: Agency Must Recognize Novation as Part of Pending Offer first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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The National Center for American Indian Enterprise Development (NCAIED) is going Beyond Boundaries for the 2025 Reservation Economic Summit. The event features tribal leaders, members of Congress, federal agency representatives, state and local officials, and top CEOs on a national platform. Our very own federal government contracts attorney and SmallGovCon contributor, Nicole Pottroff, is scheduled to be a panelist on the topic of Building and Maintaining a Compliant Company, at this year’s conference in Las Vegas on Monday, March 10. This panel will discuss ways organizations can identify compliance issues across business units, while standardizing and improving processes. If you are planning on attending this conference, please stop by and say hello to Nicole. Please use this link for more information about the conference and registration. The post Res 2025: Beyond Boundaries Conference, Las Vegas, Nevada, March 10-13, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! Tomorrow is the first day of March and you know what that means if you are a college basketball fan. March Madness! Start thinking about your bracket strategy and let the games begin! Have a great weekend. This week in federal government contracting saw GSA deviations to procurement policies, canceled contracts, and a new SBA administrator. GSA Announces ‘Deviations’ in Procurement Policies Presidential Memo Calls for More Disclosure on Canceled Spending Changes to GSA Federal Acquisition & Procurement Practices on Hold White House Seeks to Promote Foreign Investment While Protecting Nat’l Security SBA Administrator Loeffler Issues Memo on Day One Priorities EPA moves to seize $20B in clean energy grants, including $1.5B for Native communities Legion, SBA team up to assist current, prospective veteran small business owners Nearly 40% of contracts canceled by Musk’s DOGE are expected to produce no savings A vague Pentagon memo has some contractors on edge OPM procurement processing fully halted following agency layoffs, internal email says GAO High-Risk Series: Heightened Attention Could Save Billions More and Improve Government Efficiency and Effectiveness Oversight of EPA and DOE Spending: Implementing Remaining GAO Recommendations Could Help Address Identified Challenges The post SmallGovCon Week in Review: February 24-28, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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One of the rules we get asked about the most as government contracts attorneys is what’s known as the nonmanufacturer rule, 13 C.F.R. § 121.406 (So much so that we felt it wise to go over the rule in one of our “Back to Basics” posts to help clear some things up). It’s pretty understandable why: It has numerous provisions, exceptions, and requirements that can make it pretty difficult to follow. It also shows up in two different regulations: 13 C.F.R. § 121.406 as mentioned above, as well as FAR 19.505. Unfortunately, this often leads to contractors getting tripped up by the rule, either not realizing it applies where it does or, as we’ll explore here, thinking it applies where it doesn’t. Recently, SBA addressed a size protest that asserted the awardee didn’t meet the requirements of the nonmanufacturer rule, and noted to the unfortunate protestor that the rule didn’t apply for the procurement anyways. Read more: Confusion About the Nonmanufacturer Rule: When Does it Apply? In Mission Analytics, LLC, SBA No. SIZ-6325, 2024 (Dec. 12, 2024), the protester filed a size protest on an award of a contract to upgrade camera systems for the Air Force. This procurement was issued under NAICS code 561621, Security Systems Services (Except Locksmiths). The protester asserted that the awardee was not a manufacturer of the products the procurement sought and thus had to meet the nonmanufacturer rule to be eligible for award. In particular, the protester asserted that FAR 19.505(a)(2) applies the nonmanufacturer rule to all awards under FAR Subpart 19.14. The protest was dismissed by the SBA area office (and we’ll get to why in just a moment here). Raising the same issues in the size appeal, the protester again asserted that the nonmanufacturer rule applied to the procurement. However, the protester was mistaken. SBA pointed out that the procurement was issued under a services NAICS code. 13 C.F.R. § 121.406(b)(3) states: “The nonmanufacturer rule applies only to procurements that have been assigned a manufacturing or supply NAICS code, or the Information Technology Value Added Resellers (ITVAR) exception to NAICS code 541519.” In other words, the nonmanufacturer rule wasn’t applicable here because this was a services contract. This was why the area office had dismissed the protest in the first place. We aren’t going to stop here, though. It’s worth exploring further what the protester argued in this case. The protester was aware of 13 C.F.R. § 121.406(b)(3). However, the protester argued that this regulation was overruled by FAR 19.505(a)(2). To be sure, that part of FAR 19.505 does give the impression that the nonmanufacturer rule applies to all awards under FAR subpart 19.14. The protester then asserted that this was a problem recognized by the government in revisions made to the FAR back in 2021. However, the protester made a few mistakes here. First, those revisions were to the limitations on subcontracting, not the nonmanufacturer rule. These rules are similar in some respects, so let’s make some clarification here. One question the nonmanufacturer rule in 13 C.F.R. § 121.406 asks is, who is the actual manufacturer of the end item? When it comes to determining whether a company is the manufacturer, one factor that is considered under the rule is how much value the company adds to the end product in question as compared to the total value of that product. The limitations on subcontracting also require a calculation of value, but not in the same way as the nonmanufacturer rule. Instead, the limitations on subcontracting limit how much a contractor for a set-aside can pay out to its subcontractors. For example, under 13 C.F.R. § 125.6 for a set-aside services contract, the contractor cannot pay more than 50% of the contract value to subcontractors (that aren’t similarly situated). We go over the limitations on subcontracting in more detail here. The protester also made another error. FAR 19.505 clearly states that the nonmanufacturer rule doesn’t apply to services contracts, just like 13 C.F.R. § 121.406: “Any concern, including a supplier, that is awarded a contract or order subject to the nonmanufacturer rule, other than a construction or service acquisition…is required to…” FAR 19.505(c)(1). As such, the area office’s decision to dismiss was correct, and SBA concluded accordingly. With all this said, we admit some sympathy for the protester in this one. FAR 19.505(c)(1) could really use some better wording, it lacks clarity. It also really doesn’t help that there’s so many different regulations that essentially include the entire nonmanufacturer rule instead of simply having one regulation with the rule and referencing that regulation where needed. SBA was correct in its decision, to be sure. After all, it doesn’t make sense to have a rule about what must be done if a company isn’t a manufacturer of the desired product when the contract is for services. But all the same, we think this case could serve as some impetus to further clean up the FAR and SBA regulations to make things clearer for everyone. Questions about this post? Email us. Need legal assistance give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Confusion About the Nonmanufacturer Rule: When Does it Apply? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Joint ventures pursuing a contract under any of the SBA’s socioeconomic programs (Woman-Owned Small Business Program, Service-Disabled Veteran-Owned Small Business Program, 8(a) Program, and HUBZone) all have requirements beyond the general requirements that a non-joint venture prime contractor must meet to be eligible for those types of set-asides. The joint venture must be considered small, which may take into account the size of both venturers, and the joint venture agreement itself must contain specific information. But what happens when the regulatory text isn’t exactly clear on how those two requirements fit together? And how are unsuccessful offerors, contracting officers, and the SBA itself supposed to challenge the status of those joint ventures if the regulatory text doesn’t explicitly provide for the means to do so? Read ahead to see how the decision in Chenega Base and Logistics Services, LLC to find out! In August 2024, the Army awarded DPG Services JV LLP a contract for facilities support services. The joint venture consisted of an 8(a) Program participant and a small business. Size Protest Following award, Chenega Base and Logistics Services (Chenega) protested the size of DPG. In September 2024, the SBA Area Office found that DPG was a small business for procurement. Notably, the joint venturers were found to be affiliated because the joint venture was awarded its first contract more than two years prior to proposal submission. The joint venture’s first award was in February 2019, and it submitted its final offer including price for the procurement at issue, in July 2023. This meant that the joint venture far exceeded the time limit allowed under the two-year rule at 13 C.F.R. § 121.103(h). This states, “a specific joint venture generally may not be awarded contracts beyond a two-year period, starting from the date of the award of the first contract, without the partners to the joint venture being deemed affiliated for the joint venture.” Regardless, the Area Office determined joint venture was eligible for award because the joint venture was still considered small even with the venturers sizes being combined due to their affiliation. Appeal Appellant, in October 2024, appealed to SBA’s Office of Hearings and Appeals (OHA). Appellant acknowledged that the venturers individually appeared to be small, but contended that together, and including their respective affiliates, they exceeded the procurement’s size standard. Additionally, Appellant argued that the joint venture could not be compliant with 13 C.F.R. § 124.513(c) and (d). 13 C.F.R. § 124.513(c) requires every joint venture agreement for an 8(a) set-aside to describe all major equipment, facilities, and other resources to be contributed by each member of the joint venture. Further, the joint venture agreement must identify the respective responsibilities of the members as to negotiation of the contract, source of labor, and contract performance, which Appellant asserted the joint venture agreement lacked. 13 C.F.R. § 124.513(d) requires the 8(a) partner to an 8(a) joint venture to perform at least 40% of the work performed by the joint venture and that it must bring some value to the joint venture agreement. Appellant claimed that the Area Office erred by not considering whether the joint venture met the requirements in 13 C.F.R. § 124.513(c) and (d), pointing out that 13 C.F.R. § 121.103(h)(2)(i) states: For a competitive 8(a) procurement, a joint venture between an 8(a) Participant and one or more other small business concerns (including two firms approved by SBA to be a mentor and protégé under § 125.9 of this chapter) must also meet the requirements of § 124.513(c) and (d) of this chapter as of the date of the final proposal revision for negotiated acquisitions and final bid for sealed bidding in order to be eligible for award. This requirement applies to “any 8(a) contract” and “[e]very [JVA] to perform an 8(a) contract.” Therefore, the Appellant argued that even if the joint venture is small for the procurement per 13 C.F.R.§ 125.8, it didn’t meet the requirements of 13 C.F.R. § 124.513, which applies to 8(a) joint venture requirements, including the addendum requirements that require a joint venture to “create an addendum to the joint venture agreement setting forth the performance requirements for each additional award.” And the Area Office erred in not evaluating the joint venture agreement to determine whether it met those requirements. OHA’s Decision OHA agreed with the Appellant that the Area Office improperly ignored applicable SBA joint venture rules that applied because the procurement was set-aside entirely for 8(a) Program participants. 13 C.F.R. § 121.103(h)(2)(i) states that a joint venture “must also meet the requirements of § 124.513(c) and (d) of this chapter as of the date of the final proposal revision for negotiated acquisitions … in order to be eligible for award.” Accordingly, OHA pointed out that size is not the only consideration and that the Area Office should have looked at whether the joint venture agreement met the requirements of 13 C.F.R. § 124.513(c) and (d). But there was still the issue of how a disappointed offeror, Contracting Officer, or the SBA may raise such a concern. As noted in the decision, agencies were previously required to evaluate offerors’ joint venture agreements prior to award to ensure the joint venture agreement meets the 8(a) Program joint venture requirements. But when that requirement was removed, there was no existing way to protest whether an 8(a) joint venture met the joint venture requirements in 13 C.F.R. § 124.513. The Federal Register commentary that accompanied the rulemaking of 13 C.F.R. § 121.103(h)(2)(i) noted that, even though SBA removed the requirement that SBA review 8(a) joint venture agreements prior to award, SBA did not intend to allow 8(a) joint ventures that did not meet the requirements in 13 C.F.R. § 124.513 to be awarded competitive 8(a) set-asides. SBA intended the size protest process to work to ensure compliance with formal 8(a) joint venture agreement requirements. In practice, the size protest process did not work as intended in situations where the joint venture is between an 8(a) Program participant and another small business. Such a joint venture would still be considered small under 13 C.F.R. § 125.8, which states that any joint venture between two small venturers will be considered small for the procurement. But the joint venture agreement may not meet the 8(a) joint venture rules in 13 C.F.R. § 124.513, such as the 8(a) venturer being the Managing Venturer. Thus, OHA held that the only path to protesting an 8(a) joint venture’s status, thereby ensuring the 8(a) joint venture meets the 8(a) joint venture requirements in 13 C.F.R. § 124.513, is through the size protest process. Here, OHA remanded the case back to the Area Office to review the joint venture agreement in accordance with 13 C.F.R. § 124.513, concluding that it is not only the responsibility of an 8(a) joint venture to be considered small, but to also meet the joint venture requirements for any 8(a) competitive procurement. Thus, there is a method to question the joint venture compliance of an 8(a) joint venture. Please reach out to our firm should you seek to do so. If you have questions, please email us. If you need legal assistance, call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Reminder: Ensure all Joint Venture Requirements are Met to have a Successful JV first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Here is your Week in Review as you head into the weekend. We are still attempting to get through this second artic blast here in the Midwest this week. I think it’s safe to say we are all looking forward to those warmer temperatures that are returning next week. Enjoy the weekend! This week in federal government contracting news includes a new SBA administrator, updates on federal workforce reductions, and new guidance from GSA. Senate confirms Kelly Loeffler, former Georgia senator, to lead Small Business Administration SBA Administrator Kelly Loeffler Issues Statement Federal firings: You couldn’t make this up Hegseth directs Pentagon to find $50 billion in cuts this year to fund Trump military priorities GSA announces FAR class deviations, guidance for contracting officers Major Opportunities on the Horizon with CISA FY26 Contract Recompetes White House Memo: Radical Transparency About Wasteful Spending Federal Contracts Are Highly Coveted—What Happens When There’s a Fight Over Them? Pentagon’s $96M wearable contract sparks protest, accusations of vendor preference Black Business Leaders Call for Bigger Structural Change Amid Anti-DEI Surge Procurement List; Additions and Deletions Senate confirms Kelly Loeffler to lead Small Business Administration A comprehensive look at DOGE’s firings and layoffs so far The post SmallGovCon Week in Review: February 17-21, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Winning a government contract requires more than just submitting the best proposal—your company must also be deemed “responsible” by the federal government. Responsibility in government contracting goes beyond technical capabilities and pricing; it encompasses financial stability, past performance, ethics, compliance with laws, security clearances, and overall business integrity. Failure to meet responsibility requirements can lead to a contract award being denied, even if a company submits the most competitive bid. In this webinar, government contracts attorneys, Nicole Pottroff and Stephanie Ellis of Koprince McCall Pottroff LLC, will provide a comprehensive breakdown of responsibility determinations and what they mean for government contractors. You’ll gain insights into how contracting officers evaluate responsibility, what documentation and evidence contractors can provide to strengthen their case, and key actions businesses should take to avoid responsibility-related issues. Additionally, this session will explore the special rights that small businesses have to challenge negative responsibility determinations through the SBA’s Certificate of Competency (COC) process. Understanding how and when to leverage this option can be the difference between losing a contract and securing a valuable government opportunity. Whether you’re a new contractor or an experienced one looking to solidify your compliance and competitiveness, this webinar will equip you with the knowledge, tools, and strategies needed to meet responsibility requirements and position your company for long-term success in the federal marketplace. Register here. The post Govology Webinar Announcement! The Concept of “Responsibility” in Government Contracting (2025 Update), March 6, 1:00pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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As a federal contractor, there are many factors to consider in filing a potential bid protest. In this post, we look at the potential considerations, both pros and cons, for filing a bid protest at the Court of Federal Claims (COFC). Below are some of the main items to think about in considering a bid protest at the COFC, as opposed to a bid protest at the Government Accountability Office (GAO) or an agency level protest. The decision of whether, and where, to file a bid protest is one that should only be taken with care and, preferably, with the advice of counsel. Here are some of the key things to consider. As we noted in a recent post, the total number of GAO protests has generally gone down over the last several years, while COFC protests have been inching up over the last few years. There are fewer cases in COFC, but the bid protest numbers appear to be growing at COFC. For instance, the number of bid protests filed at COFC in FY 2022 was a mere 123 cases, but increased to 169 cases the next fiscal year. That may explain the trend of fewer cases at GAO. Complete Administrative Record COFC protests offer a more robust agency record as compared to GAO and agency level protests. The COFC rules require that the agency produce a number of documents, right out of the gate, including the following: Source selection plan; The agency’s estimates of the cost of performance; Correspondence between the agency and the protester, awardee, or other interested parties relating to the procurement; Records of any discussions, meetings, or telephone conferences between the agency and the protester, awardee, or other interested parties relating to the procurement; The protester’s, awardee’s, or other interested parties’ offers, proposals, or other responses to the solicitation; The agency’s competitive range determination, including supporting documentation; The agency’s evaluations of the protester’s, awardee’s, or other interested parties’ offers, proposals, or other responses to the solicitation, including supporting documentation; The agency’s source selection decision, including supporting documentation; The first thing to note is that this is a long list of documents. In fact, in the COFC rulebook, the list goes all the way from (a) to (u), close to the whole alphabet. The second thing is that this list of documents is not subject to debate by the agency. This means the agency must produce the whole list, and the agency cannot object to producing any of the documents. This is a contrast from the GAO protest world, where the agency will often decline to produce documents on the basis of relevance, and even fight through rounds of objections to not include agency evaluation materials. Finally, the list of documents includes the proposals and evaluation record for all offerors. This is a marked contrast from GAO, where the protester typically only receives its own evaluation record and a small portion of the evaluation record relevant to any specific arguments it makes about awardees. Timing GAO’s timing rules are notoriously strict. As we’ve discussed, GAO’s timeliness rules for protests not challenging solicitation terms have strict deadlines. These types of protest, challenging an agency’s evaluation decisions, basically give a company 10 days from either contract award or debriefing in which to file a GAO protest. GAO rules say that a protest shall be filed not later than 10 days after the basis of protest is known or should have been known (whichever is earlier). However, procurements with competitive proposals and required debriefings get an extension so that the initial protest shall not be filed before the debriefing date offered to the protester, but shall be filed not later than 10 days after the date on which the debriefing is held. At COFC, there is no strict deadline for this type of protest. So, you usually have much more time to file a protest at COFC that does not challenge solicitation terms as compared to GAO. On the other hand, protests to solicitation terms have a similar rule at both GAO and COFC. Both must be generally filed prior to the proposal deadline. More Complete Decision Take a look at some GAO decisions as compared to COFC decisions. One thing you’ll notice is that COFC decisions are simply longer than those at GAO. The judge at COFC will cover all arguments raised in the protest and give each sufficient consideration. However, GAO decisions will often include a footnote that says something along these lines: GAO has considered all other arguments of the protester and determined they have no merit. A COFC decision is unlikely to use the same tactic. Instead, the COFC judge will almost always review, consider, and rule on each independent aspect of the arguments advanced by the protester, the government, or any intervenor. The COFC also allows for direct appeals to the Court of the Appeals for the Federal Circuit, while the GAO has no direct appeal option. Potential Stay of Performance/Award GAO offers an automatic stay of performance, whereas COFC does not. COFC requires a complicated showing in order to get a preliminary injunction. However, more and more, the Department of Justice attorney assigned to the case will often allow for a voluntary stay of performance. This is especially true for larger procurements where there are multiple parties involved. So, protesting at COFC may also result in a stay of performance of the contract, if agreed to by the agency. Oral Argument The COFC judge will usually require an oral argument presentation, either in person or remotely. This can be a way for the parties to pare down their argument to its essentials. In these hearings, the judges can be equally harsh on protesters, intervenors, and the government. This can be a crucial way to really focus on the important issues in the case. Oral arguments are quite rare in GAO practice, although they do happen. Potentially Higher Cost With the much more complete administrative record, and the likely oral argument, the amount of briefing and argumentation is greater than during a GAO protest. However, it can in many cases be worth it because it allows a fuller picture of the entire evaluation process. It gives protesters a chance to dig into the evaluation of all awardees and consider if the agency made any mistakes. In that crucible, there may very well be errors. Or, in other cases, the protester can at least have the satisfaction of knowing that it put the agency’s evaluation through its paces. *** Next time you are considering a bid protest, give the COFC serious consideration. If you would like to know your options, reach out to a bid protest attorney here at SmallGovCon to answer any questions. Questions about this post? Email us. Need legal assistance? Give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Why File: A COFC Protest first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Many federal contractors are familiar with or have heard of the Service-Disabled Veteran Owned Small Business (SDVOSB) program. It is currently run by the SBA, but previously was administered by the VA. Due to the nature of the program being around for a while, and shifting from one agency to another in the past few years, undoubtedly there are some requirements that have changed, but contractors may not realize it. One of the requirements that has experienced change is one of the most basic: how you establish that you are a Service-Disabled Veteran. In this installment of our GovCon FAQs series, we tackle, how do you show or prove your Service-Disabled Veteran Status, now that the SDVOSB program is under the SBA? As the popular saying goes, sometimes to move forwards, you have to go backwards first. So, before answering this GovCon FAQ, we need to briefly discuss how an individual used to show they were a Service-Disabled Veteran when the VA was in charge of the SDVOSB program. As readers over the past few years likely remember, originally the SDVOSB program was administered by the VA, and then shifted over to the SBA. Naturally, when that occurred, the VA’s SDVOSB eligibility regulations were phased out or replaced by other regulations, while SBA created its own. Most of the SBA’s SDVOSB regulations are very similar to what the VA had. But one that did change, and may cause issues for federal contractors, is how to show you are a service-disabled veteran. (For more information on the basics of SDVOSB eligibility, check out our Back to Basics on SDVOSBs and Top Five Things About SDVOSBs) Back when the VA administered the SDVOSB program it defined “Service-Disabled Veteran” as a “veteran who possesses either a valid disability rating letter issued by the Department of Veterans Affairs” or “a valid disability determination from the Department of Defense or is registered in the Beneficiary Identification and Records Locator Subsystem maintained by Department of Veterans Affairs’ Veterans Benefits Administration as a service-disabled veteran.” This definition was removed at the end of 2022. Pay close attention to the parts in bold as we move forward. Also note, this regulation was removed and replaced with a size recertification regulation, so you must look to the SBA’s current regulations for SDVOSB eligibility questions. With that in mind, we come to today’s GovCon FAQ: How do I show Service-Disabled Veteran Status for SBA? The current SBA SDVOSB regulations define “Service-Disabled Veteran” as “a veteran who is registered in the Beneficiary Identification and Records Locator Subsystem or successor system, maintained by Department of Veterans Affairs’ Veterans Benefits Administration as a service-disabled veteran.” Notice how much shorter this is than the previous now-defunct VA definition, and removes the parts in bold referenced earlier in this post. Previously, a Service-Disabled Veteran could submit a letter from the Department of Defense or the VA, and meet the requirements for being a “Service-Disabled Veteran.” However, now a veteran must make sure its VA information is up to date and reflects accurately whether they were a Service-Disabled Veteran. According to that regulation, the SBA will interface with the VA’s system to determine Service-Disabled Veteran status, not simply request or rely on documents from the applicant. Simply submitting a Department of Defense letter or VA letter will not suffice. This may come as a surprise to some, as accepting such letters was the typical practice for many years, and logically, there is no reason for the SBA to doubt the veracity of a Department of Defense or VA letter. However, the regulation’s silence on such letters speaks volumes. You must make sure your VA information is up to date, as even such outside information and letters will no longer be accepted for SDVOSB certification. So, be careful when prepping your SDVOSB application to the SBA and do not assume that the same documentation that was expected by the VA (or that logically should show Service-Disabled Veteran status, such as a letter from the Department of Defense) will be accepted by the SBA. Instead, make sure to check in with the VA to ensure its files show you as a service-disabled veteran, as that is exactly what the SBA will look at. Also, make sure to reach out to a federal government contracts attorney, such as ourselves, for any questions on the SDVOSB program and eligibility requirements, because as you can see, there are lots of nuances to be careful of in pursuing SDOVSB status. If you have questions, please email us. If you need legal assistance, call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GovCon FAQs: How do I Show Service-Disabled Veteran Status for SBA? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Valentine’s Day! Well, our KC Chiefs just couldn’t pull off that third Super Bowl win but it sure was a fun football season, all the same. Looking forward to what might be in store for next season. Now we can start leaning into March Madness, which will be just around the corner! Hope you have a wonderful Valentine’s Day and enjoy the weekend. Now here’s what’s happening in federal government contracting, including stories about agency restructuring, impacts on federal personnel, and strategies for contractors. HUBZone Program Updates and Clarifications, and Clarifications to Other Small Business Programs; Correction How USAID employees were blocked from making payments Industry laying low as DOGE digs into agencies Congress seems frozen by the Trump administration bulldozer Valadao, Turner introduce bill to end human trafficking in federal contracting Indian Affairs chair seeks protection for tribal programs amid policy changes Why contractors are fuming at what’s going on at USAID GSA ‘losing too many people,’ as leaders pursue cuts to personnel, office space and contracts State Department Removes Tesla’s Name From Planned $400M Contract Amid Musk Scrutiny Elimination of the Federal Executive Institute – Contract Implications IMPCT Group Shares Strategy for Government Contractors & Alaska Native Corporations at National 8(a) Conference GSA looks to terminate probationary employees Federal judge orders HHS, CDC, FDA to restore webpages, datasets The post SmallGovCon Week in Review: February 10-14, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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It doesn’t take too long to find a blog post where we’ve discussed SBA’s Service-Disabled Veteran-Owned Small Business (SDVOSB) full-time devotion requirement. For a service-disabled veteran (SDV) to meet the SDVOSB control requirements, the SDV must control “the management and daily business operations” of the SDVOSB. This requires the SDV to be fully devoted to the SDVOSB. As a quick refresher on the full-time devotion requirement, a qualifying veteran “may not engage in outside employment that prevents [them] from devoting the time and attention to the concern necessary to control its management and daily business operations.” Further, the veteran must be able to “devote full-time during the business’s normal hours of operation” or SBA will assume lack of control. 13 C.F.R. 128.203(i). The same rule applies for the WOSB and 8(a) programs. In past decisions, SBA was OK with a veteran juggling multiple jobs as long as the hours didn’t overlap. But a recent decision shows that it may be possible to overcome this assumption. In the past, SBA has primarily focused on “normal hours of operation” to satisfy full-time devotion. We’ve touched on a few of these cases in our blog. In one decision, the full-time devotion was met when SDV’s second job did not overlap with the SDVOSB’s normal operation hours. And here, the SDV’s second full-time job at a brewery was allowed because he worked there only on nights and weekends, not during the SDVOSB’s normal business hours. Based on these cases, it’s safe to assume that SBA will find the full-time devotion requirement satisfied when SDVOSB’s normal business hours do not overlap with the second job. However, recently, OHA considered an awardee’s assertion that its qualifying veterans were fully devoted to the SDVOSB, even though the second job had the same normal hours of operation as the SDVOSB. In Data Monitor Systems, Inc., SBA No. VSBC-423-P (Jan. 16, 2025), the protestor challenged the SDVOSB status of ELK Solutions, Inc. (ELK) in connection with DLA solicitations set aside for SDVOSBs. Relevant here is the protestor’s argument that ELK’s qualifying veterans could not devote full-time work to the SDVOSB. The protestor alleged that ELK’s involvement with a subcontractor company (Subcontractor) prevented ELK’s SDVs from the management and daily business operations that the SDVOSB required. The protestor argued that the qualifying veterans could not possibly devote full-time to ELK because of their commitments working at Subcontractor. ELK and Subcontractor were in the same line of business and had the same primary NAICS code. Thus, the protestor alleged that the two companies likely had the same normal hours of operation, meaning the qualifying veterans could not devote full-time to the SDVOSB during the normal operating hours, while also managing the day-to-day operations as Subcontractor. In response, ELK pointed out that even though the two firms shared a NAICS code, the business operations of the two were different. Subcontractor was formed in 2007, while ELK formed in 2024. This set of solicitations was the first for ELK in the federal contracting industry. Subcontractor’s experience, ELK argued, showed that Subcontractor was not dependent on the SDVs’ ongoing involvement in Subcontractor’s operations. Unlike the cases touched on in previous blogs, the normal hours of operation for the SDVOSB and Subcontract do overlap here. However, the full-time devotion rule is a rebuttable presumption (or assumption in SBA’s current wording) that can be challenged. “When a qualifying veteran claiming to control a business concern devotes fewer hours to the business than its normal hours of operation, SBA will assume that the qualifying veteran does not control the business concern, unless the concern demonstrates that the qualifying veteran has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management of the business.” 13 C.F.R. § 128.203(i)(2) (emphasis added). The normal hours of operation presumption can be rebutted if the SDVOSB “demonstrates that the qualifying veteran has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management of the business.” Further, because ELK was a new business, ELK argued it was reasonable to conclude the SDVOSB required less than full-time attention. Additionally, one of ELK’s SDVs had since resigned from Subcontractor and worked full-time for ELK. OHA agreed with ELK, noting that the regulation does provide that even if the SDVOSB devotes fewer hours to a business than its normal hours of operation, the SDVOSB can still meet the control requirement if the “concern demonstrates that the qualifying veteran has ultimate managerial and supervisory control over both the long-term decision making and day-to-day management of the business.” Here, “the record establishes that the SDVs have ultimate managerial authority under the Operating Agreement and have control over both the long-term decision making and day-to-day management of ELK, and so their other employment does not disqualify ELK as an SDVOSB.” ELK’s Operating Agreement established that the SDVs had ultimate managerial authority and control over both the long-term decision making and day-to-day management of the SDVOSB. Therefore, OHA concluded that their other employment with Subcontractor did not disqualify ELK as an SDVOSB. This case is a good reminder that, in some cases, the full-time devotion rule can still be met even when there is outside employment. It suggest SBA may look more kindly on SDVOSBs that are startups where other work is required to keep the business afloat. Considering the similar language, this concept should also apply to the 8(a) and WOSB programs. It also highlights the importance of providing SBA with documentation that clearly demonstrates the qualifying veteran has control over the SDVOSB. 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 Fully Devoted or Just Rebuttable? Qualifying Veterans Overcome Full-Time Devotion Rule first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Touted as a “game-changer” when it was first introduced in 2016, the U.S. Small Business Administration’s All Small Mentor-Protege Program isn’t new anymore. Known now as simply the “SBA Mentor-Protege Program, it is still extremely powerful for large and small contractors alike. In this webinar, seasoned government contracts attorneys, Shane McCall & Gregory Weber from Koprince McCall Pottroff LLC, will explain the ins and out of the SBA Mentor-Protege Program, covering the program’s eligibility requirements, its potent benefits (including the ability to form special mentor-protege Joint Ventures), the application process, and common misconceptions and pitfalls. Target Audience: Small Businesses (SDVOSB, WOSB, HUBZone, 8(a), SDB) and large businesses interest in doing business with the federal government. Register here The post Webinar Event! February 26, 2025, The SBA Mentor Protege Program in Collaboration with Koprince McCall Pottroff LLC, 10:30-12:30pm EST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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It is a fairly standard business practice to divide profits according to ownership ratio. And a joint venture made up of only small business venturers only pursuing small business set-asides can follow this business practice—or any business practice—to divide up its profits (limited only by any applicable state, local, or Tribal law). But SBA does have specific and strict requirements for allocating the profits of any joint venture (1) between a small business protégé and its SBA-approved large business mentor, and (2) that qualifies for and pursues socioeconomic set-asides (i.e., 8(a) Program, WOSB/EDWOSB, HUBZone, VOSB/SDVOSB) and includes non-similarly situated entities. Indeed, the SBA’s small business joint venture regulations allow a joint venture to pursue small business set-aside opportunities “so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract,” or if the joint venture is between a small business protégé and its SBA-approved mentor. For the former, the rules state, “[a] joint venture agreement between two or more entities that individually qualify as small need not be in any specific form or contain any specific conditions in order for the joint venture to qualify as a small business.” But for mentor-protégé joint ventures with an other-than-small mentor, the rules contain a long list of provisions the joint venture agreement must include and requirements the joint venture must follow. Among the required joint venture agreement provisions is one: Stating that the small business participant(s) must receive profits from the joint venture commensurate with the work performed by them, or a percentage agreed to by the parties to the joint venture whereby the small business participant(s) receive profits from the joint venture that exceed the percentage commensurate with the work performed by them, and that at the termination of a joint venture, any funds remaining in the joint venture bank account shall be distributed according to the percentage of ownership[.] And among the general requirements for such joint ventures, it states: For any contract set aside or reserved for small business that is to be performed by a joint venture between a small business protégé and its SBA-approved mentor authorized by § 125.9, the joint venture must perform the applicable percentage of work required by § 125.6, and the small business partner to the joint venture must perform at least 40% of the work performed by the joint venture. Each of the socioeconomic program joint venture regulations contain provisions echoing these as well. For example, the 8(a) Program joint venture regulations require a provision: Stating that the 8(a) Participant(s) must receive profits from the joint venture commensurate with the work performed by the 8(a) Participant(s), or a percentage agreed to by the parties to the joint venture whereby the 8(a) Participant(s) receive profits from the joint venture that exceed the percentage commensurate with the work performed by the 8(a) Participant(s); And they state, “[t]he 8(a) partner(s) to the joint venture must perform at least 40% of the work performed by the joint venture.” The Woman-Owned Small Business Programs, Veteran-Owned Small Business Programs, and Historically Underutilized Business Zone (HUBZone) Program joint venture regulations all contain corresponding provisions. But keep in mind, both the profit distribution requirement and 40% performance of work requirement set minimum requirements only. All of the above-referenced rules for mentor-protégé joint ventures and socioeconomic status qualifying joint ventures state that the qualifying protégé and/or WOSB/EDWOSB, VOSB/SDVOSB, and/or HUBZone venturer must collect either the ratio of profits commensurate with work performed or a higher amount. And they all state that the qualifying protégé and/or WOSB/EDWOSB, VOSB/SDVOSB, and/or HUBZone venturer must do at least 40% of the work. So, the parties to a mentor-protégé joint venture or socioeconomic status qualifying joint venture can certainly agree to a different division of work and profits–even one in ratio to ownership percentage–provided they meet the regulatory minimums. But it is always wise to include language in a joint venture agreement assuring any agreed-up division of work and/or profits will always comply with the applicable regulations for the set-aside work being pursued. If you have questions, please email us or if you need legal assistance, give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post GovCon FAQs: How Should a Joint Venture Allocate Profits? first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Federal contracting rules and laws are complicated, and the rules aren’t always intuitive. Many contractors make legal mistakes routinely, involving everything from completing SAM profiles to calculating small business size to communicating with government contracting officers. Federal government contracts attorneys, Shane McCall & Annie Birney of Koprince McCall Pottroff, will discuss the top 21 most common legal mistakes that contractors make time and time again. You will learn what these common mistakes are and how to avoid them. Please join us for this free webinar hosted by the Oklahoma APEX Accelerators. Register here. The post Webinar Event! 21 Mistakes in Government Contracting, February 21, 2025, 11:00am-12:00pm CST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Happy Friday! Are you all ready for the Super Bowl this Sunday? Maybe it can be a time of unity amidst uncertainty. Enjoy your favorite snacks and cheer on the commercials (I mean the Chiefs!). Have fun watching the game and have a wonderful weekend! And now for this weeks news in federal government contracting. Stories included the role of DOGE, revamping federal agencies, and the new administration’s actions. Musk’s role as ‘special government employee’ raises ethics questions Disaster Contracting: Opportunities Exist for FEMA to Improve Oversight DEI, a mid-air crash, the federal workforce wrecking ball USAID takeover is unconstitutional, lawmakers say Senate Democrats raise concerns about Musk team access to Treasury payment systems Native leaders press Trump admin, Congress to preserve tribal nations’ political status amid federal changes Federal court blocks funding freeze in 22 states, tribal impact unclear Musk’s DOGE efforts pose a ‘constitutional crisis,’ experts warn Cutting Costs Alone Won’t Make Government More Efficient House Dem proposes bill named after Musk ending federal contracts for special government employees Date: February 18, 2025, 2025 Midwest Matchmaker The post SmallGovCon Week in Review: February 3-7, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Indeed, Executive Order (EO) No. 14055, Nondisplacement of Qualified Workers Under Service Contracts, was only one of many predecessor EOs rescinded by the Trump administration shortly after taking office. But its removal has significant impacts on federal government contracting. As explained in EO No. 14055, its requirements sought to promote skilled worker retention in the federal workforce by placing requirements on contractors (and subcontractors) to provide the service employees from predecessor service contracts an essential right of first refusal of employment in successor or follow-on contracts. But EO No. 14055 has now been officially rescinded as part of the new administration’s stated policy to lift any orders it felt were “replacing hard work, merit, and equality with a divisive and dangerous preferential hierarchy.” For a brief history of EO No. 14055, it was most recently signed into action by President Biden in November 2021. As for purpose and policy, it explained, at the expiration of a service contract and award of its follow-on service contract “for the same or similar services,” the government’s “procurement interests in economy and efficiency are best served when the successor contractor or subcontractor hires the predecessor’s employees, thus avoiding displacement of these employees.” It further explained: Using a carryover work force reduces disruption in the delivery of services during the period of transition between contractors, maintains physical and information security, and provides the Federal Government with the benefits of an experienced and well-trained work force that is familiar with the Federal Government’s personnel, facilities, and requirements. As for its basic requirements and their enforcement, it required that all agencies “to the extent permitted by law, ensure that service contracts and subcontracts that succeed a contract for performance of the same or similar work, and solicitations for such contracts and subcontracts, include” the “Nondisplacement of Qualified Workers” clause. And it required contractors and their subcontractors to make a good faith offer of the “right of first refusal of employment under [a follow-on] contract in positions for which those employees are qualified” to all service employees under the predecessor contract and its subcontracts. It further detailed the specific process for determining the number of employees necessary for the follow-on contract and making express offers of employment to the predecessor contract’s workers before acquiring any employees elsewhere. It also contained “Location Continuity” requirements for agencies to analyze whether performance of a follow-on contract “in the same locality or localities” as the predecessor contract “is reasonably necessary to ensure economical and efficient provision of services[.]” And finally, EO No. 14055 covered exclusions for certain contracts and exceptions that could be authorized by agencies. But as of a couple weeks ago, these requirements were effectively removed from the (still very long) list of federal government contract requirements applicable to both contractors and contracting agencies. On January 20, 2025, the new administration issued EO No. 14148, “Initial Rescissions of Harmful Executive Orders and Actions,” ordering a massive revocation of predecessors’ EOs, including EO No. 14055. The purpose and policy of the massive EO rescission is stated follows: The previous administration has embedded deeply unpopular, inflationary, illegal, and radical practices within every agency and office of the Federal Government. The injection of “diversity, equity, and inclusion” (DEI) into our institutions has corrupted them by replacing hard work, merit, and equality with a divisive and dangerous preferential hierarchy. Orders to open the borders have endangered the American people and dissolved Federal, State, and local resources that should be used to benefit the American people. Climate extremism has exploded inflation and overburdened businesses with regulation. To commence the policies that will make our Nation united, fair, safe, and prosperous again, it is the policy of the United States to restore common sense to the Federal Government and unleash the potential of the American citizen. The revocations within this order will be the first of many steps the United States Federal Government will take to repair our institutions and our economy. So, what exactly does this mean for federal contractors? As the Department of Labor website explains in the notice it issued under the final rule for EO No. 14055: “Pursuant to section 3(a) of EO 14148, the Department will take steps to rescind 29 CFR part 9 to fully implement and effectuate the revocation of EO 14055.” So, it seems we can expect to see the regulatory changes soon to follow–also meaning, contractors can expect to see the implementing contract clauses of the Federal Acquisition Regulations removed from federal government solicitations and contracts as well. On a positive note, federal contractors will have significantly less restrictions on whom they can hire for contract performance. On a negative one, there is no longer any systematic job security for federal contractor employees at the end of their contracts’ terms–no matter how skilled they are or how many years of experience they’ve accumulated. But keep in mind, President Biden’s 2021 issuance of EO No. 14055 was not the first time a President implemented these nondisplacement requirements. Nor was this the first time the subsequent President lifted such requirements–in fact, I previously blogged on the 2020 removal of the requirements from the FAR. Indeed, the requirements of EO No. 14055 have faced a lot of back and forth between previous administrations over the years. So, is it gone forever? Only time will tell. If you have any questions about this or any other government contracting matter, please 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 Executive Order for Nondisplacement of Federal Workers Rescinded first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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We at SmallGovCon have analyzed a number of key updates from the recent SBA final rule concerning HUBZone Program Updates and Clarifications, and Clarifications to Other Small Business Programs. But, with the rule covering many issues, there are aspects we didn’t cover everything. One small change could impact a number of companies seeking 8(a) Program certification or existing 8(a) Program Participants changing their ownership. The change affects married business owners in community property states and removes the requirement for transmutation agreements. The SBA regulations used to have requirement stating: Community property laws given effect. In determining ownership interests when an owner resides in any of the community property states or territories of the United States (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington and Wisconsin), SBA considers applicable state community property laws. If only one spouse claims disadvantaged status, that spouse’s ownership interest will be considered unconditionally held only to the extent it is vested by the community property laws. A transfer or relinquishment of interest by the non-disadvantaged spouse may be necessary in some cases to establish eligibility. 13 C.F. R. § 124.105(k). As SBA described this rule, “a transmutation agreement, or other such document, may be necessary for the purposes of establishing 51% unconditional ownership of the applicant firm.” Similarly, the SBA 8(a) Standard Operating Procedure said that “If the non-disadvantaged spouse’s community property interest in the applicant concern is 50 percent, evidence that the non-disadvantaged spouse has waived enough of his or her interest in the community property (that is, through a transmutation agreement) that the disadvantaged spouse unconditionally owns 51 percent or more of the applicant concern. See Matter of Philip Hawkins Architect, Inc. & Associates, SBA No. BDP- 197, at 3-5 (2003) (transmutation agreement not required to prove disadvantaged husband’s 51 percent ownership of applicant concern if his combined separate and community property interest in applicant concern totaled at least 51 percent).” For most married applicants living in the pertinent states, this created confusion and additional steps for the applicant by drafting such an agreement. But no more. SBA has seen the light and removed this requirement, which will make applications for these types of applicants a bit easier to put together. Why did SBA do this? SBA said that the goal was “to align the 8(a) BD ownership requirements with those applicable in the WOSB and VetCert programs.” SBA noted it received 6 comments that all supported the proposal. “One commenter also questioned SBA’s authority to require transmutation agreements (i.e., agreements between spouses relinquishing some percentage of his or her community property ownership rights in an applicant or Participant), and believed that even if that could be done it is a better policy not to require them since the commenter believed there was no specific statutory requirement for transmutation agreements. SBA adopts the proposed language as final in this rule.” There you have it. SBA applicants no longer need to know what a transmutation agreement is, and neither do applicants for SBA’s other programs. Questions about this post? Email us. Need legal assistance? call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post End of the Line for Transmutation Agreements in 8(a) Program first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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It’s Friday and time for another week in review, on this last day of January. We are so excited that our Kansas City Chiefs will be playing, once again, in the Super Bowl. We’re looking forward to the championship game against an impressive Philadelphia Eagles team, and a chance for the Chiefs to become the first team in NFL history to win three in a row. It should be a fun game. And now we turn from football to this week in federal government contracting news, there is news of many executive orders, fundings freezes, and turnover of inspector generals. And when we say orders, freezes, and turnovers, we’re not talking about getting the snacks ready for next Sunday. Inspectors general may be fired, but that’s not the end of the story Breakneck pace of executive orders and lagging, unclear guidance leave contractors guessing Musk visits and asserts growing influence at GSA Confusion over Trump funding freeze continues as court weighs new restraining order Virginia Contractor to Pay Over $2.6M to Settle Allegations of Falsely Obtaining Small Business Contracts Defense contractor executive pleads guilty to bribery scheme involving $100 million in government contracts Small Business Webinar “Do’s and Don’ts of preparing a GSA Multiple Award Schedules (MAS) Offer” Department of Defense Statement Clarifying Defense Contracting Agency contracting goals instruct certain federal agencies in how much of their contracting dollars should be awarded to small businesses. Contracts For Jan. 29, 2025 Governmentwide Acquisition Contracts The post SmallGovCon Week in Review: January 27-31, 2025 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article
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Federal contracting rules and laws are complicated, and the rules aren’t always intuitive. Many contractors make legal mistakes routinely, involving everything from completing SAM profiles to calculating small business size to communicating with government contracting officers. Federal government contracts attorneys, Nicole Pottroff & Annie Birney of Koprince McCall Pottroff, will discuss the top 21 most common legal mistakes that contractors make time and time again. You will learn what these common mistakes are and how to avoid them. Please join us for this free webinar hosted by the Alaska APEX Accelerators. Register here. The post Webinar Event! Top 21 Legal Mistakes in Federal Government Contracting, February 13, 2025, 12:00pm-1:30pm CST first appeared on SmallGovCon - Government Contracts Law Blog.View the full article