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Over the years, SBA size regulations have included the general rule that the size status of a business generally relates back the time of initial offer on a contract. Therefore, a small business generally stays small for the duration of a federal contract, with some exceptions. However, there was also language in the rule that required small businesses to recertify their size status after being acquired or going through similar transactions. The effect of this recertification requirement was always a little unclear. If you recertify as large, does that have any effect on your small business status for orders under contracts awarded when the business was small? Now, OHA has answered that concern. In Odyssey Sys. Consulting Grp., Ltd., SBA No. SIZ-6135, 2021 (Dec. 23, 2021), OHA considered an appeal of size protest by Odyssey for two GSA OASIS contract task order awards to Millennium Engineering and Integration LLC (MEI) for technical and engineering support services under the small business pool. The task order solicitation “did not include any express language requesting or requiring that an OASIS prime contractor must certify or recertify its size for this task order.” The OASIS contract included requirements for a contractor to notify GSA if certain events occurred related to the ownership or identity of the contractor, including mergers, acquisitions, ovations, and name changes. In that case, the contractor had to notify the contracting officer. The contract also included FAR 52.219-28, Post-Award Small Business Program Re-Representation, which required the contractor to notify the CO within 30 days if there was a novation, merger, or acquisition. The contract also provided for offramping if the contractor became a large business after the novation, merger, or acquisition: After the execution of a novation agreement or, after a merger or acquisition that does not require a novation, if the Contractor’s size standard changes from a small business concern to other than a small business concern and the Contractor has active task orders, including the exercise of options and modifications at the task order level, the Contractor shall be placed in Dormant Status immediately in accordance with Section H.16. After all the active task orders are closed out, the Contractor shall be Off-Ramped in accordance with Section H.17. The protester argued that the recertification requirements at 13 C.F.R. § 121.404(g)(2) (requiring recertification after a merger, sale, or acquisition) meant that the agency was requesting size recertification in connection with the task order awards. The provision at 13 C.F.R. § 121.404(g)(2) states: (g) Effect of size certification and recertification. A concern that represents itself as a small business and qualifies as small at the time it submits its initial offer (or other formal response to a solicitation) which includes price is generally considered to be a small business throughout the life of that contract. Similarly, a concern that represents itself as a small business and qualifies as small after a required recertification under paragraph (g)(1), (2), or (3) of this section is generally considered to be a small business[] throughout the life of that contract. Where a concern grows to be other than small, the procuring agency may exercise options and still count the award as an award to a small business, except that a required recertification as other than small under paragraph (g)(1), (2), or (3) of this section changes the firm’s status for future options and orders. The following exceptions apply to this paragraph (g): … (2)(i) In the case of a merger, sale, or acquisition, where contract novation is not required, the contractor must, within 30 days of the transaction becoming final, recertify its small business size status to the procuring agency, or inform the procuring agency that it is other than small. If the contractor is other than small, the agency can no longer count the options or orders issued pursuant to the contract, from that point forward, towards its small business goals. The agency and the contractor must immediately revise all applicable Federal contract databases to reflect the new size status. … (iii) If the merger, sale or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award. If the merger, sale or acquisition (including agreements in principal) occurs within 180 days of the date of an offer and the offeror is unable to recertify as small, it will not be eligible as a small business to receive the award of the contract. If the merger, sale or acquisition (including agreements in principal) occurs more than 180 days after the date of an offer, award can be made, but it will not count as an award to small business. The protester argued that this SBA rule requires recertification at the time of the the acquisition of the small business. The Area Office determined that the SBA’s rules at 13 C.F.R. § 121.404(g)(2) do not change timeliness rules for size protests, so the protester’s size protest was untimely. Odyssey then appealed to SBA Office of Hearings and Appeals, arguing in part that the SBA rule at 13 C.F.R. § 121.404(g)(2)(iii) mean that a “request for recertification must occur by operation of law in every solicitation.” The SBA provided commentary on the appeal, arguing that the “regulatory requirement to recertify size following a merger, sale, or acquisition is not a CO request for size certification in connection with an individual order.” OHA denied the appeal, holding that the size protest was not timely. OHA wrote: I agree with SBA and MEI that the most reasonable interpretation of § 121.404(g)(4) is that, when, as here, the underlying MAC itself was set aside for small businesses, the consequence of a merger or acquisition involving a prime contractor is not that the prime contractor becomes ineligible for award of pending or future task orders, but rather that the procuring agency cannot claim goaling credit for those orders. OHA has clarified any ambiguity with respect to the requirement for recertification after a merger or acquisition. The sole effect is that the agency can no longer count the award as a small business award for goaling purposes. But it has no effect on the small business status for a contractor for future task orders. This is an important clarification of the language in the size regulations. It’s likely the same interpretation would apply to similar recertification requirements under other socioeconomic set-asides, for instance the SDVOSB rules in 13 CFR § 125.18(e)(1)(ii). Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Confirms that Size Status Relates Back to Time of Offer, Even After Sale of Small Business first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Koprince McCall Potroff LLC is presenting a 3-part series focused on teaming agreements, joint venture agreements and subcontracts which can be essential to winning and successfully performing federal government contracts. Shane McCall and Nicole Pottroff explain how to develop, negotiate and administer agreements that are both compliant and effective for both small and large contractors. The presentations will cover both the key rules (such as flow-downs and ostensible subcontractor affiliation) and best practices for agreements that go beyond the bare minimum legal requirements. If you are interested in this informative webinar, March 22-24, 12:00-1:30pm CDT, we invite you to register here. The post Event: Compliant and Effective Teaming Agreements, Joint Ventures & Subcontracts – 3-Part Series (2022 Update), March 22-24, Hosted by Govology first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Ah, the Federal Acquisition Regulations, or FAR. Quite numerous and complex, yes, but they provide a standardized set of rules and procedures that govern federal government procurements. Regardless of what contract you’re dealing with (other than a few exceptions such as the FAA, which is not subject to the FAR), you can be sure that the rules of the FAR govern it. Unfortunately, that last statement is not true. Since 1989, the Department of Defense (and as time has passed, more and more other agencies) has held an interesting form of contracting authority. One that is not subject to the FAR or other such federal regulations. This unusual authority is referred to quite simply as “Other Transaction Authority” (OTA), and any government contractor that encounters it needs to understand that OTA procurements are a whole different beast from regular federal procurements. Background As noted above, OTA isn’t necessarily new, it has been around for over 30 years. But its usage has increased greatly since then, particularly in recent years. Initially limited to use by the DoD, it is now used by agencies such as the Department of Energy, the Department of Health and Human Services, the Department of Homeland Security, NASA, the FAA, and even the Department of Transportation. OTA is primarily used by these agencies for research work, although the DoD, NASA, and the Department of Homeland Security use it for prototype development as well. For this post, we’re going to focus on the DoD’s use of OTA as they use it the most and have the most expansive authority to use it. DoD’s authority here specifically comes from 10 U.S.C. § 4002 and 4003. These statutes note that the DoD and military may use OTA for research projects and for “prototype projects that are directly relevant to enhancing the mission effectiveness of military personnel” (in other words, weapons). So? Federal law treats DoD research projects and prototype development as distinct from federal procurements that most government contractors are used to. In fact, they are not even considered “procurements” by the COFC, as SpaceX learned the hard way in 2019 in Space Exploration Technologies, Corp. v. United States, 144 Fed. Cl. 433 (Aug. 26, 2019). In one case, GAO explained: “GAO’s audit reports to the Congress have repeatedly reported that ‘other transactions’ are ‘other than contracts, grants, or cooperative agreements that generally are not subject to federal laws and regulations applicable to procurement contracts.’” MorphoTrust USA, LLC, B-412711 (Comp. Gen. May 16, 2016). This is expressly stated in 32 C.F.R. § 3.2, in fact. Wait, wait, wait…”generally are not subject to federal laws and regulations?” Yes, you read that correctly. OTA-based agreements are not subject to the FAR, in addition to many other federal rules that don’t apply. Additionally, this lack of status as a “contract” means that OTA transactions are not subject to Court of Federal Claims or GAO jurisdiction, except where it would impact the award of a contract that is subject to such jurisdiction. See Space Exploration Technologies, Corp. Additionally, offerors can challenge the use of OTA where such authority is improper if the protest is made before bids are submitted. Blade Strategies, LLC, B-416752 (Comp. Gen. Sept. 24, 2018). Limitations on Use Well, this is certainly concerning for research contractors that work with the DoD. (Although if you are on the receiving end of an OTA award, you may appreciate that the award is difficult to protest.) If agencies can use OTA for such work and OTA isn’t governed by most federal law or hearable in the COFC or GAO, what’s to stop DoD from using it indiscriminately to get around the rules? If you perform research work for the DoD or military, it would appear the answer is “nothing.” 10 U.S.C. § 4002, which authorizes the use of OTA for research projects, does not appear to contain any limitations on the use of that authority, besides that it must only be used for research projects and that OTA cannot be used if similar research is being conducted under existing DoD programs. For those who develop actual weapons systems and such for the DoD, fortunately, there are some substantial limitations on the use of OTA. OTA for prototype work is authorized by 10 U.S.C. 4003. This statute notes that OTA can only be used for such prototypes if one of the following conditions exists: At least one nontraditional defense contractor or nonprofit research institution is participating significantly in the project. Here, nontraditional defense contractor means “an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to the full coverage under the cost accounting standards prescribed pursuant to Section 1502 of title 41 and the regulations implementing such section,”All significant participants in the transaction are small businesses or nontraditional defense contractors,At least one third of the total cost of the project is being provided by sources outside the federal government, orThe senior procurement executive for the agency finds exceptional circumstances justify the use. Furthermore, OTA may only be used for projects that, combined with any follow-on production contract, is at least $100 million in expected cost. As you may have noticed, these sorts of arrangements allow for award of follow-on production contracts, which do not have to utilize competitive procedures if competitive procedures were used for the prototype award and the awardee successfully completed the project. In any event, at least with prototype projects, OTA authority is somewhat limited. That said, the last potential condition “exceptional circumstances” is obviously quite vague. Concerns In recent years, the use of OTA has expanded greatly. The Center for Strategic & International Studies noted in 2020 that the Army’s use of OTA has increased by 416 percent since 2016. As the Center observes: “The evidence suggests that there is a paradigm shift ongoing in DoD as OTAs have become a core element in DoD’s approach to technology acquisition over the last five years. This is clearly seen in the mid-to-late stages of the development pipeline for major weapon systems where OTAs are increasingly replacing contracts. Between FY 2015 and FY 2019, OTAs rose from just 3 percent of DoD’s total R&D portfolio to 18 percent of DoD’s R&D portfolio.” While the need for flexibility with these sorts of projects is understandable, we, as well as other observers, are concerned with the increased use of OTA. Indeed, DoD internal oversight has noticed that contracting personnel utilizing OTAs have often not properly tracked awards through such a system or consistently awarded using OTA in accordance with applicable laws. The fact that DoD has made such observations gives us hope, however, that the government is recognizing that the balance between flexibility and oversight may have shifted a bit too much towards flexibility, and needed oversight may be coming soon. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Other Transaction Authority? What Other Transaction Authority? – A Look at OTA first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

If March is supposed to come in like a lion and leave like a lamb, we are certainly still in the lion stage this week, with another winter snow storm that arrived here yesterday. No worries, however, because next week the lamb arrives with 70 degree weather and we are ready for it. Hopefully, this will be winter’s last gasp as warmer temperatures are sure to follow and we spring forward into daylight savings time. There was a lot happening in federal government contracting news this week, such as the new Buy American Act final rule and updates on more cybersecurity requirements being considered for government agencies. We have included those and some additional articles that we hope you will find informative. Have a great weekend! Ready or not, here comes the new buy-American procurement rule [FedNewsNet]Contractors need agencies to help them “whip inflation now!”[FedNewsNet]International Women’s Day and small business: What’s changed in the past 30 years? [USAToday]Class Waiver of the Nonmanufacturer Rule [FedReg]Two small agencies win awards from Technology Modernization Fund board [FedNewsNet]Spurred on by Russia, Senate bill carries slew of cyber requirements for agencies, industry [FedNewsNet]Agencies continue to struggle with data center optimization [FedScoop]White House Reminds Agencies to Adopt NIST’s Software Supply Chain Security Framework [GovExec]Biden Executive Order Takes Major Steps Toward Regulating Cryptocurrencies [NextGov]VA Acquisition Regulation: Acquisition Planning; Required Sources of Supplies and Services; Market Research; and Small Business Programs [FedReg]The New Limitations on Subcontracting: New Rules, New Uncertainties[WifCon]Contractor Pays $930,000 to Settle False Claims Act Allegations Relating to Medical Services Contracts at State Department and Air Force Facilities in Iraq and Afghanistan [DoJ]DOD Wants to Shepherd Small Business Innovators [DoD]DHS Annual Assessment: Most Acquisition Programs Are Meeting Goals Even with Some Management Issues and COVID-19 Delays [GAO]Federal jury convicts two Texas men on federal fraud and false statements charges [DoJ]MOX Services Agrees to Pay $10 Million to Resolve Allegations of Knowingly Presenting False Claims to Department of Energy for Non-Existent Construction Materials [DoJ] The post SmallGovCon Week in Review: March 7-11, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The SBA’s Paycheck Protection Program went into effect March 27, 2020. At that time many business owners faced confusion in trying to navigate the affiliation rules to determine their company’s eligibility for the program. Fast forward nearly two years and many businesses that received Paycheck Protection Loans have submitted applications for forgiveness of those loans. Some of those businesses are now having to consider potential affiliation issues that they may have initially overlooked in response to inquiries from SBA in its review of their loan forgiveness application. We thought this would be a good time to revisit the basics of SBA’s affiliation rules for the Paycheck Protection Program. Which affiliation rules apply? If you are familiar with small business size standards and affiliation issues (which we discuss a lot on this blog), you are probably also familiar with SBA’s rules at 13 C.F.R. § 121.103. But these rules are not the standards applicable to Paycheck Protection Program applicants. Instead, it’s actually the rules found at 13 C.F.R. § 121.301 that apply. “For applicants in SBA’s Business Loan, Disaster Loan, and Surety Bond Guarantee Programs, the size standards and bases for affiliation are set forth in § 121.301.” 13 C.F.R. § 121.103(a)(8). The SBA also confirmed that “applicants in SBA’s Business Loan Programs (which include the PPP) are subject to the affiliation rule contained in 13 CFR 121.301” in its PPP Affiliation Interim Final Rule. What are the affiliation standards under 13 C.F.R. § 121.301 and how are they different from § 121.103? Under § 121.301’s affiliation standards, “[c]oncerns and entities are affiliates of each other when one controls or has the power to control the other, or a third party or parties controls or has the power to control both.” In addition,”[i]t does not matter whether control is exercised, so long as the power to control exists.” As under the affiliation rules at § 121.103, control is key. Section 121.301(f) highlights six general bases for finding affiliation: common ownership; potential control under stock options, convertible securities, or agreements to merge; common management; identity of interest; the newly organized concern rule; and totality of the circumstances. Many of these bases for affiliation are similar to the affiliation rules under § 121.103. But, overall, an affiliation finding under § 121.301 may be less likely for a few reasons. For one, there is a smaller risk that a minority owner could lead to an affiliation finding under § 121.301. Under § 121.103(c), where there is no majority owner and two or more minority owners are equal or approximately equal in size, and combined the minority owners are large as compared with any other stock holding, SBA presumes that each such minority owner controls the concern whose size is at issue. A similar rule would apply if there is one owner with less than 50% who owns substantially more than the next highest owner. By contrast, under § 121.301, if no one “individual, concern, or entity . . . owns or has the power to control more than 50 percent of the concern’s voting equity,” the SBA “will deem the Board of Directors or President or Chief Executive Officer (CEO) (or other officers, managing members, or partners who control the management of the concern) to be in control of the concern.” Minority shareholders, in contrast to the rule at 121.103, may only be found to control where they can “prevent a quorum or otherwise block action by the board of directors or shareholders.” In addition, § 121.301 has distinctly different rules for affiliation based on the newly organized concern rule. As we discussed here, SBA may find affiliation under the § 121.103 version of the newly organized concern rule for a number of reasons. The § 121.301 version of the rule, however, is much narrower. For instance, affiliation can only arise where “there are direct monetary benefits flowing from the new concern to the original concern”–language not found in § 121.103. This is not a complete list of differences between the two affiliation standards, but it covers two of the major ones. There is also one major similarity to note: both standards apply to the affiliation exceptions found at 13 C.F.R. § 121.103(b). Are there any exceptions to applying 13 C.F.R. § 121.301? Yes! There are three general groups to which 13 C.F.R. § 121.103 and 13 C.F.R. § 121.301 don’t apply. Because the CARES Act enacted a waiver of § 121.103 for these three groups, § 121.301 does not apply to them either. They are: “[A]ny business concern with not more than 500 employees that, as of the date on which the loan is disbursed, is assigned a North American Industry Classification System code beginning with 72.” NAICS codes starting with 72 are applicable to “Accommodation and Food Services” including businesses like hotels, restaurants, bars, caterers, and related services.“[A]ny business concern operating as a franchise that is assigned a franchise identifier code by the [Small Business] Administration.”“[A]ny business concern that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act of 1958 (15 U.S.C. 681).” Note that the interim final rule for Second Draw PPP Loans modified the exception for a business that is assigned a NAICS code beginning with 72. For Second Draw PPP Loans, these businesses may have no more than 300 employees per physical location and other eligibility criteria must be met. Though not exempt from affiliation considerations under the CARES Act waiver, faith-based organizations might not be affiliated with one another “if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion” or “where the application of the affiliation rules would substantially burden those organizations’ religious exercise.” For more information about this exception, check out the SBA’s Faith-Based Organizations FAQs here. *** In the end, affiliation concerns in any form can get very complicated. If you need specific legal guidance related to your business and any potential affiliates, reach out to us. Questions about this post? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA’s Paycheck Protection Program: Affiliation Still Matters first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

We at SmallGovCon just wanted to take a minute to wish all the amazing women out there a Happy International Women’s Day! And we would like to send an extra-special shout-out to all of our WOSBs and EDWOSBs while we are at it! It’s been a big year for you all with SBA’s implementation of its new WOSB/EDWOSB certification program. Here’s to commemorating women’s history of achievement and celebrating the bright future to come! Questions about SBA’s new WOSB/EDWOSB certification program or WOSB/EDWOSB eligibility? Or need help with a WOSB/EDWOSB 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 Happy International Women’s Day From All of Us at SmallGovCon! first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA is currently considering terminating some class waivers for its small business Nonmanufacturer Rule, as it has received information to established the existence of small business manufacturers of the subject products. As SBA explains, the Nonmanufacturer Rule is the “requirement that recipients of Federal supply contracts issued as a small business” or other socioeconomic set-asides (8(a) Program, HUBZone, WOSB/EDWOSB, or VOSB/SDVOSB) “provide the product of a small business manufacturer or processor if the recipient is other than the actual manufacturer or processor of the product” (you can learn more about the specifics of the Nonmanufacturer Rule here). SBA is authorized to waive the Nonmanufacturer Rule for a “class of products” when “there are no small business manufacturers or processors available to participate in the Federal market.” These waivers can be found on SBA’s List of Class Waivers. But SBA will periodically review this list “to determine whether small business manufacturers or processors have become available to participate in the Federal market.” And “[u]pon receipt of information that such a small business manufacturer or processor exists, the SBA will announce its intent to terminate the NMR waiver for a class of products[,]” which is what SBA has just done here. As explained in SBA’s first announcement (Fed. Reg. Doc. 2022-03201), SBA is considering terminating the Nonmanufacturer Rule class waiver for: Furniture Frames and Parts, Metal, Manufacturing under NAICS code 337215 and PSC 7195; Furniture Frames, Wood, Manufacturing under NAICS code 337215 and PSC 7195; Furniture Parts, Finished Plastics, Manufacturing under NAICS code 33725 and PSC 7195; Furniture, Factory-type (e.g. cabinets, stools, tool stands, work benches), Manufacturing under NAICS code 337127 and PSC 7110;Furniture, Hospital (e.g. hospital beds, operating room furniture) Manufacturing under NAICS code 339113 and PSC 7195; and Furniture, Laboratory-type (e.g. benches, cabinets, stools, tables) Manufacturing under NAICS code 339113 and PSC 7195. And per the second announcement (Fed. Reg. Doc. 2022-03202), SBA is also considering terminating the Nonmanufacturer class waiver for the following, under NAICS code 334517 and PSC 6525: irradiation apparatus manufacturing, computerized axial tomography (CT/CAT) scanners manufacturing; CT/CAT (computerized axial tomography) scanners manufacturing; fluoroscopes manufacturing; fluoroscopic X-ray apparatus and tubes manufacturing; generators, X-ray, manufacturing; irradiation equipment manufacturing; X-ray generators manufacturing; and X-ray irradiation equipment manufacturing. As the SBA explained: On October 6, 2019, SBA received a request to terminate the current class waiver of the NMR for the products identified above. According to the request, there are small business manufacturers available to participate in the Federal marketplace for these products. According to the information the requester provided to the SBA, several small manufacturers have provided these products to the Federal agencies within the past 24 months. Based on this information, the SBA is now seeking comment on all of the potential waiver terminations detailed in these announcements. And unless public comment reveals that there are no small businesses available for these classes of products, SBA will publish its “Final Notice of Termination in the Federal Register” for these class waivers. *** Complying with SBA’s Nonmanufacturer Rule requirements for can be pretty tricky. And failure to comply can result in the loss of an award, contract terminations, and other unfortunate consequences. So it is important to keep up on which products are covered by these class waivers. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA Proposes to Eliminate Some Nonmanufacturer Rule Class Waivers first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello, Readers. As we move into spring, we at SmallGovCon have been observing the optimism of nature as winter releases its grip. Small green plant shoots are pushing their way up towards the sunshine and the trees are preparing to bud as our temperatures warm up. The birds are getting involved as well. There’s no doubt that they are enjoying the warmer weather and looking forward to spring, too. Hope you are able to observe equally inspiring things in your neck of the woods. As usual there was a lot of news in federal government contracting, this week including articles on the future of federal government contracting, cybersecurity bills, and news on GSA multiple award contracts. Have a great weekend! The Pros And Cons of Being a Government Contractor [GovConWire]Defense contractor revenue is strong, so why is the state of the sector weakening? [FedNewsNet]Defense Federal Acquisition Regulation Supplement: Reauthorization and Improvement of Mentor-Protégé Program (DFARS Case 2020-D009) [FedReg]Clearview AI CEO says company focused on winning federal agency contracts this year [FedScoop]Defense Acquisitions Additional Actions Needed to Implement Proposed Improvements to Congressional Reporting [GAO]NASA Lunar Programs: Moon Landing Plans Are Advancing but Challenges Remain [GAO]Ernst bill to enhance government procurement process for small businesses becomes law [RiponAD]Looking at all the rules, no wonder small business contractors base is shrinking [FedNewsNet]Cybersecurity Bill Passes in Senate to Counter Russian Threats [Bloomberg]Procurement isn’t always just about procurement — a tale from Ukraine [FCW]Ensuring Compliance with the Davis-Bacon Act Under the Bipartisan Infrastructure Law [FoprConstPros]New COVID guidance for federal agencies to match CDC recommendations [FedNewsNet]Partnering with 8(a) Companies as a Large Contracting Firm [BloombergGov]The state of government contracting programs [FedNewsNet]GSA Releases Small Business Procurement Strategy for Services Multi-Agency Contract [GovConWire]Statement by SBA Administrator Guzman on President Biden’s State of the Union Address [SBA]Statement by SBA Administrator Guzman Observing Women’s History Month 2022 [SBA] The post SmallGovCon Week in Review: February 28- March 4, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The case of Superior Optical Labs, Inc. (Superior) v. United States focuses on the control of a Service-Disabled Veteran Owned Small Business (SDVOSB) and how that control, or more precisely, lack of control, can disqualify an SDVOSB with 69% service-disabled veteran ownership from a solicitation set aside for SDVOSBs. This particular Solicitation was set aside entirely for an SDVOSB to provide prescription eyeglasses and related services through the Veterans Integrated Services Network (VISN). Superior was awarded the contract, which was then protested by PDS Consultants, Inc. (PDS) challenged the SDVOSB eligibility of Superior. In the end, OHA held that Superior did not qualify as a SDVOSB for purposes of the procurement due to a lack of control as required by SBA rules. PDS then challenged OHA’s decision at the Court of Federal Claims. Because this is a case at the Court of Federal Claims, there is a substantial amount of background for those who need it. If you are already well-versed in SDVOSB requirements, the next two paragraphs will be easy reading for you. Background Under SDVOSB rules, 13 C.F.R. § 125.12 requires any small business claiming to be owned by a service-disabled veteran to meet specific criteria in order to be eligible for an award of an SDVOSB set aside contract. The SDVOSB must be “at least 51% unconditionally and directly owned by one or more service-disabled veterans.” The management and daily business operations of an SDVOSB must be controlled by one or more service-disabled veterans. 13 C.F.R. § 125.13(a). It’s not enough that a business be primarily owned by a service-disabled veteran, the service-disabled veteran must also control the business to qualify, and the Department of Veterans Affairs (VA) Center for Verification and Evaluation (CVE) looks beyond the primary relationships to determine that control. The management and daily business operations, including both long-term decisions and day-to-day management, must be controlled and conducted by one or more service-disabled veterans. 13 C.F.R. § 125.13(a). The service-disabled veteran will not be found to have control of the concern if the concern has a business relationship “with non-service-disabled veteran individuals or entities which cause such dependence that the applicant or concern cannot exercise independent business judgment without great economic risk,” 13 C.F.R. § 125.13(i)(7). Notably, this same general requirement applies to all of the various socio-economic statuses recognized by the SBA. Superior was 69% owned by a service-disabled veteran when it submitted its proposal for the solicitation. Superior’s President and CEO owned 51% of the company and two additional service-disabled veterans each owned a 9% interest in Superior. At all times relevant, Superior’s President owned and controlled more than 50% of the company. Superior was certified by the Department of Veterans Affairs (VA) Center for Verification and Evaluation (CVE) in April 2018. The VA issued this Solicitation in August 2020, Superior submitted its offer in September 2020, and the VA awarded it to Superior in October 2020. This all seems to be in line with the requirements, correct? Not so fast! PDS Consultants, Inc. (PDS) came along and filed a protest on the basis that Superior was controlled by, and shared resources with, Essilor of America, Inc. (Essilor). Additionally, PDS claimed Superior received “critical financial support from Essilor” and that Superior was required to use Essilor products. PDS alleged that this control came from a Services and Supply Agreement (the Agreement) between Superior and Essilor that was executed on November 1, 2017, when Superior’s current President and CEO obtained a controlling interest in the company. Under the Agreement, Superior was required to purchase from Essilor, in the course of contract performance, the majority of the volume of lenses, frames, contact lenses, and consumables if such products were offered by Essilor. Superior was required to submit monthly reports to Essilor to verify compliance. If a contract with VISN or another VA contract restricted purchasing from Essilor, Superior was required to purchase the maximum volume from Essilor without jeopardizing Superior’s SDVOSB status. Superior was required to use Essilor’s pricing, and Superior was required to notify Essilor in writing and receive Essilor’s approval prior to bidding if Superior planned to bid on a fixed-price government contract. The agreement further obligated Superior to obtain Essilor’s written approval to assign any part of the agreement or to make any change in control of the Superior. The agreement stated, with respect to change in control, that Essilor had to give written approval for a “(i) ‘change in possession, directly or indirectly, of the power to direct or cause the directing of the management or policies of Superior,’ (ii) any sale or transfer of 50 percent or more of Superior’s assets, (iii) any sale or transfer of 50 percent or more of Superior’s stock, (iv) any merger resulting in a change of ownership of 50 percent or more, and (v) any change of Superior’s SDVOSB status.” One could imagine a subcontractor potentially putting a similar type of provision in a subcontract. But OHA found, and the court agreed, that this “went beyond the five “extraordinary circumstances’ in which the SBA will not find that a lack of control exists even though a service-disabled veteran does not have unilateral power and authority to make decisions.” The agreement was effective from November 1, 2017, to October 31, 2027, unless shorted in accordance with the terms of the agreement. Superior and Essilor executed a Termination Agreement on October 20, 2020, with a retroactive effective date of January 29, 2018, the date upon which Superior and Essilor had made a verbal agreement to terminate the agreement (Oral Agreement). Superior’s response to the protest included the argument that Superior’s President and CEO (its President) had, at all times relevant, been both the majority shareholder and controlling director of Superior. Superior also claimed Essilor did not have a controlling interest in Superior since 2017 and that the business relationship between Superior and Essilor did not give Essilor any control of Superior. Further, Superior argued the agreement was not in effect because it had been terminated by the oral agreement in January 2018. Finally, Superior claimed “that the agreement was drafted so as not to jeopardize Superior’s status as a SDVOSB and had never been enforced.” Unfortunately for Superior, OHA found that Superior was not controlled by its President on the September 2020 date it submitted its offer for the solicitation, nor on the October date PDS filed its protest, the two relevant dates identified by OHA. Due to the terms of the agreement which required a written agreement for termination, the Termination Agreement was not found to take effect until the October 20, 2020, date. As such, the agreement was still in effect and the need for Superior to receive Essilor’s written approval prior to changes in control was found to “plainly interfere with [Superior’s President]’s ability to make all business decisions and exercise complete control over Superior” as required per SBA rules. The minimum purchase terms and conditions requiring Essilor’s approval prior to bidding further interfered. Following the finding by OHA, VA cancelled the VISN 8 contract with Superior in accordance with 13 C.F.R. § 134.1007(j)(2). The United States Court of Federal Claims, upon review of the case, determined OHA’s finding that Superior was not eligible for award at the time of the procurement was correct, and that VA acted rationally when it cancelled the VISN 8 contract. The court has a deferential ability to review, and will only disturb an SBA ruling when it didn’t consider key facts, ignored evidence or is just plain implausible. There are two important takeaways from this example. First, know all the terms of any contracts you enter into. It is likely Superior would have never been in this situation had it executed a written termination agreement, as required in its contract terms. And second, be wary of other entities where there is any possibility of finding the other party has control, and do not make bids at a time when control may be deemed in the hands of any entity that is not of a similar socio-economic status. These kind of “change in control” provisions are quite common in commercial agreements. So, for SDVOSB or other companies under SBA’s WOSB or 8(a) programs, it’s important to review any agreement for potential impact on control over the company. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Control Matters: For SDVOSB Companies, Pay Attention to Appearances as Well as Realities first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Without wanting to make the audience feel too old, I was not yet born when Transformers was a pop culture phenomenon. Still, it’s a simple but fun concept: robots that transform to and from cool vehicles. Regardless of what form they take, they are still the same character. The same cannot be said of government contractors submitting an initial bid for the first phase of a solicitation as a prime contractor and a bid as a member of a contractor teaming agreement (CTA) for the second phase of said solicitation. While the same company is involved, the bids are treated as being from different entities. Such was the case in the GAO matter of Softrams, LLC, B-419927.4 (Feb. 7, 2022). In this case, the Department of Health and Human Services (DHHS) issued the solicitation via the GSA’s federal supply schedule for operations and management of the agency’s identity management system. Award was to be made on a best-value tradeoff basis considering corporate experience, performance work statement response, a challenge exercise, and section 508 compliance. Evaluation of quotes was to be made in two phases. During the first phase, vendors were to submit quotations covering corporate experience only. During the second phase, the other factors and price would be considered. OmniFed LLC (Omni), a small business, submitted a quote for phase one. For this phase, Omni submitted its quote as the prime contractor quoting the use of a second vendor, Bana Solutions (Bana), as a subcontractor. However, for phase two, Omni asked if it could submit its quotation as a Contractor Team Arrangement (CTA) with Bana. Note, GSA CTAs are different than other CTAs, these CTAs are not a separate legal entity. See more information here. The agency approved, and so Omni and Bana (for clarity we will call the CTA OB) submitted their phase two quotation with Bana as the team leader and Omni as a team member. The agency based its evaluation of OB off the original Omni quote for phase one and the OB quote for phase two, and awarded OB. A protest followed in which the agency said it would take corrective action as Bana did not have a valid FSS contract at the time Omni submitted its phase one quotation. OB was excluded as was Omni. However, after another dispute, Omni was allowed to continue in the competition as the prime. Omni correctly noted to the agency that the original arrangement had Omni as prime, and primes can use subcontractors not on the FSS. The offerors again made their submissions. Curiously, in the subsequent evaluations, the agency evaluated Omni’s quote for three of the four factors and pricing but evaluated the old OB quote for the final factor. The agency then awarded Omni the contract, and this protest followed. The agency responded that because Omni “did not form a separate legal entity when entering into the GSA CTA with Bana, nothing under the GSA rules or the solicitation prohibited them from changing their formation under the same quotation.” GAO rejected this argument, noting: “In allowing the Omni-Prime vendor to submit a revised quotation to replace the phase two quotation submitted by the eliminated Bana-Omni CTA vendor, the agency failed to obtain a complete replacement quotation from Omni-Prime by not conducting or allowing for a new factor 3 oral presentation. In sum, the agency based its selection decision on a quotation that was composed of submissions from two different vendors. This…is squarely at odds with the agency’s contemporaneous finding in response to Omni’s agency-level protest challenging the elimination of the Bana‑Omni CTA vendor from the competition. There, the agency recognized that the two vendor configurations were separate respondents to the solicitation.” The protest was sustained as a result. This is an unusual case as the DHHS, even after excluding a quotation, nonetheless used information from that quotation as part of its evaluation. It sort of makes sense: In the original phase two solicitation, Omni and Bana were the companies working together. The same went for the evaluation that was protested in this matter. It goes to show that the form does matter, and that simply rearranging into a CTA after the fact can completely disrupt an offeror’s chances if they are not careful. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Transformers: Offerors in Disguise – GAO Sustains Protest Regarding Evaluation Based on Separate Offers from the same Offeror first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers. There were several announcements this week such as President Biden signing into law the Promoting Rigorous and Innovative Cost Efficiencies for Federal Procurement and Acquisitions (PRICE) Act of 2021, expanding the opportunities for small businesses to work with the Federal government. And several associations that represent federal contractors are highlighting operational and workforce challenges associated with continuing resolutions. You can read more about those topics as well as articles highlighting federal contracting opportunities and additional news below. Have a great weekend. Defense innovation bumps up against a Cold War budget system [FedNewsNet]Trade Groups Discuss Impact of Continuing Resolutions on Federal Contractors [ExGov]2022 Contracting Opportunities with IRS [HSToday]How Small Businesses Can Get in the Door with IRS Procurement [HSToday]VA Acquisition Regulation: Department of Veterans Affairs Acquisition Regulation System and Research and Development [FedReg]Wife of Maryland Nuclear Engineer Pleads Guilty to Espionage-Related Offense [DoJ]IRS plans pivot to Login.gov, lets users create online accounts without facial recognition [FedNewsNet]Time to reel in the growing number of supply chain risk management initiatives [FedNewsNet]Army CISO Easley departs for role at the Pentagon [FedScoop]FDIC innovation chief quits agency, blasts ‘hesitant and hostile’ attitude to tech change [FedScoop]Government Contractor Agrees to Pay Record $48.5 Million to Resolve Claims Related to Fraudulent Procurement of Small Business Contracts Intended for Service-Disabled Veterans [DoJ]Defense industrial base competitiveness report irked some services contractors [FedNewsNet]President Signs Bill to Help Federal Small Business Contracting [MeriTalk] The post SmallGovCon Week in Review, February 21-25, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Last week, the SBA’s Office of Inspector General (OIG) issued a report, entitled “SBA’s Business Development Assistance to 8(a) Program Participants.” The report detailed the OIG’s recent audit of the SBA’s 8(a) Business Development Program to “determine to what extent SBA measures and monitors an 8(a) firm’s progress toward achieving individual business development goals” and “to ensure 8(a) firms receive the help needed to meet their goals and if the program adapted during the Coronavirus Disease 2019 pandemic.” Let’s take a closer look at the details and findings. For those who don’t know, the Inspector General is a Presidentially-appointed and Senate-confirmed officer responsible for keeping the SBA Administrator and Congress briefed on any problems, recommending any corrective actions, and monitoring the progress in implementing any such actions. As the SBA explains, the OIG’s “mission is to provide independent, objective oversight to improve the integrity, accountability, and performance of the SBA.” Here, the OIG turned its eye to the SBA’s 8(a) Business Development Program to ensure the program is serving its intended purposes. As SBA’s 8(a) rules establish, the 8(a) Program serves “to assist eligible small disadvantaged business concerns [to] compete in the American economy through business development.” In the OIG’s words: The 8(a) Business Development Program helps small businesses owned by socially and economically disadvantaged individuals gain business skills and access to federal contracting opportunities so that they can better compete in the open marketplace. Congress authorized the 8(a) program for a business development purpose and approved special 8(a) contracting benefits limiting competition for this purpose. To determine whether the 8(a) Program is successfully furthering these goals, the OIG reviewed the details of the business development assistance the SBA provided to 8(a) Program participants from the years 2011 to 2020. This review included selecting a judgmental sample of 40 active 8(a) participant firms (assigned to five different SBA district offices) to test “how SBA monitored progress in achieving individual development goals outlined in their approved business plans.” The OIG also reviewed those five (of the 68) SBA district offices to determine what level of business development assistance the offices provided to the 8(a) participants. This review included interviews with various 8(a) Program officials and an examination of the applicable public laws, regulations, policies, and procedures. The OIG found that the “SBA did not have consistent practices in place to ensure program officials assessed the 8(a) firms’ development needs, counseled participants, or conducted field visits.” In the OIG’s words: SBA’s approach to monitoring 8(a) firms is more focused on reviewing for program eligibility rather than the progression of the 8(a) firm’s business development. Without processes in place to objectively monitor an 8(a) firm’s progress and measure program performance, stakeholders cannot determine success of the program. Specifically, the OIG found that 15 of the 40 firms it reviewed did not have approved business plans, making them ineligible for a whopping $93 million in 8(a) Program contract awards. The OIG also found SBA did not consistently document that its staff assessed the needs, counseled, or conducted field visits with 8(a) firms to ensure they received the assistance needed to be prepared to compete for contracts without further 8(a) assistance. But on a more positive note, the OIG did find that the SBA had adapted its business development assistance model in response to the COVID-19 global pandemic and had offered flexibility to all 40 of the 8(a) firms the OIG reviewed based on the impact of the pandemic. Based on its findings, the OIG made eight total recommendations for the SBA 8(a) Program officials “to measure, monitor, and better deliver training and other business development assistance to 8(a) firms.” First, the OIG recommended that the Administrator direct the Associate Administrator of the Office of Government Contracting and Business Development, in collaboration with the Associate Administrator of the Office of Field Operations, to carry out the following six recommendations: 1. Implement a standard process to approve initial business plans and monitor to ensure that business plans are reviewed annually, to include appropriate updates for specific targets, objectives, and goals for the business development of program participants, in accordance with 13 CFR 124.403(a) and section 7(j)(10)(D) of the Small Business Act. 2. Implement a standard process to capture, track, and recognize substantial achievement of the specific targets, objectives, and goals for the areas of finance, marketing, and management on 8(a) program participant business plans, in accordance with 13 CFR 124.112(f) and section 7(j)(10)(A) of the Small Business Act. 3. Establish outcome-based performance goals and measurements to assess whether the program achieved business development objectives, including the number of graduated 8(a) firms in accordance with the measure of success in section 101(b)(2) of the Business Opportunity Development Reform Act of 1988. 4. Implement a process that uses outcome-based performance goals for regular data-driven reviews and align program leaders’ personal performance plans with the goals so program office leaders are held accountable for improving program data quality, identifying effective practices, and validating promising initiatives, that aligns with OMB Circular A-11 Part 6 – The Federal Performance Framework for Improving Program and Service Delivery guidance. 5. Implement a process to ensure the systematic collection of accurate and complete data on program results and operations to make sure all program reporting requirements are met, in accordance with section 7(j)(16)(A) of the Small Business Act and Standards for Internal Control in the Federal Government Principles for Information and Communication. 6. Implement requirements for management to monitor that Business Opportunity Specialists consistently assess program participant’s development needs, counsel participants, conduct annual field visits, and maintain required documentation, as required by standard operating procedures. Of note is the need for BOS to “counsel participants” regarding business development issues. In our experience, we’ve heard of a wide range of levels of interaction and counseling between various BOS offices and it could be good for this to be more standard among different regions. Next, the OIG also recommended that the Administrator direct the Associate Administrator of the Office of Field Operations, in collaboration with the Associate Administrator of the Office of Government Contracting and Business Development, to carry out the final two recommendations, which follow: 7. Ensure all employees performing Business Opportunity Specialist duties maintain a current Federal Acquisition Certification in Contracting Level 1 Certification within a year of appointment in accordance with section 4(g) of the Small Business Act. 8. Use lessons learned from servicing 8(a) firms in an entirely virtual environment to coordinate district office resources and share best practices in order to equitably serve all 8(a) program participants. Align assigned Business Opportunity Specialist staffing levels accordingly to be consistent with ideal workload ratios as determined by the program office. When confronted with the OIG’s recommendations, SBA management fully agreed with five of them (#3 and #5-8), partially agreed with two of them (#1 and #2), and disagreed with one recommendation (#4). In the OIG’s opinion, the SBA Management’s planned actions in response to the recommendations successfully resolved three of the recommendations (#3, #7, and #8). Specifically, the OIG approved of the SBA’s “plans to identify program-level goals that align with the agency’s strategic plan[,]” and “plans to assess the staffing and resources allocated for SBA district offices to consistently provide business development assistance and improve 8(a) program participants’ customer experience.” But the OIG did not reach resolution with SBA Management on five of the recommendations (#1, #2, #4, #5, and #6). Even though the SBA Management agreed (or at least partially agreed) with four of these five recommendations, according to the OIG, SBA Management’s proposed did not fully address these five recommendations. Thus, the OIG report concluded that the OIG would “seek resolution of those recommendations in accordance with [its] audit resolution policies and procedures.” Only time will tell if and how the SBA’s 8(a) Program Management will address the OIG’s remaining concerns. But regardless, the OIG certainly provided some insightful considerations and suggestions for improving this incredibly valuable contracting program for small disadvantaged businesses. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post SBA’s Approach to Monitoring 8(a) Firms is Focused on Eligibility Rather than Business Development, Says SBA’s OIG first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The House recently passed Senate Bill 583, titled the “Promoting Rigorous and Innovative Cost Efficiencies for Federal Procurement and Acquisitions (PRICE) Act.” The Price Act would require the Department of Homeland Security (DHS) to report projects from its Procurement Innovation Lab (PIL) that have used innovative techniques to help modernize contracting procedures. The bill would also require the DHS to offer training to its personnel on how to use these techniques. In addition, the PRICE Act would require that these innovative best practices be made available to other federal agencies to improve procurement methods and training. The Price Act also supports the White House’s goals of providing new federal contracting opportunities to small disadvantaged businesses. A little background is helpful to understand the PRICE Act, and Congress nicely included some background in drafting the law. The act references the Business Opportunity Development Act of 1988, which established goals for federal contract awards to Veteran-owned Small Businesses (VOSBs), Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), Women-Owned Small Businesses (WOSBs), Historically Underutilized Business Zones (HUBZones), and disadvantaged small businesses. Nevertheless, some agencies have been reluctant to utilize these contracting programs. The Price Act would provide a vehicle across agencies to identify and adopt best practices, procedures and strategies to improve procurement methods to increase small business participation in government contracting. Another impediment to the federal government achieving its procurement goals is that the current data systems in the federal procurement process are cumbersome and not user friendly for many small businesses; especially for those who are new to the system. A goal of the PRICE Act is to resolve these issues by requiring the Office of Management and Budget (OMB) to work with federal acquisition administrators to share innovative new contracting systems and procedures to modernize the application process. The PRICE Act seeks to address obstacles that small businesses face when trying to take advantage of federal contracting opportunities. Especially those small businesses owned by women, minorities and veterans. Senate Bill 583 specifically references the DHS as a leader in meeting small business contracting routinely earning the highest grade on SBA’s Annual Small Business Procurement Scorecard. SBA’s scorecard measures federal agencies’ success in meeting their overall small business contracting goals. DHS is the largest federal agency to achieve this record since the SBA began using the letter grade scorecard format in 2009. DHS attributes its success, in part, to its active internal collaboration. This collaboration is demonstrated in its Procurement Innovation Lab (PIL). The PIL is a DHS framework aimed at experimenting with innovative techniques for DHS acquisitions, evaluating those techniques and sharing the results and lessons learned. The PIL provides a safe space to test new ideas in the acquisition process, share lessons learned, and promote best practices. The Price Act aims to use the success from the DHS and its PIL to adopt modernized business practices across all federal agencies. The bill requires DHS to publish on its website an annual report of PIL projects that have successfully used innovative techniques. Senate Bill 583 also requires the Chief Acquisition Officers Council (CAOC) to convene to examine best practices from the PIL. The CAOAC will subsequently issue a report on the OMB website with the goal of promoting rapid adoption of the best practices determined by the CAOCs examination. In addition, the CAOC will encourage the head of each Federal agency to maintain a website dedicated to acquisition and innovation. The report mentions the following as things that should be reported: (A) innovative acquisition practices and applications of technologies that have worked well in achieving better procurement outcomes, including increased efficiency, improved program outcomes, better customer experience, and meeting or exceeding the goals under section 15(g) of the Small Business Act (15 U.S.C. 644(g)), and the reasons why those practices have succeeded; (B) steps to identify and adopt transformational commercial business practices, modernized data analytics, and advanced technologies that allow decision making to occur in a more friction-free buying environment and improve customer experience; and (C) any recommendations for statutory changes to accelerate the adoption of innovative acquisition practices. The Congressional Budget Office (CBO) in its cost estimate expressed that Senate Bill 583 would probably change some methods and activities in contracting processes across most federal agencies. CBO also expects that the bill would codify many of the methods and activities which would help to lock in best practices and provide consistent processes across agencies. The legislation is supported by a broad coalition of groups including Small Business Majority, Association of Procurement Technical Assistance Centers (APTAC), GovEvolve, HUBZone Contractors National Council, and the Women Veterans Business Coalition. Senate Bill 583 was submitted to the President for signing on February 14th. We’ll keep you updated on this and other matters related to small business federal contracting. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post House Passes Senate Bill to Modernize Processes to Increase Small Business Participation in Federal Contracting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Readers! We hope you had a wonderful Valentine’s Day and a very productive week. Another winter storm blew in on Thursday and we received 7 inches of snow. But do you know what we say in Kansas? “If you don’t like the weather, wait a minute. ” By Monday we will reach a temperature of almost 70 degrees! The weather in Kansas can change on a dime. We put together some informative articles on federal government contracting news. Enjoy and stay warm or cool or anywhere in between in your part of the world. We’ll be doing the same here. I just wonder if I’ll need a heavy coat or a light jacket? Best to be prepared and keep both handy. Have a great weekend. Companies ask GSA to address inflation in government contracts [FedNewsNet]Pentagon: Contractor mergers hurt national security, economy [FedNewsNet]What full-year appropriations halfway through the year means to contracting [FedNewsNet]Can’t Pad Key Personnel Résumé, Says GAO [SmallGovCon]GAO sustains contract award challenge brought using evidence from LinkedIn [FedScoop]National Security Snapshot Challenges Facing DOD in Strategic Competition with China [GAO]Energy Department looks to build cyber threat detection platform for electric grid [FedNewsNet]CISA: Russian hackers have infiltrated defense contractors’ unclassified networks [FedNewsNet]Another Former Ft. Bragg Employee Pleads Guilty to Bribery [DoJ]How much of rulemaking is done by contractors? [Brookings]GSA to continue services on $50B EIS contract’s predecessor [FedScoop]Postal Regulatory Commission appoints first chief data officer [FedScoop]In-house expertise key to working with IT contractors, VA CIO says [FedScoop]Army needs to better use recent software authorities, new acquisition leader says [FedScoop] The post SmallGovCon Week in Review: February 14-18, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

SBA publishes its semiannual Regulatory Agenda to provide an update on the various rules it has in the pipeline and an estimate for when they will be published or become final. While SBA doesn’t have to meet these timeframes, it’s always good to check in on what SBA has been working on when the final rules will come out. This agenda includes an update on increased size standards, along with some other important rules. Read on for the highlights and be sure to comment on any rules that you have an opinion on. Here are the key rules, along with a summary and the next steps for that rule. Proposed Rules Small Business Size Standards: Manufacturing and Industries With Employee Based Size Standards in Other Sectors Except Wholesale Trade and Retail Trade. SBA is reviewing its size standards to consider adjustments to reflect market conditions for NAICS codes in Sector 31-33 (Manufacturing) and industries with employee-based size standards in other sectors. SBA anticipates a proposed rule in March 2022. Small Business Size Standards: Calculation of Number of Employees for All Programs and of Average Annual Receipts in Business Loan, Disaster Loan, and Small Business Investment Company Programs. SBA will be proposing rules to address the 2021 NDAA rule that changed the employee-based size standards lookback period from 12 months to 24 months. It will also propose rules for average annual receipts using a 5-year average for SBA loan programs. SBA did not include a timetable for the final rule, but comments on the initial rule ended December 2021 for the proposed rule issued in November 2021 that we discussed on the blog here, so it’s possible the final rule comes out in 2022.National Defense Authorization Act of 2020, Credit for Lower Tier Subcontracting and Other Amendments. The SBA will be issuing a proposed rule to address how the 2020 NDAA required “SBA to alter the method and means of accounting for lower tier small business subcontracting.” This is a fairly limited change for subcontracting plan credit and SBA expects the proposed rule to come out in May 2022. Final Rule Stage Small Business Size Standards: Educational Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; Other Services. SBA has reviewed and will adjust size standards for all industries in North American Industry Classification System (NAICS) Sector 61 (Educational Services), Sector 62 (Health Care and Social Assistance), Sector 71 (Arts, Entertainment and Recreation), Sector 72 (Accommodation and Food Services), and Sector 81 (Other Services). The proposed rule suggested size increases for 70 industries, including, for example, 621910 Ambulance Services increasing to $20 million from $16.5 million. SBA expects the final rule in June 2022. Small Business Size Standards: Agriculture, Forestry, Fishing and Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; Construction. This proposed rule would increase size standards for 68 industries in Sector 11 (Agriculture, Forestry, Fishing and Hunting), Sector 21 (Mining, Quarrying, and Oil and Gas Extraction), Sector 22 (Utilities), and Sector 23 (Construction). Only two construction size standards would increase. For instance, 238290 Other Building Equipment Contractors would go from $16.5 million to $19.5 million. SBA expects a final rule in July 2022. Small Business Size Standards: Transportation and Warehousing; Information; Finance and Insurance; Real Estate and Rental and Leasing. This proposed rule would increase size standards for 45 industries in Sector 48-49 (Transportation and Warehousing), Sector 51 (Information), Sector 52 (Finance and Insurance), and Sector 53 (Real Estate and Rental and Leasing). For example, 484122 General Freight Trucking, Long-Distance, Less Than Truckload would increase to $38.0 million from $30.0 million. SBA expects the final rule in August 2022. Small Business Size Standards: Professional, Scientific and Technical Services; Management of Companies and Enterprises; Administrative and Support and Waste Management and Remediation Services. This proposed rule would increase size standards for 46 industries in Sector 54 (Professional, Scientific and Technical Services), Sector 55 (Management of Companies and Enterprises), and Sector 56 (Administrative and Support, Waste Management and Remediation Services). For example, 541330 Engineering Services is increasing to $22.5 million from $16.5 million, while 541310 Architectural Services is increasing to $11.0 million from $8.0 million. SBA expects the final rule in June 2022. There are a number of important changes summarized here that are going to have proposed rules issued or scheduled to go into effect over the next few months. The size standards, for one, could allow companies to remain as small businesses for many more years. We’ll keep you updated on SmallGovCon once the final versions of these rules are released, so stay tuned. Questions about this post, or needing assistance with a GAO protest? 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 What’s on SBA’s Regulatory Plate for 2022? A Hint: Increased Size Standards first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Koprince McCall Pottroff LLC presents a webinar hosted by EPHCC that covers important legal concepts in federal government contracting that are easy to get wrong. 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. The attorneys from 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 not make the same mistakes. On February 24, join me, Shane McCall, and Kevin Wickliffe as we go over these important topics in plain English in a single webinar. To register, just click here. The post Event: Top 21 Legal Mistakes in Federal Government Contracting, Hosted by EPHCC first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello Readers! In this webinar hosted by the Ohio PTAC, attorneys Nicole Pottroff and John Holtz will be pointing out and helping you avoid common legal mistakes in federal government contracting. Join us this Thursday (February 17) by registering here. The post Webinar Event: Ohio PTAC – Top 10 Legal Misconceptions in Federal Contracting and Pending Legal Changes first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

GAO recently sustained a protest to the evaluation of an awardee’s management approach based on a material misrepresentation in its proposed key personnel experience (that the protester found on Linkedin, no less). And GAO found the misrepresentation was material because the agency relied upon it, and it significantly impacted the agency’s evaluation. Let’s take a closer look. Insight Tech. Sols., Inc., B-420133.2 (Dec. 20, 2021) involves a task order issued by the Department of Homeland Security, U.S. Immigration and Customs Enforcement seeking information technology support services for the agency’s student and exchange visitor program. The agency issued the solicitation under the National Institutes of Health’s CIO-SP3 small business GWAC. The solicitation anticipated award of a task order on a best-value tradeoff basis. It said the agency would make its source selection decision based on a tradeoff analysis considering four evaluation factors (from most to least important): (1) technical approach; (2) experience; (3) management approach; and (4) price. The agency said it would not conduct discussions or request proposal revisions. As relevant here, for the management approach factor, the solicitation identified six key personnel, including a project operations manager, and listed their qualifications. The project operations manager needed “a minimum of five (5) years of experience in managing projects, with a focus on business process and re-engineering projects.” The solicitation did not require proposed key personnel résumés. But it did require offerors to “clearly identify” qualifications and identify any “unique qualifications or experience proposed that exceed the minimum qualifications.” It said that the agency would evaluate whether proposed “qualifications” were “reasonable for successfully and efficiently performing the work,” and that proposed “personnel that exceed the minimum requirements may be evaluated more favorably.” It also said the agency would evaluate offerors’ approaches to addressing vacancies. For this management approach factor, the agency was to assign each proposal one of three ratings: exceeds the requirements, meets the requirements, or fails to meet the requirements. The solicitation didn’t call for the assessment of strengths or weaknesses. But it said the agency would document any “noteworthy observations” in the offerors’ management approaches. The agency received seven proposals for this procurement. And the protester and awardee were among the four finalists. The agency evaluated both the protester’s and awardee’s technical approach and experience as exceeds the requirements. But it determined the protester’s management approach meets the requirements while the awardee’s exceeds the requirements. And the awardee’s price was $13,579,169, while the protester’s price was $11,658,272 (nearly $2 million lower). As relevant here, the awardee included a key personnel requirements table. For the proposed project operations manager, the proposal reiterated the solicitation’s five-year management experience requirement, and next to it, said: “9 years of relevant experience including 5 years support and quality oversight of the SEVP Contact Center.” In its management approach factor evaluation, the agency found that the awardee’s proposed key personnel had “experience that exceed[s] the minimum experience requirements identified by the PWS” and said that this added value and increased the likelihood of the awardee’s success. The agency’s report specifically noted the project operations manager’s listed qualifications, concluding that the “added experience causes the Government to have high confidence that [the awardee] can successfully perform the proposed requirements with enhanced expertise.” The agency provided a similar evaluation conclusion for the protester’s proposed key personnel experience. In the end, the agency found that the awardee’s proposal represented the best value to the government, as it was superior to the protester’s proposal under the management approach factor, making it worth the 16% percent price premium in the agency’s eyes. In the reported tradeoff analysis comparing the two offerors’ management approaches, the source selection authority specifically noted that the awardee had proposed “personnel with significantly more experience than the minimum requirements.” And the analysis did not mention the protester’s proposed key personnel. The protester filed protest at GAO, arguing that the evaluation and award were improper because the awardee had misrepresented its proposed project operations manager’s relevant experience, specifically, that he or she had nine years of relevant management experience. In fact, according to the protester, the proposed project operations manager not only lacked the purported nine years of experience, he or she actually failed to meet the solicitation’s five-year minimum experience requirement. Relying on its debriefing, the protester argued that the agency’s evaluation of the awardee’s technical acceptability and benefits of the the proposed project operations manager’s experience were largely based on that misrepresentation. Thus, the protester concluded that the evaluation was flawed and failed to provide a reasonable basis for the award. In reaching its decision on the protest, GAO stated its standards for material misrepresentations in proposals as follows: A material misrepresentation in a proposal can provide a basis for disqualifying a proposal and canceling a contract award based upon the proposal. A misrepresentation is material where the agency relied upon it and it likely had a significant impact upon the evaluation. GAO then explained that the protester had supported its material misrepresentation argument with a copy of the proposed project operations manager’s LinkedIn profile. And the profile listed fewer than five years work experience at the time proposals were submitted and three of the four positions listed in the profile did not demonstrate the required management experience. Neither the intervening-awardee nor the agency disputed the proposed operation manager’s employment information listed on the LinkedIn profile. The awardee maintained that its key personnel candidate “had the required experience” but did not explain or support that assertion. And the agency argued that its evaluation was reasonable because agencies are “generally entitled to rely on information provided by an offeror in its proposal, absent significant evidence, reasonably known to the evaluators, casting doubt on the accuracy of the information.” Thus, according to the agency, even if there were a material misrepresentation, it would not provide a basis to sustain, since the protester “has not shown that the [a]gency had any reason to believe a misrepresentation had occurred.” It even argued that “considering information not before it at the time of evaluation and award would be tantamount to creating a post hoc resume requirement and reevaluating proposals against it.” But GAO didn’t buy it. It said: The agency’s response misstates the issue before us. Here, we are not reviewing a straightforward protest of the agency’s evaluation; rather, the protester has claimed that the awardee’s proposal contains a material misrepresentation that had a significant impact upon the evaluation. When resolving allegations of material misrepresentation, our Office may consider information raised during the protest that was not reasonably known to the agency during the evaluation. In the instant protest, we find it not only appropriate, but necessary, to consider information not contained in [the awardee’s] proposal in order to determine whether it misrepresented its stated project operations manager’s experience. And with that, GAO relied on the new information to reach its decision. In doing so, GAO noted that the awardee had failed “to proactively demonstrate that the key personnel experience claimed in its proposal was accurate,” even upon GAO’s request that it submit the proposed personnel’s updated resume or other information to establish the relevant experience. The awardee did submit a declaration from the proposed key personnel, but it openly stated that at the time of proposal submissions, he or she “had worked on the predecessor SEVIS contracts for, at the most, 4 years and 7 months.” The declaration also discussed a help desk analyst position that contrasted with the proposal’s description of that position as relevant managerial experience. Thus, GAO concluded that awardee’s assertion that its proposed project operations manager had nine years of project management experience was, in fact, a misrepresentation. It then went on to analyze the effect of this misrepresentation on the procurement, finding that the agency “clearly relied” on the awardee’s misrepresentation in its evaluation. GAO said: The record demonstrates that, when evaluating [the awardee’s] management approach, the agency found that the proposed key personnel had “experience that exceed[s] the minimum experience requirements identified by the PWS.” The agency specifically based this finding in part on [the awardee’s] misrepresentation, noting in the evaluation report the project operations manager’s “9 years of relevant experience, including 5 [years] supporting the quality and oversight of the SEVP Contract Center.” GAO also noted that the agency had actually conceded its reliance on the misrepresentation when it argued during the protest proceedings “that its evaluation was reasonable precisely because it was exclusively based on information contained in [the awardee’s] proposal and not on any other outside information.” Next, GAO addressed the agency’s argument that the awardee’s misrepresentation “was not material to the source selection decision and therefore not prejudicial.” According to GAO, the agency claimed this proposed key personnel’s experience was not the only basis for the confidence-raising finding in the management approach evaluation. The agency also argued that “nothing would have changed if the experience at issue had not been evaluated as exceeding the minimum experience requirements.” But GAO was not persuaded. GAO cited to the solicitation’s PWS and its minimum qualifications for key personnel requiring the project operations manager to have five-years minimum management experience focused on business process and re-engineering projects. GAO did concede that the solicitation also said, under the management approach factor, that the agency would evaluate whether proposed “qualifications . . . are reasonable for successfully and efficiently performing the work” and “personnel that exceed the minimum requirements may be evaluated more favorably.” But it explained the following: Where a solicitation states that the qualifications of key personnel will be evaluated, and a proposal fails to demonstrate that key personnel hold qualifications that the solicitation requires them to possess, the proposal may be evaluated as unacceptable. Our Office will sustain a protest where the agency unreasonably concludes that a proposed key person meets minimum experience requirements. Applying that standard, GAO explained that the awardee here could not have accurately represented that its proposed project operations manager had nine, or even five, years of relevant experience. Because the agency had “relied exclusively” on the proposals’ contents in evaluating key personnel qualifications, the agency would not have been able to reach the same evaluation conclusion if the awardee had accurately represented the person’s relevant experience. Thus, GAO concluded that the awardee’s “misrepresentation had a material effect on the evaluation because it formed the basis for the agency conclusions that [the awardee’s] proposal both met and exceeded the proposed project manager key person minimum qualifications.” Finally, GAO found that this misrepresentation and the agency’s reliance on it during the evaluation prejudiced the awardee. GAO “will sustain a protest only when a protester demonstrates that, but for the agency’s improper action, it would have had a substantial chance of receiving the award.” Here, GAO noted that the protester had the lowest-priced proposal. It said, had the awardee’s proposal been eliminated from competition or had a less favorable evaluation for the management approach factor, the protester would have stood a substantial chance of award. Based on these findings and the prejudice to the protester, GAO sustained the protest. * * * There are takeaways on both sides of the fence here. For one, it is not wise to misrepresent qualifications, resources, personnel, or really, anything, in your proposal. Even if it is not something the offeror thinks is a “big deal,” it could be something the agency relies on in its evaluation, making it material and highly problematic. Additionally, if you are the unsuccessful offeror and something in your debriefing “doesn’t feel right,” it may be fruitful to do your research on the awardee and file a protest. Of course, misrepresentations like this may be difficult to catch, but it’s still worth it to try and even the playing field for government procurement. Questions about this post, or needing assistance with a GAO protest? 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 Can’t Pad Key Personnel Résumé, Says GAO first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy Friday, Blog Readers! We are sad that our Kansas City Chiefs will not be playing in the Super Bowl, this Sunday, but nevertheless it should be a competitive game and fun to watch. If you are heading out to that Super Bowl Party or just staying in this weekend, we thought we would share a delicious dip recipe from one of our SmallGovCon team members to enjoy during the big game. 9 Layer Italian Dip 1lb. Italian Sausage (browned & drained)(2) Bricks of Cream Cheese(1) Package Zesty Italian Salad Dressing Mix(1) Package Shredded Mozzarella CheeseYour Favorite 6 Pizza Toppings (Pepperoni, Olives, Sun-Dried Tomatoes, Artichoke Hearts, etc.)Mix the cream cheese with the salad dressing mix and spread on bottom of baking dish. Layer your pizza toppings over the sausage with the mozzarella cheese. Bake for 40 minutes at 350 degrees. It’s great served with garlic bread. Enjoy! And here are a few articles concerning federal government contracting news to read while you wait for kick-off. Have a great weekend! Order Sets Standards for Federal Construction Projects, Training for Contracting Workforce [FedWeek]Anything can have DEIA if agencies look hard enough [FedNewsNet]With New White House Directives, Some Startups Could Compete for Government Contracts [Yahoo]Air Force Notifies Industry of $90M Systems Engineering, Tech Assistance Procurement Plan [ExecBiz]Legislation to Expand Federal Contracting Opportunities Reaches President’s Desk [NextGov]Why services contractors have a difficult landscape to cross [FedNewsNet]SBA Launches Journey 6 to Help Women Business Owners Compete for Federal Contracts [SmlBizTrends]United States Army Research Biologist and Contractor Charged in Bribery Scheme at Aberdeen Proving Ground [DoJ]Florida Man Sentenced for Paying Bribes and Kickbacks and Defrauding the United States [DoJ]New DOD Chief Digital Artificial Intelligence Office Launches [DoD]Executive Order on Use of Project Labor Agreements For Federal Construction Projects [WH]House sends contracting innovation bill to president’s desk for signing [FedScoop]Lawmakers urge cancellation of multibillion dollar VA logistics system [FedNewsNet]Minority Business Leaders Advocate for Elevated Access to Federal Infrastructure Contracts [BlkEnt]White House Unveils Updated Critical and Emerging Tech List [ExecGov] The post SmallGovCon Week in Review: February 7-11, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello Readers! If you work with the Air Force, you might find it helpful to get an overview of the supplement FAR provisions that the Air Force applies to its procurements. Attorneys Nicole Pottroff and Kevin Wickliffe break down the AFFARS for you in this complimentary webinar. Join us next Wednesday (February 16) by registering here. The post Webinar Event: FAR Supplement – AFFARS – Air Force first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

In response to an Executive Order, the FAR Council has recently proposed to amend the FAR in an effort to ensure that major federal procurements will minimize the risk of climate change. And DoD, GSA, and NASA sought the public’s input on the issue. Let’s take a closer look. The FAR Council issued an advance Notice of Proposed Rulemaking on October 15, 2021, which covers the second case (FAR Case No. 2021-016, Minimizing the Risk of Climate Change in Federal Acquisitions) the FAR Council has opened in response to President Biden’s May 20, 2021, Executive Order (E.O. 14030, Climate-Related Financial Risk). The E.O. addressed the increasing risks that climate change impacts are posing to financial assets, companies, communities, workers, and the Federal Government. It said: The failure of financial institutions to appropriately and adequately account for and measure these physical and transition risks threatens the competitiveness of U.S. companies and markets, the life savings and pensions of U.S. workers and families, and the ability of U.S. financial institutions to serve communities. To further the administration’s goals, section 5(b) of the E.O. required the following: (b) The Federal Acquisition Regulatory Council, in consultation with the Chair of the Council on Environmental Quality and the heads of other agencies as appropriate, shall consider amending the Federal Acquisition Regulation (FAR) to: (i) require major Federal suppliers to publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets; and (ii) ensure that major Federal agency procurements minimize the risk of climate change, including requiring the social cost of greenhouse gas emissions to be considered in procurement decisions and, where appropriate and feasible, give preference to bids and proposals from suppliers with a lower social cost of greenhouse gas emissions. Currently, FAR subpart 23.8 (and the corresponding clauses in FAR part 52) provides some coverage of greenhouse gas emissions. And the first case the FAR Council opened in response to this E.O. (FAR Case No. 2021-015, Disclosure of Greenhouse Gas Emissions and Climate-Related Financial Risk) implemented section 5(b)(i), directed at “major Federal suppliers,” requiring them to “publicly disclose greenhouse gas emissions and climate-related financial risk and to set science-based reduction targets.” The instant Proposed Rulemaking (FAR Case No. 2021-016), implements section 5(b)(ii), which is instead directed at Federal procuring agencies. In the FAR council’s own words: The E.O. states that the Federal Government should lead by example by appropriately prioritizing Federal investments and conducting prudent fiscal management. One critical lever is ensuring that the Federal Government manages climate-related financial risk within its own procurement activity, while also leveraging its scale as the Nation’s largest spender to speed the adoption of key assessment, disclosure, and mitigation measures across the private sector. Thus, DoD, GSA, and NASA sought public comment in response to the following questions: (a) How can greenhouse gas emissions, including the social cost of greenhouse gases, best be qualitatively and quantitatively considered in Federal procurement decisions, both domestic and overseas? How might this vary across different sectors? (b) What are usable and respected methodologies for measuring the greenhouse gases emissions over the lifecycle of the products procured or leased, or of the services performed? (c) How can procurement and program officials of major Federal agency procurements better incorporate and mitigate climate-related financial risk? How else might the Federal Government consider and minimize climate-related financial risks through procurement decisions, both domestic and overseas? (d) How would (or how does) your organization provide greenhouse gas emission data for proposals and/or contract performance? (e) How might the Federal Government best standardize greenhouse gas emission reporting methods? How might the Government verify greenhouse gas emissions reporting? (f) How might the Federal Government give preference to bids and proposals from suppliers, both domestic and overseas, to achieve reductions in greenhouse gas emissions or reduce the social cost of greenhouse gas emissions most effectively? (g) How might the Government consider commitments by suppliers to reduce or mitigate greenhouse gas emissions? (h) What impact would consideration of the social cost of greenhouse gases in procurement decisions have on small businesses, including small disadvantaged businesses, women-owned small businesses, service-disabled veteran-owned small businesses, and Historically Underutilized Business Zone (HUBZone) small businesses? How should the FAR Council best align this objective with efforts to ensure opportunity for small businesses? Though the public comment period ended December 14, 2021, you can still contact Ms. Jennifer Hawes, Procurement Analyst, at 202-969-7386 or by email at jennifer.hawes@gsa.gov, for clarification of the content of this Proposed Rulemaking. At this time, there have been no further updates on the outcome of this case or this Proposed Rulemaking. But be sure to keep an eye on the SmallGovCon blog for updates on this topic, as it could have a significant effect on the future of Federal procurements! Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post FAR Council Seeks to Address Climate Change in Federal Contracting first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Hello Readers! If you work with the army, you might find it helpful to get an overview of additional FAR regulations that the army has to abide by. Attorneys Nicole Pottroff and John Holtz break down the AFARS for you in this complimentary webinar. Join us tomorrow by registering here. The post Webinar Event: FAR Supplement – AFARS – Army first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Additional changes to the submission date and the self-scoring requirements for CIO-SP4 offers make up the latest batch of amendments published by the National Institutes of Health Information Technology Acquisition and Assessment Center, leaving offerors hopeful the latest changes will be the last in a long string of amendments. Amendment 15 pushes back the submission date for CIO-SP4 offers and addresses a change to offer modifications. Amendment 16 includes additional changes to submission requirements and removes the iNsight method of calculating Self Scores. Per Amendment 15, released on January 27, 2022, Submissions are now due by February 11, 2022. Additionally, this amendment (sort of) helps to clarify instructions related to submission requirements by removing language regarding submission of self-scoring data and proposal files. Prior to this change, offerors were permitted to modify their self-scoring data and proposal files up until submission. With Amendment 15, the language which permitted the modification was deleted. Presumably, this means that no additional modifications will be allowed once you’ve uploaded each part, regardless of whether you’ve officially submitted them or not, but offerors are left to figure that out on their own due to no further clarification beyond the deleted language. Amendment 16, released on February 3, 2022, makes additional changes to Self-Scoring methods and submission requirements, as well as addresses some of the uncertainty created by Amendment 15’s deleted language. First, iNsight, the method of calculating Self Scores added by Amendment 12, has been deleted and the Self-Scoring Sheet originally found in Attachment J.5 has returned. Next, Amendment 16 clarifies the ambiguities from Amendment 15’s deleted language regarding modifications by laying out new submission requirements which include an acknowledgement of all 16 amendments. If an offeror submitted their proposal by August 27, 2021 and did not make revisions due to changes in Sections L.5.2.1 through L.5.2.4 as advised in Amendment 12, the offeror must fill out Attachment J.9 “Amendments Acknowledgements” and submit that form alone via email. If an offer requires revisions due to amendments of Sections L.5.2.1 through L.5.2.4 (mainly dealing with experience examples required by both the mentor and protégé in a mentor protégé agreement), revised proposals along with a completed Attachment J.9 must be submitted via email. Detailed instructions for both situations can be found on page 139 of Amendment 16. Be sure to check these amendments closely. We continue to monitor this important solicitation to determine if NITAAC is getting close to closing the proposal submission period and starting the evaluation period. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Is the End Near? NITAAC Releases CIO-SP4 Amendments 15 and 16 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Happy February, Readers! We had some excitement this week when a winter snowstorm moved into our neck of the woods. I’m happy to report that all is well and the streets have been cleared by our vigilant city road crews whom we are very grateful for. It sure was a beautiful, snowy site. There was a lot going on in federal government contracting, this week, including an announcement from the DoD that John Sherman will be acting chief digital and AI officer as well as the deadline has arrived for paying federal contractors $15 per hour. Read these articles and more below. Have a great weekend! Performance Management and Assessment of Federally Funded Research and Development Centers [Rand]GSA meeting with industry about electric vehicle needs of US government [GovMatters]Statement by SBA Administrator Guzman Observing Black History Month 2022 [SBA]Addressing the Impact of Inflation on Government Contracts [CPG]Indictment and Guilty Plea Entered in Iranian Export Case [DoJ]U.S. Settles Dispute Over Disadvantaged Business Enterprise Fraud [DoJ]The Deadline is Here for Federal Contractors to Start Paying at least $15 an Hour [GovExec]How the boost in federal contracting with small and disadvantaged businesses will actually happen [FedNewsNet]A big governmentwide telecom contract just can’t seem to gain altitude [FedNewsNet]Crypto, Cybersecurity, Global Finance Leaders Talk Knowledge Gaps & Threat Landscape in Panel Discussion During POC’s Digital Currency and National Security Forum [GovConWire]John Sherman tapped to be acting chief digital and AI officer at DOD [FedScoop]Polaris solicitations for 2 small business pools coming in February [FedScoop]Federal appeals court strikes down FLRA decision setting higher bar for union negotiation [FedNewsNet]Top former DoD cyber official reaches settlement in bid to clear her name [FedNewsNet]BREAKING: Report Sends ‘Wake-Up Call’ for Health of Defense Industrial Base [NatDefMag] The post SmallGovCon Week In Review: January 31-February 4, 2022 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Federal contractors often ask: “It is better to team up for government work with a prime-sub arrangement or with a joint venture?” Well, (spoiler alert) the answer is: it depends. But I won’t leave you with just that. This three-part series will provide insight on some of the major differences between these two types of “teams” that offerors should consider when making the decision between a joint venture or prime/subcontractor team in competing for and performing federal contracts. While this series will not provide a comprehensive list of all the differences between these two types of teams, it will cover some of the big ones that seem to come up more frequently in this decision-making process. Our first article focused on workshare, and our second, on past performance. This final article of the three-part series will discuss the parties’ relationship with the government and with each other in both types of teams. Relationship with the Government In a joint venture relationship, the venturers are both parties to the government contract (although one of the parties must be designated as the managing venturer under the various joint venture regulations if it is a mentor-protégé joint venture or a joint venture with any kind of socioeconomic designation). In a joint venture, the parties are jointly liable for the obligations and requirements under the contract and also jointly entitled to the rights that arise thereunder. In a prime contractor/subcontractor team, the prime contractor is the only party in privity of contract with the government. Don’t worry, that is just a fancy way of saying that the prime contractor is the only one in a contractual relationship with the government and entitled to the obligations and rights that arise under it. In fact, a subcontractor actually has no rights or obligations under a federal government prime contract (although they do have rights and obligations under a subcontract). This is precisely why subcontract agreements for work performed under federal government prime contracts may often have a mandatory “pass-through claim” provision (requiring the prime to submit subcontractor claims to the contracting agency)–as well as a bevy of FAR flow-down clauses listing the subcontractor’s responsibilities and rules for performing work under the federal contract (since those terms don’t apply directly to the subcontractor through the prime contract). Now, you may be wondering why this matters. And it is potentially not a deciding factor for some contractors in picking their teams. But this factor may come into play sometimes, including, during the following circumstances: Where the “non-lead” contractor (which here, will simply refer to the potential non-managing venturer or subcontractor) is new to the federal contracting realm and is looking to establish a relationship with a specific government agency, it may be wiser to push for a joint venture so a working contractual relationship between the contractor and the agency can begin to develop; orWhere the non-lead contractor already has a long-standing working relationship with the contracting agency, it can be beneficial to name that contractor as part of the joint venture team, rather than as a subcontractor, in competing for the work. Additionally, while all contractors hope there will be no issues with the government during their performance of a team project, those issues can and certainly do arise sometimes. This may also be something to consider in making your teaming decisions–or at least, in drafting your various teaming agreements. With a joint venture relationship, the parties can jointly bring claims against the government based on performance issues. But with a prime-subcontractor team, only the prime can bring claims against the government for performance issues. This is why–as I briefly mentioned above–it is vital to a subcontractor that the subcontract agreement include a pass-through clause allowing the prime to submit any subcontractor claims to the contracting agency on its behalf. Now that we have discussed a few potential considerations regarding teaming partners’ relationship with the government, let’s take a quick look at the other important relationship to consider in picking your team–the teaming partners’ relationship with each other. Team Members’ Relationship Some aspects of the partners’ relationship with each other that should be considered in deciding between a joint venture team and a prime-subcontractor team are the anticipated longevity of the teaming relationship and frequency of the teaming projects to be pursued. This is due to SBA’s notorious affiliation regulations, and the potential for two contractors to be found affiliates if they work together too closely, too many times, or for too long. The affiliation rules do provide some protection from affiliation for joint ventures–so long as the joint ventures only bid within the prescribed time frame of two years from date of first award (per each joint venture) and follow the other regulatory requirements for joint venture performance. Regarding joint ventures, SBA’s affiliation rules say the following: Once a joint venture receives a contract, it may submit additional offers for a period of two years from the date of that first award. An individual joint venture may be awarded one or more contracts after that two-year period as long as it submitted an offer including price prior to the end of that two-year period. SBA will find joint venture partners to be affiliated, and thus will aggregate their receipts and/or employees in determining the size of the joint venture for all small business programs, where the joint venture submits an offer after two years from the date of the first award. The same two (or more) entities may create additional joint ventures, and each new joint venture entity may submit offers for a period of two years from the date of the first contract to the joint venture without the partners to the joint venture being deemed affiliates. At some point, however, such a longstanding inter-relationship or contractual dependence between the same joint venture partners will lead to a finding of general affiliation between and among them. So this means, two contractors can jointly bid on as much government work as their hearts desire, so long as they only bid within the two-year period following the first award (and also, follow SBA’s other rules). And even then, the venturers could execute a second or third joint venture after that two-year period to continue jointly bidding work. But as the rule ever-so-vaguely notes, too many of these joint venture agreements between two contractors can eventually lead to affiliation. So again, the protection is limited. The prime-subcontractor relationship does not provide this same protection from affiliation, however. Even if a prime and subcontractor perform contract work in accordance with the limitations on subcontracting, they could still be found affiliates if the subcontractor performs too much of a certain contract or if the subcontractor gets too much of its revenue from the prime contractor (the details of these specific affiliation rules are outside the scope of this article, but you can read more about them here). Although this is not to say there is automatic affiliation from working with a subcontractor repeatedly; that sort of affiliation depends on looking at the entirety of the relationship. For purposes of this article, the takeaway from this comparison is merely this: if the two contractors are looking to work together on several projects within the next few years, it may be wise to take advantage of the guaranteed affiliation protection that the joint venture relationship can provide. The final aspect of the partners’ relationship with each other that should be considered in deciding between a joint venture team and a prime-subcontractor team that we will discuss in this article is payment of the team members. Again, both contractors hope there will be no issues with payment for their part of the performance on behalf of the government–or the other team member. But these things do happen. And depending on the parties’ relationship with one another and prior dealings, that may be something to consider in picking your team as well. For a joint venture relationship, the rules say that the venturers will share in the profits in proportion to their workshare. They also require the establishment of a separate bank account which “must require the signature or consent of all parties to the joint venture for any payments made by the joint venture to its members for services performed.” But for a prime-subcontractor relationship, the government pays the prime–only–and then, the prime pays the subcontractor for their share of the work in accordance with the subcontract agreement. Prime-subcontractor teams should avoid any “profit-sharing” arrangements, as the SBA’s Office of Hearings and Appeals have found that it may be a factor giving rise to affiliation. This means, the subcontractor would need to ensure its payment terms are clearly expressed in the subcontract agreement. In the event the subcontractor was not paid, it would have to take that up directly with the prime–as it does not have access to a shared operating account or a direct share of the profits. *** As indicated at the beginning of this article, and further demonstrated herein, there is no clear-cut best choice for which type of team you should choose. But hopefully, you now have some big picture considerations to mull over in making your own decision under your specific circumstances. Questions about this post? Or need help with a government contracting legal issue? Email us or give us a call at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook. The post Picking Your Team: Joint Ventures Versus Prime/Subcontractor Teams (Part Three, Relationships) first appeared on SmallGovCon - Government Contracts Law Blog.View the full article