PilieroMazza’s Weekly Update is an e-mail sent on Fridays that recaps legislative and regulatory issues affecting businesses of all sizes. When government agencies propose significant changes to existing regulations or Congress passes legislation of special interest to the small business community, we follow-up the Weekly Update with an analysis of the proposed change and the likely impact on small business.

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Weekly Report for January 19, 2018

TOP OF THE NEWS

The Government Shutdown Top 10: Things You Should Know Before You Send Employees Home
By Nichole D. Atallah
 
Ms. Atallah’s blog creates an invaluable list for government contractors to keep in mind should the government shutdown actually come to fruition. The list discusses various labor and employment issues that could expose companies to liability, and ranges from state wage and hour law compliance to security clearance processing. For the complete list, please read the full article at http://www.pilieromazza.com/blog.
 
CONTRACTS

Republicans Rally Ranks for Month-Long Spending Bill to Avoid Shutdown
House Republicans have unveiled their stopgap measure to keep agencies funded through February 16 and avoid a shutdown when the current spending measure expires on January 19th. The month-long continuing resolution would be the fourth such temporary spending bill of fiscal 2018 and leave agencies without the certainty of full year appropriations for at least about 40 percent of the year. Its passage is not yet guaranteed, however, as House Democrats are once again threatening to withhold their support and some enclaves within the Republican ranks have expressed concerns over the measure. For more, visit govexec.com
 
VETERANS AFFAIRS

VA Veteran-Owned Small Business (VOSB) Verification Guidelines
The Department of Veterans Affairs (VA) is proposing to amend its regulations governing VA's Veteran-Owned Small Business (VOSB) Verification Program. The National Defense Authorization Act for Fiscal Year 2017 (“the NDAA”), Public Law 114-840, placed the responsibility for issuing regulations relating to ownership and control for the verification of VOSBs with the United States Small Business Administration (SBA). This proposed regulation seeks to remove all references to ownership and control and to add and clarify certain terms and references that are currently part of the verification process. The NDAA also provides that in certain circumstances a firm can qualify as VOSB or Service-Disabled Veteran Owned Small Business (SDVOSB) when there is a surviving spouse or an employee stock ownership plan (ESOP). For more information please visit federalregister.gov.
 
CAPITOL HILL

Engaging Energy: Small Business Resources at the Department of Energy
On Thursday, January 18, 2018, the House Small Business Subcommittee on Agriculture, Energy, and Trade held a hearing, titled “Engaging Energy: Small Business Resources at the Department of Energy.”  The purpose of this hearing was to examine the resources available to small businesses in the energy sector through the Department of Energy, and to analyze the effectiveness of these programs at minimizing confusion in the federal contracting process for small businesses. 

The sole-witness panel consisted of Mr. Charles R. Smith, Director of the Office of Small and Disadvantaged Business Utilization, U.S. Department of Energy.  Archived video footage of the hearing can be viewed here.
 
Strengthening SBA’s 7(a) Loan Program
On Wednesday, January 17, 2018, the House Small Business Committee held a hearing, titled “Strengthening SBA’s 7(a) Loan Program,” which focused on H.R. 4743, the Small Business 7(a) Lending Oversight Reform Act of 2018, a bipartisan bill that would allow the Small Business Administration to conduct greater oversight of the lending practices of financial firms that provide 7(a) loans.
 
Witnesses included Cindy Blankenship on behalf of the Independent Community Bankers of America, Patricia Husic on behalf of the American Bankers Association, Sonya McDonald on behalf of the National Association of Federally-Insured Credit Unions, and Tony Wilkinson of the National Association of Government Guaranteed Lenders.  Archived video footage of the hearing can be viewed here.
 
The State of the VA: A Progress Report on Implementing 2017 VA Reform Legislation
On Wednesday, January 17, 2018, VA Secretary David Shulkin testified before the Senate Committee on Veterans’ Affairs in an oversight hearing titled “The State of the VA: A Progress Report on Implementing 2017 VA Reform Legislation.” Archived video footage of the hearing can be viewed here.
 
RECENTLY ISSUED GAO DECISIONS

Herman Construction Group, Inc., B-415480 (January 5, 2018): The protester challenged the award of a contract resulting from a sealed bid procurement based on the argument that the agency improperly permitted the awardee to correct a mistake in its bid. In a sealed bid procurement, if a bidder wants to correct its bid after award because of a mistake, the bidder must submit clear and convincing evidence to prove the price it intended to bid. The awardee claimed that it used an erroneous amount for work that a subcontractor would perform and submitted its worksheet, the subcontractor’s quotation, and a statement from a company official explaining how the error occurred, as evidence. The protester argued that awardee failed to meet the clear and convincing standard required to upwardly correct its bid price, because the evidence submitted did not show it intended to include the subcontractor’s quote in its bid price, and it did not show a mistake occurred. GAO agreed with the protestor that none of the evidence submitted adequately illustrated that a mistake had been made, and found that the agency had erred in permitting the awardee to change its bid. GAO also noted that although a mistake can often be inferred from a bid that is too low on its face, the initial bid submitted by the awardee was within the “acceptable” range standard.
 
GAO sustained the protest and recommended that the agency either make the award at the original bid price or consider whether withdrawal of the bid is appropriate.
 
PILIEROMAZZA NEW BLOGS

By Kathryn Flood
 
Ms. Flood’s blog discusses a Veteran’s Affairs (“VA”) proposed rule to eliminate its own ownership and control criteria for SDVOSB and VOSB eligibility under the Vets First contracting program, in order to align ownership and control requirements with the SBA’s SDVOSB program regulations. The proposed rule implements Congress’ mandate in the 2017 National Defense Authorization Action (“NDAA”) that the SBA be the sole agency responsible for the establishment of ownership and control requirements governing SDVOSB and VOSB eligibility. 
 
By David Medalia
 
Mr. Medalia’s blog looks at the Tax Cuts and Jobs Act of 2017 (the “Act”) which he describes as “providing the most comprehensive tax reform in more than three decades.” Mr. Medalia analyzes how the Act reduces the total taxes, both on an entity and an individual level, for small and medium businesses, while also creating tax incentives to spend on capital expenditures through accelerated depreciation of both used and new property. Mr. Medalia’s blog further explores various highlights from the Act. To read more about the Tax Cuts and Jobs Act of 2017.
 
By Paul Mengel 
 
Mr. Mengel’s blog explores how the Third Circuit decided that the “but for” test was the standard to be applied in the whistleblowing case,  DiFiore v. CSL Behring, LLC, No. 16-4297, 2018 WL 266123 (3d Cir. Jan. 3, 2018). In his analysis, Mengel discusses the origin of the “but for” language, the employee’s argument to apply a less stringent standard, and ultimately the Third Circuit’s analysis of the Supreme Court’s ruling in Gross v. FBL Fin. Servs., Inc., 557 U.S. 167 (2009) and Univ. of Texas Sw. Med. Ctr. v. Nassar, 570 U.S. 338 (2013) when reaching its final decision on the standard to be used. 
 

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Weekly Report for January 12, 2018

GOVERNMENT CONTRACTS

Pentagon Task Force’s $675 Million in Contracts to Rebuild Afghanistan Found Wasteful

According to an article from Government Executive, the Defense Department’s now-defunct business task force for rebuilding war-torn Afghanistan has again been found to have ineffectively spent its budget, devoting more than half of $675 million in contract obligations to indirect or support costs.

The Special Inspector General for Afghanistan Reconstruction on Tuesday released its latest critique of the Pentagon’s Task Force for Business and Stability Operations, which worked from 2010-2014 to hire companies to help the Afghan people with economic development in such areas as mining, irrigation and banking.That body was disbanded in 2015, with many of its projects incomplete or turned over to the State Department and the U.S. Agency for International Development.

The latest Investigator General findings show that of more than $675 million the unit obligated to contracts, less than half was spent “directly on projects” in Afghanistan, going instead to support services.Only 22 percent of the $316.3 million obligated on contracts for direct support “fully met their deliverables,” the report showed. As many as 43 of the 89 contracts reviewed, together worth $201 million, “used limited competition and sole-source contracting, increasing the government’s risk of waste,” auditors noted.

According to Senator Chuck Grassley (R-Iowa), the findings of the audit further underline the Defense Department’s failure to get its financial house in order. For more information, visit Govexec.com.

VETERANS AFFAIRS

Revise and Streamline VA Acquisition Regulation To Adhere to Federal Acquisition Regulation Principles (VAAR Case 2014-V005-Parts 812, 813)

The Department of Veterans Affairs (VA) is proposing to amend and update its VA Acquisition Regulation (VAAR) in phased increments to revise or remove any policy superseded by changes in the Federal Acquisition Regulation (FAR), to remove procedural guidance internal to VA into the VAAM, and to incorporate any new agency specific regulations or policies.These changes seek to streamline and align the VAAR with the FAR and remove outdated and duplicative requirements and reduce burden on contractors. The VAAM incorporates portions of the removed VAAR as well as other internal agency acquisition policy.VA will rewrite certain parts of the VAAR and VAAM, and as VAAR parts are rewritten, will publish them in the Federal Register. To minimize the number of rules published, VA will combine related topics.

LABOR AND EMPLOYMENT

States Act To Quell Harassment As #MeToo Momentum Surges

According to an article in Law360, many “blue” states have recently proposed bills that focus on lowering workplace sexual harassment. The bills plan to curb the use of nondisclosure and mandatory arbitration provisions in employment contracts and settlement agreements. Following a series of high-profile scandals and the coalescence of the #MeToo movement, a growing number of state legislatures are proposing bills that would empower victims to come forward, and attorneys expect that trend to pick up steam in 2018. 

CAPITOL HILL

Congress Likely to Consider Another Short-Term Funding Measure

According to an article in Government Executive, House Majority Leader Kevin McCarthy, R-Calif., said Thursday that lawmakers should expect to vote on yet another stopgap measure to fund the government ahead of a January 19 shutdown deadline.

Congress faces the prospect of a government shutdown in eight days, if lawmakers cannot come to an agreement on a spending deal. Furthermore, lawmakers must also act to increase budget caps for defense and non-defense spending, or a sequester will kick-in, in accordance with the 2011 Budget Control Act.

McCarthy believes that a short term solution is required regardless of whether lawmakers come to an agreement on a long-term spending deal before the January 19 deadline, stating: “Legislation will have to be drafted to accompany the long-term deal, and thus even if the agreement is accepted, appropriators will require time to draft the required legislation.” For more, visit Govexec.com

PILIEROMAZZA BLOGS

Intern or Employee? DOL Adopts Courts’ “Primary Beneficiary” Analysis for Determining When Your Unpaid Intern Will Be Deemed an Employee Under the FLSA

By Paul Mengel on January 10, 2018

Mr. Mengel’s blog explores how the Department of Labor (“DOL”) and the courts have addressed the question: “Under what set of circumstances does an unpaid intern in the private sector cross the line and become an employee under the Fair Labor Standards Act (“FLSA”) and thus become entitled to compensation?” Since 2010, the DOL has used an inflexible test derived from a 1947 Supreme Court case that articulated a similar test for determining whether railroad brakemen trainees should be deemed employees, whereas the courts have chosen to instead apply a “primary beneficiary” analysis; that is, does the relationship primarily benefit the intern or the employer? To read Mr. Mengel’s full blog, please visit www.pilieromazza.com/blog

New Year, New Certification?

By Megan Connor on January 3, 2018 

Ms. Connor’s blog discusses why the new year is an optimal time for contractors to review their size/status certifications on SAM.gov. Ms. Connor explains that “A contractor’s representations in the SAM database qualify as certifications upon which federal agencies and prime contractors may rely. An inaccurate certification on SAM could lead to a protest by the SBA or liability under the False Claims Act. Therefore, it is vital that contractors keep these certifications up-to-date.” To find out exactly why the new year is a prime time to review these certifications, please visit www.pilieromazza.com/blog

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Weekly Report for December 22, 2017

LABOR AND EMPLOYMENT

Department of Labor Seeks to Loosen Reins on Restaurant Industry By Rescinding Regulation of Certain Tip Pooling Practices

In 2014, the U.S. Department of Labor (“DOL”) Wage and Hour Division launched an aggressive enforcement initiative aimed at ensuring companies in the restaurant and food service industry comply with the federal minimum wage, overtime, and record-keeping requirements of the Fair Labor Standards Act (“FLSA”). Plaintiff-side employment lawyers took note immediately and began advertising to their target audience. It is not surprising, therefore, that servers, bartenders, and seasonal or event staff have advanced employee complaints based on alleged improper wage- and tip-payment practices with increased frequency, exposing the restaurant industry’s unique vulnerability to the complex and nuanced requirements of the statute.

Discussed above is the Department of Labor’s (“DOL”) 2011 Regulation related to restaurant tip distribution practices and its journey to the U.S. Supreme Court. The regulation in question announced broadly that “[t]ips are the property of the employee” and “prohibited [employers] from using an employee’s tips . . . for any reason other than . . . [a]s a credit against its minimum wage obligations to the employee, or in furtherance of a valid tip pool.” What this means is that, under the current DOL regulation, even if a restaurant pays its employees a base hourly wage above the minimum wage (without consideration of tips), the restaurant is still required to distribute all tips among its tipped employees, i.e., servers, bartenders, and other wait staff, but it cannot distribute any tips to back-of-house employees, such as cooks, dishwashers, and janitorial staff.

In the December 5, 2017, edition of the Federal Register, the Wage and Hour Division of the DOL gave public notice of its proposal to rescind portions of its 2011 regulations. Under the proposed rulemaking, specifically, the DOL seeks to lift the requirement that all tips be distributed to regularly tipped employees and to consider whether it should rescind the prohibition on restaurants distributing tips to back-of-house employees, such as kitchen employees and dishwashers, so long as all employees of the restaurant receive base hourly rates of pay of at least the minimum wage.

The practical application of the DOL’s proposed new rulemaking, if adopted, is that restaurants that pay all of their employees a base hourly rate above the minimum wage could reach agreement with their employees to distribute a tip pool among a larger group of employees, essentially providing a pay raise to traditionally-lower-paid—yet critical—back-of-house members of a restaurant’s staff that do not customarily receive tips under the present DOL regulation. Notably, the proposed rulemaking would have no effect on restaurants that elect to take a tip credit when paying their employees, i.e., where a restaurant pays a server or bartender a base hourly rate less than the minimum wage (as low as $2.13 per hour) and makes up the difference by distributing tips among employees.

Federal Contractors under Trump Are Offshoring at a Speedy Clip

According to an article in the Federal Contracts Report, corporate contractors for the government have been “outsourcing” positions at a speedy pace. In the year since Trump’s election, 93,449 jobs have been lost to outsourcing or trade competition, and the top 100 federal contractors have been certified as shipping a record 10,269 American jobs abroad. Of those, four federal contractors each had more than 1000 offshoring-related job losses: General Motors Co., Boeing Co., Pfizer Inc., and United Technologies Corp. For more information see Federal Contracts Report Vol. 108, No. 22, 571.

SMALL BUSINESS

2018 NDAA Makes Big Changes to HUBZone Program

The 2018 National Defense Authorization Act (“NDAA”), signed last week, made some significant changes to the Small Business Administration’s (“SBA”) Historically Underutilized Business Zone (“HUBZone”) Program. Most of the changes will not take effect until January 1, 2020, but one important change is effective immediately: the current HUBZone maps will be “frozen” and will not change until at least January 1, 2020. This means that areas that currently are designated as HUBZone (or in redesignated status) will remain HUBZones until 2020. Under the 2018 NDAA, SBA is charged with creating a publicly accessible online tool to depict the HUBZones. The current HUBZone areas will remain the same until the new online tool is created – which will be no sooner than January 1, 2020, and potentially longer. The NDAA is not clear about how the new online tool will differ from the current HUBZone map available online, so time will tell what the new online tool will entail. For more information, see our recent blog article.

COFC

RECENTLY ISSUED DECISIONS

Veterans Contracting Group, Inc. v. U.S., No. 17-1188C (Dec. 20, 2017): The plaintiff was a CVE-verified SDVOSB and received a USACE contract that was set aside for SDVOSBs. A disappointed offeror filed a protest with SBA, and OHA ultimately determined that the plaintiff did not qualify as an SDVOSB under SBA’s rules and was ineligible for award. The VA then notified the plaintiff that is was being removed from VA’s database. The plaintiff then protested at the Court Of Federal Claims, challenging OHA’s decision. The court began its analysis by walking through the VA’s and SBA’s SDVOSB programs and noting that an anomaly is created by the VA’s regulation (38 CFR 74.2(e)), which provides that a firm in the VIP database that is found ineligible by SBA will be removed from the database, without regard to VA’s eligibility requirements.

As relevant here, OHA had held that the plaintiff was not eligible to bid as an SDVOSB because, in light of the company’s shareholder agreement, the veteran did not unconditionally own the company. Specifically, the shareholders agreement restricted his heirs’ ability to convey or transfer the stock. The court upheld OHA’s decision. In doing so, the court rejected the plaintiff’s arguments, finding that the plaintiff was relying on cases interpreting VA’s regulations, which have a different standard for ownership than SBA uses for SDVOSBs. (https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2017cv1188-34-0)

Veterans Contracting Group, Inc. v. U.S., No. 17-1015C (Dec. 21, 2017): In this case, the plaintiff challenged its removal from the VA database. Specifically, after being removed from the database, it filed a protest related to two SDVOSB procurements that it had been preparing to pursue. The plaintiff argued it should not have been removed from the database. The plaintiff argued that by relying on SBA’s decision, the VA removed the plaintiff without considering the VA’s own regulation (38 CFR 74.22.) The plaintiff also argued that the removal was not supported by the facts. The court held that the VA was required to look beyond the fact that SBA issued an adverse determination before removing an SDVOSB – it needed to look at whether the plaintiff was eligible under the VA’s regulations. The court awarded the plaintiff the bid and proposal costs for the procurement for which it was ineligible to compete (the VA extended the proposal deadline for the other). (https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2017cv1015-62-0)

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Weekly Report December 15, 2017

SMALL BUSINESS

GSA Names 80 Small Businesses to Lead Alliant 2 SB Competition

On December 7, 2017, the GSA released a pre-award list of 80 companies in the running for the five-year, $15 billion Alliant 2 Small Business information technology and professional services contract. The businesses have not yet been granted award but the listing allows competitors to challenge the small-business status of those listed. For a complete list, please see the Federal Contracts Report, Vol 108, No 21, 545.

Senator Shaheen Releases Report on Women’s Entrepreneurship

On December 13, 2017, Senator Jeanne Shaheen released a report, titled “Tackling the Gender Gap: What Women Entrepreneurs Need to Thrive,” which describes the current state of women’s entrepreneurship in the United States. The report examines the intersecting financial, cultural, and structural obstacles facing women entrepreneurs in this day and age. Identified in the report are several hurdles that women entrepreneurs face, such as a lack of mentorship, a gender pay gap, fewer credit options, and a lack of venture capital. Nevertheless, women are creating new businesses five times faster than the national average. Thirty years ago, there were approximately 4 million women-owned businesses in the U.S., and today there are more than 11 million. You can view the full report here.

“House Passes S. 1266, Enhancing Veteran Care Act” House Committee on Veterans’ Affairs Press Release, December 6, 2017. Retrieved from veterans.house.gov

On December 6 2017, the House of Representatives passed S. 1266, the Enhancing Veteran Care Act. If enacted, this legislation would allow the Department of Veterans Affairs to contract with nonprofit organizations that accredit health care organizations to conduct audits and investigations of VA medical centers, to equip the centers with additional information needed to drive improvements in care. This bill was passed by the Senate last month, and currently awaits the President’s signature for it to become law.
 

GAO

Watchdog Defends Government Use of Lowest-Price IT Contracting

According to a GAO Report issued on November 20th, Federal use of the lowest-price technically acceptable (LPTA) contracting for information technology services is acceptable as a primary method of selection. A move, by the current administration, toward using LPTA as the primary selection method stands in stark contrast to the numbers found during a recent GAO analysis of awarded contracts. Over 780 contracts, valued at ten million dollars ($10,000,000), were issued in the first half of the 2017 fiscal year. During the GAO analysis of these contracts, it was discovered that of 133 contracts awarded for IT services, only nine were awarded using LPTA. 
 
LPTA contracting has received considerable scrutiny from Congress and industry, with critics claiming it undermines competition and reduces total value. Due to these beliefs, the 2017 National Defense Authorization Act included a provision narrowing the circumstances under which agencies may use LPTA. However, the most recent GAO findings indicate that contracting offices appear to be demonstrating appropriate caution when choosing LPTA for IT services, which is understood to be more complex than commodity IT hardware and software purchases. The Report may give agencies more confidence to use LPTA in the future. For more information see the Federal Contracts Report, Vol 108, No 21, 545.

Recently Issued GAO Decisions

Goodwill Industries of the Valleys, B-415137 (Nov. 29, 2017): The protester challenged the GSA’s actions in connection with the award of a lease, arguing that the GSA’s actions violated the Javits-Wagner-O’Day Act (JWOD Act). Under the JWOD Act, agencies are required to purchase certain goods and services from a list of approved organizations. The protester is the mandatory source for the custodial services at issue, and the protester asserted that the GSA violated the JWOD Act when it entered into a lease that included custodial services. In reaching its decision, GAO first rejected the GSA’s argument that GAO lacked jurisdiction to consider this protest under the JWOD Act or because the protest was not timely filed. The GSA defended the merits of the protest by arguing that a lease for real property is not subject to the requirements of the JWOD Act. GAO disagreed, finding that similar procurement statutes and regulations apply to the acquisition of real property leasehold interest, and that a property lease is a contract. As such, the lease was subject to the JWOD Act, and GSA violated the Act by acquiring custodial services from a source other than a mandatory source. The full decision can be viewed here

Immersion Consulting, LLC, B-415155, B-415155.1 (Dec. 4, 2017): The protester challenged the issuance of a task order under FAR subpart 8.4. Specifically, the protestor challenged the evaluation of quotations and the selection decision. The evaluators assigned strengths and weaknesses to each offeror’s proposal. The evaluators assigned a weakness to the awardee because it found there was a risk the awardee would provide insufficient staffing. However, when the source selection authority (SSA) performed an independent analysis of the evaluation, he removed strengths from both offerors’ proposals and removed the weakness assigned to the awardee, stating that there was no evidence on how it would negatively affect the government. The SSA then concluded that the protester’s and awardee’s proposals were technically equal and selected the lower-priced offeror for award. The protester argued that the SSA’s disagreement with the evaluators was unreasonable and that the proposals were not technically equal. GAO sustained the protest, finding that there was nothing in the record showing what the SSA reviewed to determine the awardee’s staffing did not present a risk.  GAO also found the SSA’s removal of strengths assigned to the protester’s proposal was unreasonable because the evaluators had detailed why the protester exceeded the requirements and the SSA failed to justify the removal of the strengths. The full decision can be viewed here.
 
AdvanceMed Corporation, B-415062, B-415062.1 (Nov. 17, 2017): The protester challenged the issuance of a task order to perform audit and investigation work. The protester argued that the awardee had an undisclosed organizational conflict of interest (OCI) and that the awardee’s proposal was not technically acceptable. With respect to the OCI, the solicitation stated that an OCI existed if an offeror (or its affiliates) served both as a unified program integrity contractor (UPIC) and as a Medicaid management information systems (MMIS) contractor in the same geographic area. The awardee’s parent company performed MMIS contracts in four states, and the agency failed to consider that fact when it selected the awardee. The agency argued that all MMIS-related contracts were disclosed and reviewed for evaluation, but that there was no OCI because the jurisdiction was different and that the nature of the work was substantially different. GAO reviewed the reasonableness of the contracting officer’s OCI determination and found that despite the OCI provision in the solicitation, the record did not show that the agency meaningfully considered the conflict that arose due to the awardee’s parent company’s contracts. 
 
As for the technical acceptability argument, the protester asserted that the awardee’s proposal was not technically acceptable because the agency had identified features of the awardee’s Electronic and Information Technology (EIT) products that did not meet the applicable EIT standards and required modification. The agency argued that offerors were not required to be fully compliant at the time of award, and that offerors were only required to demonstrate an ability to meet the standards. GAO held that the agency’s interpretation of the solicitation was unreasonable and, because the awardee’s proposal did not meet the EIT requirements, it was unacceptable. The full decision can be viewed here.

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Weekly Report December 1, 2017

GOVERNMENT CONTRACTS

PROTESTS

If the Federal Watchdog Office Works for Contract Protestors, Why the Decline?

According to an article posted in the Federal Contracts Report, several reasons could explain the decrease in bid protest filings in 2017 despite an “effectiveness” rate showing that the Federal Watchdog office regularly provides relief to contractors.
 
There has been a 7% drop in filing bid protests in fiscal 2017—from 2,789 to 2,596—and there are various reasons available as likely explanations; including but not limited too, the disqualification of overly enthusiastic protestors, raising the minimum contract value threshold for valid protests, and reliance on the U.S. Court of Federal Claims.
 
This drop occurred despite the GAO’s 47% effectiveness rate for protestors. The rate comes directly from instances in which protestors convinced: 1) the GAO to sustain a protest; or 2) an agency to fix a procurement error with corrective action. With the effectiveness rating remaining constant over the last two fiscal years, and its gradual increase over the previous five fiscal years, it appears that contractors are becoming more selective when deciding when to file a protest. For more information see the Federal Contracts Report Vol. 108, NO. 19, 474-475.

SET-ASIDES

What’s in and what’s out in NDAA?

According to an article from Set-Aside Alert, there are new rules to expand HUBZones and to increase micro-purchase and simplified acquisition limits. There are also new restrictions on agencies from getting credit for small business contracts, and the SCORE program for small businesses did not get reauthorized, and a senate proposed provision to lower the employees-living-in-HUBZone requirements to 33% was dropped. Those are just a few of the latest developments in the National Defense Authorization Act for Fiscal 2018 (NDAA). 
 
A conference of House and Senate members has negotiated a final version of the NDAA. The Conference Report version of the bill can be found here. For more information see the Set Aside Alert Vol. 25, No. 23, 2

Will NDAA’s “Amazon” market hurt small business?

According to an article in the same Set-Aside Alert, even though the latest version of the National Defense Authorization Act for Fiscal 2018 (“NDAA”) waters down the so-called ‘Amazon’ provision, its still presents a potential threat to GSA Multiple-Award Schedule contract holders, many of which are small businesses. 
 
Section 846 of the NDAA authorizes the development of one or more e-commerce platforms for commercial items that could be purchased by the Defense Department. The newer version requires substantially more market and legal research in order to fulfill the requirements of the section. The NDAA says that GSA must assess the impact on small business set-asides and GSA schedule holders. However, specialists are warning small business GSA schedule holders to monitor the marketplace carefully because it could have major repercussions on them. 

GAO

RECENTLY ISSUED BID PROTEST DECISIONS

Fluor Federal Solutions, LLC, B-410486.9: In this protest, the protestor challenged the award of a base operations services contract based on, among other arguments, that the agency engaged in disparate treatment in connection with the evaluation of staff recruitment and retention. The protestor argued that the agency scrutinized its proposal to recruit 95% of the incumbent staff, while the agency failed to give meaningful consideration to similar aspects of the awardee’s proposal, or how the awardee’s proposed approach would affect the retention of employees, as required by the RFP. GAO agreed that the agency evaluated the offerors disparately under the staffing and resources factor. GAO sustained the protest, and recommended that the agency reevaluate the proposals giving them equal scrutiny. The full decision can be found here

CAPITOL HILL

“Senate Bill Seeks $1.8 Billion for DHS’ Cyber Mission” Nextgov, November 21, 2017. Retrieved from nextgov.com

On November 21, 2017 Senate Appropriations Committee Chairman Thad Cochran released the first draft of an appropriations bill. Although this bill is not identical to the House’s appropriations legislation, both bills would provide $1.8 billion for the Department of Homeland Security’s cyber operations wing, indicating that this funding level is agreed upon and will likely be included in the final legislation. This funding bill provides $731 million for upgrading and maintaining cybersecurity measures for federal computer networks, $257 million for cyber incident response within the private sector, and $341 million to help banks, airports, and other critical infrastructure against cyberattacks.

Tax Reform and Small Businesses

On November 28, 2017, SBA Administrator Linda McMahon joined Senate Republicans at an event to highlight issues faced by small businesses relating to tax reform. Highlights from the discussion include Senator John Cornyn’s mention of changing “pass-through” taxation for S Corporations, as well as Senator Deb Fischer discussed her proposal for a 25% tax credit on paid family leave for small businesses, which she said is geared toward helping hourly workers. Also in attendance at this event were representatives from several business associations. Archived video footage can be viewed here.
 
There are varying opinions on whether current tax reform efforts would achieve the Committee’s mission and help small businesses. On November 20th, Senate Small Business Committee Democrats released a statement of opposition to the Republicans’ tax plan, which you can find here.
 
Some opponents of the tax plan, including Senator Ron Johnson (R-WI), claim that the bill prioritizes traditional corporations over “pass-through” businesses, which some say would hurt small business in favor of big business. Further, recent polls have shown that Americans favor individual tax breaks, but do not support corporate tax breaks. More information can be found here.

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