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 June 22, 2018

GOVERNMENT CONTRACTING

White House Proposes a Massive Reorganization of Federal Agencies

According to an article in govexec.com, the Trump administration on Thursday released a blueprint for a massive overhaul of the federal bureaucracy, one that if implemented would touch virtually every agency and the way all Americans receive government services.
 
“This effort, along with the recent executive orders on federal unions, are the biggest pieces so far of our plan to drain the swamp,” said Office of Management and Budget Director Mick Mulvaney in a statement. “The federal government is bloated, opaque, bureaucratic and inefficient.”
 
Called “Delivering Government Solutions in the 21st Century,” the proposal contains many far-reaching recommendations, including:
  • Privatizing the Postal Service.
  • Merging the Education and Labor departments. 
  • Reorganizing safety-net programs into a Department of Health and Public Welfare. 
  • Creating a governmentwide public-private partnership office to improve services to citizens, and stewardship of public resources. 
  • Relocating more staff and offices outside the National Capital Region. 
  • Dramatically shrinking the Office of Personnel Management. 
  • Revamping the Army Corps of Engineers.
The plan, led by Mulvaney and based on the agency reorganization proposals he assigned governmentwide in April 2017, is also believed to be influenced by long-standing thinking among conservatives that welfare programs should be funded and managed together.
 

CAPITOL HILL

SBC Requests GAO Provide a Report on SBA’s Hurricane Disaster Relief Programs

On June 19, 2018, House Small Business Committee Chairman Steve Chabot and Ranking Member Nydia M. Velázquez announced that they sent a letter to the Honorable Gene L. Dodaro, Comptroller General of the United States at the United States Government Accountability Office, requesting a report on the Small Business Administration’s performance during the past hurricane season. “SBA is a resource for millions of people who have been victims of natural disasters across our nation,” said Chairman Steve Chabot. “As we examine disaster relief efforts at the SBA, it is critical that we have every piece of information from the past hurricane season at our disposal. We want to ensure that every opportunity to help is not overlooked or wasted as these communities that have been destroyed start to rebuild. I thank the Ranking Member for her persistence and passion as we tackle these pressing issues together.” You can find more information here.  

SBC Learns How Communities that Think Small–Win Big

On June 20, 2018, a House Small Business Committee panel heard testimony from community officials from across the United States on how their communities developed environments where small businesses can thrive. “Every small business ecosystem relies on a delicate balance of support and resources to survive,” said Chairman Steve Chabot. “The creation of a healthy ecosystem requires significant investment by all participants: small business owners, support organizations, and policymakers. Policymakers and support organizations, like the ones we have on this panel, have developed innovative strategies, resources, and measurements to ensure local small businesses are thriving.” “Building an ecosystem around your community’s unique advantages will prove more sustainable and impactful than placing a trend in the middle of your city,” said Ms. Vanessa Wagner, Small Business and Entrepreneurship Manager at the Loudoun County Department of Economic Development in Ashburn, VA. “One of the most important assets you have in building an entrepreneurial ecosystem is the businesses already there. The companies in your city provide the experience and talent to build the next generation of businesses.” You can find more information here.

Cardin to Government Watchdog: How Will Army Restructuring Impact Small Businesses?

On June 14, 2018, the Government Accountability Office announced that it will investigate the impact a proposed U.S. Army restructuring will have on the Department of Defense’s critical small business research, development, and innovation programs, following a request from Senator Ben Cardin. In May, Senator Cardin, Ranking Member of the Senate Small Business Committee, asked GAO to examine the Army’s proposed new Futures Command, a modernization initiative reportedly funded by shifting funds out of science and technology programs that work with innovative small businesses.  “It is estimated that 80 percent of funding for research and development programs will be reprogrammed” to pay for this restructuring, which may have a significant impact on small businesses, Senator Cardin wrote GAO. You can find more information here.

Pending Nomination – Secretary of Veterans Affairs

On June 27, 2018, the Senate Committee on Veterans’ Affairs will hold a hearing to examine President Trump’s nomination of Robert Wilkie to be Secretary of Veterans Affairs.  Mr. Wilkie recently served as Acting Secretary of Veterans Affairs in the absence of former Secretary David Shulkin.  The hearing will take place at 2:30 p.m. in room G50 of the Dirksen Senate Office Building.  You can watch a live stream of the hearing here
 

PILIEROMAZZA BLOGS 

Don't Get Disqualified Because of Organizational Conflicts of Interest

By Michelle E. Litteken and Timothy F. Valley

A recent decision from the Government Accountability Office ("GAO") reiterates two important principles concerning organizational conflicts of interest ("OCIs"). First, proactive measures may allow a contractor to effectively mitigate and avoid an OCI. Second, appearances, innuendo, and suspicion are insufficient to establish that a contractor has an OCI. Hard facts are required. [More]

Doing Business Internationally? Litigation Just Became More Difficult!

By Matthew E. Feinberg

Over the last twenty years, the expanding world market has made it easier for domestic companies to conduct business overseas and with foreign corporations. Large and small businesses alike are going global, receiving and providing products, services, and intellectual property internationally. But, along with new international opportunities comes an increase in the complexity of business-to-business transactions. And, when business deals between domestic and foreign businesses go south, the legal implications become more difficult to navigate. [More

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Weekly Report for June 15, 2018

CAPITOL HILL

Vets First? An Examination of VA’s Resources for Veteran-Owned Small Businesses

On June 7, 2018, the House Committee on Small Business Subcommittee on Investigations, Oversight, and Regulations (“Subcommittee”) held a hearing to examine the resources of the U.S. Department of Veterans Affairs (“VA”) for veteran-owned small businesses (“VOSB”), specifically the Veterans First Contracting Program (“Vets First”). The Subcommittee invited testimony from the National Veteran Small Business Coalition, the American Legion, and two service-disabled veteran-owned small businesses (“SDVOSB”). At the hearing, Subcommittee Chairman Trent Kelly said that despite VA’s authority to assist veterans through the Vets First program, “VA has continued to impede its own authority and work against the intentions of Congress by creating internal regulations and policies that make it harder to award contracts to veteran-owned small businesses.” 

The statements of the Subcommittee members and the testifying witnesses confirmed the issues plaguing SDVOSBs and VOSBs that do business with VA through the Vets First program due to the significant efforts of the VA to minimize and avoid using the Vets First program. PilieroMazza attorneys Jonathan T. Williams and Julia Di Vito, along with the Coalition to Defend Vets First, helped to get this hearing scheduled by the Subcommittee and attended the hearing along with a PilieroMazza client who testified about this important issue. This hearing was a substantial first step in advancing SDVOSB, VOSB, and small business issues that PilieroMazza has been working to get VA and Congress to address. You can find more information about this hearing here, and archived video footage here.
 

DEPARTMENT OF DEFENSE

Defense Federal Acquisition Regulation Supplement:  Repeal of DFARS Clause “Right of First Refusal of Employment–Closure of Military Installations” (DFARS Case 2018-D002)

The Department of Defense (“DOD”) is correcting the final rule published on May 30, 2018, which amended the Defense Federal Acquisition Regulation (“DFAR”) Supplement to remove a clause that duplicates an existing clause in the Federal Acquisition Regulation (“FAR”). The document erroneously cited RIN 0750-AJ54 rather than RIN 0750-AJ66. 83 Fed. Reg. 112, 26846
 

Federal Acquisition Regulation:  Exception From Certified Cost or Pricing Data Requirements–Adequate Price Competition

Pursuant to a section of the National Defense Authorization Act for Fiscal Year 2017, the DOD, General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”) are proposing to amend the FAR to provide the DOD, NASA, and the Coast Guard with guidance that addresses the exception from certified cost or pricing data requirements when price is based on adequate price competition.  The agencies are accepting public comment on the proposed rule through August 13, 2018. 83 Fed. Reg. 113, 27303
 

Federal Acquisition Regulations: Use of Products and Services of Kaspersky Lab

Department of Defense, General Services Administration, and NASA are issuing an interim rule amending the Federal Acquisition Regulation to implement a section of the National Defense Authorization Act for Fiscal Year 2018. 83 Fed. Reg. 116, 28141
 

Federal Acquisition Regulations: Violations of Arms Control Treaties or Agreements with the United States

Department of Defense, General Services Administration, and NASA are issuing an interim rule amending the Federal Acquisition Regulation to implement a section of the National Defense Authorization Act for Fiscal Year 2017 that addresses measures against persons involved in activities that violate arms control treaties or agreements with the United States. 83 Fed. Reg. 116, 28145
 

Federal Acquisition Regulations: Federal Acquisition Circular 2005-99; Small Entity Compliance Guide

This document is issued under the joint authority of Department of Defense, General Services Administration, and NASA. This Small Entity Compliance Guide has been prepared consistent with section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. It consists of a summary of the rules appearing in Federal Acquisition Circular (FAC) 2005-99, which amends the Federal Acquisition Regulation. An asterisk (*) next to a rule indicates that a regulatory flexibility analysis has been prepared. Interested parties may obtain further information regarding these rules by referring to FAC 2005- 99, which precedes this document. 83 Fed. Reg. 116, 28149
 

SMALL BUSINESS ADMINISTRATION

Small Business Investment Company Program–Impact SBICs

The Small Business Administration (“SBA”) is withdrawing its proposed rule published on February 3, 2016.  Under the proposed rule, the SBA would have recognized a new class of small business investment companies (“SBICs”) referred to as “Impact SBICs,” which sought to generate positive and measurable social impact as well as financial return. SBA hoped to expand the pool of investment capital available to primarily underserved communities, but is withdrawing the proposed rule in light of the determination that the cost is not commensurate with the benefits. 83 Fed. Reg. 112, 26874

Small Business Investment Companies (SBIC); Early Stage Initiative

The SBA is withdrawing a September 19, 2016 proposed rule, which would have made changes to its Early Stage SBIC initiative. This proposed rule is being withdrawn due to a determination that its costs were not commensurate with the results, and comments to the proposed rule did not demonstrate support for a permanent Early Stage SBIC program. 83 Fed. Reg. 112, 26875
 

DEPARTMENT OF VETERANS AFFAIRS

VA considering blockchain to help track contract closeouts

The Department of Veterans Affairs (“VA”) is reviewing how blockchain can make its acquisition process more efficient, particularly in finalizing completed contracts.  The VA has requested industry input on integrating blockchain into routine government contract procedures. The VA is just one of a growing wave of federal agencies seeking to leverage this new technology to increase efficiency. Officials at the VA foresee a contract with a base period of six months to demonstrate blockchain’s effectiveness, with the possibility of a follow-on contract if the contractor provides a viable solution. You can find more information here.
 

OFFICE OF PERSONNEL MANAGEMENT

New Collective Bargaining Rules Won’t Hurt Telework, OPM Says

In light of President Trump’s recent executive order seeking to shorten the collective bargaining negotiation process, there has been speculation that this effort could be used to curb federal employees’ ability to telework. However, Office of Personnel Management (“OPM”) officials have said that protecting the agency’s workplace priorities, including telework, and implementing President Trump’s executive order are not mutually exclusive, as the executive order, albeit controversial, only focuses on shortening the overall process of collective bargaining, and does not control the subject matter thereof. You can read more about this story here.
 

GOVERNMENT CONTRACTING

Court Enters Judgment Against New Jersey Couple for Overcharging the Military for Spare Vehicle Parts

On June 8th, U.S. Attorney William M. McSwain announced that New Jersey couple Babu Metgud and Shubhada Kalyani, operators of defense contractor Shubhada Industries, have been ordered to pay $232,891.37 to the United States for overcharging the military for light assemblies. Under the False Claims Act, anyone who causes false or fraudulent claims to be submitted to the government for payment is liable for three times the cost of the damages, plus a civil penalty for each false claim. In this case, the defendants were ordered to pay three times the amount paid by the Defense Logistics Agency, plus a $11,000 civil penalty – atop the statutory maximum. You can find more information here.
 

PILIEROMAZZA BLOGS

SAM Registration Update: Notarized Letter Requirement Change and New Deadline Looming

By Tony Franco
 
As most government contractors may know by now, in order to proactively fight against alleged fraudulent activity in the System for Award Management (SAM), the General Services Administration (GSA) issued a rule that required all entities to “provide an original, signed notarized letter stating that you are the authorized Entity Administrator before your registration will be activated.” On June 11, 2018, GSA issued an update to the notarized letter requirement in two parts. [More]
 

Pursuing a CTA Team Solution? Make Sure You're on an Eligible Team!

By Katie Flood
 
Contractor Team Arrangements (CTA) formed to pursue GSA Schedule task order opportunities are unique animals in the government contracting universe. A mashup of elements taken from joint ventures and more traditional prime-sub relationships, CTAs allow two or more Schedule contract holders to combine their respective Schedule contract offerings in response to an ordering agency’s solicitation. GSA guidance is clear that for Schedule obligations—such as reporting sales and paying the Industrial Funding Fee (IFF)—each CTA Team Member is considered to be a “co-prime” for the awarded task order. Therefore, each CTA Team Member is responsible for reporting the sales charged to its various labor categories or product offerings and is also responsible for remitting to GSA the IFF for these sales. [More]
 

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Weekly Report for June 8, 2018

SMALL BUSINESS ADMINISTRATION

Small Business HUBZone Program and Government Contracting Programs and Consolidation of Mentor-Protégé Programs

The U.S. Small Business Administration (SBA) announces that it is holding tribal consultation meetings in Albuquerque, New Mexico and Oklahoma City, Oklahoma, concerning the regulations governing the 8(a) Business Development and all Small Mentor-Protégé programs and the HUBZone program. SBA seeks to reduce unnecessary or excessive regulatory burdens in those programs and to make them more attractive to procuring agencies and small businesses. Testimony presented at these tribal consultations will become part of the administrative record for SBA’s consideration when the Agency deliberates on approaches to changes in the regulations pertaining to these programs. 83 Fed. Reg. 104, 24684

The Federal Government Achieves Small Business Contracting Goal for the Fifth Consecutive Year with Record-Breaking $105 Billion to Small Businesses

According to a press release, SBA announced that the federal government met its small business federal contracting goal for the fifth consecutive year, awarding 23.88 percent in federal contract dollars to small businesses totaling $105.7 billion, an increase of $5 billion.  This marks the first time more than $100 billion in prime contracts has been awarded to small businesses.  The federal government earned an “A” on this year’s government-wide scorecard.  “I am happy to report that for the fifth consecutive year, the federal government has not only met and exceeded its small business contracting goal, but it has awarded $105 billion to small businesses for the first time earning the government an A on SBA’s scorecard for this remarkable achievement,” said SBA Administrator Linda McMahon.  “This grade reflects significant efforts by federal agencies toward meeting the 23 percent statutory goal to award prime contracts to small businesses. Every contract that gets in the hands of a small business owner is a win-win for the business, creating jobs in their communities, and boosting the nation’s economy.”
 

GOVERNMENT CONTRACTING

House Passes Bill to Rescind $15 Billion From Federal Agencies

According to an article on govexec.com, the House on Thursday approved 210-206 President Trump’s proposal to revoke $15 billion in appropriated funds from federal agencies, the first such rescission package since the Clinton administration. Most of the claw backs would not affect agencies directly, as they deal with money that Congress appropriated that went unspent or that is no longer necessary. In some cases, Republicans have said, agencies could not spend the would-be rescinded money even if they wanted to. A Congressional Budget Office report on the package found the measure would save just $1 billion in actual outlays over the next 10 years.
 

DEPARTMENT OF DEFENSE

Class Deviation 2018-O0015 - Threshold for Obtaining Certified Cost or Pricing Data

This Class Deviation rescinds and supersedes Class Deviation 2018-O0012. Effective July 1, 2018, contracting officers shall use $2 million as the threshold for obtaining certified cost or pricing data, in lieu of the threshold of $750,000 at FAR 15.403-4. For more information, please visit Acq.osd.mil.

Defense Federal Acquisition Regulation Supplements: Contract Closeout Authority

Department of Defense is proposing to amend the Defense Federal Acquisition Regulation Supplement to implement sections of the National Defense Authorization Act for Fiscal Years 2017 and 2018 to permit expedited closeout of certain contracts entered into on a date that is at least 17 fiscal years before the current fiscal year.  83 Fed. Reg. 104, 24897
 

GENERAL SERVICES ADMINISTRATION

GSA Wants Input on Cyber Services Buying

According to an article on fcw.com, the General Services Administration launched what it's calling the "next phase" of four of its most critical cybersecurity services listed on its biggest IT purchasing platform. In two requests for information released in mid-May, the agency asked federal users and commercial suppliers of the four Highly Adaptive Cybersecurity Services how to modernize those offerings. It's been a little more than a year and a half since GSA rolled out penetration testing, incident response, risk and vulnerability assessment, and a crisis response service dubbed "cyber hunt." In the 2016 launch, the agency had more than 40 suppliers offering services through special item numbers on IT Schedule 70. GSA said it would evaluate additional vendors and add them on a rolling basis.
 

LABOR AND EMPLOYMENT

Supreme Court Narrowly Sides with Baker in LGBT Rights Row 

According to an article on pbs.org, on June 2, 2018, the U.S. Supreme Court ruled in favor of a Christian baker who refused to bake a custom wedding cake ordered from a same-sex couple in a high-profile LGBT rights case involving the state of Colorado, though it largely ducked the core constitutional questions in the case. The court, voting 7-2, vacated a lower court ruling in backing Colorado’s discrimination charges against bakery owner, Jack Phillips, but on the narrow grounds that the proceedings were tainted by anti-religious bias. Justice Anthony Kennedy delivered the opinion for the majority, which also included Chief Justice John Roberts Jr., Justice Stephen Breyer, Justice Samuel Alito Jr., Justice Elena Kagan, and Justice Neil Gorsuch. Several justices filed concurring opinions, while Justice Ruth Bader Ginsburg filed a dissent joined by Justice Sonia Sotomayor. The court held that members of the Colorado Civil Rights Commission displayed hostility to religion when adjudicating discrimination claims against Phillips, the owner of Lakewood, Colorado’s Masterpiece Cakeshop, who routinely refused his custom wedding cake services to same-sex couples due to his religious beliefs.

11th Circ. Revives Race Bias Suit Against Auto Parts Maker

According to an article on law360.com, the Eleventh Circuit revived a suit alleging that a car parts maker denied a black worker a job transfer because she was not Korean, saying in a published opinion June 1st, 2018,  that the trial court wrongly applied a stricter test meant for analyzing circumstantial evidence of bias, when the worker offered direct evidence of the discrimination. The Northern District of Georgia had granted Sewon America Inc. summary judgment on former finance clerk, Jerberee Jefferson’s, claims that she was denied a transfer to the company’s information technology department because a higher-up “wanted a Korean in that position,” and that she was fired for complaining. That court applied a test that lets employers escape bias claims by showing they had legitimate, nondiscriminatory reasons for taking a challenged action. But the court should not have applied this test, because the statement Jefferson testified to was direct evidence of discrimination, the three-judge appellate panel said. The court found this to be so even though Jefferson herself called her evidence circumstantial and argued Sewon failed the test, known as the McDonnell-Douglas burden-shifting framework.

Richmond Company Agrees to Settle False Claims Act Lawsuit

According to a press release on justice.gov, ten women and girls in Los Angeles, Chicago and seven other cities have claimed they were sexually harassed by co-workers and managers while working at McDonald’s Restaurants, according to filings with the U.S. Equal Employment Opportunity Commission. The workers say in their claims filed over the past week that McDonald’s ignored their complaints about groping, propositions for sex, and lewd comments in the workplace. In some cases, the women say, the company retaliated against them for speaking out.
 

CAPITOL HILL

Small Business 7(a) Lending Oversight Reform Act heads to President’s Desk

On June 5, 2018, the Senate passed H.R. 4743, the Small Business 7(a) Lending Oversight Reform Act, which would increase the SBA’s oversight authority over the 7(a) Loan Program.  This legislation was introduced by House Small Business Committee Chairman Steve Chabot and Ranking Member Nydia Velázquez, and currently awaits the President’s signature.  You can find more information here
 

PILIEROMAZZA BLOGS

SBA Eliminates "Direct" Ownership Rules for HUBZone Program

By Jonathan B. Bush
 
On March 26, 2018, the U.S. Small Business Administration (SBA) issued a direct final rule that changed the wording of 13 C.F.R. § 126.200(b)(1) to allow indirect ownership by U.S. citizens of companies in the HUBZone program. The stated purpose of the rule change is to align more accurately the rule with the underlying statutory authority. Prior to this change the HUBZone rules required that a HUBZone company be "unconditionally and directly owned" by U.S. citizens. The rule took effect on May 25, 2018.  [More]

Worried About Class Actions? SCOTUS Recently Handed Employers a Hall Pass

By Sarah L. Nash
 
Recently, the U.S. Supreme Court held in Epic Systems v. Lewis that employers may, as a condition of employment, require employees to sign arbitration agreements containing class action waivers. The Court rejected the NLRB's position that such agreements infringe on employees' right to engage in collective action under the National Labor Relations Act. Instead, the Court gave weight to the Arbitration Act, which, Justice Gorsuch wrote, supports "pretty absolutely" rights for employers and employees to contract for arbitration. [More]

GAO Overturns OTA Award to REAN Cloud

By Megan C. Connor
 
On May 31, 2018, GAO sustained a protest filed by Oracle America, Inc. ("Oracle") challenging the Army's entry into a follow-on production other transaction agreement ("OTA") with REAN Cloud LLC ("REAN"). Oracle alleged that the Army did not properly exercise its authority in entering the follow-on production OTA with REAN. GAO agreed. [More]
 

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Weekly Report for May 25, 2018

GOVERNMENT CONTRACTING

Contractors Oppose Proposed Limit on Federal Bid Protests

According to an article in govexec.com, the Senate Armed Services Committee on May 22, 2018 began its markup of the fiscal 2019 National Defense Authorization Act, and a contractors group was pushing committee leaders to reject a Pentagon proposal to curb time-consuming bid protests. Seeking to eliminate what some senators call “frivolous” protests and what acquisition officials call “forum shopping,” the Defense Department this spring pressed for limiting the ability of contractors who unsuccessfully sought an award and are rejected by the Government Accountability Office to then continue their protest at the Court of Federal Claims. The plan would limit the so-called “second bite at the apple” in the court to within 10 days of knowing (or when they should have known) they had the basis for a protest.

The Federal Government Achieves Small Business Contracting Goal for the Fifth Consecutive Year with Record-Breaking $105 Billion to Small Businesses

According to a press release, the U.S. Small Business Administration announced that the federal government met its small business federal contracting goal for the fifth consecutive year awarding 23.88 percent in federal contract dollars to small businesses totaling $105.7 billion, an increase of $5 billion. This marks the first time more than $100 billion in prime contracts has been awarded to small businesses. The federal government earned an “A” on this year’s government-wide scorecard. “I am happy to report that for the fifth consecutive year, the federal government has not only met and exceeded its small business contracting goal, but it has awarded $105 billion to small businesses for the first time earning the government an A on SBA’s scorecard for this remarkable achievement,” said SBA Administrator Linda McMahon. “This grade reflects significant efforts by federal agencies toward meeting the 23 percent statutory goal to award prime contracts to small businesses. Every contract that gets in the hands of a small business owner is a win-win for the business, creating jobs in their communities, and boosting the nation’s economy.”

Agencies Need to Take More Risks in Acquisition

According to an article on Govexec.com, the recently released president’s management agenda states that efforts to transform government through major acquisitions are hamstrung by processes that “remain captive to a risk-averse culture that rewards compliance over creativity.” The Federal Acquisition Regulation contains a mind-numbing 1,917 pages of policies and procedures that government acquisition officials must follow when buying goods and services. Navigating these rules can be daunting for contracting officers, who often are fearful of something going wrong. But even within the constraints, there is room for flexibility—approaches that deviate from the norm but hold potential to achieve better quality and innovative outcomes while preserving competition, transparency and accountability. Following a path toward innovation requires overcoming the fear of failure and the willingness to take risks within reasonable bounds.
 

LABOR AND EMPLOYMENT

Supreme Court rules employers can ban class action lawsuits in arbitration

According to an article on Politico.com, the U.S. Supreme Court cleared the way for employers nationwide to require workers to sign away their right to pursue class actions in a blockbuster ruling that attorneys on both sides of the bar agree will translate to millions more workers being bound by class waivers. Authored by Justice Neil Gorsuch, a five-justice majority ruled in a trio of cases that involved Epic Systems Corp., Murphy Oil USA Inc. and Ernst & Young LLP that businesses aren't violating the National Labor Relations Act if they force workers to forgo the ability to pursue class actions by including class waivers in arbitration agreements they must sign as a condition of employment. Instead, the justices held that mandatory arbitration agreements must be enforced under the Federal Arbitration Act according to their terms, even if those terms include individual arbitration. 

CAPITOL HILL

House Passes Service-Disabled Veterans Small Business Continuation Act

On May 21, 2018, the House of Representatives passed H.R. 5044, the Service-Disabled Veterans Small Business Continuation Act, which originated in the House Small Business Committee and was introduced by Chairman Steve Chabot. If enacted, this legislation would allow surviving spouses of service-disabled veterans to continue operating their spouse’s small business as service-disabled veteran-owned small businesses for a period of time after the veteran spouse’s passing. The bill was passed in the House of Representatives by a voice vote, and currently awaits consideration from the Senate Committee on Veterans’ Affairs. You can monitor the progress of this legislation here

Cardin Statement on Annual Small Business Contracting Goals

On Wednesday, May 23, 2018, Senator Ben Cardin, the Ranking Member of the U.S. Senate Committee on Small Business & Entrepreneurship, commented on the Small Business Administration’s (“SBA”) 2017 assessment of how well federal agencies are meeting small business federal contracting goals. According to SBA, in 2017 the federal government met its small business federal contracting goal for the fifth consecutive year (awarding $105.7 billion). However, the percentage of small business prime contracts awarded to women-owned small businesses, small disadvantaged businesses, and businesses located in SBA’s Historically Underutilized Business Zones each declined from 2016, failing to reach their respective 2017 contracting goals. You can find more information here

Intellectual Property 101: How Small Business Owners Can Utilize Intellectual Property Protections in Their Businesses

On May 16, 2018, the House Small Business Committee held a hearing to examine the ways in which small business owners can leverage patents, trademarks, copyrights, and trade secrets in order to maximize the success of their businesses. You can find more information, including archived video footage of the hearing, here.
 

PILIEROMAZZA BLOGS

Who Are the "Key Management Personnel" for Purposes of My Company's Facility Clearance?

By Megan C. Connor
 
Whether a federal contractor can be cleared depends on its people. Specifically, whether a company can obtain a facility clearance ("FCL") depends on the personnel clearances ("PCL") of the company's Key Management Personnel ("KMP"). [more]

New Maryland Sexual Harassment Law Creates Important Implications for Employers Both Inside and Outside the State

By Matthew E. Feinberg
 
On May 15, 2018, Maryland Governor Larry Hogan signed into law the Disclosing Sexual Harassment in the Workplace Act of 2018. Described by bill sponsor Craig Zucker (D-Montgomery) as a "national model," the law, which goes into effect on October 1, 2018, is the first of its kind in the Mid-Atlantic region. And, it has important implications, not only for employers in the State of Maryland, but for out-of-state employers who allow employees to telecommute from, work from time to time in, or participate in events in Maryland. [more]
 

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Weekly Report for May 11, 2018

SMALL BUSINESS ADMINISTRATION

Masstech, Richard Lee, and Arnold Lee to Pay U.S. $1.9 Million to Settle False Claims Act Allegations Relating to Small Business Innovation Research Awards

Columbia-based MassTech, Inc., its former Chief Executive Officer, Arnold Lee, and its former Chief Financial Officer, Richard Lee, have agreed to pay the United States $1.9 million to resolve allegations that MassTech falsely certified that it was a small business concern in order to obtain Small Business Innovation Research (SBIR) awards. The settlement agreement was announced today by United States Attorney for the District of Maryland, Robert K. Hur; Inspector General for the National Science Foundation, Allison Lerner; Special Agent in Charge for NASA Office of Inspector General, Michael Sonntag; and Special Agent in Charge for the Office of Inspector General for the Department of Health and Human Services, Maureen Dixon.
 

DEPARTMENT OF DEFENSE

Class Deviation from the Federal Acquisition Regulation (FAR) to Increase the Threshold for Requiring Certified Cost or Pricing Data.

Notice was provided to serve as consultation in accordance with FAR 1.404, which authorizes agencies to issue a class deviation to implement a section of the National Defense Authorization Act for Fiscal Year 2018 to increase the threshold for requiring certified cost or pricing data. The objective of the statute and this deviation is to implement Section 811 of the National Defense Authorization Act for Fiscal Year 2018, which amends 10 U.S.C. 2306a and 41 U.S.C. 3502, to increase the threshold for certified cost or pricing data. This increase raises the threshold for requiring Certified Cost or Pricing Data from $750,000 to $2,000,000.

Class Deviation--Contract Closeout Authority

Effective immediately, contracting officers may close out contracts, or groups of contracts, through the issuance of one or more modifications to such contracts without completing a reconciliation audit or other corrective action in accordance with Federal Acquisition Regulation 4.804-5(a)(3) through (15), as appropriate, if each contract following a defined list of requirements, which can be found here.
 

GOVERNMENT ACCOUNTABILITY OFFICE

GAO’s IT Expert Talks What to Expect on the Next FITARA Scorecard

According to the Federal Times, the Government Accountability Office (GAO) releases an information technology report card twice each year, grading the 24 Chief Financial Officers Act of 1990-designated agencies on their adherence to IT best practices. Now awaiting its sixth iteration, the Federal Information Technology Acquisition Reform Act (FITARA) scorecard has become the defining evaluation of agency commitment to IT modernization. It has also evolved to include other legislation, such as the Modernizing Government Technology (MGT) Act and Making Electronic Government Accountable by Yielding Tangible Efficiencies (MEGABYTE) Act, in its evaluations. 
 

WHITE HOUSE

Trump Calls on Congress to Pull Back $15 Billion in Spending, Including on Children’s Health Insurance Program

According to the Washington Post, President Trump is sending a plan to Congress that calls for stripping more than $15 billion in previously approved spending, with the hope that it will temper conservative angst over ballooning budget deficits. Almost half of the proposed cuts would come from two accounts within the Children’s Health Insurance Program (CHIP) that White House officials said expired last year or are not expected to be drawn upon. An additional $800 million in cuts would come from money created by the Affordable Care Act in 2010 to test innovative payment and service delivery models. 
 

CAPITOL HILL

SBA Administrator Linda McMahon to Testify Before Congress

On Tuesday, May 15, 2018 at 3:30 PM, Linda McMahon, Administrator of the Small Business Administration, will testify before the Senate Committee on Small Business and Entrepreneurship, to discuss the state of small business affairs in the United States.  You can view the hearing live and find more information here.
 

House of Representatives Passes 7 Small Business Bills

On Tuesday, May 8, 2018, the U.S. House of Representatives passed seven bills relating to a wide variety of issues facing small businesses, including cybersecurity, women’s entrepreneurship, and oversight. House Small Business Committee Chairman, Steve Chabot, has praised the chamber’s decision, saying, “I applaud the bipartisan work our Committee and the full House has done to safeguard 30 million small businesses.” The bills are:
H.R. 3170 – Small Business Development Center Cyber Training Act
H.R. 4743 - Small Business 7(a) Lending Oversight Reform Act
H.R. 4754 - Change Order Transparency for Federal Contractors Act 
H.R. 1680 - Women’s Business Centers Improvements Act
H.R. 1702 - Small Business Development Centers Improvement Act
H.R. 4111 - Spurring Business in Communities Act 
H.R. 5236 - Main Street Employee Ownership Act
 
These measures would now need to be passed by the Senate in order for President Trump to sign them into law.
 

PILIEROMAZZA BLOGS

Legislative Remedies for Surviving Midsize 

By Cy Alba 
 
Back when you started your small business, and the very prospect of making payroll for the month was nerve-wracking, you probably never imagined that your company might actually become too successful. Now, as you get closer to midsize, this very concern may have crossed your mind. [Read More]
 

The Protests Are Coming: Draft DoD Guidance Reveals How Cyber Readiness Will Impact Contract Evaluations 

By Jon Williams 

We have been blogging and giving webinars since last year about the DoD requirements around cybersecurity for contractors that are subject to DFARS 252.204-7012. Please view our past blogs and webinars here and here to get more of the backstory. In a nutshell, DoD contractors operating nonfederal IT systems and subject to DFARS 252.204-7012 were required to have a system security plan ("SSP") in place by December 31, 2017, to demonstrate compliance with the recommended security controls in NIST SP 800-171. Although the DFARS requirements were black-and-white, there was a fair amount of uncertainty late last year and continuing into this year about what contractors needed to do to comply and if/how DoD would enforce the requirements. [Read More]

 

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