Key Issues for Due Diligence of Government Contracts – Part II
By Kimi Murakami In a recent blog post, I highlighted key issues to be analyzed when performing due diligence on a target company that performs government contracts. In addition to the review of government contracts, comprehensive due diligence review of any target company should also include evaluation of five other broad categories relating to general business matters discussed below as part II of key issues to be considered when performing due diligence in M&A transactions for government contractors. 1. . . . Read More
Expert Witness Testimony: Often the Critical Component for a Successful Case
If your company is facing litigation, especially in high-stakes cases, one of the first questions you and your counsel should address is whether the testimony of an expert witness might be helpful, or even essential, to your case. Expert witness testimony comes into play, as stated in Federal Rule of Civil Procedure 702, whenever “the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue.” Whether . . . Read More
Court of Federal Claims Applies a 150 Employee Size Standard to ITVAR Non-Manufacturers
The Court of Federal Claims (“Court”) has issued a bid protest decision which stated, in apparent dicta, that a concern must satisfy a 150-employee standard under the Information Technology Value Added Resellers (“ITVAR”) exception to NAICS code 541519 as opposed to the 500-employee size standard which a concern usually must meet to qualify as a small business under the requirements of the “non-manufacturer rule” (“NMR”). York Telecom Corp. v. United States, No. 15-489 (Fed. Cl. Jan. 11, 2017). According to an SBA . . . Read More
Three Big Reasons to Incorporate in America’s Second Smallest State: Delaware
By Dana Livne When our clients decide to launch a business, they often ask us about the incorporation process. Business owners incorporate their business primarily to limit their personal liability for business debts and obligations. Choosing where to incorporate is an important decision, because the state your company calls home will continue to influence a number of aspects of your company’s lifecycle. Over 50 percent of the United States’ companies choose to incorporate in Delaware, even if they do not . . . Read More
Does Sarbanes-Oxley Apply to Government Contractors?
By Michael A. de Gennaro Certain government contracts contain representations and warranties which require primes and subs to “comply with all applicable provisions of the Sarbanes-Oxley Act (“SOX”).” Several times, clients have asked which SOX provisions specifically apply to them, and this article will answer that question on a high level. As a threshold matter, we must clarify a common misconception about SOX. Enacted in 2002, SOX is often thought to apply only to publicly-traded companies, but that is not . . . Read More
How Should a Government Contractor Prepare the Company for Sale?
By Dana Livne Whether you have decided to sell your company or have just begun considering the possibility, you will want to make the most out of your market potential. The preparation you undertake before the sale will help you maximize this unique opportunity, and to a large extent, determine your financial and professional future. To put your business in the strongest position for sale, it is crucial that you prepare a strong business exit strategy. This plan should include . . . Read More
Three Big Reasons Government Contractors Should Complete Seller-Side Due Diligence
By Michael de Gennaro and Dana Livne If approached properly, selling your business will rank among the most significant and rewarding moves of your career, representing the culmination of years of patience, hard work and vision. Whether you are planning a sale or just considering it a possibility down the road, there are good reasons as a seller to be proactive about due diligence. Due diligence involves a thorough analysis of your business that will identify not only its assets . . . Read More
The SBA’s Two New Recertification Rules
The Small Business Administration (“SBA”) has issued two more regulations that will require that small businesses recertify their size when they engage in a merger and/or acquisition (“M&A”). The regulations, published in conjunction with the final limitation on subcontracting regulation and the new mentor-protégé program, further limit the ability of small businesses to engage in acquisitions that could impact their continued performance of small business set-aside contracts. Both are certain to make it more difficult for small businesses to engage . . . Read More
SBA Simplifies Minority Shareholder Affiliation Rule for Loan Program Applicants
SBA recently issued a final rule redefining the rules of affiliation for firms applying to SBA’s business loan programs. The final rule separates and distinguishes the loan program affiliation rules from SBA’s government contracting and business development programs. Moreover, the final rule simplifies the guidelines for determining affiliation for small business eligibility as it relates to the loan programs. Case in point—the minority shareholder rule. Under the new minority shareholder rule, when no single owner (individual or entity) holds more . . . Read More
How the New Defend Trade Secrets Act of 2016 Impacts Government Contractors
By Kimi Murakami The overwhelming bipartisan passage by both the House and Senate of the new Defend Trade Secrets Act of 2016 (“DTSA”) which was signed into law (18 U.S.C. §§ 1831-1839) by the president on May 11, 2016, marks not only an unusual display of political unity in Washington, but also presents an ideal moment for federal government contractors to assess and update their policies and procedures relating to trade secrets. To make sure you are ready for the . . . Read More