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 July 13, 2018


DEFENSE DEPARTMENT

To Streamline Acquisitions, 809 Panel Presses Department of Defense to Adopt Portfolio Management

According to an article on federalnewsradio.com, the congressionally-mandated panel in charge of finding ways to streamline the Defense acquisition system called on June 28, 2018 for dramatic changes in how DoD organizes itself to define requirements for weapons systems and manage its procurement budgets, saying DoD must move to a “portfolio-centric” approach to procuring military equipment. In the second volume of its report to Congress, the Section 809 Panel said the Pentagon’s current decision making and incentive structures are far too focused on individual weapons programs, not on broader portfolios of capabilities. In a related problem, the panel said the three broader communities within DoD that are in charge of deciding what to buy, prioritizing funding for those systems, and actually conducting procurements, are too siloed to make the agile decisions needed to deliver military capabilities that are relevant to the modern battlefield.

WHITE HOUSE

Senators Look to Give Trump Authority to Reform and Reorganize Government

According to an article in govexec.com, Republican lawmakers have introduced legislation to give President Trump increased authority to reorganize the government as he sees fit, including consolidating, transferring, abolishing or creating agencies. The 2018 Reforming Government Act seeks to start the process for Trump to implement the proposals the White House unveiled last week in its reorganization plan, which included 32 distinct recommendations for reshaping an array of federal agencies. Congress has not granted a president reorganization authority since 1984, though President Carter was the last to actually use the power.
The measure would not give the White House carte blanche to start implementing Trump's proposed reforms. Instead, it would provide a pathway for those recommendations to go before Congress for consideration. Trump would still need to send his formal proposals to lawmakers, who would then have 90 days to approve them. If they took no action, the plans would not advance. The president would have two years to officially send his suggestions to Congress.

Evaluation of Department of Defense Hotline Complaint Regarding Defense Contract Management Agency Baltimore’s Actions on Audit Findings Reported by Defense Contract Audit Agency

According to an article in dodig.mil, DoD evaluated a Defense Hotline complaint alleging that a Defense Contract Management Agency contracting officer at the Baltimore Field office did not take appropriate action on a Defense Contract Audit Agency Audit Report which identified $1.1 million in indirect costs that did not comply with the Federal Acquisition Regulation.

LABOR AND EMPLOYMENT

Pacific Bell Settles Disability Discrimination Lawsuit with EEOC

According to an article on natlawreview.com, Pacific Bell Telephone Company, formerly known as AT&T Pacific Bell, will pay $15,000 and furnish other relief to settle a disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced. According to the EEOC's lawsuit, Pacific Bell violated federal law when it did not effectively accommodate a deaf employee at its Fresno, California location. Despite the employee's numerous requests for a sign language interpreter, managers chose to provide inadequate accommodations for the worker by standing close to him during meetings so he could read their lips, or by jotting down notes explaining the contents of the meeting after the fact. The EEOC contends that such behavior deprived the worker of equal employment opportunities, privileges, and benefits of employment, which negatively affected him as an employee.

OFFICE OF PERSONNEL MANAGEMENT

Thousands of Feds Would Get Raises under OPM’s Locality Pay Proposal

According to an article on govexec.com, around 62,000 federal employees could see a pay raise next year, thanks to proposed regulations from the Office of Personnel Management (OPM). OPM Director Jeff Pon published a proposal in the Federal Register to add four regions to its list of locality pay areas for 2019: Birmingham-Hoover-Talladega, AL.; Burlington-South Burlington, VT.; San Antonio-New Braunfels-Pearsall, TX; and Virginia Beach, VA. The proposed rule would mark the first implementation of recommendations from the Federal Salary Council since President Trump took office. The council had recommended the four regions be added in 2016 and 2017, but last December, the President’s Pay Agent delayed action on those proposals until 2019.

CAPITOL HILL

Senate Veterans Affairs Committee Votes for Robert Wilkie to lead Department of Veterans Affairs

On July 10, 2018, the Senate Committee on Veterans Affairs held an executive business meeting to consider the nomination of Robert Wilkie to serve as Secretary of Veterans Affairs. The nominee was reported favorably by voice vote, with one Member (Sen. Bernie Sanders, I-VT) requesting to be recorded as voting “no.” The nominee now awaits confirmation by the full Senate in order to be officially appointed by the President. Although no archived video footage exists for this executive business meeting, you can view the transcript here.

Innovation Nation: How Small Businesses in the Digital Technology Industry Use Intellectual Property

On July 11, 2018, the House Small Business Committee held a hearing to examine the continuing emergence of new small businesses in the digital technology industry, and to consider ways to safeguard these businesses’ intellectual property. The panel included Frank Cullen of the Global Innovation Policy Center, U.S. Chamber of Commerce, Morgan Reed of ACT | The App Association, Christopher Mohr of the Software & Information Industry Association, and Chris Israel of the Alliance for U.S. Startups & Inventors for Jobs. You can find more information about the hearing here.

Achieving Government-Wide Verification of Service-Disabled Veteran-Owned Small Business

On July 17, 2018 at 2:00 p.m., the House Small Business Subcommittee on Investigations, Oversight, and Regulations, and the House Veterans’ Affairs Subcommittee on Oversight and Investigations will hold a joint hearing titled “Achieving Government-Wide Verification of Service-Disabled Veteran-Owned Small Business.” The intent of this hearing is to examine the joint efforts of the Veterans Affairs (VA) and Small Business Administration (SBA) to reconcile the differences between their definitions relating to service-disabled veteran-owned small businesses (SDVOSBs), consider SBA’s ability to assume the responsibility of SDVOSB verification, and evaluate the benefits of extending verification of SDVOSBs government-wide. The witness panel includes Thomas J. Leney, Executive Director of Small and Veteran Business Programs with the Department of Veterans Affairs, Robb Wong, Associate Administrator of the Office of Government Contracting and Business Development at the SBA, William Gould, Senior Advisor with the Office of the Administrator at the SBA, and Davy G. Leghorn, Assistant Director of the American Legion. You can view live footage of the hearing and find more information here.

Senate Moves to Start Negotiations on Defense Policy Bill

The Senate officially moved on Tuesday, July 10, 2018, to reconcile its version of the $716 billion annual defense policy bill with the House’s, approving a motion by 91-8 to go to conference. In addition to that move, senators approved two motions to instruct conferees, which are nonbinding directions to negotiators. One, approved 97-2, says Senate negotiators should work to keep in the bill reforms to the Committee on Foreign Investment in the United States (CFIUS). The other, approved by the same margin, says negotiators should reaffirm the U.S. commitment to NATO. For more information, please go here.

PILIEROMAZZA BLOGS

GAO Denies Protest Based on Cybersecurity Compliance
By Jon Williams

Last month, I blogged about DoD's draft guidance on how it will evaluate cybersecurity compliance in the award of contracts. The blog is available here. Based on this draft guidance indicating DoD may use cybersecurity compliance as pass/fail or best value criteria in evaluations, I concluded that bid protests would not be too far behind once DoD finalizes and implements the guidance. [More]

No-Poaching Agreements: You Could Be Criminally Liable

By Nichole Atallah

Earlier this year, the Department of Justice's Antitrust Division (DOJ) issued the Antitrust Guidance for Human Resource Professionals (DOJ Guidelines), which signaled for the first time that DOJ would "proceed criminally against naked wage-fixing or no-poaching agreements." "No-poaching" or wage fixing agreements are a defense against employees leaving their companies to work for competitors in tight markets. However, companies that are not careful and enter into these agreements could face substantial liability, even criminal liability. By way of example, in 2015, Google, Apple, Adobe, and Intel settled a lawsuit for $415 million for having an agreement not to hire the others' employees. [More]

New and Proposed Certified Cost or Pricing Data Requirements Will Shift Burdens upon DoD Contractors
By Patrick T. Rothwell

Compliance with the requirements of the Truthful Cost or Pricing Data statute ("TCPD"), which is still commonly known as the Truth in Negotiations Act, has been a significant burden to many small business contractors. Under TCPD, federal contractors are required to submit "certified cost or pricing data" to the contracting officer prior to the award of negotiated contracts where (i) the price exceeds a specific threshold and (ii) an exception to the requirement is not applicable. If there is a significant increase in the contract price as a result of the cost or pricing data not being complete, accurate, or current as certified, the government may seek a price reduction from the contractor. [More]

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Weekly Report for June 29, 2018

DEFENSE DEPARTMENT

Federal Acquisition Regulation: Special Emergency Procurement Authority

The Department of Defense, General Service Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation to implement sections of the National Defense Authorization Act for Fiscal Year 2017 to expand special emergency procurement authorities for acquisitions of supplies or services that facilitate defense against or recovery from cyber attack, provide international disaster assistance under the Foreign Assistance Act of 1961, or support response to an emergency or major disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. 83 Fed. Reg. 123, 29736

Class Deviation—Defense Commercial Solutions Opening Pilot Program

According to a memorandum released by the Department of Defense, effective immediately, contracting officers may acquire innovative commercial items, technologies, or services using a competitive procedure called a commercial solutions opening by following the procedures provided in this class deviation.

Defense Federal Acquisition Regulation Supplement: Undefinitized Contract Action Definitization (DFARS Case 2015-D024)

Department of Defense is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement to provide a more transparent means of documenting the impact of costs incurred during the undefinitized period of an undefinitized contract action on allowable profit. 83 Fed. Reg. 126, 30584

Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Clause “Requirements” (DFARS Case 2018-D030)

Department of Defense is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement to remove a clause that is duplicative of an existing Federal Acquisition Regulation (FAR) clause. 83 Fed. Reg. 126, 30587

Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Clause “Pricing Adjustments” (DFARS Case 2018-D032)

Department of Defense is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to remove a clause that is duplicative of an existing Federal Acquisition Regulation clause rendering the DFARS clause unnecessary. 83 Fed. Reg. 126, 30584

Defense Federal Acquisition Regulation Supplement: Offset Costs (DFARS Case 2015-D028)

Department of Defense  is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 related to costs associated with indirect offsets under foreign military sales agreements and expand on the prior interim rule guidance related to FMS offset costs. 83 Fed. Reg. 126, 30825
 

LABOR AND EMPLOYMENT

The Department of Labor issued the following CFR correction:

(4) * * * Circumstances may require that FMLA leave begin before the actual date of birth of a child. 
 
The regulation change has, in effect, made it possible for pregnant mothers to add leave before “maternity leave” would be warranted. For example, a pregnant employee may be unable to report to work because of severe morning sickness. 83 Fed. Reg. 124, 30035
 
High Court Rules Against Unions In Battle Over Public Worker Fees 
On June 27, 2018, the U.S. Supreme Court, held that public-sector workers who aren’t union members can’t be forced to pay "agency fees" that cover the cost of collective bargaining, overturning 41-year-old precedent that found those fees constitutional and dealing a financial blow to organized labor. The justices by a 5-4 vote upheld Illinois state worker Mark Janus' bid to overturn the Supreme Court’s landmark 1977 Abood v. Detroit Board of Education decision, which allowed public employers to require nonunion workers in union-represented bargaining units to pay agency fees, also known as “fair share” fees, to cover the cost of collective bargaining so long as the workers were not forced to pay for a union’s political or ideological activities. For more information, please see the decision.
 

OFFICE OF PERSONNEL MANAGEMENT

Proposed OPM Reorganization Draws Widespread Criticism

According to an article in govexec.com, the Trump administration’s proposal to shuttle the Office of Personnel Management’s (OPM) service responsibilities to other agencies and bring its policy arm into the White House’s management structure drew nearly unanimous condemnation since it was announced Thursday, including from a former architect of the reorganization plan. The plan would send the National Background Investigations Bureau, which is responsible for security clearance investigations across the government, to the Defense Department, accelerating a congressional effort to move security clearance checks out of OPM that began with the 2018 National Defense Authorization Act. HR Solutions, and retirement claims processing and administration of the Federal Employees Health Benefits Program would move to the General Services Administration, renamed the Government Services Agency, while OPM’s policy arm would become part of the Executive Office of the President. Although Office of Management and Budget Deputy Director for Management Margaret Weichert suggested that the transition of policy offices from an independent agency to the White House could be done administratively, most experts are confident the changes would require legislation from Congress, from both legal and logistical standpoints. 
 

GOVERNMENT CONTRACTING

Watchdog Finds Flaws in Certification Process for Women-Owned Small Businesses

According to an article on govexec.com, the Small Business Administration must improve its execution of the law requiring it to steer certain types of contracts to women-owned small businesses. A review of a major portion of sole-source federal contracts in 2016 and early 2017 awarded to self-certified women-owned companies showed that 50 out of 56--worth as much as $52 million—did not follow regulations, according to an inspector general’s report released last week. “Federal agencies’ contracting officers did not comply with the program requirements,” the report said. “Furthermore, the firms that received those contracts did not comply with the program’s self-certification requirement,” the result being “no assurance that these contracts were awarded to firms that were eligible to receive sole-source awards under the program.”
 

PILIEROMAZZA BLOGS

The FLSA Is 80 Years Old—Has It Made Us Wiser?

By Nichole Atallah
 
This week marks the Fair Labor Standards Act's ("FLSA") 80th birthday. Because I have a particular affection for birthdays, this occasion is a good time to send the FLSA some overdue love and reflect on how it continues to challenge us today.  [More]

False Claims Act Cases Involving Set-Aside Contracts Held to More Stringent Requirements Following Escobar

By Ambika Biggs
 
Two years have passed since the U.S. Supreme Court issued Universal Health Services, Inc. v. United States ex rel. Escobar, a key False Claims Act ("FCA") case that resolved a circuit court split regarding the scope and validity of the implied false certification theory and established that the materiality standard for FCA cases is "demanding." Since that time, lower courts have been implementing those standards to varying effects. The trend has been favorable for companies facing FCA cases that allege false certifications related to qualifications to participate in socio-economic contracting programs. [More]
 

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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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