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 December 14, 2018
GOVERNMENT CONTRACTINGA former National Aeronautics and Space Administration (NASA) Facility Chief pleaded guilty to receiving illegal gratuities. Steven Eric Kremer, a former Chief of the Range and Mission Management Office at NASA’s Wallops Flight Facility (WFF) pleaded guilty to receiving gratuities in exchange for official acts performed in his capacity as a government official as well as stealing funds from a government contract. As Chief of the Range and Mission Management Office, Mr. Kremer administered the Range Operations Contract (ROC)—a multi-year government contract intended to provide services at test facilities and launch control centers. During the summers of 2008-2015, a subcontractor provided Mr. Kremer with the free use of the subcontractor’s vacation home in Virginia in exchange for Mr. Kremer facilitating the selection of the subcontractor’s firm to supply interior design services and office furniture for WFF. Mr. Kremer also used ROC funds to purchase gift cards for personal use and to obtain a piece of personalized art. Mr. Kremer will be sentenced in March 2019.
The U.S. Department of Veterans Affairs (VA) Office of Inspector General (OIG) Administrative Investigations Division did not substantiate allegations of improper contracting practices. The VA OIG investigated an allegation that an employee in the Veterans Health Administration, Office of Quality, Safety and Value engineered the award of a contract valued in excess of $1 million to a company whose Chief Executive Officer was alleged to be a personal friend. The complainant alleged that an existing contracting vehicle was available to meet the requirement and should have been used to procure the services at issue, and that the employee instead improperly steered the contract to the company run by the employee’s friend. The OIG did not substantiate the allegations. The OIG’s full report can be found here.
The U.S. Government Accountability Office (GAO) issued a legal advisory reviewing the 1974 Impoundment Control Act, which allows the president to propose to rescind funding previously approved by Congress. In the first-of-its-kind advisory, the GAO concluded that the Impoundment Control Act does not permit the withholding of funds through their date of expiration. For further discussion on the advisory and the political context within which it was issued, please see this article on Government Executive.
An enforcement agency within the U.S. Department of Labor (DOL) is offering federal contractors a five-year moratorium on compliance audits as part of workplace discrimination settlements. To cash in on the deal, federal contractors would have to turn over biannual data reports on companywide hiring and compensation data to the agency, something that immediately chills excitement, management attorneys told Bloomberg Law. The agency, at present, audits contractors based mostly on location, not by pooling companywide data. Some employer representatives are worried that agreeing to companywide exposure only increases the chances of adverse findings, instead of focusing on the issues of a single location. Employer representatives also raised concerns about ambiguities in the policy and whether it should have been introduced through a formal regulatory process.
The U.S. Department of Defense (DoD) published an announcement of public meetings to obtain views of experts and interested parties regarding revising policies and procedures for contract financing, performance incentives, and associated regulations for DoD contracts. The public meetings will be held on the following dates at the Mark Center Auditorium in Alexandria, VA, and registrations are due one week before each meeting:
• January 10, 2019, from 9:00 a.m. to 12:00 p.m., EST.;
• January 22, 2019, from 1:30 p.m. to 4:30 p.m., EST.; and
• February 19, 2019, from 1:00 p.m. to 4:00 p.m., EST.
The GAO issued a report after it was asked to review the federal government’s use of noncompetitive contracts for information technology (IT). The report examined (1) the extent that agencies used noncompetitive contracts for IT, (2) the reasons for using noncompetitive contracts for selected IT procurements, (3) the extent to which IT procurements at selected agencies were bridge contracts, and (4) the extent to which IT procurements were in support of legacy systems. The GAO found, however, that the DoD, U.S. Department of Homeland Security (DHS), and U.S. Department of Health and Human Services’ (HHS) contracting officials misreported competition data in the Federal Procurement Data System-Next Generation (FPDS-NG) for 22 of the 41 orders the GAO reviewed. The GAO’s findings call into question competition data associated with nearly $3 billion in annual obligations for IT-related orders. DHS identified and corrected its errors, but the GAO asked the DoD and HHS to do the same. The GAO’s overview and summaries can be found here.
The DoD issued a memorandum reminding contracting officers that the must comply with the documentation requirements for each phase of the negotiation process as outlined in FAR 15.406, “Documentation.” The reminder was issued as a result of a recent evaluation performed by the DoD Inspector General (DoDIG) to determine whether contracting officers took appropriate actions when Defense Contract Audit Agency (DCAA) determined a price proposal was inadequate. The DoDIG reviewed 23 contractor price proposals and found that, even though the contracting officers addressed the proposal inadequacies, they did not adequately document the contractor price proposal inadequacies and the actions taken to address the same in the contract file.
CLASS DEVIATIONSThe U.S. General Services Administration’s (GSA) Civil Agency Acquisition Council (CAAC) issued a letter permitting agencies to authorize class deviations to implement a section of the National Defense Authorization Act (NDAA) for 2019 to remove the best procurement approach determination requirement to use an interagency acquisition in FAR 17.502-1(a). In accordance with the CAAC letter, the Department of Energy issued a class deviation to remove the requirement for a best procurement approach, which was effective as of October 23, 2018
LABOR AND EMPLOYMENTThe National Labor Relations Board (NLRB) released a proposed rule that would establish a standard for determining when companies can be held liable for labor law violations committed by subcontractors. Under the proposal, a company would have to possess and exercise “substantial, direct and immediate control” over the hiring, firing, discipline, supervision and direction of another firm’s employees to be considered a joint-employer. The rule further states that control can't be limited or routine, and the rule may have implications on bargaining between employers and jointly employed workers. For more, please see the article on The Hill.
This week, the NLRB also published a proposed rule extending the comment period concerning the standard for determining joint-employer status under the National Labor Relations Act. Comments are due by January 14, 2019, and replies to comments submitted are due January 21, 2019. The published version can be found here.
The NLRB also issued a strategic plan for fiscal years 2019-2022, which includes four mission-related goals: (1) achieving a collective 20% increase (5% over each of four years) in timeliness in case processing of unfair labor practice charges, (2) achieving resolution of a greater number of representation cases within 100 days of the filing of an election petition, (3) achieving organizational excellence and productivity, and (4) managing agency resources efficiently and in a manner that instills public trust. The strategic plan also calls for an annual, agency-wide 5% reduction in case processing time for unfair labor practice charges at all levels of handling these matters, from case handling in the regional offices to the time between the issuance of an ALJ’s decision and a Board Order. More information can be found on the NLRB’s website.
BUSINESS AND CORPORATE LAWMembers in both the House and Senate have introduced bills that would add regulatory oversight for proxy advisors, whom institutional investors hire for recommendations on how to vote their shares in public companies. Legislative action is unlikely in the current session of Congress, which ends Jan. 3. But the bills’ sponsors—Rep. Sean Duffy (R-Wis.) and Sen. Jack Reed (D-R.I.)—plan to reintroduce their legislation in the new Congress, their spokesmen said. The SEC is reportedly considering making its own changes as part of a broader look at shareholder voting in company elections, presumably through new rules. Further discussion of the issues, Congress’s role, and the SEC action can be found in a Bloomberg Government article.
CAPITOL HILLAs of December 14, 2018, the Small Business Runway Extension Act (H.R. 6330) had not yet been signed into law by President Trump. The U.S. Constitution dictates that when Congress passes a bill and presents it to the president, the president has ten (10) days, excluding Sundays, to either sign the bill or veto it. H.R. 6330 was presented to President Trump on December 11, 2018, so he has until December 22 to sign the bill into law.
Generally, if the president does not take any action by the end of the ten-day period, the bill is automatically enacted into law without the president’s signature. However, if Congress adjourns prior to the end of the ten-day period, and the president does not sign the bill by the end of the ten-day period, the bill does not become law. This is known as a “pocket veto.” If this happens, the bill would have to be reintroduced in the next session of Congress, and the legislative process would have to start over again. Due to Congress’s impending adjournment, it is possible that H.R. 6330 would be pocket vetoed if President Trump does not sign the bill into law by December 22.
Key Considerations for Government Contractors Facing a Government ShutdownBy Nichole D. Atallah and Jacqueline K. Unger
A government shutdown is looming once again. Congress has already passed five of the twelve FY 2019 funding bills, which fund 70% of the government through September 2019, through two vehicles. H.R. 6157 includes funding for the Departments of Defense, Labor, Health and Human Services, Education, and related agencies. H.R. 5895 provides funding for the Departments of Energy, the Interior (Bureau of Reclamation only), Veterans Affairs, and related and independent agencies, as well as the Army Corps of Engineers civil works projects, and the legislative branch. However, the remaining departments and agencies have yet to be funded for FY 2019, leading to a potential partial government shutdown as of December 21st if another Continuing Resolution or funding measures are not passed. [Read More].
Congress Passes New Receipts Calculation for Determining the Size of Small Businesses
By Emily J. Rouleau
On December 6, 2018, the Senate passed the Small Business Runway Extension Act (HR 6330), which amends the Small Business Act by changing the time period for determining a company's size based on average annual receipts. Initially, the Small Business Act required a company's compliance with the size standards to be prescribed on the basis of the company's average annual receipts from the previous three years; the Small Business Runway Extension Act extends this time to the previous five years. The House passed the bill on September 25, 2018, and on December 11, 2018, it was presented to President Trump to be signed into law.
Important Changes Governing Limitations on Subcontracting Immediately Affecting All DoD ProcurementsBy Kathryn V. Flood
In a welcome step towards regulatory conformity, on December 4, 2018, the FAR Council finally issued its proposed rule to bring the FAR into compliance with the statutory requirements of § 1651 of the NDAA for FY 2013, which governs limitations on subcontracting. The proposed rule will conform the FAR's limitations on subcontracting clause, FAR 52.219-14, with how SBA performs the calculation, codified at 13 C.F.R. § 125.6.
SBA Proposes Significant Changes to Its Small Business RegulationsBy Samuel S. Finnerty
On December 4, 2018, the U.S. Small Business Administration ("SBA") issued a proposed rule ("Rule") to implement several provisions of the National Defense Authorization Acts ("NDAA") of 2016 and 2017 and the Recovery Improvements for Small Entities After Disaster Act of 2015 ("RISE Act"), as well as other clarifying amendments. The Rule will likely garner a lot of attention in the coming weeks, as it proposes a number of sweeping amendments that could have a significant impact on small business government contracting. Indeed, the proposed revisions address key small business issues such as subcontracting plans, the non-manufacturer rule ("NMR"), Information Technology Value Added Reseller ("ITVAR") procurements, limitations on subcontracting ("LOS"), recertification, size determinations, and the ostensible subcontractor rule. Below, we summarize some of the more notable amendments that will impact small business procurement.
Weekly Report for December 7, 2018
RULES AND REGULATIONS
Proposed RulesThe Small Business Administration (SBA) published a proposed rule amending its regulations and implementing provisions of the NDAAs of 2016 and 2017 as well as the Recovery Improvements for Small Entities After Disaster Act of 2015 (RISE Act). The proposed rule would (1) clarify that contracting officers have the authority to request information in connection with a contractor's compliance with applicable limitations on subcontracting clauses; (2) provide exclusions for purposes of compliance with the limitations on subcontracting for certain types of contracts (i.e. environmental remediation contracts, information technology service acquisitions that require substantial cloud computing, and contracts performed outside of the United States); (3) require a prime contractor with a commercial subcontracting plan to include indirect costs in its subcontracting goals; (4) establish that failure to provide timely subcontracting reports may constitute a material breach of the contract; (5) clarify the requirements for size and status recertification; and (6) limit the scope of Procurement Center Representative reviews of DoD acquisitions performed outside of the United States and its territories. The proposed rule would also authorize agencies to receive double credit for small business “goaling” achievements and remove the kit assembler exception to the non-manufacturer rule. 83 Fed. Reg. 233, 62516.
The General Services Administration (GSA), National Aeronautics and Space Administration (NASA), and DoD published a proposed rule amending the Federal Acquisition Regulations (FAR) to implement the final rule published by the SBA implementing section 1651 of the NDAA for fiscal year 2013, which revised and standardized the limitations on subcontracting, including the non-manufacturer rule, that apply to small business concerns under FAR part 19 procurements. 83 Fed. Reg. 233, 62540.
The DoD issued a class deviation implementing revisions made by the SBA to its regulations regarding the limitations on subcontracting. Contracting officers must immediately follow the procedures in the class deviation when issuing solicitations and awarding contracts or task or delivery orders to small business concerns, 8(a) Program participants, historically underutilized small business concerns, service-disabled veteran-owned small business concerns, economically-disadvantaged women-owned small business concerns, and women-owned small business concerns. The revisions changed and standardized the limitations on subcontracting and the non-manufacturer rule with which small businesses must comply under government contracts awarded pursuant to the set-aside or sole source authorities of the Small Business Act.
The DoD published a proposed rule amending the DFARS to implement the NDAAs for fiscal years 2017 and 2018, which establish limitations and prohibitions on the use of the lowest priced technically acceptable source selection process. 83 Fed. Reg. 233, 62550.
The DoD published a proposed rule amending the DFARS to implement a section of the NDAA for fiscal year 2019 regarding set-asides for architect-engineer and construction design contracts. 83 Fed. Reg. 233, 62554.
Final RulesThe Department of Defense (DoD) issued a final rule amending the Defense Federal Acquisition Regulations System (DFARS) to revise a clause to reflect current terminology and industry practices, pursuant to action taken by the DoD Regulatory Reform Task Force. 83 Fed. Reg. 233, 62502.
The DoD issued a final rule amending the DFARS to implement a section of the National Defense Authorization Act (NDAA) for fiscal year 2019 that removes the requirement to make a best procurement approach determination to use an interagency acquisition. 83 Fed. Reg. 233, 62501.
The DoD issued a final rule amending the DFARS to implement a section of the NDAA for fiscal year 2018 that repeals the fiscal year 2015 restrictions on the source of photovoltaic devices in contracts awarded by DoD that result in DoD ownership of photovoltaic devices by means other than DoD purchase of the photovoltaic devices as end products. 83 Fed. Reg. 233, 62498.
LABOR AND EMPLOYMENTIn a News Release, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced three directives establishing (1) an opinion letter process and enhancing OFCCP’s Help Desk, (2) a process to resolve compliance evaluations at the earliest stage possible with corporate-wide compliance, and (3) clarifying the Agency’s compliance review procedures. More information can be found here.
According to an article on Bloomberg Government, the EEOC may lose its quorum if the Senate does not end a logjam on nominations for three EEOC seats before the end of the year, which could leave the agency without the authority to green light new policy decisions, handle certain big-ticket lawsuits, and approve significant spending. The EEOC has increased harassment enforcement and training efforts over the past year as well.
Companies’ use of mandatory arbitration pacts, particularly for employee claims of harassment and assault, is getting more scrutiny from the Labor Department, according to an article on Bloomberg Government. The article asserts that this issue is also on the nation’s radar, particularly in light of the #MeToo movement. Google and Facebook recently announced they would make some mandatory arbitration policies optional for employees making claims of harassment and assault, and Airbnb also ended forced arbitration for employee harassment and workplace discrimination claims.
Twenty Eight Years after its passage, President George H.W. Bush’s Americans with Disabilities Act (ADA) is still developing. According to an article by Robert Iafolla on Bloomberg Government, Congress amended the ADA in 2008 in response to U.S. Supreme Court rulings that had narrowed the definition of “disability” under the law. Chai Feldblum, a commissioner at the Equal Employment Opportunity Commission commented that, prior to these amendments, cases were often disposed of early in litigation on the question of whether a plaintiff was disabled, and, consequently, the ADA is not as developed as one would expect. The article asserts that unsettled legal issues in the law—such as long-term leave to accommodate employees with disabilities, competition between disabled and non-disabled candidates, and whether attendance is an essential function of a job—will ultimately need to be resolved by the U.S. Supreme Court. Until then, the lack of clarity in these areas could land employers in court, which can be costly even if an employer prevails.
Though companies like Google have stopped requiring arbitration for employee sexual harassment and assault claims, most employee wage-and-hour claims and discrimination claims continue to have arbitration agreements in place. According to an article in Bloomberg, the Economic Policy Institute reported that 56 percent of nonunion private-sector employees are subject to mandatory individual arbitration procedures, roughly 60 million American workers. Of those, 30 percent have signed agreements that include class-action waivers.
Congress Passes Small Business Size Standards Legislation, Providing Five Year “Runway”
On December 6, 2018, Senator Ben Cardin, the ranking member on the Senate Committee on Small Business & Entrepreneurship, announced that the Senate passed legislation amending the Small Business Act to ensure that small business size standards are calculated using average annual receipts from the previous five years; currently, size standards are calculated using average annual receipts from the previous three years. The bill, the Small Business Runway Extension Act of 2018 (HR 6330), passed in the House of Representatives in September and will now go to President Trump for signature.
Limitations on LPTA Coming to DFARSBy Megan C. Connor
On December 4, 2018, DOD issued a proposed rule amending the DFARS to impose limits on the use of the lowest price technically acceptable ("LPTA") source selection process. These changes are driven by the National Defense Authorization Acts ("NDAA") for Fiscal Years 2017 and 2018. Notably, the 2018 NDAA directed similar changes to the FAR, but there is no proposed change to the FAR yet.
Congress Passes New Receipts Calculation for Determining the Size of Small BusinessesBy Emily Rouleau
On December 6, 2018, the Senate passed the Small Business Runway Extension Act (HR 6330), which amends the Small Business Act by changing the time period for determining a company's size based on average annual receipts. Initially, the Small Business Act required size standards to be prescribed on the basis of a company's average annual receipts from the previous three years; the Small Business Runway Extension Act extends this time to the previous five years. The House passed the bill on September 25, 2018, and the legislation will now go to President Trump for his signature.
Title VII's Protections Don't Extend That Far—4th Circuit Says Review and Copying of Confidential Files Not Protected ActivityBy Paul W. Mengel III
Catherine Netter, a 19-year employee of the Guilford County, N.C., Sheriff's Office, believed a disciplinary sanction she received in 2014, which impeded her ability to be promoted, was motivated by discrimination. Netter, who is African-American and Muslim, felt that other similarly situated officers who were neither African-American nor Muslim had not been disciplined in a similar manner, so she filed complaints with the Equal Opportunity Employment Commission ("EEOC") and the Guilford County Human Resources Department.
Weekly Report for December 3, 2018
RULES AND REGULATIONSThe Department of Veterans Affairs (VA) issued a proposed rule on November 29, 2018 proposing to amend and update its VA Acquisition Regulation (VAAR) in phased increments to revise or remove any policy superseded by changes in the FAR. It will also remove procedural guidance that is internal to the VA, move it to the VA Acquisition Manual, and incorporate new agency-specific regulations or policies. The proposed rule would also add VAAR coverage concerning Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace; Other Socioeconomic Programs; and Contract Modifications. 83 Fed. Reg. 230, 61365.Modifications. 83 Fed. Reg. 230, 61365.
GOVERNMENT CONTRACTINGThe Government Accountability Office (GAO) issued its annual bid protest report to Congress. Notably, nearly half of all protesters obtained some form of relief. Specifically, the GAO reported an effectiveness rate of 44%, and the number of protests filed in 2018 generally remained the same. You may view the report here.
The Department of Defense (DoD) issued a class deviation for fixed-price contracts requiring contracting officers to first consider the use of fixed-price contracts in determining contract type. The class deviation also prohibited contracting officers from awarding two categories of cost-type contracts (i.e. cost-reimbursement contracts in excess of $50 million awarded after October 1, 2018 and before October 1, 2019, and cost-reimbursement contracts in excess of $25 million awarded on or after October 1, 2019) unless the contract is approved by the head of the contracting activity. More information can be found here.
The General Services Administration announced that it will consolidate 24 Multiple Award Schedules into one single schedule for products and services. This consolidation is part of the GSA’s Federal Marketplace strategy, which seeks to make the government buying and selling experience easy, efficient, and modern. The move also supports the GSA’s goal of establishing the agency as the premier provider of “efficient and effective acquisition solutions across the government.” View the Federal Times article here.
Five officials from Explo Systems, Inc. (ESI) were sentenced for their roles in a criminal conspiracy that used Camp Minden, located in Louisiana, as an illegal dumping ground for military explosives. ESI received an $8.6 million contract from the U.S. Army to demilitarize approximately 1.35 million propelling charges containing M6 propellant, an explosive. ESI was also required to store the propelling charges and handle final disposition of the explosives. It had represented that it would sell and reuse the M6 propellant. However, the officials defrauded the U.S. by submitting false certificates to the U.S. Army, transporting hazardous waste to unpermitted facilities, improperly storing the explosives, and submitting false certificates that the propellant had been sold, though no sales occurred. More information can be found here.
Patricia Pauline Driscoll, the former executive director of the Armed Forces Foundation, was found guilty of fraud and tax evasion. As executive director of the foundation, Driscoll filed false annual reports regarding her salary and benefits, falsely reported the amount of donations received by the foundation, inflated the amounts of donations, incorrectly listed the types of donations received, failed to include commissions she received from fundraising, and failed to disclose other benefits she received. She also falsely categorized expenses in the foundation’s records and concealed money she took from the charity, such as rent money for an office space she co-owned. More information can be found here.
Finbar Charles, the business partner of a former U.S. military contractor, Terry Hall, was sentenced to prison for his role in a years-long scheme to bribe U.S. Army contracting officials stationed at a military base in Kuwait during the Iraq War. Charles bribed the officials in exchange for preferential treatment for Hall’s companies in connection with DoD contracts to deliver bottled water and construct security fencing to support troops in Kuwait and Iraq. More information can be found here.
Andrew Otero and his company, A&D General Contracting, Inc., were convicted on charges that they fraudulently obtained $11 million in federal contracts set aside for service-disabled veteran-owned businesses (SDVOSB). Otero had no military experience but formed a joint venture with another company, Action, and then falsely represented that the joint venture qualified as an SDVOSB. More information can be found here.
LABOR AND EMPLOYMENTAccording to an article on Bloomberg Government, LGBT bias complaints have tripled at the Department of Labor, which is being viewed as a complement to the Equal Employment Opportunity Commission. Because two agencies within President Trump’s administration are clashing over whether federal law protects lesbian, gay, bisexual, and transgender employees from discrimination, some government-contractor employees have been bringing bias complaints in the Department of Labor’s Office of Federal Contract Compliance Programs.
Retailers such as Walmart, Target, and Burlington Coat Factory face litigation arising from claims that pregnant employees were put at risk on the job. Four such suits were filed against retailers in November alone, and women allege they were discriminated against due to their pregnancies and denied modifications to their jobs. In 2015, the U.S. Supreme Court held that companies that accommodate injured workers must also accommodate pregnant workers. That decision has now been cited in over 200 cases, and the number of lawsuits filed has almost doubled since 2015. In the pending cases, women allege they were made to lift heavier boxes than recommended by federal authorities and stand for long stretches, putting themselves and their babies at risk. In 2015, Professor Joan Williams at the University of California Hastings College of Law stated that the Supreme Court decision, however, now means that employers fact “a sharp potential rise in legal liability . . . if you don’t accommodate pregnant workers with reasonable accommodations.” For example, Walmart has updated its national accommodation policy to include temporary alternative duty as a possible reasonable accommodation for pregnant employees.
The U.S. Department of Labor entered into a conciliation agreement with Oldcastle BuildingEnvelope, Inc.(Oldcastle)—a federal government contractor that supplies building materials—to resolve allegations of hiring discrimination at the company’s Denver, Colorado, facility. The Department’s compliance evaluation alleged that from January 21, 2013 to January 20, 2015, Oldcastle discriminated against white, black, and female applicants who applied for 8A Loader and Unloader positions in favor of Hispanic and male applicants. More information can be found here.
Small Business Committee Chairman Chabot and Veterans’ Affairs Committee Chairman Roe Introduce VA-SBA Act
On November 27, 2018, House Committee on Small Business Chairman Steve Chabot and House Committee on Veterans’ Affairs Chairman Phil Roe, M.D. released statements following the introduction of a new legislation: H.R. 7169, the Verification Alignment and Service-disabled Business Adjustment (“VA-SBA”) Act. The bill was introduced by Trent Kelly, who is the Chairman of the House Small Business Committee’s Subcommittee on Investigations, Oversight, and Regulations. The bill states that it will transfer the responsibility of verifying small business concerns owned and controlled by veterans or service-disabled veterans to the SBA. The text of the bill can be viewed here.Currently, SBA certifies certain small businesses that participate in federal contracting preference programs. However, SDVOSBs are the exception—they are verified by the VA to qualify for VA contracts, and are uniquely allowed to self-certify to obtain federal contracts from all other federal government agencies. In support of the bill, the press release from the House Committee on Small Business asserted that SDVOSBs’ abilities to self-certify has allegedly led to years of fraud, waste, and abuse, and has allegedly allowed companies not owned by service-disabled veterans to take advantage of the system. The VA-SBA Act would require the SBA to certify all SDVOSB applications, as it does for other small businesses. The full press release can be viewed here.
Avoiding Flat Tires When Acquiring IDIQ Contract VehiclesBy Cy Alba
With proposals costing hundreds of thousands of dollars and many IDIQs having 50 or more awardees, it can easily happen that some contractors who win a spot on a contract are unable to capitalize on it and simply stop trying to capture task orders. Whether it was because the initial win was based on sheer luck or perhaps because of a tragic, unforeseeable change in circumstances, making it impossible to bid or even keep the company doors open, a contractor may find itself with a shiny new license to hunt, but without the proper tools to successfully compete for and win the actual task orders. After failing to win any work for usually a year or more, contractors in situations like this may just be looking to recoup the bid and proposal costs or salvage the win. Often, they look to sell their zombie contracts to a more viable candidate. In the past, this was not too difficult, but in recent years, even months, it has become a harder and harder "sell." [Read More].
Weekly Report for November 16, 2018
Performance-Based Payments and Progress Payments (DFARS Case 2017-D019)The Department of Defense (DOD) is withdrawing the proposed rule on performance-based payments and progress payments that it published on August 24, 2018. 83 Fed. Reg. 193, 50052.
Commercial Items Omnibus Clause for Acquisitions Using the Standard Procurement SystemThe DOD issued a class deviation, which rescinds and supersedes Class Deviation 2013-00019. Effective immediately, when using the Standard Procurement System (SPS) to contract for commercial items, all DOD contracting activities may deviate from the requirements at Federal Acquisition Regulation (FAR) 12.301 (b)( 4) and the clause at FAR 52.212-5, Contract Terms and Conditions Required To Implement Statutes or Executive Orders- Commercial Items. The clause at FAR 52.212-5 requires the contracting officer to "check a box" to identify the clauses that are applicable to the specific acquisition of commercial items. Rather than requiring the contracting officers to "check the applicable clauses," SPS has a clause logic capability that automatically selects the clauses under FAR clause 52.212-5.
Defense Federal Acquisition Regulation SupplementThe DOD issued the following final rules:
• Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Clause “Acquisition Streamlining” (DFARS Case 2018-D033) 83 Fed. Reg. 211, 54676.
• Defense Federal Acquisition Regulation Supplement: Mentor-Protégé Program Modifications (DFARS Case 2017-D016) 83 Fed. Reg. 211, 54677.
• Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Provision “Bonds or Other Security” (DFARS Case 2018-D036) 83 Fed. Reg. 211, 54677. 83 Fed. Reg. 211, 54679.
• Defense Federal Acquisition Regulation Supplement: Update of Clause on Section 8(a) Direct Award (DFARS Case 2018-D052) 83 Fed. Reg. 211, 54681.
• Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Clause “Option for Supervision and Inspection Services” (DFARS Case 2018-D041) 83 Fed. Reg. 211, 54680.
SMALL BUSINESS ADMINISTRATIONThe U.S. Small Business Administration published a notice of proposed rulemaking in the Federal Register to solicit public comments on, among other things, Express loan programs and affiliation standards. This Proposed rule announces the extension of the current comment period for an additional 15 business days until December 18, 2018. 83. Fed. Reg. 222, 57693.
OFFICE OF PERSONNEL MANAGEMENT
OPM to Agencies: ‘Be Mindful’ of Policies in Trump’s Workforce Orders Despite Court RulingAccording to an article on Govexec.com, Office of Personnel Management acting Director Margaret Weichert issued new guidance for agencies to implement three controversial executive orders, despite the fact that their key provisions were struck down in federal court in August. In a memo to agency leaders, Weichert acknowledged that provisions making it easier to fire federal employees, setting time limits on collective bargaining negotiations, and restricting grievances and the use of official time were ruled unlawful by U.S. District Judge Ketanji Brown Jackson last summer. But she encouraged agencies to continue to pursue the spirit of those executive orders in their ongoing negotiations for new contracts with federal employee unions. The Justice Department is in the process of appealing that decision to the U.S. Court of Appeals for the D.C. Circuit, although its request to expedite the case was denied. The government’s opening brief is due December 7th, and unions’ response will be due in February.
OPM Grants Greater Flexibility with Senior Executive Personnel Appraisal SystemsAccording to an article in Govexec.com, the Office of Personnel Management (OPM) announced that it would provide agencies with additional flexibilities in the process to certify performance appraisal systems for senior executives and technical experts. In a memo to agency heads, acting OPM Director Margaret Weichert said the changes are part of an effort to implement President Trump’s management agenda by “removing procedural hurdles” for agencies when they look to certify their performance appraisal systems for the Senior Executive Service, Senior-Level and Scientific and Professional pay systems. “The majority of agencies now have extensive experience with SES and SL/ST certification and have well-established policies and procedures that operationalize the certification criteria,” Weichert wrote. “Therefore, the changed process focuses less on verifying operational compliance and more on the results of agencies’ appraisal systems, thereby saving time and resources.”
VA Acquisition Regulation: Construction and Architect-Engineer ContractsThe 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 FAR, to remove procedural guidance internal to VA into the VA Acquisition Manual (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 the 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. VA will combine related topics, as appropriate. In particular, this rulemaking revises VAAR concerning Construction and Architect-Engineer Contracts, as well as affected parts covering the Department of Veterans Affairs Acquisition Regulations System, Foreign Acquisition, Contract Administration and Audit Services, Quality Assurance, Solicitation Provisions and Contract Clauses, and Forms. 83 Fed. Reg. 174, 45384.
Three Indicators You Need an OCI Mitigation PlanBy Michelle E. Litteken
The risk of an organizational conflict of interest (“OCI”)—either perceived or actual—strikes fear in the heart of many a government contractor. An OCI may result in disqualification from a procurement, an adverse bid protest decision, or termination of a contract. Although that can be unnerving, in many cases, an OCI is mitigatable if the contractor implements measures to avoid, neutralize, or mitigate the conflict. At the same time, it is critical to implement a mitigation plan early on. For this reason, contractors should be aware of signs that a contract could give rise to a perceived or actual OCI. To read the full Blog, please follow this link.
Growing Pains: Growth Capital Sources and Considerations Part 1: Debt FinancingBy Kathryn L. Hickey
At a certain point in a company’s life cycle, founders are likely to be faced with the financial pinch of requiring outside sources of funding to finance further growth and expansion of the business. Once bootstrapping ceases to be an option, there are two main avenues to pursue for growth capital: traditional bank debt or private equity investment. Both options present pros and cons, and they are not mutually exclusive. Ultimately, the route founders decide upon will depend on the objectives, limitations, and concerns specific to their organization. This article will focus on the first of these two financing options, traditional debt financing. A second post will follow that focuses on private equity investment. Too read the full blog, please follow this link.
Weekly Report for October 22, 2018
Class Deviation-Commercial Items Omnibus Clause for Acquisitions Using the Standard Procurement SystemAccording to an article on acq.osd.mil, this class deviation rescinds and supersedes Class Deviation 2013-00019. Effective immediately, when using the Standard Procurement System (SPS) to contract for commercial items, all Department of Defense (DOD) contracting activities may deviate from the requirements at Federal Acquisition Regulation (FAR) 12.301 (b)( 4) and the clause at FAR 52.212-5, Contract Terms and Conditions Required To Implement Statutes or Executive Orders- Commercial items. The clause at FAR 52.212-5 requires the contracting officer to "check a box" to identify the clauses that are applicable to the specific acquisition of commercial items. Rather than requiring the contracting officers to "check the applicable clauses," SPS has a clause logic capability that automatically selects the clauses under FAR clause 52.212-5.
Performance-Based Payments and Progress Payments (DFARS Case 2017-D019)The DOD is withdrawing the proposed rule on performance-based payments and progress payments that published on August 24, 2018, and is cancelling the public meeting previously scheduled to be held on October 10, 2018. 83 Fed. Reg. 193, 50052.
How Contractor Fraud Is Reported Shouldn’t Affect How It Gets InvestigatedAccording to an article in govexec.com, while the vast majority of federal contractors are dedicated to their craft and their country, very few wrongdoers occasionally cast a shadow on the industry as a whole. Unfortunately, the way that the government resolves fraud allegations is often dictated not by the egregiousness of the fraud but rather by how the government learns of suspected wrongdoing. Given this inconsistency, it is suggested that a more uniform approach to addressing whistleblower allegations be implemented.
SMALL BUSINESS ADMINISTRATION
U.S. Department of Labor Announces New Compliance Assistance Tools to Assist New and Small BusinessesAccording to a press release, the U.S. Department of Labor today announced the launch of the New and Small Business Assistance and the Compliance Assistance Toolkits webpages. These new online tools assist American small businesses and workers with simple, straightforward resources that provide critical Wage and Hour Division (WHD) information, as well as links to other resources. The webpages were established in response to feedback received from new and small business stakeholders voicing their need for a centralized location to secure the tools and information they need to comply with federal labor laws. These new webpages provide the most relevant publications and answer the questions most frequently asked by new and small business owners. These tools, in conjunction with worker.gov and employer.gov, ensure greater understanding of federal requirements and provide tools to help employers find resources offered by other regulatory agencies. “The Wage and Hour Division has long understood that the majority of employers want to do the right thing and comply with the law, but they need to know how,” said the WHD’s Acting Administrator Bryan Jarrett. “These new webpages demonstrate our ongoing commitment to proactively help employers comply with the law and provide them the tools they need to understand their responsibilities. We encourage all employers to visit these new webpages and reach out to us for assistance at any time.”
OFFICE OF PERSONNEL MANAGEMENT
OPM Calls on Agencies to Implement Coaching Programs for EmployeesAccording to an article on govexec.com, the Trump administration is calling on federal agencies to expand their use of “coaching,” an “experimental” and “creative” process designed for individuals to help other government workers realize their full potential. Office of Personnel Management Director Jeff Pon sent a memorandum to agency leaders that was made public this week aimed at highlighting the “importance of creating a coaching culture.” Such a culture would boost retention of employees, forge stronger relationships, increase focus on mission and lead to better performance, Pon said. The director tasked agencies’ human capital officers to use his memo to plan, design and implement coaching programs.
Senate Small Business Committee Passes Six Bills to Assist Current, Prospective Small Business OwnersOn October 12, 2018, the Senate Committee on Small Business & Entrepreneurship favorably reported six bills to the full Senate that would, among other things, help veterans transition from service to entrepreneurship, create an equal playing field for small business borrowers receiving a real estate loans through the Small Business Administration’s (SBA) loan programs, aid recovery in natural disasters, and require the SBA to assess the size of businesses based on average revenues of five years rather than three. The full list of bills reported is as follows:
• S. 2679, Veterans Small Business Enhancement Act
• S. 3552, 7(a) Real Estate Appraisal Harmonization Act
• S. 3553, Small Business Access to Capital and Efficiency Act
• S. 3554, A bill to extend the effective date for the sunset for collateral requirements for SBA disaster loans
• S. 3561, National Guard and Reserve Entrepreneurship Act
• S. 3562, Small Business Runway Extension Act of 2018
President Signs Risch, Peters Bill Helping Small Businesses Access Patent ProtectionEarlier this week, President Trump signed into law legislation aimed at helping small businesses safeguard their intellectual property with expanded education on obtaining and protecting patents. The Small Business Innovation Protection Act is expected to build upon existing SBA and United States Patent and Trademark Office (USPTO) programs, to better inform small businesses on domestic and international intellectual property protections. This Act requires the SBA and USPTO to develop partnerships in order to develop high quality training relating to domestic and international intellectual property protection by leveraging existing training materials developed for small businesses. It also requires the SBA and USPTO to enter partnerships in order to increase the effectiveness of Small Business Development Centers by providing training that addresses small business concerns related to domestic and international intellectual property protections which may be conducted in person or online. You can find more information here.
Submitting a Proposal Soon? Make Sure Your SAM Registration Is ActiveBy Meghan F. Leemon
While there has been some confusion and a bit of a grey area surrounding when an offeror's profile with the System for Award Management (SAM) must be active, the confusion will be put to rest effective October 26, 2018. Recently, a final rule was released clarifying that offeror registration in SAM is required prior to submission of an offer. [Read More].