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 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proposing to amend and update its VA Acquisition Regulation (VAAR) in phased increments to revise or remove any policy superseded by changes in the FAR.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].
Weekly Report for October 1, 2018
Federal Acquisition Regulation: Evaluation Factors for Multiple-Award ContractsThe Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) are proposing to amend the Federal Acquisition Regulation to implement a section of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017. Section 825 of the NDAA for FY 2017 amends 10 U.S.C. 2305(a)(3) to modify the requirement to consider cost or price as an evaluation factor for the award for certain multiple award task order contracts issued by DoD, NASA, or the Coast Guard. Section 825 provides that, at the Government’s discretion, solicitations for multiple award contracts for the same or similar services that state the Government intends to award a contract to each qualifying offeror that do not require price or cost as an evaluation factor for contract award. This exception does not apply to solicitations for multiple-award contracts that provide for sole source orders pursuant to section 8(a) of the Small Business Act (15 U.S.C. 637(a)). 83 Fed. Reg. 185, 48271.
Federal Acquisition Regulation: Federal Acquisition Circular 2005-101; Introduction, System for Award Management Registration, One Dollar CoinsThis document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in this Federal Acquisition Circular (FAC) 2005-101. A companion document, the Small Entity Compliance Guide, follows this FAC. 83 Fed. Reg. 187, 48690. Further, DoD, GSA, and NASA are issuing a final rule amending the FAR to update the instructions for registration in the System for Award Management and clarify the timing of registration in the System for Award Management. 83 Fed. Reg. 187, 48691. DoD, GSA, and NASA are also issuing a final rule amending the FAR to implement a section of the National Defense Authorization Act for FY 2018 that provides an exception for business operations conducted by a contractor while performing under a Government contract from the requirement to accept and dispense $1 coins. 83 Fed Reg. 187, 48700.
Federal Acquisition Regulation: Federal Acquisition Circular 2005-101; Small Entity Compliance GuideThe 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 the FAC, which amends the FAR 83 Fed. Reg. 187, 48702.
SMALL BUSINESS ADMINISTRATION
Ownership and Control of Service-Disabled Veteran-Owned Small Business ConcernsThe U.S. Small Business Administration (SBA) is amending its regulations to implement provisions of the National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017). The NDAA 2017 placed the responsibility for issuing regulations relating to ownership and control for the Department of Veteran Affairs (VA) verification of Veteran-Owned (VO) and Service-Disabled Veteran-Owned (SDVO) Small Business Concerns with the SBA. Pursuant to NDAA 2017, SBA issued one definition of ownership and control for these concerns, which applies to the VA in its verification and Vets First Contracting Program procurements, and all other Government acquisitions, which require self-certification. The legislation also provided that in certain circumstances a firm can qualify as VO or SDVO when there is a surviving spouse or an employee stock ownership plan. 83 Fed. Reg. 189, 48908.
VA Veteran-Owned Small Business (VOSB) Verification GuidelinesThe VA is amending its regulations governing VA's Veteran-Owned Small Business (VOSB) Verification Program. The NDAA for FY 2017 placed the responsibility for issuing regulations relating to ownership and control for the verification of VOSBs with the SBA. This regulation implements the NDAA by referencing SBA's regulations governing ownership and control and adds and clarifies certain terms and references that are currently part of the verification process. The NDAA also provides that in certain circumstances a firm can qualify as a VOSB or Service-Disabled Veteran-Owned Small Business when there is a surviving spouse or an employee stock ownership plan. 83 Fed. Reg. 185, 48221.
VA Acquisition Regulation: Taxes; Quality Assurance; Transportation; Solicitation Provisions and Contract Clauses; and Special Procurement ControlsThe VA is amending and updating 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 the 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. The VA will rewrite certain parts of the VAAR and VAAM, and as VAAR parts are rewritten, we will publish them in the Federal Register. In particular, this rulemaking revises VAAR concerning Taxes; Quality Assurance; Transportation; Solicitation Provisions and Contract Clauses; and Special Procurement Controls. 83 Fed. Reg. 185, 48257.
‘Unprecedented’ Government Spending Spree Picks Up SpeedAccording to an article on Nextgov.com, the federal Government is primed to spend as much as $300 billion in the final quarter of fiscal 2018 as agencies rush to obligate money appropriated by Congress before Sept. 30 or return it to the Treasury Department. The spending spree is the product of the omnibus budget agreement signed six months late in March, coupled with funding increases of $80 billion for defense and $63 billion for civilian agencies. The shortened time frame left procurement officials scrambling to find ways to spend the money. Through August, defense and civilian agencies obligated some $300 billion in contracts. Nevertheless, to spend all the money appropriated to them by Congress, they may have to obligate well over $200 billion more in the final quarter of fiscal 2018, which ends in two weeks.
GAO Rebukes Agency for Finding Proposal Nonresponsive Based on Buy American Act SubmissionBy Julia Di Vito
The U.S. Government Accountability Office ("GAO") recently sustained a bid protest in which the U.S. Department of Energy ("DOE") found a construction contractor's bid to be nonresponsive due to the contractor's failure to provide all information required by Federal Acquisition Regulation ("FAR") 52.225-9 and 52.225-10. When these FAR provisions are included in a solicitation, they set out a preference that a contractor use domestic products and materials in its construction project. If a contractor wishes to use foreign materials instead of domestic ones based on cost reasons, these FAR provisions require a contractor to provide data about the construction materials the contractor plans to use so that the agency can determine whether the Buy American Act should be applied to the contract. To read the full blog, please follow this Link.
New Receipts Calculation for Federal Contractors?By Megan C. Connor
Congress is considering changing the receipts calculation for small businesses. Currently, a company’s size is determined based on the average annual receipts of the three recently completed fiscal years. However, in the Small Business Runway Extension Act of 2018, H.R. 6330, which the House passed on September 25, 2018, the House of Representatives, proposes amending the Small Business Act to change this time period to five years. For the full blog, please follow this Link.
Effective October 1, 2018: A Universal Set of Ownership and Control Requirements for VOSBs and SDVOSBsBy Meghan F. Leemon
Just one week before taking effect, the VA issued a final rule on verification guidelines for veteran-owned and service-disabled veteran-owned small businesses, found in the National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017). The final rule implements the NDAA 2017, which placed the responsibility for issuing regulations relating to ownership and control for the VA’s verification of VOSBs and SDVOSBs with SBA. For the full blog, please follow this Link.
Weekly Report for September 21, 2018
SMALL BUSINESS ADMINISTRATION
House Small Business Committee Calls for a Status Update on FAR Revision of Limitations on Subcontracting.Last week, House Small Business Committee Chairman Steve Chabot and Ranking Member Nydia Velázquez sent a letter to the acting administrator of the Office of Federal Procurement Policy requesting a status update of Federal Acquisition Regulation Case Number 2016-011, titled “Revision of Limitations on Subcontracting. Section 1651 of Public Law 112-239, the National Defense Authorization Act for Fiscal Year 2013 (2013 NDAA), made significant changes to the limitations on federal subcontracting, which were reflected in corresponding regulations made by the Small Business Administration (SBA) on May 31, 2016. Section 1651 of the 2013 NDAA and SBA regulations require that the limitations on subcontracting for full or partial small business set-aside contracts, HUBZone contracts, 8(a) contracts, service-disabled veteran-owned small business contracts, women-owned small business, and economically disadvantaged women-owned small business contracts be evaluated based on the amount paid by the federal government, rather than the previously used cost of labor, or cost of manufacturing calculation. Significantly, the 2013 NDAA and SBA regulations exclude from the limitations on subcontracting the work performed by first-tier subcontractors that are considered "similarly situated entities." It has been 6 years since the 2013 NDAA was signed into law and Congress has respectfully requested a status update and timeline. You can find the article here.
Improvements Needed in SBA’s Oversight of 8(A) Continuing Eligibility ProcessesThe Small Business Administration’s (SBA’s) 8(a) Business Development Program provides economically and socially disadvantaged small business owners with business development assistance and greater access to Federal contracting opportunities. The objective was to determine whether SBA’s oversight ensured 8(a) program participants met continuing eligibility requirements. To answer this objective, OIG judgmentally selected two samples for review. First, they reviewed 15 individually owned 8(a) firms, with the highest 8(a) set-aside contract dollars in FY 2016. The 15 firms received $461 million, or 3.96 percent, of the $11.6 billion in 8(a) set-aside contract dollars awarded to individually owned firms in FY 2016. Second, they reviewed 10 individually owned 8(a) firms based on complaints that the OIG Hotline referred to SBA between October 1, 2015, and May 4, 2017, regarding the continuing eligibility of 8(a) participants to assess SBA’s complaint review process as part of its oversight of the program. The OIG also met with SBA officials to gain an understanding of the current 8(a) program structure and processes. Additionally, the OIG reviewed documents associated with the firms’ annual and continuing eligibility reviews, information in SBA’s 8(a) information systems, and third-party sources for indications of ineligibility. It was found that SBA did not consistently identify ineligible firms in the 8(a) program and did not always act to remove firms it determined were no longer eligible for the program. Additionally, SBA did not perform required continuing eligibility reviews when it received specific and credible complaints regarding firms’ eligibility and did not log all complaints. It was found that 20 of the 25 firms reviewed should have been removed from the 8(a) program. These firms received $126.8 million in new 8(a) set-aside contract obligations in FY 2017 at the expense of eligible disadvantaged firms. For more information on the Audit Report, follow this link.
Class Deviation- Permanent Supply Chain Risk Management AuthorityThe Office of the Undersecretary of Defense issued a Class Deviation, which, effective immediately, removes the sunset date at Defense Federal Acquisition Regulations (“DFARS”) SUBPART 239.73--REQUIREMENTS FOR INFORMATION RELATING TO SUPPLY CHAIN RISK, Section 239.7300(b) and changes the statutory citations in OF ARS subpart 239.73 from section 806 Pub. L. 111-383 to 10 U.S.C. 2339a. Contracting officers shall use the provision and clause provided in the attachment to this deviation in lieu of the provision at OF ARS 252.225-7017, Notice of Supply Chain Risk, and clause at 252.225-7018, Supply Chain Risk, as prescribed in the attachment.
Organizational Name Change to Defense Pricing and Contracting
The Office of the Undersecretary of Defense issued the following Memorandum, which, effective immediately, renamed the organization formerly known as Defense Pricing/Defense Procurement and Acquisition Policy (DP/DP AP), as Defense Pricing and Contracting (DPC). The DPC office is currently evaluating their mission, function, and responsibility.
Performance-Based Payments and Progress PaymentsThe Department of Defense (DoD) is hosting a public meeting on October 10, 2018, to obtain views of experts and interested parties in Government and the private sector regarding revising policies and procedures relating to customary progress payment rates and maximum performance-based payment rates for DoD contracts. 83 Fed. Reg. 184, 47867.
VA Acquisition Regulation Changes:The Department of Veterans Affairs (VA) is amending and updating its VA Acquisition Regulation (VAAR) in phased increments to revise or remove any policy superseded by changes in the Federal Acquisition Regulation (FAR), to remove procedural guidance internal to VA into the 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, to be published in the Federal Register. The first rulemaking revises VAAR concerning Subcontracting Policies and Procedures and Government Property. 83 Fed. Reg. 181, 47097. An additional 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. Finally, a third rulemaking revises the VAAR concerning Contracting by Negotiation and Service Contracting, as well as affected parts covering the Department of Veterans Affairs Acquisition Regulation System, Types of Contracts, Termination of Contracts, Solicitation Provisions and Contract Clauses, and Loan Guaranty and Vocational Rehabilitation and Employment Programs. 83 Fed. Reg. 174, 45374.
‘Unprecedented’ Government Spending Spree Picks Up SpeedAccording to an article on Nextgov.com, the federal government is primed to spend as much as $300 billion in the final quarter of fiscal 2018 as agencies rush to obligate money appropriated by Congress before Sept. 30 or return it to the Treasury Department. The spending spree is the product of the omnibus budget agreement signed six months late in March coupled with funding increases of $80 billion for defense and $63 billion for civilian agencies. The shortened time frame left procurement officials scrambling to find ways to spend the money. Through August, defense and civilian agencies obligated some $300 billion in contracts. But to spend all the money appropriated to them by Congress, they may have to obligate well over $200 billion more in the final quarter of fiscal 2018, which ends in two weeks.
House Small Business Committee Calls for Transparency from Federal AgenciesLast week, House Small Business Committee Chairman Steve Chabot and Ranking Member Nydia Velázquez sent follow-up letters to the heads of three federal agencies requesting further information on small entity compliance guide reporting as required by Section 212 of the Small Business Regulatory Enforcement Fairness Act.
“Small businesses deserve transparency from the federal government and for their voices to be heard in the federal rulemaking process. It is imperative that all federal agencies comply with the law by producing these documents to the Committee, so we can understand the unique effects of regulations on small businesses,” said Chairman Chabot. You can find the letter and more information about this topic here.
Small Business Optimism Hits 45-Year HighOn Tuesday, September 11th, the National Federation of Independent Business (NFIB) released its Small Business Optimism Index from August, which marks a new record high in the survey’s 45-year history. New records were set for job creation plans and unfilled job openings. Inventory investment plans were also at the strongest level since 2005, and capital spending plans were the highest since 2007.
“With small business optimism at the highest its been in 45 years, it’s clear that Americans are prospering, and small businesses are thriving. These historic gains are proof that the new tax law and a reduction in regulations are significantly driving our economic gains. I look forward to seeing continued growth in our economy,” said Chairman Chabot (R-OH)
Chairman Chabot: Our Economy is Full Speed AheadOn Friday, September 7th, House Small Business Committee Chairman Steve Chabot released a statement in light of a U.S. Department of Labor report that 201,000 jobs were created in August, with wages up 2.9 percent for the year, which is the largest increase since June 2009.
“Our economy is going full speed ahead, as evidenced by today’s jobs report released by the Department of Labor. With the unemployment rate remaining near historic lows of 3.9 percent and 201,000 jobs added in August, we are seeing the effects of the tax law and a reduction in regulations. In fact, small business owner’s optimism levels are among the highest in history. It is not just more jobs, but better jobs as wages increased by 2.9 percent from last year, putting more money in hardworking Americans’ pockets. I look forward to more growth from small businesses on Main Street,” said Chairman Chabot.
You can find more information, including the Department of Labor report here.
NLRB Proposes Rule to Limit Joint Employer Test: Small Businesses BewareBy Sarah L. Nash
If at first you don't succeed, try, try again. The National Labor Relations Board ("NLRB") has taken this proverb to heart when it comes to implementing a new test for what it means to be a "joint employer" under the National Labor Relations Act. Following a failed attempt to change the standard through case law, the NLRB is now attempting to revise it by issuing a proposed rule. [Read more]
How New Minimum Wage and Service Contract Act Health and Welfare Rates Apply to Your ContractBy Nichole D. Atallah
As we head into a busy proposal and award season, keep in mind some important changes to Service Contract Act ("SCA") wages and fringe benefits. In July, the Department of Labor ("DOL") issued revised SCA health and welfare ("H&W") benefit amounts, increasing the base rate from $4.41 per hour to $4.48 per hour. An H&W rate of $4.18 per hour is now applicable to employees performing work on contracts that include FAR 52.222-62, Sick Leave for Contractors. This rate takes into account that employers who are required to provide sick leave cannot count sick leave provided against the H&W benefit. Hawaii employers should look closely for special rates that apply to contracts performed there. [Read more]
How a CTA Can Help You Qualify for Government ContractsBy Julia Di Vito
You may have heard of Contractor Team Arrangements ("CTA") that can be used to pursue General Services Administration ("GSA") Schedule contract opportunities, but do you know how a CTA can maximize your ability to qualify for government contracts? CTAs are distinct from traditional prime contractor-subcontractor relationships and joint ventures, and they provide different methods for making your company a more attractive offeror. [Read more]
Taking Advantage of State and Local Small Business CertificationsBy Meghan F. Leemon
Many federal government contractors are familiar with certain federal certifications, such as small business, woman-owned small business, service-disabled veteran-owned small business, and the like, and the contract set-aside benefits that are associated with such socioeconomic designations. While some of these federal certifications may flow down to state and local procurements, many government contractors may also qualify for state and local certifications, which can generate more revenue outside of the ever-competitive federal government contracting marketplace. [Read more]