PilieroMazza’s Weekly Update is an e-mail sent on Fridays that recaps legislative and regulatory issues affecting businesses of all sizes. When government agencies propose significant changes to existing regulations or Congress passes legislation of special interest to the small business community, we follow-up the Weekly Update with an analysis of the proposed change and the likely impact on small business.
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Weekly Report for July 20, 2018
SMALL BUSINESS ADMINISTRATION
504 Loan Program Rural Initiative: Waiver of Limitation on Lending AuthorityAccording to an article in amazonaws.com, the U.S. Small Business Administration (SBA) announced the 504 Loan Program Rural Initiative Pilot Program (504 Rural Pilot). The 504 Rural Pilot waives the restrictions on the authority of Certified Development Companies (CDCs) to make 504 loans outside their Area of Operations to allow each CDC to make loans for 504 Projects with an address located in any rural county if the 504 Project is located in the same SBA Region in which the CDC is incorporated. This pilot will provide rural small businesses with increased opportunities to access capital and will further the statutory public policy goal of the 504 Loan Program to achieve rural development impact.
Contracting with Small Disadvantaged Businesses and Those Owned by Minorities and Women Has Increased in Recent YearsAccording to an article on GAO.gov, the federal government is one of the country's largest advertisers, spending nearly $1 billion annually on advertising contracts. As it does for virtually all of the products and services it buys, the government seeks to provide procurement opportunities for these contracts to certain socially and economically disadvantaged small businesses and to businesses of any size owned by minorities and women. It was found that the government has generally directed an increasing share of its advertising contract dollars to these businesses, averaging about 13 percent over the past five years.
In Pursuit of Innovative Technologies, Department of Defense Creates Another Pathway Around Traditional Acquisition RulesAmid the hype over its growing use of Other Transaction Agreements (OTAs), the Defense Department is taking yet another step into unorthodox contracting methods as it pursues more participation from non-traditional vendors. As part of a four-year pilot program, the Pentagon issued new rules that will let its contracting officers move though streamlined acquisition processes when they’re buying “innovative” commercial goods and services. Much like the department’s burgeoning use of OTAs, they will allow the Department of Defense (DoD) to make purchases without issuing traditional requests for proposal and conducting formal competitions. But unlike OTAs, those purchases won’t be restricted mainly to prototypes. And the term “innovative” is fairly broad, under the June 26 guidance DoD published, known as a class deviation. It sweeps up any commercial “technology, process, or method, including research and development, that is new as of the date of submission of a proposal, or any application that is new as of the date of submission of a proposal of a technology, process, or method.” For more information, please visit here.
U.S. Plans ‘Continuous Evaluation’ of New and Existing Security ClearancesAccording to an article on govexec.com, when the Pentagon starts handling all federal security clearances this fall, it will usher in a brand-new approach to figuring out who can be trusted with dangerous secrets. Whereas the Office of Personnel Management performed an initial background check on individuals who requested clearances, then reviewed its findings every five or ten years, the Defense Department will move toward a more automated “continuous evaluation,” after the initial check, beginning in October, a Department of Defense official told reporters. After an applicant passes their initial screening, they’ll be incorporated into a system in which software continuously scours open-source information — court proceedings, financial data, and more — looking for signs that the person might be turning into a security risk.
White House, House lawmakers want to give Department of Defense’s IT oversight authorities to all agenciesThe White House and House Homeland Security Committee members are developing new legislation to add more rigor to how agencies oversee the technology they buy and use. The Trump administration sent a legislative proposal to the Hillthis week, which recommends giving every civilian agency the same authorities Congress gave the Defense Department in 2011 to better manage its supply chain. The proposal, called Federal Information Technology Supply Chain Risk Management Improvement Act of 2018, would do several things, including establishing a Federal IT Acquisition Security Council and a Critical IT Supply Chain Risk Evaluation Board, and provide agencies with authorities to mitigate supply chain risks when buying technology products and services. At the same time, committee lawmakers are working on similar legislation to bring all agencies up to the same level as the Department of Defense and the intelligence community. For more information, please visit here.
LABOR AND EMPLOYMENT
Court rules against Trump administration on transgender military banAccording to an article on thehill.com, an appeals court on Wednesday ruled against the Trump administration and upheld a court order stalling a ban on transgender individuals serving in the military. The U.S. Court of Appeals for the 9th Circuit upheld a block on the implementation of the ban, which was first announced by President Trump last year. The court's move enables transgender people to continue enlisting in the military until the opposing parties go to trial, expected in April 2019. The administration had filed a motion to stay the preliminary injunction granted by a lower court in December 2017. The 9th Circuit ruling holds that the stay requested by the administration “would upend, rather than preserve, the status quo,” which currently allows transgender people to serve.
DEPARTMENT OF VETERANS AFFAIRS
VA Defends Expedited Firing Law Amid Accusations It's Creating 'Cultural Fear'According to an article on govexec.com, The Department of Veterans Affairs (VA), at a congressional hearing, defended its implementation of a new law easing the firing of its employees, saying any complaints one year into the law’s existence were minor speed bumps on the road to overhauling the culture in the government’s second largest agency. Lawmakers on both sides of the aisle during a House Veterans' Affairs Committee hearing to mark the one-year anniversary of the passage of the VA Accountability and Whistleblower Protection Act expressed concern that VA was circumventing congressional intent in implementing the law. Democrats on the panel repeatedly drew attention to the disproportionate impact the disciplinary cases have had on lower-ranked employees since President Trump signed the measure into law, in turn Republicans questioned whether whistleblowers were truly being protected. Rep. Phil Roe, R-Tenn., the committee’s chairman, suggested the VA was pushing to expand the power of the newly formed Office of Accountability and Whistleblower Protection beyond what Congress had envisioned.
GAO Weighs in on Facility Clearance Requirement for Unpopulated Joint Ventures
By Megan ConnorA recent GAO decision upholds a facility clearance in a U.S. Department of Homeland Security ("DHS") solicitation even if burdensome to unpopulated joint ventures. The protester in the case made a common mistake among unpopulated joint ventures: assuming the clearances of the venturers may be attributed to the joint venture, without going through the process of clearing the joint venture. GAO found the cleared status of the venturers was irrelevant under applicable classified information policies. [Read more]
Weekly Report for July 13, 2018
To Streamline Acquisitions, 809 Panel Presses Department of Defense to Adopt Portfolio ManagementAccording to an article on federalnewsradio.com, the congressionally-mandated panel in charge of finding ways to streamline the Defense acquisition system called on June 28, 2018 for dramatic changes in how DoD organizes itself to define requirements for weapons systems and manage its procurement budgets, saying DoD must move to a “portfolio-centric” approach to procuring military equipment. In the second volume of its report to Congress, the Section 809 Panel said the Pentagon’s current decision making and incentive structures are far too focused on individual weapons programs, not on broader portfolios of capabilities. In a related problem, the panel said the three broader communities within DoD that are in charge of deciding what to buy, prioritizing funding for those systems, and actually conducting procurements, are too siloed to make the agile decisions needed to deliver military capabilities that are relevant to the modern battlefield.
Senators Look to Give Trump Authority to Reform and Reorganize GovernmentAccording to an article in govexec.com, Republican lawmakers have introduced legislation to give President Trump increased authority to reorganize the government as he sees fit, including consolidating, transferring, abolishing or creating agencies. The 2018 Reforming Government Act seeks to start the process for Trump to implement the proposals the White House unveiled last week in its reorganization plan, which included 32 distinct recommendations for reshaping an array of federal agencies. Congress has not granted a president reorganization authority since 1984, though President Carter was the last to actually use the power.
The measure would not give the White House carte blanche to start implementing Trump's proposed reforms. Instead, it would provide a pathway for those recommendations to go before Congress for consideration. Trump would still need to send his formal proposals to lawmakers, who would then have 90 days to approve them. If they took no action, the plans would not advance. The president would have two years to officially send his suggestions to Congress.
Evaluation of Department of Defense Hotline Complaint Regarding Defense Contract Management Agency Baltimore’s Actions on Audit Findings Reported by Defense Contract Audit Agency
According to an article in dodig.mil, DoD evaluated a Defense Hotline complaint alleging that a Defense Contract Management Agency contracting officer at the Baltimore Field office did not take appropriate action on a Defense Contract Audit Agency Audit Report which identified $1.1 million in indirect costs that did not comply with the Federal Acquisition Regulation.
LABOR AND EMPLOYMENT
Pacific Bell Settles Disability Discrimination Lawsuit with EEOCAccording to an article on natlawreview.com, Pacific Bell Telephone Company, formerly known as AT&T Pacific Bell, will pay $15,000 and furnish other relief to settle a disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced. According to the EEOC's lawsuit, Pacific Bell violated federal law when it did not effectively accommodate a deaf employee at its Fresno, California location. Despite the employee's numerous requests for a sign language interpreter, managers chose to provide inadequate accommodations for the worker by standing close to him during meetings so he could read their lips, or by jotting down notes explaining the contents of the meeting after the fact. The EEOC contends that such behavior deprived the worker of equal employment opportunities, privileges, and benefits of employment, which negatively affected him as an employee.
OFFICE OF PERSONNEL MANAGEMENT
Thousands of Feds Would Get Raises under OPM’s Locality Pay ProposalAccording to an article on govexec.com, around 62,000 federal employees could see a pay raise next year, thanks to proposed regulations from the Office of Personnel Management (OPM). OPM Director Jeff Pon published a proposal in the Federal Register to add four regions to its list of locality pay areas for 2019: Birmingham-Hoover-Talladega, AL.; Burlington-South Burlington, VT.; San Antonio-New Braunfels-Pearsall, TX; and Virginia Beach, VA. The proposed rule would mark the first implementation of recommendations from the Federal Salary Council since President Trump took office. The council had recommended the four regions be added in 2016 and 2017, but last December, the President’s Pay Agent delayed action on those proposals until 2019.
Senate Veterans Affairs Committee Votes for Robert Wilkie to lead Department of Veterans AffairsOn July 10, 2018, the Senate Committee on Veterans Affairs held an executive business meeting to consider the nomination of Robert Wilkie to serve as Secretary of Veterans Affairs. The nominee was reported favorably by voice vote, with one Member (Sen. Bernie Sanders, I-VT) requesting to be recorded as voting “no.” The nominee now awaits confirmation by the full Senate in order to be officially appointed by the President. Although no archived video footage exists for this executive business meeting, you can view the transcript here.
Innovation Nation: How Small Businesses in the Digital Technology Industry Use Intellectual PropertyOn July 11, 2018, the House Small Business Committee held a hearing to examine the continuing emergence of new small businesses in the digital technology industry, and to consider ways to safeguard these businesses’ intellectual property. The panel included Frank Cullen of the Global Innovation Policy Center, U.S. Chamber of Commerce, Morgan Reed of ACT | The App Association, Christopher Mohr of the Software & Information Industry Association, and Chris Israel of the Alliance for U.S. Startups & Inventors for Jobs. You can find more information about the hearing here.
Achieving Government-Wide Verification of Service-Disabled Veteran-Owned Small BusinessOn July 17, 2018 at 2:00 p.m., the House Small Business Subcommittee on Investigations, Oversight, and Regulations, and the House Veterans’ Affairs Subcommittee on Oversight and Investigations will hold a joint hearing titled “Achieving Government-Wide Verification of Service-Disabled Veteran-Owned Small Business.” The intent of this hearing is to examine the joint efforts of the Veterans Affairs (VA) and Small Business Administration (SBA) to reconcile the differences between their definitions relating to service-disabled veteran-owned small businesses (SDVOSBs), consider SBA’s ability to assume the responsibility of SDVOSB verification, and evaluate the benefits of extending verification of SDVOSBs government-wide. The witness panel includes Thomas J. Leney, Executive Director of Small and Veteran Business Programs with the Department of Veterans Affairs, Robb Wong, Associate Administrator of the Office of Government Contracting and Business Development at the SBA, William Gould, Senior Advisor with the Office of the Administrator at the SBA, and Davy G. Leghorn, Assistant Director of the American Legion. You can view live footage of the hearing and find more information here.
Senate Moves to Start Negotiations on Defense Policy BillThe Senate officially moved on Tuesday, July 10, 2018, to reconcile its version of the $716 billion annual defense policy bill with the House’s, approving a motion by 91-8 to go to conference. In addition to that move, senators approved two motions to instruct conferees, which are nonbinding directions to negotiators. One, approved 97-2, says Senate negotiators should work to keep in the bill reforms to the Committee on Foreign Investment in the United States (CFIUS). The other, approved by the same margin, says negotiators should reaffirm the U.S. commitment to NATO. For more information, please go here.
GAO Denies Protest Based on Cybersecurity Compliance
Last month, I blogged about DoD's draft guidance on how it will evaluate cybersecurity compliance in the award of contracts. The blog is available here. Based on this draft guidance indicating DoD may use cybersecurity compliance as pass/fail or best value criteria in evaluations, I concluded that bid protests would not be too far behind once DoD finalizes and implements the guidance. [More]
By Jon Williams
No-Poaching Agreements: You Could Be Criminally Liable
Earlier this year, the Department of Justice's Antitrust Division (DOJ) issued the Antitrust Guidance for Human Resource Professionals (DOJ Guidelines), which signaled for the first time that DOJ would "proceed criminally against naked wage-fixing or no-poaching agreements." "No-poaching" or wage fixing agreements are a defense against employees leaving their companies to work for competitors in tight markets. However, companies that are not careful and enter into these agreements could face substantial liability, even criminal liability. By way of example, in 2015, Google, Apple, Adobe, and Intel settled a lawsuit for $415 million for having an agreement not to hire the others' employees. [More]
By Nichole Atallah
New and Proposed Certified Cost or Pricing Data Requirements Will Shift Burdens upon DoD Contractors
Compliance with the requirements of the Truthful Cost or Pricing Data statute ("TCPD"), which is still commonly known as the Truth in Negotiations Act, has been a significant burden to many small business contractors. Under TCPD, federal contractors are required to submit "certified cost or pricing data" to the contracting officer prior to the award of negotiated contracts where (i) the price exceeds a specific threshold and (ii) an exception to the requirement is not applicable. If there is a significant increase in the contract price as a result of the cost or pricing data not being complete, accurate, or current as certified, the government may seek a price reduction from the contractor. [More]
By Patrick T. Rothwell
Weekly Report for June 29, 2018
Federal Acquisition Regulation: Special Emergency Procurement Authority
Class Deviation—Defense Commercial Solutions Opening Pilot Program
Defense Federal Acquisition Regulation Supplement: Undefinitized Contract Action Definitization (DFARS Case 2015-D024)
Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Clause “Requirements” (DFARS Case 2018-D030)
Defense Federal Acquisition Regulation Supplement: Repeal of DFARS Clause “Pricing Adjustments” (DFARS Case 2018-D032)
Defense Federal Acquisition Regulation Supplement: Offset Costs (DFARS Case 2015-D028)
LABOR AND EMPLOYMENT
The Department of Labor issued the following CFR correction:
OFFICE OF PERSONNEL MANAGEMENT
Proposed OPM Reorganization Draws Widespread Criticism
Watchdog Finds Flaws in Certification Process for Women-Owned Small Businesses
The FLSA Is 80 Years Old—Has It Made Us Wiser?
False Claims Act Cases Involving Set-Aside Contracts Held to More Stringent Requirements Following Escobar
Weekly Report for June 22, 2018
White House Proposes a Massive Reorganization of Federal Agencies
- Privatizing the Postal Service.
- Merging the Education and Labor departments.
- Reorganizing safety-net programs into a Department of Health and Public Welfare.
- Creating a governmentwide public-private partnership office to improve services to citizens, and stewardship of public resources.
- Relocating more staff and offices outside the National Capital Region.
- Dramatically shrinking the Office of Personnel Management.
- Revamping the Army Corps of Engineers.
SBC Requests GAO Provide a Report on SBA’s Hurricane Disaster Relief Programs
SBC Learns How Communities that Think Small–Win Big
Cardin to Government Watchdog: How Will Army Restructuring Impact Small Businesses?
Pending Nomination – Secretary of Veterans Affairs
Don't Get Disqualified Because of Organizational Conflicts of Interest
A recent decision from the Government Accountability Office ("GAO") reiterates two important principles concerning organizational conflicts of interest ("OCIs"). First, proactive measures may allow a contractor to effectively mitigate and avoid an OCI. Second, appearances, innuendo, and suspicion are insufficient to establish that a contractor has an OCI. Hard facts are required. [More]
Doing Business Internationally? Litigation Just Became More Difficult!
Over the last twenty years, the expanding world market has made it easier for domestic companies to conduct business overseas and with foreign corporations. Large and small businesses alike are going global, receiving and providing products, services, and intellectual property internationally. But, along with new international opportunities comes an increase in the complexity of business-to-business transactions. And, when business deals between domestic and foreign businesses go south, the legal implications become more difficult to navigate. [More]
Weekly Report for June 15, 2018
Vets First? An Examination of VA’s Resources for Veteran-Owned Small Businesses
The statements of the Subcommittee members and the testifying witnesses confirmed the issues plaguing SDVOSBs and VOSBs that do business with VA through the Vets First program due to the significant efforts of the VA to minimize and avoid using the Vets First program. PilieroMazza attorneys Jonathan T. Williams and Julia Di Vito, along with the Coalition to Defend Vets First, helped to get this hearing scheduled by the Subcommittee and attended the hearing along with a PilieroMazza client who testified about this important issue. This hearing was a substantial first step in advancing SDVOSB, VOSB, and small business issues that PilieroMazza has been working to get VA and Congress to address. You can find more information about this hearing here, and archived video footage here.