Federal Construction Contracting Blog

Six New Bills Emerge to Assist Small Businesses

Edward DeLisle — Thu, 22 Mar 2012 13:23:12 -0500

By: Edward T. DeLisle & Maria L. Panichelli

On March 7, 2012, a package comprised of six bills, (H.R. 3850--112th Congress: Government Efficiency through Small Business Contracting Act of 2012 (2012); H.R. 3851--112th Congress: Small Business Advocate Act of 2012 (2012); H.R. 3893--112th Congress: Subcontracting Transparency and Reliability Act of 2012 (2012); H.R. 3980--112th Congress: Small Business Opportunity Act of 2012 (2012); H.R. 4121--112th Congress: Early Stage Small Business Contracting Act of 2012 (2012); H.R. 4118--112th Congress: Small Business Procurement Improvement Act of 2012 (2012)), each designed to increase the number of federal contract opportunities for small businesses, cleared the House of Representatives’ Small Business Committee.

The most notable of the bills is the Government Efficiency Through Small Business Contracting Act (H.R. 3850). It would raise the government’s business goals for procurement contracts awarded to small business concerns, codified at section 15 (g) of the Small Business Act, from 23% to 25% of all prime contract awards per fiscal year. In addition, the bill proposes to increase the current goal of subcontracting to small business from 35.9% to 40% percent. Government-wide goals for procurement contracts awarded to small business concerns owned and controlled by service-disabled veterans (3%), qualified HUBZone small business concerns (3%), small business concerns owned and controlled by socially and economically disadvantaged individuals (5%), and small business concerns owned and controlled by women (5%) will remain the same. An amendment proposed by Rep. Gary Peters, D-Mich., would have raised the set-aside for economically and socially disadvantaged businesses from 5% to 7.5%, but it was withdrawn.

The Small Business Advocate Act (H.R. 3851) elevates agency Small and Disadvantaged Business Utilization offices both in terms of salary and duties. Specifically, it amends the Small Business Act to require the Director of Small and Disadvantaged Business Utilization (established in each federal agency having procurement powers) to be compensated at least at the GS-15 rate and allows such a position to be compensated up to a Senior Executive Service level. It also adds, as additional duties of each Director, the following:

(1) reviewing and advising on decisions to convert an activity performed by a small business to an activity performed by a federal employee;

(2) providing advice and comments on acquisition strategies, market research, and justifications related to small business;

(3) providing training to small businesses and contract specialists;

(4) carrying out exclusively the duties enumerated under the Act and, while Director, not holding any other title, position, or responsibility, except as necessary to carry out such duties; and

(5) reporting annually to the congressional small business committees on the provision of small business and contract specialist training.

Lastly, it amends the Federal Acquisition Streamlining Act of 1994 to require the Small Business Procurement Advisory Council to: (1) conduct reviews of each Office of Small and Disadvantaged Business Utilization to determine compliance with Small Business Administration (SBA) requirements, (2) identify best practices for maximizing small business utilization in federal contracting, and (3) report annually to the small business committees on such reviews and best practices.

The Subcontracting Transparency and Reliability Act (H.R. 3893) would amend the Small Business Act to prohibit a small business receiving a guaranteed loan through the Small Business Administration from expending more on subcontractors than: (1) 50% of the loan amount received, in case of a contract for services other than construction; (2) 85%, in the case of a contract for general construction; (3) 75%, in case of a contract for construction by a special trade contractor; and (4) 50%, in the case of a contract for supplies (other than from a regular dealer in such supplies). This bill would require the small business, in case of a contract for supplies from a regular dealer, to supply the product of a domestic small business manufacturer or processor, unless the SBA grants a waiver. The Bill authorizes the SBA Administrator to: (1) modify the above percentage limits when necessary to reflect conventional industry practices; and (2) establish a subcontractor percentage limit for contracts not covered by (1) through (4), above, and provides penalties for violations of such limits.

Under the bill, each subcontracting plan submitted to federal agencies is required to contain assurances that the offeror or bidder will: (1) report on subcontracting activities throughout the life of the contract, and (2) cooperate with any study or survey required by the federal agency or the SBA to determine the extent of compliance with the subcontracting plan. The bill directs the Administrator to ensure that the federal subcontracting reporting system to which such reports are submitted is modified to notify the Administrator, the appropriate contracting officer, and the appropriate Director of Small and Disadvantaged Business Utilization if an entity fails to submit a required report. It also provides that a contractor’s failure to submit such a report constitutes a breach of contract for which appropriate action may be taken. If an agency procurement center or commercial market representative determines that a subcontracting plan fails to provide the maximum practicable opportunity for small businesses to participate, under the bill, such representative may delay acceptance of the plan for a 30-day period for plan alteration.

The bill also allows a federal agency to convert a function from performance by a small business to performance by a federal employee only if: (1) the agency has made publicly available the procedures for such a decision, and (2) the procedures require such decisions to be reviewed by the appropriate Office of Small and Disadvantaged Business Utilization and procurement representative. (H.R. 3893--112th Congress: Subcontracting Transparency and Reliability Act of 2012. (2012).

The Small Business Opportunity Act (H.R. 3980), amends the Small Business Act to replace the position of “breakout procurement representative” within the Small Business Administration with the position of “procurement center representative.” Pursuant to the bill, such representatives must review any acquisition plan for a procurement requirement and make recommendations regarding procurement method determinations and acquisition plans. The bill would remove the requirement that these representatives review restrictions on competition, instead requiring them to review barriers to small business participation in federal contracting, as well as any bundled or consolidated solicitation or contract. The representatives must: (1) have electronic access to any acquisition plan developed or in development with respect to a procurement activity, (2) be an advocate for the maximum practicable utilization of small businesses in federal contracting, and (3) be notified of and included in all applicable acquisition planning processes.

The bill directs the Defense Acquisition University and the Federal Acquisition Institute to each provide a course on contracting requirements under the Small Business Act, and requires each federal department or agency having contracting authority to: (1) enumerate opportunities for participation by small businesses during all acquisition planning processes and in all acquisition plans, and (2) invite the participation of the appropriate Director of Small and Disadvantaged Business Utilization and procurement representatives in such planning processes and provide Director and representative access to all acquisition plans in development.

The Early Stage Small Business Contracting Act (H.R. 4121) would amend the Small Business Act to direct the Administrator of the Small Business to establish and carry out a program to provide increased access to federal contract opportunities for early stage small businesses (a business with no more than 15 employees and average annual receipts of no more than $1 million). The bill requires the Administrator to identify appropriate federal procurement contracts for award under the program and allows a contracting officer to award: (1) a sole source contract under the program if an entity is determined to be a responsible contractor and the officer does not reasonably expect that two or more early stage businesses will submit offers, and (2) contracts on the basis of competition restricted to early stage businesses if the officer reasonably expects that at least two early stage businesses will submit offers and that the award can be made at a fair market price. It requires all program contract awards to be counted toward goals for small business participation in federal procurement contracts.

Small Business Procurement Improvement Act (H.R. 4118) would amend the Small Business Act to provide for increased small business participation in multiple award contracts, and for other purposes. Specifically, the bill would add to section 15(g) of the Small Business Act a requirement that the President shall establish “government-wide goals for the total dollar value of all task orders and delivery orders placed against multiple award contracts, blanket purchase agreements, and basic ordering agreements awarded to small business concerns, small business concerns owned and controlled by service disabled veterans, qualified HUB-Zone small business concerns, small business concerns owned and controlled by socially and economically disadvantaged individuals, and small business concerns owned and controlled by women.”

What does all this mean? Based upon the bi-partisan nature of the support for these bills, it means that there is agreement across the aisle that small businesses are deemed an important factor in the country’s economic recovery. Expanding the government’s goals for small, and small disadvantaged, businesses, for example, will assist in steering federal dollars to those who may not have otherwise had access to those dollars. Small companies benefitting from the receipt of federal contracts will hire employees and buy goods and services to support those contracts. Large businesses will, and certainly should, play a role in the legislative process as the bills wind their way out of committee. We will follow the progress of each bill and report back with any findings.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group. Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Contractors Must Take Ethics Compliance Seriously

Michael Payne — Thu, 01 Mar 2012 10:31:44 -0500

By: Michael H. Payne

There has been a noticeable increase in the number of contractors proposed for debarment and in the tenacity with which alleged ethical violations are being investigated. Government contractors who receive contract awards in excess of $5 million are required to have a written Code of Business Ethics and Conduct pursuant to the requirements of FAR 3.1002 and FAR 3.1004. (Also See FAR 52.203-13 and 52.203-14). This requirement is very important in light of FAR 9.104-1, which states that to be determined responsible, a contractor must have a satisfactory record of integrity and business ethics. It is incumbent upon federal contractors to take these requirements seriously and to not only have a written code, but to conduct themselves in such a way that ethical conduct is built into the culture of the company.

In our experience, when companies face the possibility of suspension or debarment it is typically because a rogue employee does something foolish, or because someone simply does not follow the rules. Most frequently, the act that comes to the attention of a suspension and debarring official is not something that was done with the knowledge, or approval, of company management. In determining whether the company, and its management, should be held responsible for the misconduct of an employee, however, the suspension and debarring official will be very interested in whether the company has a Code of Business Ethics and Conduct in place, whether there is a compliance program, whether there is on-going ethics training, and whether the ethical culture of the company is effectively communicated to every employee.

Simply having a Code of Business Ethics and Conduct in place is not enough. Too many companies have drafted a code, conducted one round of training, and have had virtually no follow-up for a number of years. That sort of a superficial ethics program will not convince the government that your company has done everything possible to avoid unethical conduct and will increase the risk that the company will be implicated in the misconduct of an offending employee. Our recommendation is that contractors periodically, at least once a year, review and update the company’s Code of Business Ethics and Conduct, that an on-going ethics compliance program be put into place, and that both management and other employees have frequent training. The consequences of not taking the government’s ethics requirements seriously can be devastating.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including ethics compliance, and presents ethics training and compliance seminars.

Will Agencies Be Penalized for Missing Their Small Business Goals?

Edward DeLisle — Wed, 01 Feb 2012 14:16:24 -0500

By: Edward T. DeLisle

On January 18, 2012, Representative Bill Owens (D.-N.Y.) introduced a bill entitled, “The Small Business Growth and Federal Accountability Act” (H.R. 3779). The Act is designed to “hold accountable Federal departments and agencies that fail to meet goals relating to the participation of small business concerns.” In order to achieve this goal, the Act goes on to state that “[if] a Federal department of agency does not meet a covered goal with respect to a fiscal year, that department or agency, in the succeeding fiscal year, may not expend for the procurement of goods or services an amount that is greater than 90 percent of the amount expended for the procurement of goods or services…”

If enacted, the bill would essentially penalize a federal department or agency by slashing its budget by 10% if that department or agency fails to hit its established small business procurement goals. As it currently stands, federal departments and agencies are required to expend 23% of their annual procurement dollars on small business awards. The problem, however, is that there is no penalty if an agency fails to meet this goal. If this bill becomes law that would certainly change. The question becomes: How would federal agencies react to it? The bill does state that “[t]o meet a covered goal, the head of a Federal department or agency may give preference to a small business concern when procuring goods or services.” While it does not define the type of preference that may be given, this concept opens the door to any number of possibilities that could impact the procurement process. For example, will a system emerge during the bill review process that is akin to the 10% price preference currently in existence for the HUBZone program? We will simply have to wait and see. The bill is currently being reviewed by the House Small Business Committee.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

SBA Updates Set-Aside and Protest Procedures for Women-Owned Small Businesses

Edward DeLisle — Tue, 24 Jan 2012 14:19:08 -0500

By: Edward T. DeLisle

On Thursday, January 12, 2012, the Small Business Administration issued an interim final rule, which alters the protest procedures pertaining to its Women-Owned Small Business (WOSB) Program. The changes serve two primary functions. First, when the SBA implemented the WOSB program by publishing a final rule in the Federal Register on October 7, 2010, it established set-aside thresholds of $5 million for contracts pertaining to manufacturing and $3 million for all other contracts. As part of the new interim rule, those thresholds have increased to $6.5 million and $4 million, respectively, to account for inflation.

Second, the changes ushered in as part of the interim rule, make the protest procedures for the WOSB Program consistent with the SBA’s other set-aside programs. For example, under the procedures that existed before issuance of the interim rule, if a contracting officer received a protest on a WOSB set-aside and, nonetheless wished to make an award, that contracting officer would have to issue a written determination concluding that doing so was required to prevent significant harm to the public interest. This requirement is inconsistent with the procedure outlined for other programs. Under the interim rule, a contracting officer may issue an award, despite a protest, if he or she makes the simple determination that doing so is necessary to protect the public interest.

As there have been few reported protests involving the WOSB Program, the new rules should not cause wide-spread confusion. If you are considering a protest, however, you are encouraged to read the changes and consult with a legal professional if you have any questions.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

VA's Ambiguous Solicitation Leads to Successful Protest

Michael Payne — Mon, 09 Jan 2012 15:25:23 -0500

By: Edward T. DeLisle

Over the last several years, the scrutiny over federal small business programs has grown. That scrutiny has led to changes in policy and legislation designed to curb potential fraud in the procurement process. Because these changes have been implemented in such a short period of time, however, it is not unusual for the government to issue solicitations for small business set-aside contracts that are confusing, or even contradictory. In Commandeer Construction Company, Inc., B-405771, December 29, 2011, that is precisely what occurred resulting in a successful protest.

Commandeer Construction involved a solicitation that was set aside for Service-Disabled, Veteran-Owned Small Businesses (SDVOSBs), a program that has experienced much change in recent years. In 2006, the VA was given the authority to restrict competition to SDVOSBs as part of the Veterans Benefits, Health Care, and Information Act (the "Act"). 38 U.S.C. 8127(d). As the GAO explained in Commandeer Construction, pursuant to the Act, an SDVOSB set-aside contract may only be issued to entities listed in a database of veteran-owned small businesses maintained by the VA. The VA has chosen to use what it has termed its "Vendor Information Pages" ("VIP"), which can be found at www.vetbiz.gov, as its official listing of veteran-owned and service-disabled, veteran-owned concerns.

Subsequent to issuance of the Act, the VA issued VAAR 804.1102, which states that all VOSB and SDVOSB entities must be listed in its VIP database by January 1, 2012 in order to be eligible for set-aside contracts for such entities. By December 31, 2011, all VOSB and SDVOSB entities must not only be listed, but must also be "verified," in order to receive new contract awards under the Veteran's First program, a program operated exclusively by the VA. While firms were once permitted to self-certify their status as VOSBs and SDVOSBs, as part of Veterans Benefits Act of 2010, the VA instituted a more rigorous qualification process. Consistent with this new review procedure, which was designed to weed out fraud, the VA's "Center for Veterans Enterprise" ("CVE") was given the authority to render eligibility determinations for these programs. If a firm wished to obtain a set-aside contract as a VOSB or a SDVOSB entity, it would have to be verified by CVE.

In an effort to assist in the transition from a self-certifying system to one requiring government approval, the VA issued what it called its "Memorandum from VA Acting Associate Deputy Assistant Secretary for Procurement Policy, Systems Oversight and Accompanying Class Deviation from VA Acquisition Regulation" (the "Memorandum"). The Memorandum referenced what the VA described as a "class deviation." Based upon this class deviation, any "apparently successful offeror" that had not already been verified by CVE, could become verified on an expedited basis, and obtain an award of a VOSB or SDVOSB set-aside contract, provided CVE approved its status. Later, the VA clarified its position regarding who may qualify for a “class deviation,” taking the position that a company was not eligible for “either award or Fast Track Verification," unless it was visible in the VA’s VIP database. Commandeer Construction addressed the interplay between the class deviation identified in the Memorandum and the VA’s attempt to subsequently clarify what it meant.

In Commandeer Construction, the VA issued an IFB for a construction contract that was set aside for eligible SDVOSB firms. The solicitation stated that the award would be made to an SDVOSB firm that had “been verified for ownership and control and [was] so listed in the [VIP] database.” The IFB also included the “class deviation” language referenced above. What was not included as part of the IFB, however, was the Memorandum (and accompanying deviation), or the clarification made to the deviation, which was issued after the fact.

On August 8, 2011, the protesting party, Commandeer Construction, submitted an application to the CVE for approval as an SDVOSB. Thereafter, on August 30, 2011, Commandeer submitted its bid. As its bid was the lowest of those submitted, Commandeer was in line for an award. As it was not listed in the VIP database, however, the contract specialist for the VA intended to contact Commandeer for purposes of explaining the process of obtaining expedited verification.

Prior to contacting Commandeer, the VA contract specialist apparently learned of the clarification for the first time and discussed its meaning and significance with other VA officials. Based upon these discussions, the VA contract specialist decided that Commandeer was ineligible for award and informed it of such by letter dated August 31, 2011. At the time, CVE had not rendered a final decision on Commandeer’s SDVOSB eligibility.

Commandeer protested VA’s decision, taking the position that rejecting its bid was improper based upon the expedited review procedures outlined in the solicitation. The VA countered that the deviation clause, upon which Commandeer relied for potential eligibility, was never meant to apply to entities that were absent from the VIP database. According to the VA, the deviation clause was merely an effort to provide assistance to those firms that had already self-certified, but had not yet been CVE verified under the new review procedures. Commandeer Construction at 4.

The GAO based its decision on a strict reading of the solicitation. The deviation clause in the solicitation specifically stated that “the apparent successful offeror” would be given an opportunity to have its SDVOSB status reviewed on an expedited basis, if it was not “currently listed as verified” in the VIP database. While the VA may not have intended for the deviation to apply to firms not already listed in its VIP database, the GAO concluded that the solicitation itself did not provide that qualification. As such, Commandeer’s understanding that it could qualify for award pursuant to the expedited review procedure was reasonable. Based upon this finding, the GAO recommended that the VA complete its review of Commandeer’s verification documents and, if found to be eligible for SDVOSB status, award it the contract.

As the government continues to alter its approach in exercising control over small business programs, mistakes, such as those in Commandeer Contracting, will happen. Contractors must exercise care in reviewing and responding to any solicitation. If, during the course of the review process, an ambiguity is discovered, bring it to the attention of the contract specialist, contracting officer, or source selection authority immediately. Doing so will benefit all bidders and quite possibly prevent a pre-bid protest. For those ambiguities that are not readily detectible, and are only revealed at the time of contract award, be prepared to discuss your concerns with an attorney familiar with such issues right away, as a protest is likely your only source of recourse. For those participating in the government’s various small business programs, the fast-paced nature of regulatory change has opened these programs up to issues such as those presented in Commandeer Contracting. Bid and beware.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Court Reverses Termination for Default and Criticizes the Army Corps of Engineers for Failing to Acknowledge Its Defective Design

Michael Payne — Fri, 06 Jan 2012 15:38:46 -0500

By: Michael H. Payne

A decision was issued by the United States Court of Federal Claims on December 20, 2011, in Martin Construction Co. v. United States, a case involving a Corps of Engineers construction project in North Dakota. Martin was represented by Michael Payne and Joseph Hackenbracht, of Cohen Seglias Pallas Greenhall & Furman, and the case involved a termination for default by the Omaha District of the Corps on a multi-million dollar project involving the construction of a marina. The termination occurred because the Contracting Officer concluded that Martin was at fault for failing to complete the project by the required contract completion date. Martin had argued that the Corps’ design of the cofferdam (temporary dam), which was critical to the construction of the marina, was defective and that the contractor was effectively prevented from completing the marina according to the original schedule. The Court agreed that there was a defective design and found that the Corps’ designer had grossly underestimated the amount of water that would flow through the cofferdam.

The decision is extremely critical of the Corps of Engineers and amounts to a complete vindication of Martin. The Court ruled that the termination for default was wrongful and ordered a conversion to a termination for convenience. This, of course, now exposes the Corps to the payment of damages amounting to millions of dollars to compensate Martin for the costs incurred in attempting to deal with the defective design. The Court aptly noted that “The most troubling aspect of this case is the Corps’ adamant refusal to accept any responsibility for the defective design, even while Martin made every effort to comply with it.” The Court was also very critical of the Contracting Officer and stated that “Competent procurement officials would have acknowledged the agency’s obvious design mistake, made the necessary corrections, and afforded the contractor the contractor the additional time and money to complete performance.”

The Court concluded that the “evidence is overwhelming” that Martin was entitled to a time extension and that the termination for default was improper. Judge Thomas Wheeler quoted Martin’s geotechnical and scheduling experts, and he also quoted the Plaintiff’s brief by stating that “As Plaintiff’s counsel aptly pointed out, the Defendant ‘ignored the elephant standing amongst the teacups in the living room.” The decision is an important verification to the federal contracting community that a termination for default is a “drastic action” that will not be sustained unless the government can meet its burden of proof that the termination was justified. It was unfortunate, however, that Martin was forced to suffer the consequences of the “black mark” associated with a default termination until, as in this case, justice was ultimately served.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Protester Wins Because the Government's Best-Value Analysis was Irrational

Michael Payne — Wed, 28 Sep 2011 14:40:17 -0500

By: Michael H. Payne

A protest that challenges the source selection decision on a negotiated, best value, procurement is not easy to win. Numerous decisions of the GAO and the United States Court of Federal Claims have held that procurement officials are entitled to substantial deference. In a recent decision by the Court of Federal Claims, however, the Court stated that “such deference is not unlimited.” See Firstline Transportation Security, Inc. v. United States dated September 27, 2011. While the protest did not involve a construction project, and dealt with a Department of Homeland Security contract for airport screening services, the Court’s decision is certainly applicable to procurements for construction.

The Plaintiff argued that the Source Selection Evaluation Board (“SSEB”) failed to conduct a proper best-value analysis and actually awarded the contract on a lowest-price, technically acceptable basis. That, of course, was improper because the government advertised that there would be a best-value tradeoff that would weigh all of the evaluation factors and price. While a number of protesters have alleged that the Government ignored the advertised evaluation factors and simply found a way to award to the lowest price, it is refreshing to know that, in this case, the Court agreed that the facts supported the protester’s contention.

The Court’s decision is quite lengthy (79 pages) and we will not discuss it in detail, but a copy is linked to this article and we recommend that you give it a quick review. In essence, the Court found that that the best-value analysis performed by the SSEB was both irrational and inconsistent with the evaluation scheme set forth in the RFP. In criticizing the agency, the Court stated that the SSEB failed to account for the significant differences between the competing proposals with respect to technical quality; and, that in selecting a higher-priced, technically superior proposal for award, an agency must explain and document why the technical merits of that proposal warrant its higher price. The Court stated:

[T]he agency is compelled by the FAR to document its
reasons for choosing the higher-priced offer. Conclusory
statements, devoid of any substantive content, have been
held to fall short of this requirement, threatening to turn
the tradeoff process into an empty exercise. Indeed, apart
from the regulations, generalized statements that fail to
reveal the agency’s tradeoff calculus deprive this court of
any basis upon which to review the award decisions.

The finding regarding lack of documentations is particularly welcome because we see so many cases where the GAO and the Court accept very sparse documentation without putting the agency to the test of fully explaining, and supporting, its source selection rationale.

The decision in this case is noteworthy because it holds out the hope that where the facts support a protester’s allegations, the Court will not simply defer to the discretion of the agency. The Source Selection Authority (“SSA”) in this case did not perform an independent evaluation and assessment of competing proposals which, of course, explains why there was no documentation of any such assessment. The Court found this to be particularly egregious and emphasized that the “SSA’s documentation is limited to her adoption of the SSEB report and her otherwise unsupported statement that the intervenor’s proposal represents the best value to the government.” The more that federal agencies are required to document and fully explain the basis for their procurement decisions, the more likely it will be that procurement decisions will be made fairly and impartially.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

GAO Expands Its Jurisdiction to Consider All Task Order Protests

Michael Payne — Thu, 07 Jul 2011 10:40:52 -0500

Prior to 2008, dating back to 1994, it was not permissible to protest a task order. The 1994 enactment of the Federal Acquisition Streamlining Act ("FASA") provided that protests over task or delivery orders were barred unless the protest alleged that the order increased the scope, period, or maximum value of the underlying contract through which the order was issued. That changed with the passage of the Defense Authorization Act of 2008 ("NDAA"), which contained an amendment that expanded the jurisdiction of the GAO to include protests of task or delivery orders valued in excess of $10 million. 41 U.S.C., Section 253j(e)(2). The NDAA also contained a sunset provision, which stated that the "subsection shall be in effect for three years." Section 253j(e)(3). The three year period expired on May 27, 2011. The question then arose as to whether the GAO could lawfully consider task and delivery order protests after May 27, 2011. That question was recently answered in the affirmative by the GAO.

In a protest filed by Technatomy Corporation, of Fairfax, Virginia, the protester argued that the agency unreasonably evaluated vendors' technical and cost quotations. The government argued that the protest should be dismissed because the GAO's jurisdiction had expired. In a decision issued on June 14, 2011, the GAO disagreed with the government and ruled that it now has jurisdiction to rule on all task and delivery order protests, regardless of their dollar value. The reasoning of the GAO was that the sunset provision which gave the GAO the authority to consider task and delivery protests in excess of $10 million (for three years) replaced the former statutory provision (1994 - “FASA”) that provided for only very limited task order review. The GAO concluded that when the three year period expired, its authority to consider task and delivery order protests did not simply revert to the pre-2008 jurisdictional level, but actually reverted back to the pre-1994 level.

In other words since the pre-2008 limitations were eliminated by the sunset provision in 2008, the only thing left is the pre-1994 jurisdiction under the Competition in Contracting Act which places no limitation on the GAO's authority to consider task and delivery order protests. The GAO will therefore accept jurisdiction of all protests involving task and delivery orders regardless of the dollar value. This also raises the interesting question of whether, based on the GAO’s decision in Technatomy Corporation, the Court of Federal Claims will now accept jurisdiction of task and delivery order protests, as well.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Terminology Differences Between a "Bidder" and an "Offeror"

Michael Payne — Mon, 27 Jun 2011 10:20:26 -0500

By: Michael H. Payne

Government contractors frequently use incorrect terminology to describe a solicitation. For example, clients often call me and ask why they were not awarded a contract even though they had submitted the lowest bid. The first thing that I ask is whether the solicitation was a Request for Proposals ("RFP"), or an Invitation for Bid ("IFB"). If it was an RFP, the award was probably based on best value and the lowest-priced proposal would not necessarily receive the award. If the solicitation was an IFB, there would be more of a question about why an award was not made to the lowest-priced bidder. Of course, even in sealed bidding the lowest bidder must also be responsive and responsible in order to receive an award, so there can be a valid reason as to why the lowest bidder did not receive the award.

The best way to show that you understand the basics of the federal procurement process is to remember that responses to an IFB (sealed bid solicitation) are referred to as "bids," and responses to an RFP (negotiated procurement) are referred to as "proposals" or "offers." In other words, the proper terms under an IFB are "bid," "bidder," and "sealed bid," and the proper terms under an RFP are "proposal," "offer," and "offeror." Your lawyer will become very confused if you mix these terms by saying, for example, "I just submitted a bid on an RFP." Sometimes, the only way that I can figure out what my client is talking about is to ask for the solicitation number (the "R" or the "B" in the middle will be a dead giveaway), or I may simply ask my client to send me a copy of the solicitation.

Of course, government procurement personnel frequently add to the confusion. RPPs are often referred to as "negotiated procurements" even though there usually are no negotiations (or "discussions"), and contracting officers often refer to both bids and proposals as "bids," To make matters worse, the GAO and the courts refer to protests of either an IFB or an RFP as "bid protests." No wonder there is so much confusion.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Understanding Contractor Bonds

Michael Payne — Wed, 22 Jun 2011 10:57:13 -0500

Guest Post By: Kristen Bradley

The U.S. boasts a huge contract bond market as federal, state and local government agencies all utilize contract bond law to regulate professionals who work in the construction industry. Inevitably, some contracting firms find themselves unable to qualify for these bonds because they do not have the financial stability needed to back them up. This denies them access to working on publicly funded construction projects.

Contractors who cannot find a surety provider that's willing to issue them necessary bonds might complain that contract bond requirements are too strict and difficult to fulfill. Their purpose, however, is to deter unqualified and financially unstable contractors from working on projects for which they might not be qualified. Contractor bonding helps stabilize the industry in a number of legally enforceable ways.

Contract Bond Protection

Contract bonds work to protect the best interests of the project owners and government agencies that fund construction projects, as well as the best interests of the public.

The Surety Information Office explains how crucial surety bonds are to the financial success of the construction industry:

"The use of corporate surety bonds makes it possible for the government to use private contractors for public construction projects under a competitive sealed bid, open competition system where the work is awarded to the lowest responsive bidder. Political influence is not a factor, the government is protected against financial loss if the contractor defaults, and certain laborers, material suppliers and subcontractors have a remedy if they are not paid, all without consequence to the taxpayer."

Bid bonds specifically work to keep the bidding process honest. When a contracting firm submits a bid bond along with a project bid, it makes a legal promise that it won't increase the bid after being selected to work on the project. For example, the city of Philadelphia frequently requires contracting firms to provide a bid bond that's 10% of the total bid amount. If the winning contractor raises the bid after being awarded the project, the city could collect on the bond to gain financial reparation.

Contract Bonds and the Surety Bond Process

Contract bonds function as do other surety bond types. Contractors and contracting firms purchase surety bonds to financially guarantee some aspect of their work. When a surety provider issues a bid bond to a contractor, the bond essentially acts as a legally binding contract among three entities:

1. the principal: the contractor or contracting firm that purchases the bond as a promise that the bid will not be increased
2. the obligee: the project owner that requires the bond to protect itself from potential financial loss
3. the surety: the agency that executes the bond, thus providing a financial guarantee that the contractor won't increase the bid

Although bid bonds are often used for publicly funded projects managed by the government, private project owners can also choose to take advantage of their protective benefits.

How Surety Bonds Affect the Bidding Process

When government agencies or other project owners require bid bonds, the contracting firm must purchase a bid bond and submit it along with its original bid. Bid bonds may not be purchased after a bid has been submitted, and surety providers will not execute a bid bond after a contracting firm has already submitted its formal bid to a project owner.

Contracting firms that want to bid on high scale public construction projects must have a high bonding capacity. Contracting firms can take a few approaches to increase their bonding capacities, such as

• making more investments
• taking their net cash position down to zero
• excluding net pension liabilities and construction credits in residential development co-ops

Although the effort required to secure bid bonds for high scale projects might seem unnecessary to some contractors, the stability they give the construction industry is irreplaceable.

This article was provided by SuretyBonds.com, a nationwide surety bond producer.
SuretyBonds.com offers surety bond education to contractors who need to purchase contract bonds. The agency believes that contractors should understand the bonding market so they are prepared for the surety bond application process.

Beware the False Claims Act

Michael Payne — Mon, 06 Jun 2011 13:35:35 -0500

By: Edward T. DeLisle

Pursuant to the Contract Disputes Act of 1978 (CDA), every claim on a federal construction project that is in excess of $100,000 must be certified. The reasoning behind this policy is simple: the government wants to discourage the submission of questionable and/or inflated claims. As such, for each claim in excess of the threshold amount, a contractor must append the following language to its claim:

I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the Contractor believes the Government is liable; and that I am duly authorized to certify the claim on behalf of the Contractor.

If a contractor submits a claim that it has reason to believe runs afoul of this affirmation, it is subject to a variety of penalties. Those set forth in the False Claims Act (FCA) are the most daunting and represent those that the government will most likely pursue if it becomes aware of a potential violation.

In order to be liable under the civil version of the FCA, the government (or an individual in a qui tam action) must prove that the contractor submitted false information and had actual knowledge that the information was false; acted in deliberate ignorance of the truth or falsity of that information; or acted in reckless disregard of the truth of falsity of the information. If, after an evidentiary hearing, a fact finder determines that a violation took place, a contractor can be assessed fines, damages, or both. Fines can range from $5,000 to $10,000 per violation. This can amount to quite a penalty indeed. For example, in Ab-Tech Const., Inc. v. U.S., 31 Fed.Cl. 429 (1994), a contractor was successful in obtaining the award of a contract issued as an 8(a) set-aside. It subsequently pursued a claim for an equitable adjustment of its contract. The government filed a counterclaim under the FCA, alleging that the contractor was not eligible to receive the award, thereby forfeiting its claim. The government also demanded penalties in the amount of $10,000 for each instance that the contractor submitted an invoice for payment, arguing that in each case the contractor was effectively asserting that it was an eligible participant under the 8(a) program. The court ultimately agreed that the government was entitled to a penalty of $221,000, $10,000 for each payment application submitted by the contractor.

The government can also seek treble damages under the FCA. While many of the reported cases that involve the assessment of treble damages pertain to egregious violations, that does not preclude the government from pursuing such a remedy in more benign situations. See Morse Diesel Intern v. U.S., 79 Fed.Cl. 116 (2007)(assessing treble damages where contractor billed the government more than $1.6 million for reimbursement of bond premiums that were not paid and in excess of $650,000 for false indemnity payments to a parent company).

The above must be taken very seriously based upon the current trends in federal government contracting. The GAO has issued a number of reports over the last several years identifying instances of fraud in the government procurement process. Those reports have generated intense interest on Capitol Hill, resulting in legislation such as the Small Business Contracting Fraud Prevention Act of 2011. The Act would allow for stricter enforcement of the regulations governing small business procurement and increase prosecutions, suspensions and debarments for violations. Similarly, there is a push to amend the FCA to increase the statute of limitations for offenses from six (6) to ten (10) years, expand the ability of the government to obtain awards in excess of any actual losses incurred and apply these principals in a retroactive fashion. All of this suggests increased vigilance in the prosecution of potential instances of fraud. Inevitably, as the government attempts to vigorously root out the evils in the system, there will be honest, hard-working contractors who find Justice knocking on their door. Contractors must be aware of the FCA and the world we now live in and have sufficient controls in place to avoid any unwanted visitors.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

This article was originally published on Law360.

Contractors Should Beware of FAPIIS

Michael Payne — Thu, 19 May 2011 09:50:51 -0500

By: Michael H. Payne

The Duncan Hunter National Defense Authorization Act of 2009 (Public Law 110-417) was enacted on October 14, 2008. Section 872 of the Act required the development and maintenance of an information system that contains specific information on the integrity and performance of covered Federal agency contractors and grantees. The Federal Awardee Performance and Integrity Information System (“FAPIIS”) was developed to address these requirements. FAPIIS is a distinct application that is accessed through the Past Performance Information System (PPIRS) and is available to federal acquisition professionals for their use in award and responsibility determinations. FAPIIS provides users access to integrity and performance information from the FAPIIS reporting module in the Contractor Performance Assessment Reporting System (CPARS), proceedings information from the Central Contractor Registration (CCR) database, and suspension/disbarment information from the Excluded Parties List system (EPLS). (Past performance information on construction contracts is stored in the Construction Contractor Appraisal Support System “CCASS”).

Contractors need to be aware that FAPIIS includes information relating to a contractor’s past performance reviews, suspensions, debarments, nonresponsibility determinations, and civil, criminal and administrative proceedings that include a contractor's performance of federal, state and local contracts. Since contracting officers will be reviewing this information when they conduct responsibility determinations, contractors need to be certain that the information is accurate. In addition, since some of the information, excluding past performance information, is available for public review, there is a possibility that competitors will look for information to use against a contractor in a bid protest. That provides all the more reason that contractors should be diligent in assuring that inaccurate information does not remain on the system.

The new requirements, that became effective on April 15, 2011, are implemented by FAR 9.104-7 and the clause found at FAR 52.209-9., and further information can be found at the Contractor Performance Appraisal Reporting System (“CPARS”) website, and by reading the FAPIIS User Manual.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on compliance and federal procurement matters.

The Time to File a Bid Protest

Michael Payne — Mon, 09 May 2011 13:51:20 -0500

By: Michael H. Payne

The GAO requires, as provided in 4 CFR 21.2, that:

(a)(1) Protests based upon alleged improprieties in a solicitation which are apparent prior to bid opening or the time set for receipt of initial proposals shall be filed prior to bid opening or the time set for receipt of initial proposals. In procurements where proposals are requested, alleged improprieties which do not exist in the initial solicitation but which are subsequently incorporated into the solicitation must be protested not later than the next closing time for receipt of proposals following the incorporation.

(2) Protests other than those covered by paragraph (a)(1) of this section shall be filed not later than 10 days after the basis of protest is known or should have been known (whichever is earlier), with the exception of protests challenging a procurement conducted on the basis of competitive proposals under which a debriefing is requested and, when requested, is required. In such cases, with respect to any protest basis which is known or should have been known either before or as a result of the debriefing, the initial protest shall not be filed before the debriefing date offered to the protester, but shall be filed not later than 10 days after the date on which the debriefing is held.

Of course, filing a GAO protest may not achieve any meaningful relief unless the project is stayed pending resolution of protest. In this regard, FAR 33.104(c) provides that "When the agency receives notice of a protest from the GAO within 10 days after contract award or within 5 days after a debriefing date offered to the protester for any debriefing that is required by 15.505 or 15.506, whichever is later, the contracting officer shall immediately suspend performance or terminate the awarded contract," except when the interests of the United States will not permit waiting for a GAO decision. The key here is that, in a negotiated procurement, the agency must have received notice from the GAO within five days after the debriefing. That means that the protest needs to be filed as quickly as possible after the debriefing in order for there to be any realistic possibility that the GAO will notify the agency in time. In our experience, when agencies receive notice even one day late, they will refuse to impose a stay.

The rigid timeliness requirements of the GAO often lead protesters to file bid protests in the United States Court of Federal Claims where there is no 10-day, or 5-day, time limit, and where a debriefing is not a prerequisite to filing a protest on a negotiated procurement. The downside, however, is that the Court does not grant an automatic stay and a protester must file a motion for a temporary restraining order in order to halt further performance pending resolution of the protest. In our experience, the government frequently agrees to voluntarily stay performance once the protest is filed (often at the urging of the judge) and a TRO hearing is not always required.

It should also be noted that if a protest involves a matter that should have been raised prior to bid opening, or prior to the date for receipt of proposals, such as a challenge to the terms of the solicitation, a protest filed after award will be dismissed as untimely. The Court of Appeals for the Federal Circuit has held that “a party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection subsequently in a bid protest action in the Court of Federal Claims.” (See Blue and Gold, 492 F.3d 1308). Accordingly, contractors should consult with legal counsel to be certain that all of the procedural requirements of a protest have been met.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on bid protests and federal construction matters.

Federal Construction Contract Claims Must be Evaluated Fairly

Michael Payne — Wed, 23 Mar 2011 14:46:21 -0500

By: Michael H. Payne

The growth of contracting by negotiation or “best value” procurement, has had a chilling effect on the submission of claims by construction contractors. There seems to be a growing fear that claims are frowned upon by contracting officers and that they will be counted against a contractor during future proposal evaluations. This fear, in my opinion, is misplaced provided that the claims are not frivolous and are technically and legally supported.

The Contract Disputes Act of 1978, 41 U.S.C. § 601 et. seq., requires contractors to certify that claims in excess of $100,000 are “made in good faith,” that all “supporting data are accurate and complete to the best of [the contractor's] knowledge and belief,” and that the amount requested “accurately reflects the contract adjustment for which the contractor believes the government is liable.” 41 U.S.C. § 605(c)(1). A contractor who is willing to make that certification should not be denied the opportunity to recover the additional costs, or time, that the contract and the law specifically allow. There are a number of clauses in federal construction contracts, including “Changes” (FAR 52.243-4), “Differing Site Conditions” (FAR 52.236-2) “Suspension of Work” (FAR 52.242-14) “Termination for Convenience” (FAR 52.249-2), etc., that afford contractors with the right to seek an equitable adjustment to the contract. These clauses apply to sealed bidding and negotiated procurements alike, and the fear of retribution on proposal evaluations should not be used to deny contractors the very rights that the contract and the law provide.

It is also important to note that contracting officer’s are required to deal with claims fairly, and there is a duty of good faith and fair dealing in government contracting. As the U.S. Court of Federal Claim noted in Lavezzo v. United States, a contracting officer is obligated to “put his own mind to the problems and render his own decisions.” Such decisions must be “personal [and] independent,” and “even the appearance of coercion [must] be avoided.” 74 Fed.Cl. 502, 509 (2006). In addition, a Contracting Officer's outright denial of meritorious contractor claims to gain some advantage over the contractor will not be condoned by the Court. In other words, a contracting officer's review of certified claims submitted in good faith is not intended to be a negotiating game where the agency may deny meritorious claims to gain leverage over the contractor. Moreland Corp. v. U.S., 76 Fed.Cl. 268 (2007). Contractors are legally entitled to submit claims, to have those claims fairly and impartially reviewed, and contractors are entitled to do so without fear of the impact on future source selections.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters, including teaming arrangements, negotiated procurements, bid protests, claims, and appeals.

Senate Bill Introduced to Combat SBA Fraud

Michael Payne — Mon, 21 Mar 2011 10:28:50 -0500

By: Edward T. DeLisle

Senator Olympia Snowe, R-Maine, introduced a bipartisan bill on Thursday that is designed to combat fraud and abuse in the world of small business contracting. As we have reported, the General Accounting Office (GAO) has issued a number of reports over the last several years detailing the existence of fraud in the HUBZone, Service-Disabled, Veteran-Owned Small Business (SDVOSB) and 8(a) programs. These reports have generated much discussion about the need to revamp the system and, in certain circumstances, talk has led to action. The implementation of the current SDVOSB verification system is but one example of the government’s response to the current state of affairs. S. 633, entitled the “Small Business Contracting Fraud Prevention Act of 2011” (Fraud Prevention Act), is designed to take the government’s ability to respond to fraud and abuse in small business contracting to a new level.

As reported by Law360, the Fraud Prevention Act contains three key provisions:

     1. It calls for the development of an oversight structure within the Small Business Administration (SBA) that would allow for better enforcement of the rules governing small business contracting;

     2. It would allow for an increase in criminal prosecutions, suspensions and debarments for those who violate the rules; and

     3. It would require the SBA to issue annual reports to Congress regarding those who are suspended, debarred or referred to the Department of Justice for prosecution.

S. 633 is yet another step to close the loopholes that have developed in the federal government’s small business contracting system. We will track this legislation and report any further developments.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Possible Extension of GAO's Protest Authority in the Works

Michael Payne — Thu, 10 Mar 2011 10:42:48 -0500

By: Edward T. DeLisle

As part of the National Defense Authorization Act of 2008 (the 2008 Act), Congress provided the General Accounting Office (GAO) with the authority to hear protests involving certain task and delivery order contracts emanating from both defense and civilian agencies. At the time, this authority was limited to a period of three years, meaning that it was set to expire later this year. A few months ago, President Obama signed the National Defense Authorization Act of 2011 (the 2011 Act). As part of that Act, Congress partially extended the GAO’s authority. It permitted the GAO to continue hearing task and delivery order protests for contracts in excess of $10 million, but only for those contracts issued by Department of Defense agencies. For a reason not readily apparent, Congress failed to extend the GAO’s authority over civilian agencies. A bill has emerged in the Senate to address this omission.

As reported by Law360, Senate Bill 498, entitled the “Independent Task and Delivery Order Review Extension Act of 2011,” was recently introduced by Senate Homeland Security and Governmental Affairs Committee Chairman Joseph Lieberman, I-Conn. If passed, it would extend the GAO’s jurisdiction over task and delivery order protests relating to civilian agencies for an additional five and a half years, equaling the extension provided on DOD protests under the 2011 Act. This is an important development for government contractors. Many questions arose following passage of the 2011 Act. Why would Congress only extend the GAO’s authority over task and delivery orders on DOD work? It is possible that this was simply an oversight, though no one is quite sure. The legislative history is devoid of any discussion on the issue. Whatever the reason, if passed, S. 498 would maintain the status quo for five more years. We will continue to track this bill and report on its progress.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Past Performance Reporting Overseas: Does it Happen?

Michael Payne — Wed, 02 Mar 2011 14:05:23 -0500

By: Edward T. DeLisle

For those who regularly read our blog, you know that we have followed the government’s recent concern about fraud and abuse in the federal procurement process. The GAO has issued reports that recite such abuse relative to the 8(a), HUBZone and SDVOSB programs. As those reports indicate, companies have been awarded set-aside contracts through those programs, but were not qualified to receive them. In certain circumstances, the apparent fraud was so blatant that the hubris, which certainly existed to think such abuses would go unnoticed, puts Charlie Sheen to shame. Yet, as the GAO reports state, even when the abuses were uncovered, many of these contractors continued to receive government awards. It appears that some contractors performing work overseas in places like Iraq and Afghanistan may also be receiving awards that they do not deserve.

As reported by Govexec.com, government agencies responsible for overseas contracts are not properly recording past performance history in the CPAR and PPIR electronic databases. The biggest offenders appear to be the State Department, the Department of Defense and the U.S. Agency for International Development (USAID). Based upon information supplied to the Commission on Wartime Contracting, congressionally mandated to investigate overseas contracting activities, these agencies have failed to properly report past performance history in up to 90% of the contingency contracts they have issued. While the failure to report this information is problematic for many reasons, it certainly exposes the government to contractors who are less than ideal for important government contracts. This is especially an issue as it relates to contractors in line for suspension or debarment. As former Connecticut Congressman Christopher Shays, who is the chairman of the Commission, stated: “[I]f suspensions and debarments are impeded by bureaucratic decisions or inertia, then companies that have committed fraud may continue receiving taxpayer funds. In either case, untrustworthy contractors can continue profiting from government work, responsible businesses may be denied opportunities, and costs to taxpayers can climb.”

Over the years, the government has increasingly relied upon “best value” procurement to let contracts. Past performance is almost always an important factor in determining “best value.” In fact, in most cases, it is the most important factor. If federal agencies intend to continue issuing contracts in this fashion, a practice that is highly questionable for the purchase of certain services, such as construction, then they must make it a point to create a system that allows those deserving of awards to receive them. In the case of small business set aside contracts, the government has started to slowly move in this direction. The VA, for example, is now vetting those contractors on its on-line SDVOSB registry to verify eligibility. If this function is performed correctly, it will greatly enhance the probability that contracts will be let to those who deserve them. With respect to past performance history, there is a system in place. Federal agencies simply need to use it. Hopefully, the findings exposed by the Commission on Wartime Contracting make this a reality.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Important New SBA 8(a) Rules Announced

Michael Payne — Wed, 16 Feb 2011 15:22:09 -0500

By: Michael H. Payne and Edward T. DeLisle

The U.S. Small Business Administration published a package of final rules on February 11, 2011, that will revise the regulations of its 8(a) Business Development program to better ensure that the benefits flow to the intended recipients and help prevent waste, fraud and abuse. The rules were published in The Federal Register and will become effective on March 14, 2011.

The revisions are the first comprehensive overhaul of the 8(a) program in more than 10 years. The regulations incorporate technical, as well as substantive, changes that mirror legislation enacted since the last revision in June of 1998. The rules cover a variety of areas ranging from clarifications on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Protégé program. Some of the components of the 8(a) program that the revised regulations will affect include:

Joint Ventures - The new rules require that the 8(a) firm must perform 40 percent of the work of each 8(a) joint venture contract that is awarded, including those awarded under a Mentor/Protégé agreement, to ensure that these companies are able to “build capacity.” In other words, the SBA has discarded the vague “significant portion” test in favor of a requirement for a protégé to perform 40 percent of the work performed by the joint venture partners.

Economic Disadvantage – The rules provide more clarification on factors that determine economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner when determining the owner’s ability to access capital and credit.

Mentor-Protégé Program – The rules add consequences for a mentor who does not provide assistance to its protégé, ranging from stop-work orders to debarment.

Ownership and Control Requirements – The rules provide flexibility on whether to admit 8(a) program companies owned by individuals with immediate family members who are owners of current and former 8(a) participants.

Tribally-Owned Firms – The rules require firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations to report benefits flowing back to their respective communities.

Excessive Withdrawals – The rules amend the regulations on what amount is considered excessive as a basis for termination or early graduation from the 8(a) program.

Business Size for Primary Industry – The rules require that a firm’s size status remain small for its primary industry code during its participation in the 8(a) program.

Other interesting changes include a revision to the prior practice of allowing a mentor-protégé joint venture to only submit bids or proposals on three solicitations in two years. Under the new regulations, instead of being limited to three bids or proposals over a two-year period, a mentor-protégé joint venture is limited to three contract awards. This is a far more reasonable way to limit participation. In addition, the new regulations also make it possible, with SBA approval, for joint venture partners who meet other small business requirements to form a second or a third joint venture, each with the ability to receive an additional three awards.

We will provide a more in-depth analysis of the new rules prior to the March 14, 2011 effective date and will also post a copy of the amended Code of Federal Regulations when it is published. The 8(a) program is a nine-year business development program for small businesses where the owner(s) fits the SBA’s criteria of being socially and economically disadvantaged and the same owners control the firm. The 8(a) program helps these firms develop their business and provides them with access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace. It also provides specialized business training, counseling, marketing assistance and high-level executive development to its participants. In FY09, small businesses received $18.6 billion in 8(a) contract dollars.

Michael H. Payne is the Chairman of the firm's Federal Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters. Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group who represents contractors on a whole range of small business issues including teaming arrangements and compliance with the SBA’s rules and regulations.

Seminar - Unraveling the Mysteries of Federal Construction Contracting

Michael Payne — Tue, 15 Feb 2011 14:01:41 -0500

Join the Federal Construction Group of Cohen, Seglias as it presents, "Unraveling the Mysteries of Federal Construction Contracting," at two different locations.

Dates/Locations:
March 29, 2011 - Hyatt Regency Savannah, GA
March 31, 2011 - Hyatt Regency Grand Cypress Orlando, FL

Time:
8:00a.m.-1:00p.m.

Cost:
$195.00 per person and $95 for each additional person from the same company.

Attendees will learn about the following topics:

Understanding the FAR and how a Federal construction contract works
The RFP procurement process
Preparing winning proposals on “best value” solicitations
Understanding the IDIQ/MATOC process
How to successfully team on Federal projects
Knowing when, and whether, to file a bid protest
Negotiating contract modifications
Maintaining proper project documentation
Obtaining prompt payment
Preparing and submitting Requests for Equitable Adjustment and Claims
Protecting your rights through the dispute resolution process

Regardless of your experience level, this seminar will help you understand these key concepts and develop strategies for both obtaining federal contracts and profiting from them.

Please click here for complete seminar details and registration form. For questions, please contact Rachel McNally at (215) 564-1700 or rmcnally@cohenseglias.com.

SBA Offers Federal Contract Program for Women-Owned Small Businesses

Michael Payne — Mon, 07 Feb 2011 17:02:20 -0500

By: Edward T. DeLisle

As of Friday, February 4, 2011, women-owned small businesses could begin taking steps to participate in a new federal contracting program just for them. The new Women-Owned Small Business ("WOSB") Federal Contract Program (the "Program") will be fully implemented over the next several months, with the first contracts expected to be let during the fourth quarter of this year.

The Program will provide greater access to federal contracting opportunities for WOSBs and economically-disadvantaged women-owned small businesses (EDWOSBs). It allows contracting officers, for the first time, to set aside specific contracts for certified WOSBs and EDWOSBs, which will assist federal agencies in achieving the existing five percent statutory goal of federal contracting dollars for WOSBs.

Complete information and eligibility requirements of the Program are listed on the SBA website.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.