| A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1 | Recent SBA Rule Changes | What Changed | Additional Information | FAR Clause | ||||||||||||||||||||||
2 | VETERAN AND SERVICE DISABLED VETERAN SELF CERTIFICATION | EFFECTIVE JANUARY 2023 - VETERAN AND SERVICE DISABLED VETERAN SELF CERTIFICATION WILL NO LONGER BE VALID. FORMAL CERTIFICATION WILL BE REQUIRED BY ALL AGENCIES IN ORDER TO BID ON SET ASIDE OPPORTUNITIES. AT THIS TIME, ONLY THE DEPARTMENT OF VETERANS AFFAIRS REQUIRES FORMAL CERTIFICATION. THE FORMAL CERTIFICATION PROCESS WILL BE THROUGH THE SBA EFFECTIVE JANUARY 2023. PRESENTLY FORMAL CERTIFICATION IS COMPLETED BY THE DEPARTMENT OF VETERANS AFFAIRS FOR COMPANIES WANTING TO BID ON SET ASIDE CONTRACTS OFFERED BY THE DEPARTMENT OF VETERANS AFFAIRS. BELOW IS A LETTER FROM THE SBA ENCOURAGING COMPANIES WHO ARE NOT ALREADY FORMALLY CERTIFIED TO COMPLETE THE VERIFICATION PROCESS WITH THE DEPARTMENT OF VETERANS AFFAIRS IN ORDER TO MAKE THE TRANSITION SEAMLESS. | ||||||||||||||||||||||||
3 | SBA is no longer required to approve competitive 8(a) Joint Ventures, only JVs related to a pending sole source | In accordance with 13 CFR § 124.513(e)(1), the SBA is no longer required to approve competitive 8(a) Joint Ventures, only JVs related to a pending sole source. However, many of you have inquired on the logistical process of verifying your 8(a) status in relation to competitive awards. | Please note, the Richmond District Office continues to process to process eligibility determinations for apparent successful joint venture offerors on competitive 8(a) contract awards. However, for such awards SBA will no longer review the joint venture agreement to assess whether it complies with the provisions of 13 CFR §§ 124.513(c) and (d). | |||||||||||||||||||||||
4 | SBA to Publish Interim Final Rule on Extension of 8(a) Participation | Both the Appropriations Act and the 2021 National Defense Authorization Act permit businesses who were participants in the 8(a) Business Development program on or before September 9, 2020, to extend their participation in the program for a period of one year. Accordingly, the U.S. Small Business Administration (SBA) is expected to publish a final rule incorporating this mandate tomorrow, January 13, 2021. Below are key takeaways for government contractors seeking to extend participation in the 8(a) program. Eligibility Requirements Through the unpublished rule, SBA has further clarified that it believes that any firms participating in the 8(a) program as of the date the national disaster was declared due to the COVID-19 pandemic (March 13, 2020) should receive the program extension. Accordingly, to be eligible for the one-year extension you must: Have been in the 8(a) program as of March 13, 2020, or September 9, 2020. You are not eligible for the one-year extension if you: Graduated or otherwise left the program prior to March 13, 2020; Were a participant between March 13, 2020, and September 9, 2020, but were terminated, early graduated, or voluntarily withdrew; or Were admitted after September 9, 2020. How Will the Extension Be Implemented? If you were an 8(a) participant between March 13, 2020, and the date the rule is published, the extension is automatic, unless your company declines the extension | If you were a participant as of March 13, 2020, but have since graduated, you must notify SBA of your intent to be readmitted for a period of one year from date of completion of the program term (e.g., if you graduated on November 25, 2020, your program participation would be extended until November 25, 2021). This notification must be received by SBA no later than 60 days after the rule is published. You must certify that you continue to meet the eligibility requirements. All requests for re-admittance must be submitted to: Associate Administrator, Office of Business Development, Small Business Administration, 409 Third Street SW, Washington, DC 20416 or via email to 8aQuestions@sba.gov. It is important to keep in mind that participants must continue to comply with all applicable 8(a) eligibility requirements. Additionally, SBA has confirmed that in order to be eligible to receive 8(a) sole-source contracts during the extended program term, the participant must have met the 50% non-8(a) business activity target (or made good faith efforts to meet that target) during its ninth program year. The final rule, which will have immediate effect, is expected to be published tomorrow, January 13. While the rule will have immediate effect, SBA is providing for a 60-day comment period If you are looking to bid as a joint venture for any set-aside procurement, it is important to understand the joint venture-specific requirements as well as your rights to challenge such requirements. Importantly, any challenge to these requirements must be brought before proposals are due, so it is critical to raise any potential issues or concerns prior to that date and time. | |||||||||||||||||||||||
5 | OMB Releases Guidance to Advance Equity for Underserved Small Businesses in Federal Procurement | The Office of Management and Budget (OMB) released guidance on December 2, 2021, implementing Executive Order 13985, “Advancing Racial Equity and Support for Underserved Communities through the Federal Government” (EO). The EO directs agencies to readily make available federal contracting opportunities to all eligible vendors and to remove barriers preventing underserved individuals and communities from entering into procurement opportunities. Additionally, President Biden has set a goal to increase the share of contracts awarded to small, disadvantaged businesses (SDBs) to 15% by 2025. | Federal agencies shall agree to specific contracting goals with the Small Business Administration (SBA) to reach a federal-wide SDB contract spend of at least 11% for FY 2022. In FY 2020, federal agencies awarded 10.45% of eligible contracting dollars to SDBs. Interim goals set between agencies and the SBA shall eventually lead to the President’s goal of 15% by 2025. In addition to SDBs, SBA will work with OMB and other councils to identify ways to increase “the floor amount of spending for women-owned small businesses (WOSB), service-disabled veteran-owned small businesses (SDVOSB), and HUBZone” small business contractors for FY 2023. | |||||||||||||||||||||||
6 | First-tier subcontractor(s) in the proposal, the head of the agency must consider the capabilities, past performance, and experience of each first tier subcontractor The final rule, which will be codified as 13 C.F.R. 125.2(g) | When an offer of a small business prime contractor includes a proposed team of small business subcontractors and specifically identifies the first-tier subcontractor(s) in the proposal, the head of the agency must consider the capabilities, past performance, and experience of each first tier subcontractor that is part of the team as the capabilities, past performance, and experience of the small business prime contractor if the capabilities, past performance, and experience of the small business prime does not independently demonstrate capabilities and past performance necessary for award. | Limited as it is, this regulation can be very helpful to small businesses in appropriate cases. Like the joint venture regulations we discussed in #2, Contracting Officers aren’t always aware of 13 C.F.R. 125.2(g), so small businesses should be prepared to raise the matter if necessary. First, the rule only applies to the offer of a “small business prime.” Large business primes cannot avail themselves of the new rule. Second, the rule covers a “team of small business subcontractors.” Unfortunately, SBA’s commentary accompanying the final rule didn’t delve any further into this issue, but it seems SBA’s intent is that the new rule apply only to small business subcontractors, not large business subcontractors. Third, the subcontractor or subcontractors in question must be identified in the proposal. This, of course, is only logical: there is no good reason for a procuring agency to give an offeror evaluation credit for a mystery subcontractor. Despite these limits, the new SBA regulation will undoubtedly prove beneficial to many small prime contractors. The new regulation takes effect November 16, 2020. | |||||||||||||||||||||||
7 | GAO Confirms Joint Ventures Pursuing DOD Contracts May Rely on Facility Clearances of Their Members | In a recent decision, the Government Accountability Office (GAO) sustained a protest challenging the terms of a solicitation because it required that a joint venture (JV) pursuing an Air Force contract hold a facility clearance (FCL), which is prohibited by the National Defense Authorization Act (NDAA) of 2020 and U.S. Small Business Administration (SBA) regulations. This decision has significant implications for JVs pursuing classified contracts and underscores the value of protests as a useful procurement tool for government contractors. https://www.pilieromazza.com/gao-confirms-joint-ventures-pursuing-dod-contracts-may-rely-on-facility-clearances-of-their-members/ | This rule has been a welcome change for JVs because, under the prior regime, it was unclear whether a JV could rely on the FCLs of its members. As a result, when a solicitation required an offeror to hold an FCL, many companies were left scrambling to obtain an FCL for a JV that had no employees and no contracting history—something which is not always easy to do. While the new rule would seem to provide clarity, it has faced challenges. This is because SBA does not manage the FCL process for the federal government. That is done by the Defense Counterintelligence and Security Agency, which has indicated that it will not follow SBA’s new rule and will continue to require a JV to obtain an FCL when awarded a classified contract. As a result, JVs continue to face a quandary when determining how to compete for set-aside contracts that require FCLs. Thanks to GAO, some of this confusion may now be over. | |||||||||||||||||||||||
8 | CVE’s SDVOSB and VOSB Verification to Transfer to SBA January 1, 2023 | The U.S. Department of Veterans Affairs (VA) has announced that the functions of its Center for Verification and Evaluation (CVE) will be fully transferred to the U.S. Small Business Administration (SBA) on January 1, 2023. The CVE certifies service-disabled veteran-owned small businesses (SDVOSB) and veteran-owned small businesses (VOSB) to compete for set-aside and sole-source contracts under the VA’s Veterans First Contracting Program, which—with some exceptions—currently operates independently of SBA’s SDVOSB program. This transfer will eliminate the VA’s separate SDVOSB and VOSB certification program and eventually eliminate self-certification for non-VA SDVOSB procurements. Section 862 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 provided for the elimination of the VA’s certification program altogether, requiring that all SDVOSBs working with the VA or any other federal agency eventually be certified through SBA. | FAR 52.219-14 | |||||||||||||||||||||||
9 | Avoiding False Claims Act Violations from Limitations in Subcontracting and Performance of Work Requirements | In order to accomplish the goal of promoting small business growth, the limitations on subcontracting provisions of the Act generally require that the prime contractor under a set-aside contract perform a percentage of the work with its own personnel. Specifically, the SBA regulations require that the cost of labor on any contract awarded under a small business set-aside—including contracts awarded to joint ventures (JV) or mentor-protégé joint ventures—must be performed: -50% by the prime contractor for small business set-asides, -50% by the prime contractor for 8(a) contracts, and -40% by the prime contractor for mentor-protégé joint ventures, -If the contract is for a construction project, the prime contractor in any instance is required to perform 15% of the project. Notably, subcontracts issued to “similarly situated entities”—for example, entities with the same socioeconomic classification as the prime contractor, in addition to being small under the NAICS code assigned to the prime contractor’s procurement—may be counted towards the prime contractor’s performance calculation. Further adding to the confusion, the FAR includes its own limitations on subcontracting rules; if these rules are incorporated into a contract, then they become a contractual obligation. | The metrics of the limitations on subcontracting get even more complicated when an 8(a) small business and non-small business enter a joint venture eligible for the award of 8(a) contracts, including: The parties must abide by the internal performance of work requirements, which require that the 8(a) firm must perform at least 40% of the work performed by the joint venture. Additionally, because the JV is considered an 8(a) entity, the JV is also subject to the limitations on subcontracting applicable to 8(a) firms in general. Thus, under the limitations on subcontracting rules, the JV itself can only subcontract out a certain percentage, depending on the nature of the work performed, of the cost of labor for the contract; additionally, under the internal performance of work requirements, the 8(a) member must perform at least 40% of the work, calculated by the cost of labor, that the JV did not subcontract out. If the joint venture is between a mentor and protégé, the protégé must perform at least 40% of the work, again calculated by the cost of labor, performed by the joint venture and cannot include work subcontracted to a similarly situated entity in that calculation. These requirements can be confusing, but they are critical to understand. The Court of Federal Claims holds that the limitations on subcontracting clause is a material portion of a contract. The Act imposes hefty penalties for violations. And, the SBA considers violation of the subcontracting limitations to be potential grounds for debarment. Finally, the Department of Justice (DOJ) has not only pursued contractors under the FCA for violating this clause, but also has expressly stated its intent to continue to bring charges for such violations. | FAR 19.507 to clarify that, in solicitations and contracts using the HUBZone price evaluation preference, the contracting officer shall insert the clause at FAR 52.219-14, Limitations on Subcontracting. The final rule also adds paragraph (h)(1)(ii)(B) to specify that the contracting officer shall insert the clause at FAR 52.219-33, Nonmanufacturer Rule, in solicitations and contracts when the HUBZone price evaluation preference is used. | ||||||||||||||||||||||
10 | HUBZone Price Evaluation Preference | The final rule clarifies that the nonmanufacturer and LOS rules apply to solicitations and contracts using the HUBZone price evaluation preference to award to a HUBZone small business concern unless the concern waived the evaluation preference. Specifically, the final rule adds paragraph (e)(2) to FAR 19.507 to clarify that, in solicitations and contracts using the HUBZone price evaluation preference, the contracting officer shall insert the clause at FAR 52.219-14, Limitations on Subcontracting. The final rule also adds paragraph (h)(1)(ii)(B) to specify that the contracting officer shall insert the clause at FAR 52.219-33, Nonmanufacturer Rule, in solicitations and contracts when the HUBZone price evaluation preference is used. For the FAR clauses at 52.219-14 and 52.219-33, the final rule also states that the contracting officer shall not insert the clause in the resultant contract if the prospective contractor waived the use of the price evaluation preference or is “an other than small business.” | ||||||||||||||||||||||||
11 | SBA’s Regulations Regarding Past Performance for Small Business Mentor-Protégé Joint Ventures | In a recent decision, the Government Accountability Office (GAO) sustained a protest challenging the terms of a solicitation, as the solicitation impermissibly required that a protégé and mentor in a joint venture have the same level of experience as other offerors. This is an important decision for companies that are parties to a joint venture, and a reminder to carefully review a solicitation’s requirements before submitting a proposal. As relevant background, the Small Business Administration (SBA) revised its regulations in November 2020. Prior to November 2020, SBA’s regulations provided that, in evaluating proposals submitted by a joint venture, agencies must consider the past performance of the joint venture entity itself and each party to the joint venture. Effective November 16, 2020, this provision was expanded to include capabilities, experience, business systems, and certifications. SBA explained that while a small business protégé should have some experience in the type of work to be performed, “it is unreasonable to require the protégé concern itself to have the same level of past performance and experience (either in dollar value or number of previous contracts performed, years of performance, or otherwise) as its large business mentor.” Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments, 85 Fed. Reg. 66146, 66167 (Nov. 16, 2020). | In the procurement at issue in Innovate Now, LLC, B-419546 (Apr. 26, 2021), the solicitation required that, for joint venture offerors, at least one work sample be submitted for each member of the joint venture and that each sample meet the same requirements. The protester argued that, because the protégé member of a joint venture is required to meet the same requirements applicable to its mentor (and all other offerors), the requirement violates SBA’s regulations. GAO sustained the protest, finding that, while it was permissible for the agency to require experience from each joint venture member, the solicitation improperly required each firm—including the protégé—to meet the same evaluation requirements. Pursuant to 13 C.F.R. § 125.8(e): When evaluating the capabilities, past performance, experience, business systems and certifications of an entity submitting an offer for a contract set aside or reserved for small business as a joint venture established pursuant to this section, a procuring activity must consider work done and qualifications held individually by each partner to the joint venture as well as any work done by the joint venture itself previously. A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally. The partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract. As the solicitation required the protégé to meet the same qualifications as its mentor, the solicitation clearly violates SBA’s regulation. While this solicitation involved the requirements found in SBA’s joint venture regulation applicable to small business mentor-protégé joint ventures (13 C.F.R. § 125.8(e)), near-identical language is found in SBA’s joint venture regulation applicable to 8(a) (13 C.F.R. § 124.513(f)), SDVOSB (13 C.F.R. § 125.18(b)(5)), HUBZone (13 C.F.R. § 126.616(f)), and WOSB (13 C.F.R. § 127.506(f)) joint ventures. | |||||||||||||||||||||||
12 | GAO Holds that SAM Registration Pertains to a Bidder’s Responsibility, Not Responsiveness of a Bid | On December 16, 2020, the Government Accountability Office (GAO) sustained a protest by a contractor that was eliminated from a competition because its System for Award Management (SAM) registration had expired. Holding that registration in SAM pertains to a bidder’s responsibility, not the responsiveness of the bid, the GAO directed the agency to afford the bidder an opportunity to cure the matter after bid opening and before the award rather than finding the bidder to be ineligible for award. This holding should provide some comfort to contractors, particularly small businesses that may experience difficulties with SAM registrations while bidding for work. In the protest of Master Pavement Line Corporation, B-419111, Dec. 16, 2020, the protester was determined to be the lowest bidder; however, following a review of the bid, the Department of Transportation, Federal Highway Administration (Agency) found the firm’s SAM registration was expired. Based on this finding, the Agency determined that the bid was nonresponsive. Master Pavement thereafter protested. The GAO held that the Agency acted improperly when it rejected Master Pavement’s low bid as nonresponsive. Specifically, GAO explained that a responsive bid is one that will obligate the contractor to perform the exact thing called for in the solicitation. This is determined at the time of bid opening from the face of the bid documents, so unless something on the face of the bid reduces or modifies the bidder’s obligation to perform the terms of the solicitation, the bid is responsive. | In addition to reviewing the standard for responsiveness, GAO determined that FAR 14.405 establishes the rules for handling bids that contain minor informalities or irregularities. This covers immaterial defects that can be corrected without being prejudicial to the other bidders. It explains that a defect is “immaterial” when it has a “negligible effect on price, quantity, quality, or delivery.” If the defect is immaterial, FAR 14.405 directs the CO to allow the bidder an opportunity to cure or waive the deficiency. GAO held that required representations can be cured or waived under FAR 14.405 when they are not material to the bid. Matters concerning contractor representations and certifications generally pertain to a bidder’s responsibility, not the responsiveness of the bid, according to the GAO. Therefore, because registration—or failure to register—in SAM does not affect a firm’s obligation to perform in accordance with the terms of the solicitation, compliance is not a matter of responsiveness, but rather a matter of responsibility. Therefore, the agency should have afforded the protester an opportunity to cure the matter after bid opening. Although this decision may offer some reprieve for firms trying to get their registration completed before the submission of proposals, it is still important to maintain an active SAM registration. Following the GAO’s reasoning, a contractor may not be eliminated as non-responsive for such informalities but could be found to be a non-responsible bidder. Small businesses are somewhat insulated from such finding as the Small Business Administration (“SBA”) must make responsibility determination through the SBA’s Certificate of Competency Program, making it harder for agencies to disqualify them. Nonetheless, given the length of time that it can take to properly register with SAM and problems contractors could encounter with procuring agencies that place too much stock on the SAM registration requirement, contractors should still plan ahead to avoid the problems Master Pavement faced. | 13 C.F.R. § 121.404(g) (emphasis added). SBA made similar changes to its status recertification rules for SDVO SBCs and EDWOSB / WOSBs. See 13 C.F.R. §§ 125.18(i) and 127.504(h). | ||||||||||||||||||||||
13 | SBA Adopts Critical Rule Change on Small Business Recertification: Tweaking Its “Technical Correction | October 16, 2020, the U.S. Small Business Administration (SBA) enacted a final rule (Rule) that merges the 8(a) Business Development Mentor-Protégé Program and the All Small Mentor-Protégé Program and makes a number of other significant changes that impact the small business contracting community. One modifies SBA’s recertification rules and will directly affect a contractor’s ability to pursue options and orders set aside under pre-existing contracts. SBA’s regulations require a concern to recertify its small business size / socio-economic (e.g., Service-Disabled Veteran-Owned Small Business Concern (SDVO SBC), Women-Owned Small Business (WOSB) / Economically Disadvantaged WOSB (EDWOSB)) status (1) within 30 days of a contract novation; (2) within 30 days of a merger, sale, or acquisition; and (3) prior to the end of the fifth year of a contract exceeding five years in duration (including options) and prior to any option being exercised thereafter. | In 2018, in a case with wide-ranging implications, SBA’s Office of Hearings and Appeals (OHA) clarified that under a plain reading of SBA’s recertification rules, a concern that initially certifies and qualifies for a given status will retain its status for the life of a contract, including Multiple Award Contracts (MACs) (e.g., OASIS, Alliant, Eagle II, SEWP, CIO SP3, VETS 2). See In the Matter of Analytic Strategies, Inc., SBA No. VET-268 (Jan. 29, 2018). OHA explained that the only exception to this general rule occurs if the contracting officer requests recertification in connection with a specific order. In addition, OHA held that when a concern no longer qualifies for a given status and recertifies as such as a result of one of the three events outlined above, the procuring agency may still exercise options and issue orders pursuant to pre-existing contracts—but the agency can no longer count the options or orders toward its procurement goals. Notably, in that case, SBA unsuccessfully argued that when a concern is required to recertify and informs the agency that it no longer qualifies for a given status, not only can the agency no longer take credit, but the concern is no longer eligible to receive options and orders set aside under pre-existing contracts. OHA refused to give SBA’s interpretation of its regulations deference and explained that “a change to SBA’s regulatory scheme requires notice and comment rulemaking.” | |||||||||||||||||||||||
14 | New Minimum Wage Requirements for Government Contractors May Impact Price Adjustments | Effective January 1, 2021, the Executive Order (the Order) minimum wage rate that generally must be paid to workers performing work on or in connection with covered government contracts will increase to $10.95 per hour, while the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will increase to $7.65 per hour. Each year, the Department of Labor (DOL) assesses the established minimum wage and, using determined methodology, announces an increase. For government contractors, if your workforce is affected by the increase, you may be eligible for a price adjustment. Although some contractors have not been affected by the Order because their workforces were earning above the required minimum rates, contractors should annually evaluate whether the increases affect their workforce, including anyone that may not directly work on a contract but does work incidental to a contract. Unlike some prevailing wage rules, the Contracting Officer does not need to take any affirmative action to apply the new rates. If the appropriate provisions are in the government contract, the contractor must comply with any future increase. If your workforce is affected by the increase, you may be eligible for a price adjustment. | ||||||||||||||||||||||||
15 | Reselling Laptops and Tablets to the Federal Government Just Got Easier | The Small Business Administration (SBA) issued a class waiver of the non-manufacturer rule (NMR) on March 9, 2020. Effective April 8, 2020, it waives the NMR for commercially available off-the-shelf (COTS) laptop and tablet computers. The waiver is great news for small business resellers in the IT industry because the waiver will make it easier for these small businesses to comply with the NMR when reselling COTS laptops and tablets to federal agencies. For some background, the NMR is an exception to the requirement that prime contractors on small business set-aside contracts supplying products—not construction or services—to the government perform at least 50 percent of the cost of manufacturing those products. The NMR allows a small business to supply products it did not manufacture with the caveat that those products must be made by another small business—unless SBA issues a waiver. If SBA issues a waiver, small business resellers may qualify under the NMR if the product they resell is made by a large business. SBA issues two types of waivers, individual and class waivers. While only the contracting officer may request an individual waiver from SBA for a particular contract, anyone can ask SBA to issue a class waiver. If there are no small business manufacturers available to participate in the federal market for a class of products, SBA will waive the NMR for that class of products. PilieroMazza has submitted several requests for class waivers to SBA, including the request that resulted in the new class waiver for COTS laptops and tablets. | This class waiver is specifically limited to COTS laptops and tablet computers procured by the government. COTS is defined under the FAR as any item or supply, including construction material (but not bulk cargo), that is: A commercial item; Sold in substantial quantities in the commercial marketplace; and Offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace. The class waiver will allow small business nonmanufacturers to resell COTS laptops and tablets on set-aside contracts regardless of whether the COTS laptop or tablet manufacturer is a large or small business. This will make it easier for small business nonmanufacturers to resell COTS laptops and tablets to federal agencies, and should encourage more federal agencies to procure these common IT products via small business set-aside contracts. The class waiver will also make it easier for small business nonmanufacturers to comply with the NMR. SBA is expected to increase scrutiny of NMR compliance as part of a growing focus on compliance with the limitations on subcontracting, particularly for new multiple-award indefinite-delivery, indefinite-quantity contracts. Therefore, we expect this waiver to be a big help for small business nonmanufacturers. | |||||||||||||||||||||||
16 | The Service Contract Right of First Refusal Rules Continue to Fall Away | On January 31, 2020, the Federal Register announced that the U.S. Department of Labor (DOL) rescinded the service contractor “right of first refusal” regulations at 29 C.F.R. Part 9.[1] This was done to implement the President’s October 31, 2019 revocation of the 2009 Executive Order No. 13,495, Nondisplacement of Qualified Workers Under Service Contracts (Nondisplacement Rules). DOL’s move was primarily administrative in nature, given that the President’s revocation order commanded Executive Agencies to stop enforcing the rules. Nondisplacement Rules guaranteed (with exceptions) that workers covered by Service Contract Labor Standards (SCLS, formerly known as the Service Contract Act) were re-offered their positions by a successor contractor. This non-displacement kicked in provided that the follow-on contract was “for the same or similar services at the same location.” FAR 22.1203-1. | Another practical consequence is that unionized workforces may not be as protected as they were when the Nondisplacement Rules were in effect. While contractors cannot discriminate in hiring based on union membership, there is no longer a requirement which ensures that the majority of the predecessor workforce will be hired, which is necessary to maintain the bargaining unit. Contractors should be aware that Federal Acquisition Regulation (FAR) Clause 52.222-17 (Nondisplacement of Qualified Workers) is still in solicitations and contracts. Although the FAR Council is expected to remove the clause, it has not yet done so. Nonetheless, the fact that DOL will not be enforcing the clause means that contractors do not need to honor it. Finally, it is worth noting that FAR Clause 52.207-3 (Right of First Refusal of Employment) still gives a federal employee whose job has been outsourced to a contractor a right of first refusal for being hired by that contractor. Additionally, FAR Clause 52.237-3 (Continuity of Services), which applies where “services under the contract are considered vital to the Government and must be continued without interruption[,]” requires an incoming contractor to “allow as many personnel as practicable to remain on the job to help the successor maintain the continuity and consistency of the services required[.]” FAR Clause 52.237-3(c). So, if a SCLS-covered contract arises in either of these circumstances, one or both of these clauses will kick in and obligate the incoming contractor to implement nondisplacement of the previous employees. | |||||||||||||||||||||||
17 | Federal “Ban-the-Box” Law: The Fair Chance Act to Limit Criminal Background Inquiries by Federal Contractors | On December 17, 2019, the Senate passed the National Defense Authorization Act (NDAA) for Fiscal Year 2020, which was subsequently signed by the President. As part of the NDAA, the government enacted the Fair Chance to Compete for Jobs Act of 2019 (the Fair Chance Act or Act), which prohibits federal agencies and federal contractors from requesting criminal background information from job applicants prior to extending an offer, with a few exceptions. The Fair Chance Act goes into effect on December 20, 2021. What is the Fair Chance Act? The Fair Chance Act is a federal extension of the “ban-the-box” laws that have been enacted in various states and localities in the past few years. Under the Act, federal contractors may not request information relating to criminal history, verbally or in writing, for positions “related to work under [the] contract” before the contractor extends a conditional offer to the applicant. The law provides three exceptions as follows: if consideration of criminal history record information prior to a conditional offer is required by law; the position at issue would have access to classified information or have sensitive law enforcement or national security duties; or the position is identified as excepted by the Administrator of General Services (or, in the case of defense contracts, by the Secretary of Defense). Positions are set to be identified by the Administrator of General Services and the Secretary of Defense by April 2021 and should be limited to positions that “involve interaction with minors, access to sensitive information, or managing financial transactions.” | Consequences of Non-Compliance Although compliance procedures are forthcoming, the Fair Chance Act sets forth progressive penalties for violations, up to and including suspension of payment for a repeated offense. A first violation carries with it a written warning followed by a notice to comply. Subsequent violations include requiring the contractor to provide assurances that they are coming into compliance and/or suspension of payment on the contract until compliance is demonstrated. Implications for Federal Contractors Contractors should follow best practices to ensure they are compliant with current laws and are proactively preparing to be Act compliant. Even though the Fair Chance Actdoes not go into effect until December 2021, current best practice is to refrain from asking about criminal convictions until a conditional offer has been made, given state law requirements and the Equal Employment Opportunity Commission’s focus on employment actions that result in a disparate impact to minority applicants. All employers should consider taking the following measures: Review hiring practices and onboarding materials, including application forms, checklists, and policies; offer periodic training to those involved in the recruiting and hiring processes; and determine how best to implement a policy (or policies) to comply with all applicable federal, state and local laws. | |||||||||||||||||||||||
18 | No More “Consent to Subcontract” for 8(a) Firms | Firms that participate in the U.S. Small Business Administration (“SBA”) 8(a) program operate in a highly regulated environment. For years, 8(a) firms were required to seek approval, or “consent to subcontract,” from contracting officers and SBA to subcontract work on an 8(a) contract. In September, with little fanfare, the Federal Acquisition Regulatory Council removed the consent-to-subcontract requirement from two Federal Acquisition Regulation (“FAR”) clauses (FAR 52.219-12 and 52.219-17), which are supposed to be incorporated in all 8(a) contracts. According to the Council, this was done after SBA removed the rarely enforced requirement from its regulations. The final regulations took effect in October. The removal of the consent-to-subcontract requirement is welcome news for 8(a) firms, who faced exposure to adverse contractual remedies if accused of violating the requirement. | Now, fortunately, 8(a) firms no longer need to worry about the consent-to-subcontract requirement specific to 8(a) contracts. Of course, like all government contractors, 8(a) firms still need to make sure other consent-to-subcontract requirements are not buried in a FAR clause within the prime contract. Consent-to-subcontract requirements are incorporated in many prime contracts, such as cost reimbursement, time and material, labor hour, and architect-engineer services contracts. 8(a) firms should not view the change in the FAR clauses specific to 8(a) contracts as giving them a pass on the need to seek agency approval to subcontract on a particular prime contract — 8(a) or non-8(a). | |||||||||||||||||||||||
19 | 5 Things Government Contractors Should Know About Enhanced Debriefings | With the end of the fiscal year approaching and the frequency of contract awards increasing, many government contractors will be focusing on post-award debriefings. The Department of Defense (DOD) implemented enhanced post-award debriefings last year, and contractors often have questions about the process. Below are five things contractors should know about enhanced debriefings, which can be beneficial to a government contractor before becoming involved in a bid protest. Enhanced debriefings are limited to DOD agencies. Civilian agency debriefings have not changed and are still governed by FAR 15.506. The enhanced debriefing procedures apply to post-award debriefings. This means that a contractor is not entitled to an enhanced debriefing if it is eliminated from the competitive range but an award decision has not yet been made. | The enhanced debriefing gives a disappointed offeror the opportunity to ask additional questions. At the end of the debriefing, the contractor has two business days to submit follow-up questions. The agency is supposed to respond within five days of receiving the questions. If the agency is delayed in responding, the contractor may want to follow up in writing to confirm that the debriefing has not concluded. The agency’s response to the supplemental questions concludes the debriefing and starts the clock for filing a timely protest and obtaining the automatic stay of performance under the Competition in Contracting Act (CICA). The enhanced debriefing rules do not impact GAO’s timeliness rules. In procurements where a debriefing is required, GAO’s rules require a disappointed offeror to file a protest within 10 days of the debriefing’s conclusion. With an enhanced debriefing, the deadline is 10 days from when the agency responds to the follow-up questions and closes the debriefing. The time period is not shortened simply because the protester obtained an enhanced debriefing. The enhanced debriefing rules do not change the requirements to obtain an automatic stay of performance. Under CICA, if the agency receives notice of a post-award GAO protest within 10 days of award or five days of a required debriefing, whichever is later, the Contracting Officer is required to suspend performance. With an enhanced debriefing, if the protest is filed within five days of the agency’s response to the follow-up questions and the conclusion of the debriefing, the requirement to obtain the CICA stay is met. Receiving an unsuccessful offeror letter is always disappointing, and filing a protest may be top of mind. Enhanced debriefings can be a valuable source of information to support a protest, and understanding the enhanced debriefing rules is critical for that effort. | |||||||||||||||||||||||
20 | A Universal Set of Ownership and Control Requirements for VOSBs and SDVOSBs | The Department of Veterans Affairs (VA) issued a final rule on verification guidelines for veteran-owned and service-disabled veteran-owned small businesses, found in the National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017). The final rule implements the NDAA 2017, which placed the responsibility for issuing regulations relating to ownership and control for the VA’s verification of VOSBs and SDVOSBs with SBA. Effective October 1, this should no longer be the case. Rather than having its own definitions relating to ownership and control, the VA’s revised regulations will state that ownership and control “is determined in accordance with 13 CFR part 125.” To the extent 13 CFR part 125 is limited to SDVOSBs, CVE will apply the same ownership and control criteria to firms seeking VOSB status. In the VA’s final rule, it was noted that the “VA and SBA consider October 1, 2018 to be the best date for implementation of new unified rules for the programs,” suggesting that SBA’s final rule surrounding ownership and control should follow shortly. However, SBA’s final rule has not yet been issued. Whenever SBA’s final rule is issued, this could again change the ownership and control requirements applicable to VOSBs and SDVOSBs. We will keep you posted, but it is a good idea to have your corporate documents checked to ensure compliance. | Among other amendments, the final rule also adopts a revised definition of principal place of business to coincide with the wording in 13 CFR 125.13 and revises the definitions of eligible individual, joint venture, participant, service-disabled veteran, SDVOSB, small business concern, surviving spouse, veteran, and VOSB to have the same meaning given in 13 CFR part 125. Particularly important for joint ventures seeking CVE verification, the VA’s regulation currently states that for an SDVOSB joint venture, the SDVOSB partner must receive at least 51% of the net profits. 38 CFR § 74.3(d)(2). However, this does not correspond with SBA’s SDVOSB joint venture regulations, which state that the SDVOSB partner “must receive profits from the joint venture commensurate with the work performed.” 13 CFR § 125.18(b)(2)(iv). The final rule should help to end the confusion for SDVOSB joint ventures seeking verification. | |||||||||||||||||||||||
21 | New CVE Guidance on Joint Ventures and Mentor-Protégé Relationships | The VA’s Center for Verification and Evaluation (“CVE”) published a new VA Verification Assistance Brief, Understanding Joint Venture and Mentor-Protégé Agreement Eligibility (“Assistance Brief”). The Assistance Brief explains the criteria that make a joint venture (“JV”) eligible for verification and inclusion in the VA VetBiz Vendor Information Pages (“VIP”) database, which is helpful given that the VA’s regulations, specifically 38 C.F.R. Part 74, say very little in terms of how a JV can be verified by CVE as an eligible veteran-owned or service-disabled-veteran-owned small business (“VOSB” or “SDVOSB”). Nevertheless, VOSBs and SDVOSBs interested in forming JVs to pursue set-aside work with the VA must not treat the new CVE guidance as gospel because the Assistance Brief, while informative, cites outdated SBA regulations and, at the same time, raises questions about how the VA’s own regulations should be interpreted. For a JV to be considered a VOSB or SDVOSB for VA set-aside work, (1) the JV must qualify as a small business under the SBA’s size rules for SDVOSB JVs; and (2) the parties’ joint venture agreement (“JVA”) must contain the 12 provisions required by the SBA’s regulations on SDVOSB JVs. And, in this regard, the Assistance Brief is a valuable resource (with one exception discussed below), as it cites the full text of each provision that must be set forth in the JVA. Moreover, the Assistance Brief explains that a JV between a verified SDVOSB or VOSB and a large business can qualify as small, provided the parties have a Mentor-Protégé Agreement (“MPA”) approved by the SBA. In other words, the Assistance Brief confirms that the VA will recognize the exemption from affiliation available to JVs formed under the umbrella of an SBA-approved MPA. | Still, VOSBs and SDVOSBs should be cautioned that the VA/CVE is mistaken with respect to how JV profits should be split. According to the Assistance Brief, the JVA has to contain a provision stating that the VOSB or SDVOSB partner will receive profits from the JV commensurate with its ownership interest in the JV. However, in December of last year, the SBA made a technical correction to its SDVOSB JV regulations to clarify that the JVA shall state that the SDVOSB partner must receive profits from the JV commensurate with the work performed by the SDVOSB. Notably, the Assistance Brief also states that a JV may be in the form of a partnership. While the SBA’s rules on JVs make clear that a JV can have a formal structure (e.g., an LLC) or an informal structure (e.g., a partnership), a JV—as defined under the VA’s regulations—must be in the form of a separate legal entity, which suggests you cannot form a JV as a partnership to pursue VA work. In closing, the Assistance Brief sheds additional light on how a JV can be verified by CVE and included in the VIP database. Thus, if you are looking to form a JV to pursue VA set-aside work, you should review the Assistance Brief—but for informational purposes only. As the disclaimer in the Assistance Brief appropriately warns, the information provided may not be accurate or up-to-date and, as such, you need to review the applicable regulations and/or seek counsel with expertise in this area. | |||||||||||||||||||||||
22 | ||||||||||||||||||||||||||
23 | ||||||||||||||||||||||||||
24 | ||||||||||||||||||||||||||
25 | ||||||||||||||||||||||||||
26 | ||||||||||||||||||||||||||
27 | ||||||||||||||||||||||||||
28 | ||||||||||||||||||||||||||
29 | ||||||||||||||||||||||||||
30 | ||||||||||||||||||||||||||
31 | ||||||||||||||||||||||||||
32 | ||||||||||||||||||||||||||
33 | ||||||||||||||||||||||||||
34 | ||||||||||||||||||||||||||
35 | ||||||||||||||||||||||||||
36 | ||||||||||||||||||||||||||
37 | ||||||||||||||||||||||||||
38 | ||||||||||||||||||||||||||
39 | ||||||||||||||||||||||||||
40 | ||||||||||||||||||||||||||
41 | ||||||||||||||||||||||||||
42 | ||||||||||||||||||||||||||
43 | ||||||||||||||||||||||||||
44 | ||||||||||||||||||||||||||
45 | ||||||||||||||||||||||||||
46 | ||||||||||||||||||||||||||
47 | ||||||||||||||||||||||||||
48 | ||||||||||||||||||||||||||
49 | ||||||||||||||||||||||||||
50 | ||||||||||||||||||||||||||
51 | ||||||||||||||||||||||||||
52 | ||||||||||||||||||||||||||
53 | ||||||||||||||||||||||||||
54 | ||||||||||||||||||||||||||
55 | ||||||||||||||||||||||||||
56 | ||||||||||||||||||||||||||
57 | ||||||||||||||||||||||||||
58 | ||||||||||||||||||||||||||
59 | ||||||||||||||||||||||||||
60 | ||||||||||||||||||||||||||
61 | ||||||||||||||||||||||||||
62 | ||||||||||||||||||||||||||
63 | ||||||||||||||||||||||||||
64 | ||||||||||||||||||||||||||
65 | ||||||||||||||||||||||||||
66 | ||||||||||||||||||||||||||
67 | ||||||||||||||||||||||||||
68 | ||||||||||||||||||||||||||
69 | ||||||||||||||||||||||||||
70 | ||||||||||||||||||||||||||
71 | ||||||||||||||||||||||||||
72 | ||||||||||||||||||||||||||
73 | ||||||||||||||||||||||||||
74 | ||||||||||||||||||||||||||
75 | ||||||||||||||||||||||||||
76 | ||||||||||||||||||||||||||
77 | ||||||||||||||||||||||||||
78 | ||||||||||||||||||||||||||
79 | ||||||||||||||||||||||||||
80 | ||||||||||||||||||||||||||
81 | ||||||||||||||||||||||||||
82 | ||||||||||||||||||||||||||
83 | ||||||||||||||||||||||||||
84 | ||||||||||||||||||||||||||
85 | ||||||||||||||||||||||||||
86 | ||||||||||||||||||||||||||
87 | ||||||||||||||||||||||||||
88 | ||||||||||||||||||||||||||
89 | ||||||||||||||||||||||||||
90 | ||||||||||||||||||||||||||
91 | ||||||||||||||||||||||||||
92 | ||||||||||||||||||||||||||
93 | ||||||||||||||||||||||||||
94 | ||||||||||||||||||||||||||
95 | ||||||||||||||||||||||||||
96 | ||||||||||||||||||||||||||
97 | ||||||||||||||||||||||||||
98 | ||||||||||||||||||||||||||
99 | ||||||||||||||||||||||||||
100 |