November 25, 2014 by cs
It has been the common understanding within the SBA, and the small business government contracting community as a whole, that the SBA’s nonmanufacturer rule applies only to contracts for the provision of supplies (i.e., goods) and not to service contracts, regardless of
whether or not such service contracts have a supply component. The SBA memorialized this understanding in a 2011 rulemaking. According to 13 C.F.R. § 121.406(b)(3), the nonmanufacturer rule does not apply to procurements that are assigned a services, construction, or specialty trade construction code.
The U.S. Court of Federal Claims (COFC) recently turned this common understanding about the nonmanufacturer rule on its head. In its September 19, 2014, decision in Rotech v. United States, COFC No. 14-502C (2014), the COFC invalidated 13 C.F.R § 121.406(b)(3).
Keep reading this article by clicking here (pdf file).
November 24, 2014 by cs
SDVOSBs—and basic fairness and common sense—were big winners in a recent decision issued by the U.S. Court of Federal Claims. In its decision, the Court held that the VA’s Center for Verification and Evaluation (CVE) violated the law when it disqualified a SDVOSB, without giving the SDVOSB the opportunity to contest the reasons for the disqualification. In a decision reminiscent of last year’s landmark Miles Construction case, the Court then held that the CVE’s substantive reasons for the disqualification were arbitrary and unreasonable.
In AmBuild Company, LLC v. United States, No. 14-786C (Oct. 10, 2014), AmBuild was the apparent lowest-cost bidder on a VA SDVOSB set-aside solicitation. The second-lowest bidder, Welch Construction Inc., filed a protest challenging AmBuild’s SDVOSB status. Welch contended that AmBuild was not controlled by a service-disabled veteran and that AmBuild exceeded the applicable size standard.
The U.S. Small Business Administration, which has jurisdiction over size issues, reviewed Welch’s small business allegation and determined it to be unfounded. The CVE proceeded to separately analyze Welch’s allegation regarding SDV control.
November 21, 2014 by cs
The government panel that reviews federal rules and how they affect small businesses is manipulated by trade associations, a Nov. 12 Center for Effective Government report says.
Three federal agencies – the Environmental Protection Agency, the Labor Department’s Occupational Safety and Health Administration and the Consumer Financial Protection Bureau – are required to convene a small business review panel any time the govenrment plans to issue a rule that could have a significant economic impact on small businesses.
But the report says trade associations have too much power over the panel. Trade associations are supposed to identify small business representatives to advise the panel, participate in meetings and even help write their comments, the report says.
Keep reading this article at: http://www.fiercegovernment.com/story/report-small-biz-panel-manipulated-trade-associations/2014-11-13
November 20, 2014 by cs
A contractor working at the Energy Department’s Sandia National Laboratories sought help from federal officials to receive a no-bid contract extension at the lab worth about $2.4 billion, a Nov. 7 DOE inspector general report says.
The report says Sandia Corporation, a subsidiary of Lockheed Martin that runs the lab, campaigned aggressively to convince then Energy Secretary Steven Chu to extend it’s contract without any competition.
Keep reading this article at: http://www.fiercegovernment.com/story/ig-contractor-tried-influence-doe-receive-no-bid-contract-extension/2014-11-13
November 19, 2014 by cs
In a November 7, 2014 report the U.S. Government Accountability Office (GAO) found that the SBA performs minimal oversight of third-party certifiers of women-owned small businesses and has yet to develop procedures that provide reasonable assurance that only eligible businesses obtain contracts set-aside for women-owned small businesses.
Businesses have two options to certify their eligibility for the federal government’s women-owned small business (WOSB) program. Whether self-certifying at no cost or using the fee-based services of an approved third-party certifier, businesses must attest that they are a WOSB or an economically disadvantaged women-owned small business (EDWOSB). Businesses also must submit documents supporting their attestation to a repository the Small Business Administration (SBA) maintains (required documents vary depending on certification type), and, if they obtain a third-party certification, to the certifier.
In its examination of the certification process, the GAO found that:
- SBA generally has not reviewed certifier performance or developed or implemented procedures for such reviews, including determining whether certifiers inform businesses of the no-cost self-certification option, a requirement in the agency’s agreement with certifiers.
- SBA also has not completed or implemented procedures to review the monthly reports that third-party certifiers must submit.
In its report, the GAO says that without ongoing monitoring and oversight of the activities and performance of third-party certifiers, the SBA cannot reasonably assure that certifiers fulfill the requirements of the agreement.
This finding is bolstered by the fact that, in 2012 and 2013, the SBA found that more than 40 percent of businesses (that previously received contracts) it examined for program eligibility should not have attested they were WOSBs or EDWOSBs at the time of the SBA’s review. SBA officials speculated about possible reasons for the results, including businesses not providing adequate documentation or becoming ineligible after contracts were awarded, but the SBA has not assessed the results of the examinations to determine the actual reasons for the high numbers of businesses found ineligible. The SBA also has not completed or implemented procedures to conduct eligibility examinations. According to federal standards for internal control, agencies should have documented procedures, conduct monitoring, and ensure that any review findings and deficiencies are resolved promptly. As a result of inadequate monitoring and controls, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible.
The GAO finds that the WOSB program has had a limited effect on federal contracting opportunities available to WOSBs. Set-aside contracts under the program represent less than 1 percent of all federal contract obligations to women-owned small businesses. The Departments of Defense and Homeland Security and the General Services Administration collectively accounted for the majority of the $228.9 million in set-aside obligations awarded under the program between April 2011 and May 2014. Contracting officers, business owners, and industry advocates with whom GAO spoke identified challenges to program use and suggested potential changes that might increase program use, including allowing sole-source contracts rather than requiring at least two businesses to compete and expanding the list of 330 industries in which WOSBs and EDWOSBs were eligible for a set-aside.
A summary of the GAO’s report can be downloaded at: http://www.gao.gov/assets/670/666430.pdf
The full report can be downloaded at: http://www.gao.gov/assets/670/666431.pdf
Company using 60 business names and 50 websites sued by FL attorney general for misleading businesses about GSA Schedule process
November 18, 2014 by cs
Florida Attorney General Pam Bondi’s Office filed a complaint on Nov. 5, 2014 against an Oldsmar, Florida-based company allegedly misleading small businesses by claiming to be the U.S. General Services Administration or implying a government affiliation to offer a five-year GSA contract.
Federal Verification Co, Inc., doing business as GSA Applications, conducts business through more than 60 business names and more than 50 websites. The company and manager of the businesses, James Dale Sprecher, allegedly used telemarketing to solicit small businesses and guarantee them a GSA contract within a short time frame, 90 days to six months, for an upfront fee ranging typically from $5,000 to $8,000.
A GSA contract allows a business to sell goods and services to the federal government at pre-negotiated pricing.
The Florida Attorney General’s Office reportedly received more than 200 complaints about the defendants’ unfair business practices.
The Complaint alleges violations of the Florida Deceptive and Unfair Trade Practices Act. According to the complaint the company allegedly:
- Makes false and misleading representations as to the likelihood of a customer successfully obtaining a GSA contract, including assuring the business that it qualifies for a five-year to 20-year GSA contract award;
- Makes false and misleading representations assuring government-guaranteed minimum revenues upon a contract award and a 100 percent guaranteed return on investment;
- Unfairly collects advance fees, up to $10,000, from customers before services begin; and
- Enrolls customers without diligent review of their circumstances, adequate disclosure of requirements pertaining to the customer or its products or services, or regard for the customer’s meaningful probability or being awarded a GSA contract.
More details on the company’s alleged practices can be found in a copy of the Florida Attorney General’s complaint which is posted here: http://myfloridalegal.com/webfiles.nsf/WF/KCAN-9QKLP3/$file/GSAComplaint.pdf
November 17, 2014 by cs
Some in the veteran-owned contracting community are voicing concerns about implications made by a California company that its new offering provides a competitive advantage that doesn’t actually exist.
Los Angeles-based Dun & Bradstreet Credibility Corp., which did not respond to a request for comment, launched 10 Veteran VERIFIED, “a proprietary business verification and authentication service that verifies both military service and veteran business ownership,” according to the company’s press release.
“Once the verification process is completed, a military serviceperson can showcase his or her veteran status sticker in storefronts; a point of sale; on the business website; or through social media.”
What caught the attention of some in the contracting community, however, are claims that the verification could improve a company’s chances of landing contracts.
Keep reading this article at: http://www.bizjournals.com/jacksonville/news/2014/11/14/california-companys-sales-tactics-raise-red-flags.html?page=all
November 14, 2014 by cs
Andre Gudger has heard the argument many times that, as he puts it, “small businesses don’t build planes and ships and nuclear weapons.”
It’s his job — or at least part of it — to change that perception.
A Maryland native, Gudger has been the director of the Defense Department’s Office of Small Business Programs since 2011. During the three years prior to his arrival, the share of the agency’s contracts awarded to small companies had shrunk every year. Moreover, in the more than three decades since federal small-business contracting goals had been put in place, the agency had never once accomplished them.
In the three years since, even amid budgetary constraints, small-business participation in Defense Department projects has expanded each year. In fact, this past year, the agency for the first time eclipsed not only its small-business goal, but also the federal government’s target, awarding roughly 23.4 percent of defense contracting dollars, representing about $53 billion, to small employers.
Keep reading this article at: http://www.washingtonpost.com/business/on-small-business/operation-small-business-an-interview-with-the-pentagons-small-business-director/2014/10/23/216d4cc8-5a12-11e4-b812-38518ae74c67_story.html
November 13, 2014 by cs
The Office of the Inspector General (IG) of the U.S. Small Business Administration reports on 11 weaknesses in a range of SBA programs. Two of the “challenges” identified in the Oct. 17, 2014 report pertain directly to small business participation in federal contracting:
- Procurement flaws allow large firms to obtain small business awards, and allow agencies to count contracts performed by large firms towards their small business goals.
- The SBA needs to modify the Section 8(a) Business Development Program so more firms receive business development assistance, standards for determining economic disadvantage are justifiable, and the SBA ensures that firms follow 8(a) regulations when completing contracts.
The IG’s full document, entitled “Report on the Most Serious Management and Performance Challenges Facing the Small Business Administration In Fiscal Year 2015″ can be downloaded here, but the text of the IG’s finding on the two point just cited appears below.
The Small Business Act established a Government-wide goal that 23 percent of the total value of all prime contracts be awarded to small businesses each fiscal year. As the advocate for small business, the SBA should strive to ensure that only small firms obtain and perform small business awards. Further, the SBA should ensure that procuring agencies accurately report contracts awarded to small businesses when representing their progress in meeting small business contracting goals.
In September 2014, we issued a report that identified over $400 million in FY 2013 contract actions that may
have been awarded to ineligible firms. We also identified over $1.5 billion dollars in contract actions for
which the firms were in the 8(a) or HUBZone programs at the time of contract award, but were no longer in
these programs in FY 2013. Previous OIG audits and other Government studies have shown widespread
misreporting by procuring agencies, since many contract awards that were reported as having gone to small
firms have actually been performed by larger companies. While some contractors may misrepresent or
erroneously calculate their size, most of the incorrect reporting results from errors made by Government
contracting personnel, including misapplication of small business contracting rules. In addition, contracting
officers do not always review the on-line certifications that contractors enter into Government databases
prior to awarding contracts. The SBA should ensure that procuring agencies accurately report contracts
awarded to small businesses when representing their progress in meeting small business contracting goals,
and that contracting personnel are reviewing on-line certifications prior to awarding contracts.
The SBA revised its regulations to require firms to meet the size standard for each specific order to address a
loophole within General Services Administration Multiple Awards Schedule (MAS) contracts, which contain
multiple industrial codes that determine the size of the company. Previously, a company awarded an MAS
contract could identify itself as a small business on individual task orders awarded under that contract, even
though it did not meet the size criteria for the applicable task. Thus, agencies received small business credit
for using a firm classified as small, when the firm was not small for specific orders under the MAS contract. In
addition, the SBA submitted a final rule to the Federal Acquisition Regulations (FAR) Council to implement the
changes made to its regulations in the FAR. The SBA also updated its standard operating procedure (SOP) to
ensure consistency in conducting its surveillance reviews to assess Federal agencies’ management of their
small business programs and compliance with regulations and applicable procedures.
While the SBA has made substantial progress on this challenge, we are working with the Agency to verify that
the surveillance reviews were conducted in a thorough and consistent manner.
The SBA’s 8(a) Business Development (BD) Program was created to assist eligible small disadvantaged
business concerns to compete in the American economy through business development. Previously, the
SBA did not place adequate emphasis on business development to enhance the ability of 8(a) firms to
compete, and did not adequately ensure that only 8(a) firms with economically disadvantaged owners in
need of business development remained in the program. Companies that were “business successes”
were allowed to remain in the program and continue to receive 8(a) contracts, causing fewer companies
to receive most of the 8(a) contract dollars and many to receive none.
The SBA has made progress towards addressing issues that hinder its ability to deliver an effective 8(a)
BD Program. For example, the SBA expanded its ability to provide assistance to program participants
through its resource partners—small business development centers, service corps of retired executives,
and procurement technical assistance centers. In addition, the SBA has taken steps to ensure business
opportunity specialists assess program participants’ business development needs during site visits. The
SBA also revised its regulations, effective March 2011, to ensure that companies deemed “business
successes” graduate from the program. These regulations also establish additional standards to address
the definition of “economic disadvantage.” Agency officials stated that the rule-making process served
as an adequate proxy to objectively and reasonably determine effective measures for economic
disadvantage, and were not aware of any reliable sources of data to determine economic disadvantage.
However, for the second consecutive year, the SBA has not completed updating its SOP for the 8(a) BD
Program to reflect the March 2011 regulatory changes. In addition, we continue to maintain that the
SBA’s standards for determining economic disadvantage are not justified or objective based on the
absence of economic analysis. In December 2011, the SBA awarded a contract to develop and deploy a
new IT system by December 2012 to assist the SBA in monitoring 8(a) program participants. However,
the new system has not been deployed, and its delivery date and capabilities are undetermined at this
November 11, 2014 by cs
A company called North Florida Shipyards and its president, Matt Self, will pay the U.S. government $1 million to resolve allegations that they violated the False Claims Act by creating a front company, Ind-Mar Services Inc., in order to be awarded Coast Guard contracts that were designated for Service Disabled Veteran Owned Small Businesses (SDVOSBs), the Justice Department announced today. North Florida Shipyards has facilities in Jacksonville, Florida.
To qualify as a SDVOSB on Coast Guard ship repair contracts, a company must be operated and managed by service disabled veterans and must perform at least 51 percent of the labor. The government alleged that North Florida created Ind-Mar merely as a contracting vehicle and that North Florida performed all the work and received all the profits. The government further alleged that if the Coast Guard and the Small Business Administration (SBA) had known that Ind-Mar was nothing but a front company, the Coast Guard would not have awarded it contracts to repair five ships.
In December 2013, the SBA suspended North Florida, Matt Self, Ind-Mar and three others from all government contracting. In April 2014, North Florida and Matt Self entered into an administrative agreement with the SBA in which they admitted to having created and operated Ind-Mar in violation of its Coast Guard contracts and SBA statutes and regulations.
“Special programs to assist service disabled veterans are an important part of the SBA’s business development initiative,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida. “False claims such as this undermine the integrity of this vital program and, where found, will be vigorously pursued by our Office.”
“This settlement sends a strong message to those driven by greed to fraudulently obtain access to contracting opportunities set-aside for deserving small businesses owned and operated by service disabled veterans,” said Inspector General Peggy E. Gustafson for the SBA. “We are committed to helping ensure that only eligible service disabled veteran owned small businesses benefit from that SBA program.”
The settlement resolves allegations originally filed in a lawsuit by Robert Hallstein and Earle Yerger under the qui tam, or whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The act also allows the government to intervene and take over the action, as it did in this case. Hallstein and Yerger will receive $180,000.
The claims resolved by the settlement are allegations only, except to the extent that North Florida and Matt Self have admitted to the conduct in their agreement with the SBA.
The case is captioned United States ex rel. Yerger, et al, v. North Florida Shipyards, et al., Case No. 3:11-cv-464J-32 MCR (M.D. Fla.).