Georgia Tech Procurement Assistance Center

For government contractors, 2015 is in full swing

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Contractors with their eyes on hot-button issues such as cybersecurity legislation, information technology (IT) acquisition reform, and strategic sourcing policy have plenty to consider in the 2015 National Defense Authorization Act (NDAA) and a recent policy memorandum issued by Office of Management and Budget (OMB) Administrator Anne Rung. Some key items to consider:

  • Cybersecurity: In 2015, the Department of Defense must issue rules requiring “operationally critical contractors” to report cyber incidents in their network and information systems.
  • IT Acquisition Reform: Under the Federal Information Technology Acquisition Reform Act (FITARA), Chief Information Officers in Federal agencies will take key roles in the acquisition process, which could affect the nature of IT-related acquisitions for years to come.  FITARA also sharpens the Government’s FOCUS on strategic sourcing.
  • Strategic Sourcing and Category Management: In an initiative that complements strategic sourcing, OMB has established “category management” as a key Federal acquisition strategy, which will foster Government-wide purchasing of items, such as IT hardware and software, by one source instead of through multiple agencies.

For a broad array of contractors, those “operationally critical contractors” working with the DoD, providers of IT-related supplies and services, and those supplying “categories” of supplies throughout the Federal government, these changes will affect their daily operations and how they market and sell to their Federal customers in 2015 and beyond.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=362362

SBA announces new HUBZone designations effective Jan. 1, 2015

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The Small Business Administration (SBA) has announced changes to the geographic HUBZone designations, effective January 1, 2015.

The SBA says the changes reflect several new data sources. These data sources include:

  • American Community Survey 2009-2013 five year estimates,
  • 2013 OMB metropolitan area delineations, and
  • 2015 lists of Difficult Development Areas and Qualified Census Tracts, released by HUD in October 2014.

The changes reflect:

  • eight newly qualified counties,
  • 47 counties that have been re-designated until January 2018,
  • 1,479 newly qualified census tracts, and
  • 1,319 census tracts that have been re-designated until January 2018.

All current HUBZone designated areas can be found by downloading this document: HUBZone Designations – effective 01.01.2015

Please note that these new changes have not been incorporated into SBA’s interactive HUBZone map yet.  SBA says it will make another announcement about revisions to the map when it is updated.

For more information about the HUBZone program, please see: https://www.sba.gov/content/understanding-hubzone-program

Lax oversight allows women-only contracts to go to men

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Jennifer Dickerson spent more than 40 hours of work over three months to get her Orlando environmental consulting company certified as a women-owned business, a designation that would help her win federal contracts intended to go to disadvantaged businesses. She and her assistant assembled legal documents and tax records, responded to multiple questions, and paid a $275 processing fee to a third-party agency to prove that her small company is majority woman-owned and operated.

“It was important to me to make sure I adhered to all the requirements” of the federal program established in 2000 to set aside a percentage of government contracts for women-owned small businesses, Dickerson says.

Not every business owner shares Dickerson’s sense of responsibility. A recent report critical of the U.S. Small Business Administration’s program revealed that more than 40 percent of companies that got government contracts as women-owned businesses in the last two years were not actually eligible.

Keep reading this article at: http://www.businessweek.com/articles/2014-11-20/lax-oversight-lets-men-pose-as-women-to-win-government-contracts

Construction company to pay $2.15 million, admits abuse of DC’s certified business enterprise program

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Forrester Construction Company has agreed to pay $2.15 million to the United States and implement internal reforms to resolve a criminal investigation into alleged fraud committed by the company in connection with the use of Certified Business Enterprises (CBEs) in the procurement of more than $145 million in District of Columbia government contracts. The internal reforms will be subject to independent review and reporting.

As part of the resolution, Forrester Construction admitted that it improperly entered into written letter agreements and “Action of Management Committee” memoranda with the CBE participants to joint ventures that were not disclosed to the District of Columbia during the contract procurement process. As a result, the company admitted, both Forrester Construction and the CBE partners failed to follow the required CBE rules and regulations.

The announcement concludes a two-year investigation into Forrester Construction, a firm based in Rockville, Md., as well as its CBE partners on the joint venture projects.

Under the terms of a non-prosecution agreement reached with the U.S. Attorney’s Office for the District of Columbia, Forrester Construction agreed to pay $2.15 million to the United States and accepted and acknowledged responsibility for its improper conduct, as described in a Statement of Facts. The company also agreed to undertake various remedial measures to ensure compliance with the requirements of the District of Columbia’s CBE program (or any such equivalent on federal government projects) and the U.S. Small Business Administration’s 8(a) program, insofar as the company undertakes projects involving CBEs or 8(a) companies in the future.

Both the District of Columbia’s CBE program and SBA’s 8(a) program are meant to help small, disadvantaged businesses access government procurement markets.

The remedial measures include the hiring or designation of a CBE and 8(a) Compliance Officer, as well as an Ethics Officer; the implementation of a comprehensive training program for all company personnel regarding compliance with the CBE and 8(a) programs; maintaining an effective compliance and ethics program, and continuing cooperation with law enforcement. Significantly, individual employees directly associated with the inappropriate conduct are no longer employed by the company.

Additionally, the company agreed to undertake community service intended to develop improvements in the CBE and 8(a) programs going forward. Forrester Construction agreed to offer workshops, either individually or in collaboration with an industry trade association, aimed at providing training with respect to the rules and regulations of the CBE and 8(a) programs, among other topics relating to the construction industry.

This case is the latest example of law enforcement efforts to protect the integrity of CBE programs. Michael A. Brown, a former member of the Council of the District of Columbia, pled guilty in 2013 to a federal bribery charge stemming from an undercover investigation in which he accepted $55,000 from FBI agents posing as employees of a company that purportedly wanted CBE approval and contracting opportunities. Brown is serving a 39-month prison term.

“By changing the terms of joint ventures with small disadvantaged businesses and not reporting them to the D.C. government, Forrester Construction circumvented the foundation of the CBE program and used their proceeds to increase their own bottom line,” said Assistant Director in Charge McCabe.

“These joint ventures principally served the interests of Forrester Construction Company to make money and to obtain contracting opportunities otherwise unavailable to them,” said SBA Inspector General Gustafson. “Joint ventures involving SBA program participants should be structured and executed to give the small business an opportunity to gain experience and technical knowledge and to further develop their business. I want to thank the U.S. Attorney’s Office for its leadership in reaching this agreement.”

According to the Statement of Facts agreed to by the company, between 2008 and 2009, Forrester Construction formed multiple joint ventures with CBEs for the purpose of bidding on construction contracts in the District of Columbia.

Three joint ventures formed by Forrester Construction and one of the CBEs, EEC of D.C., Inc., were awarded construction contracts from the District of Columbia. These contracts, including change order amounts, totaled approximately $64 million for construction of a new headquarters building for the Department of Employment Services; approximately $5.4 million for construction of a Senior Wellness Center in Ward 1, and approximately $56 million for the renovation and modernization of the existing Anacostia Senior High School building.

Forrester Construction also formed joint ventures with another CBE, and those joint ventures were also awarded construction contracts from the District of Columbia, which were, over a period of approximately three years, in an aggregated amount in excess of $20 million.

In each of these various projects, the joint venture formed by Forrester Construction and the respective CBE partner received the maximum amount of contracting preferences for which the CBE partner was eligible, which provided Forrester Construction and the respective CBE partner with a competitive advantage during the bidding process.

As part of its joint venture submissions to the District of Columbia Department of Small and Local Business Development (DSLBD), Forrester Construction and its respective CBE partner represented that the CBE partner would be the majority partner and maintain a 51% interest in the joint venture, entitling the CBE partner to 51% of the net operating profits of the joint venture. Each joint venture agreement also established a “Management Committee,” consisting of two representatives from the CBE partner and one representative from Forrester Construction, which provided the CBE partner with majority control of the joint venture.

After each joint venture for the projects was submitted to, and certified by, the DSLBD, however, Forrester Construction and the respective CBE partner signed a memorandum entitled “Action of Management Committee” or signed a letter agreement, which related to the operations of each joint venture. The memoranda and/or letter agreements effectively increased Forrester Construction’s control over the day-to-day operations of the projects and reduced the CBE partner’s share of the profits or losses in the projects—notwithstanding the requirements of the joint venture agreements and the CBE rules and regulations. Forrester Construction and the CBE partner did not disclose these “Action of Management Committee” memoranda or the letter agreements to the District of Columbia government during the procurement process.

The “Action of Management Committee” memoranda also revised the respective scope of work and services that Forrester Construction and the CBE partner would provide to certain of the projects. In each instance, the “Action of Management Committee” memorandum applicable to the particular project identified a small scope of work for the CBE partner to complete and provided that Forrester Construction would provide all remaining general conditions, subcontract work, and all other work required to fulfill the requirements of the project.

For example, with respect to the Anacostia Senior High School joint venture, the applicable “Action of Management Committee” memorandum provided that the scope of work for the CBE equated to approximately $2.75 million, while the scope of work for Forrester Construction equated to approximately $46 million. The “Action of Management Committee” memoranda also established a pre-determined profit for the joint venture that specifically excluded any profits earned or losses sustained by either Forrester Construction or the CBE partner for their respective scope of work. Moreover, Forrester Construction and the CBE partner agreed that only the pre-determined profit, exclusive of each partner’s individual “scope of work,” would be split in the proportions agreed to in the joint venture agreement (i.e., 51% for the CBE partner and 49% for Forrester Construction). All other profits or losses generated through an individual scope of work would belong to the respective entity.

All of the work was performed under the various contracts. However, as a result of the letter agreements and “Action of Management Committee” memoranda, the CBE participant for each of the projects did not maintain majority control of the projects and did not receive 51% of the profits or losses associated with the projects, as required by the joint venture agreements and in accordance with the CBE rules and regulations.

This investigation was conducted by the FBI’s Washington Field Office; the Criminal Investigation Unit of the U.S. Attorney’s Office for the District of Columbia; the District of Columbia’s Office of the Inspector General, and the SBA Office of Inspector General.

Source: http://www.fbi.gov/washingtondc/press-releases/2014/forrester-construction-company-agrees-to-pay-2.15-million-admits-abuse-of-certified-business-enterprise-program

U.S. files suit against firm for allegedly submitting false claims under HUBZone program

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The United States has filed a complaint against Orlando, Florida, based Air Ideal Inc. and its owner, Kim Amkraut, for allegedly making false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company.

Under the federal HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company.  HUBZone companies can then use this certification when bidding on government contracts.  In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.

Justice Dept. sealThe complaint alleges that Air Ideal and Kim Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone.  The complaint further alleges that, in fact, this location was a “virtual office” where no Air Ideal employees worked and Air Ideal was actually located in a non-HUBZone location.  Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement for its purported HUBZone office.

The complaint alleges that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the U.S. Coast Guard, U.S. Army, U.S. Army Corps of Engineers and the U.S. Department of Interior that were worth millions of dollars.  Each of those contracts had been set aside for qualified HUBZone companies.  The complaint asserts claims against Air Ideal and Kim Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

The United States filed its complaint in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act.  Under the act, a private citizen can sue on behalf of the United States and share in any recovery.  The United States is entitled to intervene in the lawsuit, as it has done here.

The case is U.S. ex rel. Hopson v. Air Ideal, Inc. and Kim Amkraut, No. 6:13-cv-775-Orl-37GJK (M.D. Fla.).

The claims asserted against Air Ideal and Kim Amkraut are allegations only, and there has been no determination of liability.

Source: http://www.justice.gov/opa/pr/united-states-files-suit-against-air-ideal-and-its-owner-allegedly-submitting-false-claims

2015 NDAA eliminates self-certification of WOSBs

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With little fanfare, Congress just passed legislation eliminating the ability of WOSBs to self-certify for purposes of WOSB set-aside contracts.

The 2015 National Defense Authorization Act rewrites the portion of the Small Business Act governing WOSB set-asides, deleting what I have called the “trust but verify” option: the ability for putative WOSBs to self-certify as such, then back up their self-certifications by submitting supporting documentation to the WOSB Document Repository.  Instead, the 2015 NDAA would appear to require a formal certification in order for a small business to be awarded a WOSB set-aside contract.

Section 825 of the 2015 NDAA is entitled “sole source contracts for small business concerns owned and controlled by women.”  As the title suggests, the 2015 NDAA authorizes sole source awards for WOSBs and EDWOSBs–more on that soon in a separate blog post.  But the NDAA also amends the portion of the Small Business Act dealing with WOSB set-asides generally.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/wosb-program-2015-ndaa-eliminates-self-certification

 

Done deal? VA could finally have a contractor to help verify veteran-owned small businesses

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It appears the Department of Veterans Affairs will move forward with a new contract supporting its program for verifying veteran-owned small businesses, more than a year after the VA ended the old contract and following a number of bizarre delays spurred by legal and regulatory wrangling.

CVE logoThe Small Business Administration has determined that Loch Harbour Group in Alexandria does indeed qualify to perform the work as a small business, according to the company’s attorney in the matter. That determination came after the VA filed a size protest that could have prevented the contractor from landing the work.

“It was a lot of work, on both sides, but it appears that the issues between Loch Harbour and the government have finally been resolved and they can move forward working together to do the important work of verification,” which is required to bid on work set aside by the VA, said Lee Doughterty, a principal at the Vienna office of law firm Offit Kurman who represents Loch Harbour.

Keep reading this article at: http://www.bizjournals.com/washington/blog/fedbiz_daily/2014/12/done-deal-va-could-finally-have-a-contractor-to.html

DHS seeks help of small businesses to develop security-related solutions

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The Homeland Security Department’s research and development arm recently released a pre-solicitation notice to small businesses regarding the potential development of innovative technologies from forensics to cybersecurity to wearable communications.

DHS logoThe Science and Technology Directorate released the joint pre-solicitation with the Domestic Nuclear Detection Office, or DNDO, which is also part of DHS, through its Small Business Innovation Research, or SBIR, program. It focuses on nine areas, including seven for S&T and two for DNDO.

The program began accepting proposals starting Dec. 18, according to FedBizOpps.

“While we want to stimulate innovation to meet the needs of the homeland security enterprise by having offerers submit proposals that concentrate on proving the scientific and technical feasibility of their ideas, they must consider the commercialization potential of their proposed effort,” Lisa Sobolewski, S&T’s SBIR program director, said in a statement.

Keep reading this article at: http://www.fiercehomelandsecurity.com/story/dhs-seeks-help-small-businesses-develop-security-related-solutions/2014-12-11

Agencies awarding SBIR contracts to businesses owned by venture capital firms

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Two of the agencies participating in a Small Business Administration innovation program opted to open the program to small businesses that are majority-owned by venture capital firms, says a Nov. 20 Government Accountability Office report.

The Health and Human Services Department and the Energy Department opted to open part of their Small Business Innovation Research programs to small businesses that are majority-owned by multiple venture capital or similar firms, allowing such companies to apply for and receive SBIR awards, the report says.

Specifically, HHS’s National Institutes of Health and the DOE’s Advanced Research Projects Agency allowed such companies to participate.

For fiscal 2013 and fiscal 2014, NIH and ARPA together received 20 applications from majority-owned portfolio companies and made 12 SBIR awards to them, totaling about $7.9 million, the report says.

Keep reading this article at: http://www.fiercegovernment.com/story/gao-2-agencies-awarding-sba-contracts-businesses-owned-venture-capital-firm/2014-11-25

How companies hide the spoils of winning government contracts

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General Electric, the venerable maker of light bulbs, refrigerators, and other appliances, recently announced that it was selling off its consumer products division because the profit margins are too low. While GE bids that division goodbye, it’s holding onto its highly lucrative government-contracting business, in which a less-demanding customer leaves room for higher margins. Between 2007 and 2012, GE secured more than $16 billion worth of federal contracts, which might have something to do with the fact that it spent $150 million on lobbying during that period.

How often do these sorts of contracts roll in for companies that spend heavily on political advocacy? Unfortunately, there’s not enough public information to say.

Journalists and critics frequently bring up the dizzying totals that special interests put into elections—one estimate was that $3.7 billion was spent on last month’s midterms—but it’s much less common to hear about the impact of that money on the government’s decision-making.

Keep reading this article at: http://www.govexec.com/contracting/2014/12/how-companies-hide-spoils-winning-government-contracts/100572

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