Inspector general releases report on critical risks facing the SBA

December 12, 2014 by

The Office of Inspector General of the U.S. Small Business Administration (SBA) has issued its semi-annual report focusing on the most critical risks facing the SBA, including several aspects of government procurement.

SBA - IGCovering the period April through September 2014, the OIG’s report covers key SBA programs and operations, including financial assistance, government contracting and business development, financial management and information technology, disaster assistance, management challenges, and security operations.

Of particular interest to the government contracting community are findings such as:

  • Over $400 million in federal contracts that were awarded to ineligible firms, which may have contributed to the overstatement of small business goaling dollars for the Small Disadvantaged Business and the HUBZone Business Preference Programs in FY 2013.
  • The owner of a Colorado real estate firm and 5 family members were charged in a 37-count indictment by a state grand jury in connection with a $2,323,000 SBA-guaranteed loan to refinance an office building and other existing debt.
  • Sixteen cases of contract-related bribery and/or fraud were identified in connection with contracts or subcontracts set-aside for 8(a), HUBZone, veterans, or other categories of small business.
  • The OIG was unable to determine if the SBA appropriately issued waivers to the non-manufacturer rule because of a lack of established procedures, missing files, and other deficiencies.

The OIG’s full report can be downloaded here: SBA OIG Semi-Annual Report to Congress – Fall 2014

IG reports continued weaknesses in small business reporting and 8(a) program

November 13, 2014 by

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.

SBA - IGThe 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.

Procurement Reporting

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.

                                                                                               ***

8(a) Program

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
time.

SBA’s 8(a) and HUBZone eligibility workshop to be held in Atlanta on Nov. 12

November 6, 2014 by

The Georgia District Office of the Small Business Administration (SBA) is conducting a workshop on Wednesday, Nov. 12, 2014 for small businesses interested in learning about the eligibility requirements associated with the SBA’s 8(a) Business Development and Historically Underutilized Business Zone (HUBZone) programs.

The workshop will be held at 233 Peachtree St. NE, Ste. 1900, Harris Tower, Peachtree Center Mall, Atlanta, GA, 30303, from 10:00am until noon.

In order to attend, pre-registration is required.  To register, click on this link: http://events.sba.gov/eventmanagement/EventRegistration.aspx?id=838a3859-3c5d-e311-9914-02bfa56e2a24.

SBA’s inspector general says agencies are overstating 8(a) and HUBZone contracting achievements

September 29, 2014 by

On September 24, 2014, the Small Business Administration’s Office of Inspector General (OIG) issued Evaluation Report 14-18, Agencies are Overstating Small Disadvantaged Business and HUBZone Goaling Credit by Including Contracts Performed by Eligible FirmsThis report presents the results of an evaluation of select Section 8(a) Business Development Program and Historically Underutilized Business Zones (HUBZone) contract awards.

The OIG identified over $400 million in contract actions that were awarded to ineligible firms, which may have contributed to the overstatement of small business goaling dollars for the Small Disadvantaged Business and the HUBZone Business preference programs in FY 2013.  Besides reporting inaccurate information in Federal Procurement Data System-Next Generation (FPDS-NG), procuring agencies may have limited contracting opportunities for firms currently participating in the 8(a) or HUBZone programs.

Further, the OIG found that HUBZone and 8(a) certification information is not consistently transmitted to the Dynamic Small Business Search (DSBS) and the System for Award Management (SAM).  As a result, the affected small businesses are not getting the visibility in the DSBS database, especially the HUBZone firms, and as a result, may impact federal agencies in meeting their HUBZone procurement goals.

Additionally, the OIG also identified over $1.5 billion dollars in contract actions for which the firms were in the programs at the time of contract award, but in FY 2013 were no longer in the 8(a) or HUBZone programs.  Specifically, SBA regulations permit procuring agencies to claim Small Disadvantaged Business and HUBZone goaling credit on certain contract actions even after firms have left the program.  In the opinion of the OIG, the amount of dollars the SBA reports to Congress and the public as being performed by 8(a) and HUBZone firms in the Small Business Goaling Report is significantly impacted by the inclusion of contract actions performed by former program participants.

The OIG made two recommendations to SBA’s Associate Administrator for Government Contracting and Business Development intended to strengthen controls between SBA databases on certification data of 8(a) and HUBZone firms and information reported in FPDS-NG. The recommendations are:

  1. In coordination with the Office of Federal Procurement Policy and the General Services Administration, the SBA should strengthen controls between the SBA’s Dynamic Small Business Search Database and the System for Award Management to ensure accuracy of 8(a) and HUBZone certification data in FPDS-NG.
  2. The SBA should modify DSBS so that a firm’s profile and certification information for HUBZone and 8(a) status remains visible and accurate to agency contracting officers, or develop an alternate list to verify a firm’s status.

The OIG reports that SBA’s management has agreed to pursue both recommendations.

Defense department’s ‘sources sought’ for IT services underscores importance of an effective capabilities statement

September 16, 2014 by

Market research undertaken last week by a unit of the Department of Defense places significant importance on small businesses having a written capabilities statement.

In fact, as the Defense Information Systems Agency (DISA) puts it, It is vitally important that Small Businesses responding to this Sources Sought Notice do so with highly effective Capability Statements.”

The call for submittal of capabilities statements comes in DISA’s posting of a sources sought notice on FedBizOpps on September 11, 2014.  The purpose of the sources sought is to determine the availability and technical capability of small businesses to provide a wide range of information technology services to the U.S. Cyber Command, including assistance for offensive and defensive cyber operations.

The sources sought notice is a precursor to an anticipated indefinite delivery, indefinite quantity IT contract which will be open only to small businesses.  Small businesses are being sought to provide support for cyber planning, training knowledge, records management, science and technology research and development, and more than 30 cyber exercises a year.

The small businesses that DISA is seeking to identify include Small Disadvantaged Businesses, HUBZone Firms; Certified 8(a), Service-Disabled Veteran-Owned Small Businesses, and Woman Owned Small Business.

The primary place of performance will be at USCYBERCOM Government facilities within the Ft. George G. Meade, MD local area. Local area is any facility within a 50 mile radius of Ft. Meade, Maryland.

Responses to the sources sough are due not later than 4:00 pm Eastern Time on September 29, 2014.

DISA’s sources sought notice may be seen at: https://www.fbo.gov/index?s=opportunity&mode=form&id=63a08d1386b0426debf21c53cd8572db&tab=core&_cview=0.

For background information on the “sources sought” process, read: http://gtpac.org/2010/09/what-is-a-sources-sought-heres-the-answer

For general information on putting together a capabilities statement, read: http://gtpac.org/2010/05/what-is-a-capabilities-statement-and-why-should-i-have-one/

Clients of the Georgia Tech Procurement Assistance Center may ask their assigned counselor for a sample capabilities statement as well as for a review of their capabilities statement before submitting it in response to any sources sought notice.

 

SBA will help you determine your 8(a) or HUBZone eligibility on Aug. 13

August 6, 2014 by

The Georgia District Office of the Small Business Administration will be conducting its monthly 8(a) and HUBZone Eligibility Workshop on Wednesday, August 13, 2014, from 10:00 a.m. to 12:00 Noon.

At this event attendees will be given an overview of the eligibility requirements for 8(a) and HUBZone certifications, and other procurement-related information.

The workshop will be held at 233 Peachtree St., NE, Ste. 1900, Harris Tower, Peachtree Center Mall, Atlanta, GA 30303.

You must pre-register in order to attend.  Register on-line at: http://events.sba.gov/EventManagement/EventRegistration.aspx?id=5340c13a-395d-e311-9914-02bfa56e2a24.

Note: This workshop will be repeated on Sept. 10, 2014.  You may register for it at: http://events.sba.gov/eventmanagement/EventRegistration.aspx?id=8131b924-3a5d-e311-9914-02bfa56e2a24.

Subcontracting uncertainty means no HUBZone price preference required, says GAO

July 28, 2014 by

An agency properly refused to apply the HUBZone price preference when the agency determined HUBZone company’s proposal was unclear as to whether the company would comply with the subcontracting limits set forth in the Federal Acquisition Regulation’s HUBZone price preference clause.

In a recent bid protest decision, the GAO held that the Defense Logistics Agency (DLA) reasonably refused to apply the HUBZone price preference in a procurement for supplies because the HUBZone company’s proposal suggested that HUBZone companies might perform less than 50% of the manufacturing costs.

The GAO’s decision in Wakan, LLC, B-408535.2 (June 19, 2014) involved a DLA procurement for chicken products.  The procurement included a small business set-aside portion and an unrestricted portion.  The unrestricted portion of the procurement was to be awarded on a lowest-price, technically acceptable basis.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/gao-subcontracting-uncertainty-means-no-hubzone-price-preference-required/#more-3158

Small biz size status ordinarily is based on underlying GSA Schedule contract

July 8, 2014 by

When a small business submits an offer for a Blanket Purchase Agreement issued against a GSA Schedule contract, the offeror does not automatically recertify its size.  Rather, a new regulation effective December 31, 2013 provides that an offeror’s size status for a BPA issued against a GSA Schedule ordinarily is determined by looking to the offeror’s self-certification for the underlying GSA Schedule contract.

In a recent size appeal decision, the SBA Office of Hearings and Appeals relied, in part, on the new regulation to find that an offeror had not recertified its small business status by submitting a quotation for a BPA to be issued against the offeror’s GSA Schedule contract.

SBA OHA’s decision in Size Appeal of Total Systems Technologies Corp., SBA No. SIZ-5562 (2014) involved a Homeland Security RFQ for business management support at the Coast Guard’s C4IT Service Center.  The Coast Guard issued the RFQ under the MOBIS Schedule 874, and stated that the RFQ would result in the award of a single BPA.  The RFQ was set aside for HUBZone firms.

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/gsa-schedule-bpa-awards-size-status-ordinarily-is-based-on-underlying-gsa-schedule-contract/

 

GSA to hold industry day in Atlanta for HUBZone and SDVOSB firms on May 28

May 21, 2014 by

The General Services Administration (GSA) is planning an Industry Day focusing on Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and HUBZone certified small businesses with specific NAICS codes.  The program’s planned presentations will outline contracting and potential subcontracting opportunities in GSA’s Public Buildings Service (PBS).  GSA’s Federal Acquisition Service (FAS) also will be presenting.  This event is being facilitated by GSA’s Office of Small Business Utilization.

The top NAICS codes for Region 4 PBS:

236220   Commercial and Institutional Building Construction
337214   Furniture
53              Real Estate (includes rental & leasing)
541611    Administrative, Management & General Management Consulting Services
561720   Janitorial Services
561210   Operations and Maintenance
GSA Schedule 70

AGENDA

1:00 p.m. – 1:15 p.m. Opening Comments
Chasity Ash, Small Business Technical Advisor, GSA Office of Small Business Utilization
Mildred Quinley, Director, GSA Office of Small Business Utilization (OSBU)

1:15 p.m. – 1:45 p.m.  GSA, Federal Acquisition Service
1:45 p.m. –  2:15 p.m. Services Branch, GSA Public Buildings Service
2:15 p.m. – 2:45 p.m.  Small Projects Branch, GSA Public Buildings Service
2:45 p.m. – 3:15 p.m.  Capital and Program Support Branch, GSA Public Buildings Service
3:15 p.m. – 4 :00p.m.  Wrap Up, GSA Office of Small Business Utilization

This event is open to small business firms whose primary NAICS codes are listed above.  Pre-registration is required.  Please send attendee names, company name, address, phone numbers, and email addresses to vog.asgnull@zibllams4r.  Limit two attendees per firm.  Please include your NAICS codes, CAGE code, and HUBZone certification number or SDVOSB status in the email.  Please direct all inquiries to Region 4 OSBU at (404) 331-5103 or vog.asgnull@zibllams4r.

If you are unable to attend this even, a conference line  is being set-up.  Be advised that this will be a “Listen Only Call” and all phones will be muted.  If you have any questions during the call, please email them to vog.asgnull@zibllams4r. The Conference Call-In Number is 559-546-1000 and the Access Code is 584979.

Controversial IT contractor charged with murder

April 8, 2014 by

Braulio Castillo, the president of IT contractor Strong Castle, was arrested April 1 by Loudon County, Va., authorities and charged with first degree murder in the death of his estranged wife, Michelle.

Castillo gained notoriety as a result of a June 2013 hearing of the House Oversight and Government Reform Committee that examined the validity of the service-disabled veteran-owned small business (SDVOSB) status enjoyed by the firm he co-owned with his wife.

Castillo’s disability arose from a sports injury incurred at the U.S. Military Academy Preparatory School. Additionally, Castillo’s firm enjoyed a special status as a HUBZone company under a Small Business Administration program that gives preference to firms located in designated neighborhoods. SBA decertified Strong Castle’s HUBZone status in May 2013, while the Department of Veterans Affairs affirmed Strong Castles SDVOSB status last September.

keep reading this article at: http://fcw.com/articles/2014/04/02/castillo-murder-charges.aspx