Webinars on joint ventures, 8(a) and HUBZone programs offered June 23 & 25

The Small Business Administration is offering two webinars in June that provide helpful information to small businesses in the federal marketplace.

  • Tuesday, June 23, 1 PM – Topic: Joint Ventures.  This 2 hour webinar will outline how federal regulations define joint ventures, as well as discuss some of the technical issues that firms face when pursuing this strategy for winning federal contracts.
  • Thursday, June 25, 10 AM – Topic:  8(a) Business Development and Hubzone Program.  This 2 hour webinar will discuss the eligibility criteria, how to apply and benefits of participating in the 8(a) Program.

To register for either of these webinars, click on the title of the webinar above.

Florida company pays $250K to resolve alleged False Claims Act violations involving HUBZone status

Florida-based Air Ideal Inc. and its majority owner, Kim Amkraut, have agreed to pay the United States $250,000 to resolve allegations that they made false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced April 8, 2015.  Under the settlement, the defendants must also pay five percent of Air Ideal’s gross revenues over the next five years.

“When companies falsely claim eligibility for government contracts set aside for HUBZone businesses, they not only misuse taxpayer funds, but they also deprive HUBZone communities of the benefits of the program,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “This settlement shows that there is a stiff price to pay for obtaining government contracts through false statements.”

“The HUBZone program is an important tool in the government’s effort to strengthen our economy by encouraging businesses to grow in underutilized and disadvantaged areas,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will not tolerate contractors who use deception to undermine its objectives and effectiveness.”

The purpose of the HUBZone program is to stimulate job growth in areas that have historically had low business investment.  Under the 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.

The United States’ complaint alleged that Air Ideal and 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 alleged that, in fact, this location was a “virtual office” where no Air Ideal employees worked, and that 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 and other fabricated documents for its purported HUBZone office.  The complaint further alleged that during the government’s investigation of this case, the defendants fabricated another version of its agreement for the virtual office and submitted that false document to the government.

The complaint alleged 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 the Interior.  Each of those contracts had been set aside exclusively for HUBZone companies.  The government’s complaint asserted claims against Air Ideal and Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

The settlement resolves allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by Patricia Hopson, who is employed in the construction industry.  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 did here.  As part of the resolution, Ms. Hopson will receive $42,500.

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Middle District of Florida, in conjunction with the SBA’s Office of Inspector General (OIG) and Office of General Counsel, the Department of Homeland Security’s Office of Inspector General, and the Defense Criminal Investigative Service.

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.).

Source: http://www.justice.gov/opa/pr/florida-company-and-owner-agree-resolve-alleged-false-claims-act-violations-regarding

SBA seeks comment on mentor protégé program, small business size rules, government contracting

The U.S. Small Business Administration (SBA) is proposing to amend its regulations to implement provisions of the Small Business Jobs Act of 2010 and the National Defense Authorization Act for Fiscal Year 2013.  Based on authorities provided in these two statutes, the proposed rule would:

  • Establish a Government-wide mentor-protégé program for all small business concerns, consistent with SBA’s mentor-protégé program for participants in SBA’s 8(a) Business Development program.
  • Make minor changes to the mentor-protégé provisions for the 8(a) program in order to make the mentor-protégé rules for each of the programs as consistent as possible.
  • Amend the current joint venture provisions to clarify the conditions for creating and operating joint venture partnerships, including the effect of such partnerships on any mentor-protégé relationships.
  • Make several additional changes to current size, 8(a) Office of Hearings and Appeals and HUBZone regulations, concerning among other things, ownership and control, changes in primary industry, standards of review and interested party status for some appeals.

SBA’s proposed rule, and a discussion of its provisions appears at: http://www.regulations.gov/#!documentDetail;D=SBA-2015-0001-0001.

SBA is seeking comments on the proposed rule, and comments must be received on or before April 6, 2015.

 

Approximately 600 small contractors will lose their set-aside status in 2015 — and might not know it

Nearly 600 small businesses will lose a set-aside status in 2015 — and the Small Business Administration isn’t so sure they even realize it yet.

That was among the findings from a report released by the Government Accountability Office Feb. 13 assessing the SBA’s contracting program for small businesses located in designated, highly underutilized business zones, or HUBZones.

Areas are designated as HUBZones based on demographic data including unemployment and poverty rates. The problem, according to the GAO, is the SBA lacks an effective way to communicate program changes to small businesses that participate in the program, which allows them to bid on contracts set aside for small businesses located in HUBZones. And because areas can lose their qualifying status due to changes in economic conditions, resulting in a three-year transition period before the status is stripped entirely, communication with participating small businesses is crucial.

Keep reading this article at: http://www.bizjournals.com/washington/blog/fedbiz_daily/2015/02/approximately-600-small-contractors-will-lose.html?ana=lnk&page=all

New rules proposed for mentor-protégé, HUBZone, 8(a) and other SBA programs

On February 5, 2015, the Small Business Administration (SBA) published a proposed rule in the Federal Register for the purpose of amending existing regulations in order to implement provisions of the Small Business Jobs Act of 2010 and the FY13 National Defense Authorization Act.

Based on these two statutes, SBA is proposing a Governmentwide mentor-protégé program for all small business concerns, consistent with SBA’s existing mentor-protégé program for Participants in the 8(a) Business Development (BD) program. The proposed rule also would make minor changes to the mentor protégé provisions for the 8(a) BD program in order to make the mentor-protégé rules consistent across agency boundaries.

Similarly, SBA is also proposing to amend current joint venture provisions to clarify the conditions for creating and operating joint venture partnerships, including the effect of such partnerships on any mentor-protégé relationships. Finally, SBA’s proposed rule would make several additional changes to current size, 8(a) Office of Hearings and Appeals, or HUBZone regulations, concerning ownership and control, changes in primary industry designations, standards of review, interested party status, and other matters.

Comments on the proposed rule are due on April 6, 2015.

The proposed rule can be seen here: Federal Register Vol. 80 No. 24 Part III Feb. 5 2015

An analysis of the proposed rule can be found here: Analysis of SBA’s Proposed Rule to Create a New Mentor-Protege Program for All Small Businesses – 02.06.2015

SBA offers insights into the HUBZone protest process

The Small Business Administration (SBA) has introduced a new website where visitors can review samples of HUBZone-related protest decisions.

Examining these samples can help you learn about how allegations of non-compliance are analyzed by the SBA.

The website also has a link to a mini-primer to help you better understand the HUBZone protest process.

The award of a HUBZone contract may be protested by an offeror, the contracting officer, or the SBA. There are three possible outcomes of a HUBZone status protest:

  • Dismissed: the protest was not evaluated by the SBA because it was untimely, not submitted by an interested party, or not specific enough. In some cases when a protest is dismissed because it was not submitted on time, but the information presented was specific, SBA may file its own protest.
  • Sustained: SBA found the protested company to be ineligible for the award and/or ineligible for (and therefore decertified from) the program.
  • Denied: SBA found the protested company to be eligible for the award and for the program.

Past HUBZone protest decisions can be found at: https://www.sba.gov/content/protest-case-highlights.

The SBA’s mini-primer on Understanding HUBZone Protests can be located at: https://www.sba.gov/tools/sba-learning-center/training/hubzone-mini-primer-3

SBA to hold 8(a) and HUBZone eligibility workshop Feb. 11th

Small businesses interested in learning about the Small Business Administration’s eligibility requirements for becoming 8(a) or HUBZone certified will be interested in a workshop on that subject to be held on Feb. 11, 2015, from 10:00 a.m. to noon.

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

Advance registration is required and may be accomplished by visiting: http://events.sba.gov/eventmanagement/EventRegistration.aspx?id=b73797b8-cba0-e411-8f7e-02bfa56e2a24.

SBA announces new HUBZone designations effective Jan. 1, 2015

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

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

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

Inspector general releases report on critical risks facing the SBA

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