SBA proposed rule would let small businesses join together for single contract

January 12, 2015 by

The Small Business Administration issued a proposed rule that would let two or more small businesses join together to bid on single small business contracts, a Dec. 29, 2014 Federal Register notice says.

The proposed rule comes as part of an update in the 2013 National Defense Authorization Act that changed some provisions in the Small Business Act.

“SBA proposes to remove the restriction on the type of contract for which small businesses may joint venture without being affiliated for size determination purposes,” the proposed rule says.

SBA says it’s proposing the change because it would encourage more small business joint venturing and would help agencies meet goals for small business participation in federal contracting.

Keep reading this article at: http://www.fiercegovernment.com/story/sba-proposed-rule-would-let-small-businesses-join-together-single-contract/2015-01-08

SBA announces new HUBZone designations effective Jan. 1, 2015

January 5, 2015 by

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

December 31, 2014 by

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

December 30, 2014 by

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

Faulty joint venture results in disqualifying affiliation

December 29, 2014 by

An 8(a) program protege was deemed affiliated with its mentor–and ineligible for a small business set-aside contract–because the joint venture agreement between the mentor and protege failed to comply with certain mandatory 8(a) joint venture requirements.

In a recent decision, the SBA Office of Hearings and Appeals concluded that an 8(a) mentor-protege joint venture was not entitled to take advantage of the special exception from affiliation because of the flaws in its joint venture agreement.  OHA’s decision is an important reminder to 8(a) mentors and proteges of the critical importance of strictly complying with the 8(a) joint venture regulation.

OHA’s decision in Kisan-Pike, A Joint Venture, SBA No. SIZ-5618 (2014) involved an Army Corps of Engineers solicitation for the design and construction of an Army Reserve Center.  The solicitation was issued as a small business set-aside.

Kisan-Pike, A Joint Venture, submitted a proposal.  Kisan-Pike was a joint venture between Kisan Engineering Company, P.C., an 8(a) program participant, and its large business mentor, The Pike Company, Inc.  Kisan and Pike had an active, approved 8(a) mentor-protege agreement at the time that Kisan-Pike submitted its proposal.  Kisan-Pike self certified as a small business based on the special exception from affiliation available to 8(a) mentor-protege joint ventures.

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/8a-mentor-protege-jvs-faulty-jv-agreement-results-in-affiliation

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

December 22, 2014 by

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

Agencies awarding SBIR contracts to businesses owned by venture capital firms

December 17, 2014 by

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

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

VA demands review of company’s small business status, days after awarding it a contract

December 11, 2014 by

Days after the Department of Veterans Affairs awarded a contract to manage its verification program for veteran-owned small businesses, it’s questioning the winner’s own status as a small business.

The VA filed a size protest with the Small Business Administration against Loch Harbour Group Inc. of Alexandria, less than a week after awarding the company a $39.9 million contract to manage the VA’s Center for Veterans Enterprise, said Lee Doughterty, a principal at the Vienna office of law firm Offit Kurman who represents Loch Harbour.

That contract, which was set aside for veteran-owned small businesses and involves processing contractor applications to be verified as veteran-owned, was originally awarded to Monterey Consultants Inc. of Dayton, Ohio. The VA terminated the Monterey award in November, opting to take corrective action in response to a protest filed by Loch Harbour in the U.S. Court of Federal Claims.

“It is a terrible tactical move,” said Dougherty, who added that Loch Harbour was deemed qualified to compete for the work during the contract evaluation process. “The retaliation taken by the program and contracting officer is absolutely inappropriate and a gross violation.”

Keep reading this article at: http://www.bizjournals.com/washington/blog/fedbiz_daily/2014/12/va-demands-review-of-companys-small-business.html?page=all

GAO sustains protest resulting from agency’s failure to make referral to SBA

December 5, 2014 by

A procuring agency erred by essentially assigning a small business a failing past performance score without referring the matter to the SBA.

In a recent bid protest decision, the GAO held that the assignment of a failing past performance score under a past/fail system constituted a non-responsibility determination–and that the SBA was entitled to review the agency’s determination under the SBA’s Certificate of Competency procedures.

The GAO’s decision in FitNet Purchasing Alliance, B-410263 (Nov. 26, 2014) involved a Bureau of Indian Affairs solicitation for gym floor racks, covers, and accessories.  The solicitation was posted on the FedBid reverse auction website and was set aside for small businesses.

FitNet Purchasing Alliance submitted the lowest price.  However, the Contracting Officer elected to make award to the second-lowest bidder, Nationwide Supplies.  A single-page document in the agency’s file stated that the Contracting Officer had declined FitNet’s bid because of adverse past performance information about FitNet.  The agency’s file did not mention Nationwide’s past performance, or indicate that the Contracting Officer had considered Nationwide’s past performance in making the award decision.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/agency-doesnt-request-sba-coc-gao-sustains-protest/