Georgia Tech Procurement Assistance Center

Cost realism: Using offeror’s actual rates was unobjectionable

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GAO-GovernmentAccountabilityOffice-SealIn conducting a cost realism evaluation, an agency was entitled to use an offeror’s historic approved indirect rates and current incumbent direct labor rates to upwardly adjust the offeror’s evaluated cost, in a case where the offeror’s proposed rates were significantly lower.

The Government Accountability Office (GAO) recently held that an agency did not err by adjusting a protester’s rates to better align with the protester’s historic indirect rates and current direct rates, where the agency was unable to determine that the protester’s significantly lower proposed rates were realistic.

In AM Pierce & Associates Inc., B-413128 et al. (Aug. 22, 2016), GAO considered a protest by a disappointed offeror challenging the Navy’s evaluation under a solicitation seeking program management support services for the H-60 Helicopter Program Office. The solicitation was completely set-aside for EDWOSBs. The resulting contract was to be awarded on a cost-plus-fixed-fee basis, under a best-value evaluation.

DCAA_EmblemThe solicitation said that offerors’ proposed costs would be evaluated for realism, to determine whether the overall costs were realistic for the work to be performed, reflective of the offeror’s understanding of the requirements, and/or consistent with the technical proposal. To facilitate the evaluation, the RFP required offerors to substantiate their proposed direct and indirect labor rates through payroll verification, contingent offer letters, Defense Contract Audit Agency (DCAA) rate verification or approval letters, or other detailed justification methods. The cost realism analysis would then involve a calculation of each offeror’s evaluated costs, to reflect the estimated most probable costs. This determination would include an evaluation of the offeror’s cost information — including its substantiated labor rates.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/cost-realism-using-offerors-actual-rates-was-unobjectionable/

Set-aside decision need not consider compliance with limitation on subcontracting

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GAO-GovernmentAccountabilityOffice-SealBefore deciding whether to set-aside a solicitation for small businesses under FAR 19.502-2, should the contracting officer first determine whether those small business will be able to provide the needed services while, at the same time, complying with the limitation on subcontracting?

No, according to a recent Government Accountability Office (GAO) bid protest decision. Instead, an agency’s determination whether a small business will comply with the limitation on subcontracting should be made as part of its award decision (following the evaluation of proposals), not during its initial set-aside determination.

Under FAR 19.502-2(b), a procurement with an anticipated dollar amount greater than $150,000 must be set-aside for small businesses where there is a reasonable expectation that offers will be received from at least two responsible small businesses and that award will be made at fair market prices. Though orders under Federal Supply Schedule (FSS) contracts (issued under FAR part 8.4) are exempt from these small business programs, a contracting officer nonetheless has discretion to set-aside FSS orders for small businesses.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/set-aside-decision-need-not-consider-compliance-with-limitation-on-subcontracting/

SBA finalizes “universal” small business mentor-protege program

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SBA Mentor-Protege Program 07.2016The SBA has finalized its “universal” mentor-protege program for all small businesses.

In a final rule published in the Federal Register on July 25, 2016, the SBA provides the framework for what may be one of the most important small business programs of the last decade – one that will allow all small businesses to obtain developmental assistance from larger mentors, and form joint ventures with those mentors to pursue set-aside contracts.

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/sba-finalizes-universal-small-business-mentor-protege-program/

 

 

SBA to interpret Supreme Court contractor ruling for small business

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SBA logo smallThe June 16 Supreme Court decision requiring the Veterans Affairs Department to expand set-asides for veteran-owned small businesses could affect broader procurement regulations across government, says the Small Business Administration’s John Shoraka, associate administrator of SBA’s Office of Government Contracting and Business Development.  He recently told Government Executive at a contractors networking event that “the path forward is that we have to interpret how the decision impacts the Small Business Act.”

The court’s decision in Kingdomware Technologies Inc. v. the United States determined that the so-called “rule of two” requirement that the VA consider at least two bidding contractor firms (and apply a set-aside to the one that qualifies) must apply to supply orders as well as contracts.

“There was a perception that a [pre-existing GSA Schedule] order was not a contract, so the rule didn’t apply,” Shoraka told the audience. “But the Supreme Court says it is a contract, so now we know,” and the department must pick the veteran-owned small business assuming it offers a reasonable price.

Keep reading this article at: http://www.govexec.com/contracting/2016/06/sba-interpret-supreme-court-contractor-ruling-small-business/129477

SBA issues new rules affecting small business affiliation — and lots more

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Federal RegisterBack when the U.S. Congress was adopting the 2013 version of the National Defense Authorization Act (NDAA), it included directives to the Small Business Administration (SBA) to make changes to multiple rules pertaining to small business set-aside contracts and subcontracting.  On Monday, May 31, 2016, the SBA published final rules in the Federal Register implementing each of these changes.

The rule changes are wide ranging, amending SBA’s nonmanufacturer rule and affiliation rules, and for the first time allowing joint ventures to qualify as small for any government procurement as long as each partner to the joint venture qualifies individually as small under applicable size standards.

All of the changes can be seen at: https://www.federalregister.gov/articles/2016/05/31/2016-12494/small-business-government-contracting-and-national-defense-authorization-act-of-2013-amendments.

Here is a summary view of some of the most significant changes being made:

  • Affiliation. In the case of a solicitation for a bundled contract, a small business contractor may enter into a Small Business Teaming Arrangement with one or more small business subcontractors and submit an offer as a small business without regard to affiliation, so long as each team member is small for the size standard assigned to the contract or subcontract. This is a major change.  Previously, small businesses risked losing small business status if combined employees or gross revenues exceeded SBA’ s size standards.  This new concept applies to joint ventures as well.  A joint venture of two or more business concerns may submit an offer as a small business for a federal procurement, subcontract or sale so long as each concern is small under the size standard corresponding to the NAICS code assigned to the contract.  In addition, the new rule provides that firms owned or controlled by married couples — in addition to parties to a civil union, parents, children, and siblings — are presumed to be affiliated with each other if they conduct business with each other, such as subcontracts or joint ventures or share or provide loans, resources, equipment, locations or employees with one another. This presumption may be overcome by showing a clear line of fracture between the concerns. Other types of familial relationships are not grounds for affiliation on family relationships.
  • Procurement Center Representatives.  The SBA has Procurement Center Representatives (PCRs) located at federal agencies and military bases which have major contracting programs.  Under the new rules, PCRs are to review all acquisitions that are not totally set aside for small businesses to determine whether a set-aside or sole source award to a small business is appropriate and to identify alternative strategies to maximize the participation of small businesses in the procurement. PCRs are also to advocate against the consolidation or bundling of contract requirements (which tend to adversely impact small business contract participation), and reviewing any justification provided by the agency for consolidation or bundling. This review includes acquisitions that are Multiple Award Contracts (MACs) where the agency has not set-aside all or part of the acquisition or reserved the acquisition for small businesses. It also includes acquisitions where the agency has not set-aside orders placed against MACs for small businesses.  Also, for the first time, PCRs may receive unsolicited proposals from small businesses.  They are to send such proposals to the agency personnel responsible for reviewing such proposals, and the agency personnel are to provide PCRs with information regarding the disposition of each proposal.
  • Subcontracting to Small Businesses.  A prime contractor that identifies a small business by name as a subcontractor in a proposal, offer, bid or subcontracting plan is now obligated to notify those subcontractors, in writing, prior to identifying the concern in the proposal, bid, offer or subcontracting plan.  Safeguards against naming a subcontractor that the prime really doesn’t intent to use are also strengthened.  The new rules state that anyone who has a reasonable basis to believe that a prime or a subcontractor may have made a false statement with respect to subcontracting plans is to report the matter to the SBA’s Office of Inspector General. All other concerns as to whether a prime contractor or subcontractor has complied with SBA regulations or otherwise acted in bad faith may be reported to the Government Contracting Area Office where the firm is headquartered.  Contractors who are judged to have acted in bad faith may be found to be in material breach of contract and subject to liquidated damages under their contract.
  • Limitations on Subcontracting.  The rules have changed for the amount of work a small business may subcontract out.  In order to be awarded a full or partial small business set-aside contract with a value greater than $150,000, a small business concern now must agree that:

    (1) In the case of a contract for services (except construction), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated.  (Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded.)

    (2) In the case of a contract for supplies or products (other than from a non-manufacturer of such supplies), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated. (Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded.) Cost of materials are excluded and not considered to be subcontracted.

    (3) In the case of a contract for supplies from a non-manufacturer, it will supply the product of a domestic small business manufacturer or processor, unless a waiver is granted.

    (4) For a multiple item procurement where a waiver has not been granted for one or more items, more than 50% of the value of the products to be supplied by the non-manufacturer must be the products of one or more domestic small business manufacturers or processors.

    (5) For a multiple item procurement where a waiver is granted for one or more items, compliance with the limitation on subcontracting requirement will not consider the value of items subject to a waiver. As such, more than 50% of the value of the products to be supplied by the non-manufacturer that are not subject to a waiver must be the products of one or more domestic small business manufacturers or processors.

    (6) For a multiple item procurement, the same small business concern may act as both a manufacturer and a non-manufacturer.

  • Contracts Set-Aside for Service Disabled Veteran Owned Small Businesses.  Under the new rules, a joint venture comprised of at least one Service Disabled Veteran Owned Small Business (SDVOSB) and one or more other businesses may submit an offer as a small business for a competitive SDVOSB set-aside procurement, or be awarded a sole source SDVOSB contract, so long as each concern is small under the size standard corresponding to the NAICS code assigned to the procurement.

All of these rule changes are effective on June 30, 2016.

 

Group sues SBA, says government ‘defrauded small businesses’

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ASBL Injunction Against SBA - May 2016Just a week after the Small Business Administration celebrated record-breaking contract awards to small business owners eligible for government set-asides, a longtime critic filed suit in federal court for an injunction to force SBA to halt some of the practices used in measuring its success.

The Petaluma, Calif.-based American Small Business League, in an injunction addressed to Administrator Marie Contreras-Sweet filed in Federal District Court in San Francisco, argued that the SBA’s “illegal policies” have “defrauded small businesses and small businesses owned by women, minorities and disabled veterans out of hundreds of billions of dollars in government contracts.”

ASBLIt quotes the Small Business Act’s language noting that “the governmentwide goal for participation by small business concerns shall be established at not less than 23 percent of the total value of all prime contract awards for each fiscal year.” And within that category, the goal states 5 percent for women-owned small businesses, 5 percent for minority-owned firms, and 3 percent for disabled veterans.

But the SBA, the group’s argument goes, “has created a policy they call the ‘exclusionary rule’ and ‘small business eligible dollars’ that uses a significantly lower federal acquisition budget number to calculate the percentage of contracts awarded to all categories of small businesses.”

SBA logo smallKeep reading this article at: http://www.govexec.com/management/2016/05/group-sues-sba-says-government-defrauded-small-businesses/128084

See copy of complaint for injunctive relief here: http://www.asbl.com/documents/Filed_Complaint_For_Injunctive_Relief.pdf

Indian-owned businesses should see more procurement contracts under new ‘Buy Indian’ policy

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Buy Indian ActThe U.S. Department of the Interior’s Bureau of Indian Affairs (BIA) on Jan. 12, 2016, announced a new policy to improve the implementation of the Buy Indian Act of 1910 (Act). The policy, announced in a memorandum by Acting Deputy Assistant Secretary – Indian Affairs (Management) James Burckman, comes in response to a U.S. Government Accountability Office (GAO) report, released in July 2015, that criticized the federal government’s enforcement of the Act.

The Buy Indian Act authorized certain federal procurement contracts to be set aside for preferential awards to Indian Economic Enterprises (IEEs) for all procurement contracts issued by the BIA, the Bureau of Indian Education (BIE), the office of the Interior Assistant Secretary – Indian Affairs (AS-IA) and the Indian Health Service (IHS). In 2013, regulations were issued that defined IEEs as those companies which are at least 51 percent Indian-owned.

While the BIA and IHS have obtained services and supplies from IEEs under the Act since 1965,the GAO found that Buy Indian procurements have comprised only a small percentage of BIA and IHS annual contract obligations, the result of limited knowledge and implementation of the set-aside in regional or area offices where contracts are often awarded.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=461952

Protest lessons learned: Check your spam filter!

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Late is late. All government contractors know the rule. Submissions must be received by the Agency at the time indicated, or else risk being excluded. Still, as we start the New Year, it bears repeating because of the new and exotic ways we still see the rule popping up and harming contractors.

DHS logoToday – we look at the perils of Agency spam filters.

Advanced Decisions Vectors (ADV) was an offeror on a Department of Homeland Security 8(a) set-aside contract for consulting services. The RFP called for proposals to be submitted by 10 a.m. Eastern on September 8. ADV claimed that sent its proposal by email before the deadline (with 5 minutes to spare!), but the Agency disagreed – it did not receive the proposal – and disqualified ADV.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=458364

Diminishing federal contract program has Alaskan Native corporations diversifying

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Alaska Native regional corporations are drawing a decreasing amount of their revenue from a controversial government contracting program that gives preferential treatment to minority-owned businesses, financial reports show.

Alaska Native Claims Settlement ActFederal budget cuts, a temporary government shutdown and reform legislation spurred by Congressional critics and government watchdogs has made obtaining contracts through what’s known as the 8(a) program more difficult and costly.

“They see the writing on the wall,” Kim Reitmeier, executive director of the Alaska Native Claims Settlement Act Regional Association, said at a recent Anchorage Chamber of Commerce lunch at the Egan Center. “And so the regional corporations have diversified.”

At Calista Corp., management “continues to take steps to lessen its dependence on government contracting by expanding its investments in real estate,” the company’s 2014 annual report said. Between 2012 and 2014, the majority of Calista’s revenue came from contracts or subcontracts with federal government agencies. Of those contracts, a significant portion came from the 8(a) program.

Total revenue earned through the 8(a) contracting program by the 12 regional corporations, which comprise the membership of the ANCSA Regional Association, was $2.4 billion in 2014, down from $3.6 billion in 2010, the association’s most recent annual report said.

Keep reading this article at: http://www.adn.com/article/20151206/diminishing-federal-contracting-program-has-native-corporations-diversifying

Contractor teaming strategy: Achilles’ heel or competitive advantage?

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With the increase in small business set-asides, capture managers and business development professionals would be wise to ask themselves an important question: Is our company’s teaming strategy an Achilles’ heel or a source of competitive advantage?

Why Government Contractors TeamMore often than not a company’s teaming strategy — the process by which prime and subcontractors connect, bid, and execute work — is an afterthought instead of a key dimension of the company’s overall business strategy.

As David Boyajian noted recently, small business set-asides have reached a 15-year high with set-asides representing “58 percent of the federal money obligated to small business in fiscal 2014.” In fact, for the second year in a row, the federal government hit its contracting goal for small business, according to the Small Business Administration (SBA) FY2014 Small Business Procurement Scorecard. Nearly 25% of all prime contracting dollars were awarded to small business in 2014, exceeding the federal goal of 23%.

This trend makes teaming critical for small and large contractors alike — and an area that top-performing capture managers and business development professionals must master. It affects the entire federal contracting industry and companies have two real choices: 1) identify ways to capitalize on this trend by integrating teaming into their overall business strategy or, 2) adopt a passive, and surely less profitable, approach.

Keep reading this article at: http://about.bgov.com/blog/contractor-teaming-strategy-achilles-heel-or-competitive-advantage/

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