Deadline for comments is Feb. 27 on proposed rule affecting small business federal contracts

February 23, 2015 by

Are you a small business owner doing business with the government?  As previously reported here, the Small Business Administration (SBA) recently published a proposed rule to implement Section 1651 of the National Defense Authorization Act of 2013 (NDAA), proposing to change several key areas that could impact you:

  • The performance requirements applicable to small business and socioeconomic program set aside contracts and small business subcontracting.
  • The nonmanufacturer rule and affiliation rules.
  • The performance requirements for joint ventures.

From the SBA’s point of view, the proposed regulations should benefit small businesses by allowing small business concerns to use similarly-situated subcontractors in the performance of a set-aside contract, thereby expanding the capacity of small business prime contractors and potentially enabling small businesses to compete for and win larger contracts. SBA also believes the proposed rules will strengthen the small business subcontracting provisions, which may result in more subcontract awards to small business concerns. The proposed regulations also seek to address or clarify issues that are ambiguous or subject to dispute, thereby providing clarity to federal contracting officers as well as small business concerns.

Have comments? Visit the Federal Register online for information and to submit your comments by February 27, 2015.

Task order size status based on proposal date, not award date

February 19, 2015 by

A contractor was eligible for award of a small business set-aside task order because the contractor was “small” as of the date of its task order proposal–even though the contractor outgrew the size standard by the time the task order was awarded.

In a recent bid protest decision, the GAO held that a contractor may qualify for the award of a set-aside task order based on the date of its initial proposal, even in cases where the agency is prohibited from taking small business credit for the award.

The GAO’s decision in Research and Development Solutions, Inc., B-410581.2 (Jan. 14, 2015) involved a Navy task order solicitation for technical and engineering services.  The solicitation was issued as a small business set-aside under the SeaPort-e IDIQ contract vehicle.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/task-order-size-status-based-on-proposal-date-not-award-date/

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

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

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

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 proposes revisions to employee-based size standards for manufacturing and other industry sectors

September 11, 2014 by

The U.S. Small Business Administration (SBA) has published two proposed rules to revise small business size standards in North American Industry Classification System (NAICS) Sector 31-33 (Manufacturing) and industries with employee-based size standards that are not a part of NAICS Sector 31-33, Sector 42 (Wholesale Trade), and Sector 44-45 (Retail Trade).  The proposed rules were published in the Federal Register on Sept. 10, 2014.

As part of its comprehensive size standards review required by the Small Business Jobs Act of 2010, the SBA evaluated employee-based size standards for all 364 industries in NAICS Sector 31-33 and 57 industries and five exceptions that are not in NAICS Sectors 31-33, 42, or 44‑45 to determine whether they should be retained or revised.

In the first rule, SBA proposes to increase size standards for 209 industries in Sector 31-33.  The SBA also proposes to increase the refining capacity component of the Petroleum Refiners (NAICS 324110) size standard to 200,000 barrels per calendar day total capacity for businesses that are primarily engaged in petroleum refining.  The proposed rule also eliminates the requirement that 90 percent of a refiner’s output being delivered should be refined by the bidder.

In the second rule, SBA proposes to increase the employee-based size standards for 30 industries and three exceptions and decrease them for three industries that are not in Sectors 31-33, 42, or 44‑45.

Additionally, SBA proposes to remove the Information Technology Value Added Resellers exception under NAICS 541519 (Other Computer Related Services) together with its 150-employee-based size standard.  Similarly, SBA also proposes to eliminate the Offshore Marine Air Transportation Services exception under NAICS 481211 and 481212 and Offshore Marine Services exception under NAICS Subsector 483 and their $30.5 million receipts based size standard.  Accordingly, the second proposed rule also removes Footnotes 15 and 18 from the table of size standards.

If the changes in the two rules are adopted as proposed, nearly 1,650 more firms will become small and eligible for federal procurement and SBA’s loan programs.

Comments can be submitted on the proposed rules on or before November 10, 2014 at www.regulations.gov, identified by the following RIN numbers: (RIN 3245-AG50 for Sector 31‑33) and (RIN 3245-AG51 for employee-based size standards for industries that are not part of Sector 31-33, Sector 42 or Sector 44-45).  You may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd St., SW, Mail Code 6530, Washington, DC  20416.

For size standards review, SBA takes into account the structural characteristics of individual industries, including average firm size, startup cost and entry barriers, the degree of competition, and small business share of federal government contracting dollars.  This ensures that small business size definitions reflect current economic conditions and federal marketplace in those industries.

An SBA-issued White Paper entitled, “Size Standards Methodology,” which explains how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards, can be viewed at http://www.sba.gov/size.

For more information about SBA’s revisions to its small business size standards for various industry sectors, click on “What’s New with Size Standards” on SBA’s Web site at http://www.sba.gov/size.

Family relationship, revenues and subcontracts caused affiliation, says SBA

September 5, 2014 by

A small business was affiliated with companies owned by the business owner’s father and siblings, based on the family relationship and the companies’ ongoing history of doing business together.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the small business had not successfully rebutted the regulatory presumption that companies owned by close family members are affiliated, because the small business had earned substantial revenues from the alleged affiliates, and intended to issue a subcontract to both affiliates with respect to the procurement at issue.

SBA OHA’s decision in Size Appeal of Industrial Support Service, LLC, SBA No. SIZ-5576 (2014) involved an Army Corps of Engineers solicitation seeking a contractor to provide certain repair work.  The solicitation was issued as a small business set-aside under NAICS code 238290 (Other Building Equipment Contractors).

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/family-relationship-plus-revenues-subcontracts-caused-affiliation-says-sba-oha/

How many big contractors are actually posing as small businesses?

August 25, 2014 by

In the sixth of its annual studies, a small business advocacy group has again blasted the government for allegedly awarding contracts to major corporations when policy intends for them to go to legitimate small businesses. The Small Business Administration offered other possible explanations for the apparent discrepancies.

The Petaluma, Calif.-based American Small Business League’s new study of fiscal 2013 procurement data concluded that of the top 100 companies receiving the highest-valued small business federal contracts, “79 were large companies that exceeded the SBA’s small business size standards, five were anomalous and 16 were legitimate small businesses.”

The group’s annual studies also show that the number of top-100 contracting companies that are large firms has risen steadily, from 60 in fiscal 2009 to 84 in fiscal 2013.

The large corporations that received the contracts in question in fiscal 2013 included Lockheed Martin Corp., General Dynamics Corp., Boeing Co., General Electric, Oracle Corp., Apple Inc., Verizon, Bank of America Corp., Citigroup Inc., PepsiCo, Comcast Corp., Intel Corp., John Deere Co. and many more, said the league, which published brief company-by-company profiles.

Keep reading this article at: http://www.govexec.com/contracting/2014/08/how-many-big-contractors-are-actually-posing-small-businesses/91694 

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/