Georgia Tech Procurement Assistance Center

The definition of a subcontractor, and why it matters

By

What is a subcontractor?

The answer to this question seems obvious – a subcontractor is a contractor that contracts with the prime contractor to perform a scope of work on a construction project.

However, it is not always easy to distinguish a subcontractor from a materials supplier (sometimes referred to as a “materialman”). That distinction is important in the context of claims by lower-tier subcontractors or materials suppliers on payment bonds, such as those provided by prime contractors on federal and state public works projects. That is, a lower-tier subcontractor or materials supplier may not be entitled to recovery from a payment bond if its contract is with a materials supplier instead of a subcontractor. Therefore, identifying the role of the party with whom a contractor is contracting is a key task the prudent contractor will perform at the outset of a project.

This distinction is most important in the context of federal public works projects. For those projects, the Miller Act restricts claimants on payment bonds to those who had a contract with the prime contractor and those who had a contract with a subcontractor, provided that in the latter case the claimant provides notice to the prime contractor. In other words, if a firm has a contract with a materials supplier, as opposed to a subcontractor, the firm does not have entitlement to payment under the bond. Courts look at the “total relationship” between the parties to determine if the party in question is a subcontractor or materials supplier.

Courts have applied a balancing test to make this determination, with some factors weighing in favor of a subcontractor relationship and other factors weighing in favor of a materials supplier relationship.

Keep reading this article at: https://idahobusinessreview.com/2019/02/28/the-definition-of-a-subcontractor-and-why-it-matters/

How one company changed to meet new IT contract styles

By

Federal agencies are changing the way they structure IT contracts, asking for more proof-of-concept and capability up front instead of basing decisions on a portfolio of past work.

“We’re increasingly seeing requests for proposals, and what the RFP is asking for is, instead of a written response, show up with a team and deploy a product by the end of the day,” said Charles Onstott, senior vice president and chief technology officer at SAIC, in an interview with Federal Times. “What that challenge is demonstrating is your ability to do that, and then that would lead to follow-on work.”

To meet the new contracting requirements, SAIC in October 2018 created its Innovation Factory, a component of the company that relies on innovative and fast working teams of IT professionals to meet current contract requirements, prepare to bid on potential contracts and experiment with new products.

“We launched this really in response to some of the major trends that we’re seeing in the federal government, and one of them is to do app modernization, but to do it rapidly in an incremental delivery fashion,” said Onstott.

“The other is [the Department of Defense’s] push to do more agile across DoD, agile acquisition.”

Keep reading this article at: https://www.federaltimes.com/it-networks/2019/02/27/how-one-company-changed-to-meet-new-it-contract-styles/ 

Why a founders’ agreement is important for every small business

By

If you’re an entrepreneur with that golden, once-in-a-lifetime idea, it can feel impossible to hit the brakes. The name of the game is momentum — slow down, and you’ll miss that window of opportunity, right?

But sometimes you just have to press pause, take a deep breath, and make sure you’re not missing anything big before moving forward. All of those legal documents and agreements you’ll need to draw up are a good example: if you speed on past them, you might regret it down the line.

In other words, you should focus on building a solid foundation before taking the next step with your business. And if you’re planning to run your business with co-founders, then a founders’ agreement is pretty much the perfect place to start.

Keep reading this article at: https://www.fundera.com/blog/founders-agreement

Atlanta FRB: Small firms face challenges to find workers

By

Amid a largely positive Beige Book report by the Federal Reserve Bank (FRB) on economic conditions in the Southeast, some small businesses report particular challenges competing with larger companies for a dwindling pool of available workers.

Across the board, businesses continued to report pressure to increase wages for low-skill, hourly jobs, notably in the hospitality and retail industries. That’s good news for workers.

But the January 16 report notes, “Challenges with escalating wage pressure were especially acute among small businesses.”

Growing numbers of Americans are switching jobs, according to the U.S. Bureau of Labor Statistics.  In that context, the past few Beige Book reports have captured a powerful focus on retaining employees in a tight labor market. The latest Beige Book includes a couple of newer nuggets:

  • The particular challenges facing smaller employers, and reports from a few contacts in construction, manufacturing, and health services that they are overstaffing certain jobs to prepare for anticipated growth, figuring it will be difficult to find people in the coming months.

Even as many confront hiring challenges, retailers across the Sixth Federal Reserve District reported steady holiday sales. Not surprisingly, online sales grew faster than those at traditional stores.  Travel and tourism contacts also reported growth in business and leisure travel.

In other sectors:

  • Companies reported input costs kept climbing, especially for products affected by tariffs.  So far, most firms report passing along tariff-related price increase with no serious impact on profit margins.
  • Demand for renewable power continued to grow compared to electricity generated by coal, gas, or nuclear plants.
  • In many parts of the district, sales of existing homes were flat or declined. Home construction is lagging demand, as builders focus on higher-priced houses in popular submarkets.
  • Commercial real estate reports were generally upbeat. Vacancy rates continued to decline, fueled by the industrial, multifamily, and medical sectors. In fact, demand for industrial space, such as big distribution centers, continues to exceed supply. However, contacts reported ongoing concerns about bankruptcies and generally difficult conditions among traditional big-box retailers.
  • Cargo shipments were up among contacts at seaports, air freight haulers, and railroads. Logistics firms reported higher volumes of packages delivered during the holidays compared to the previous year.
  • Financial institutions generally reported that conditions held steady.  Higher interest rates boosted net margins at most banks, while growth in loan volumes continued but at a slower pace, especially in real estate.  While measures of loan quality stayed mostly strong, some lenders noted increases in late payments by consumers.
  • In the farming business, the U.S. Department of Agriculture designated counties in Alabama, Florida, Georgia, and Mississippi as natural disaster areas because of damages and losses from hurricanes and flooding.

Source: https://www.frbatlanta.org/economy-matters/regional-economics/beige-book/2019/01/16/beige-book-small-firms-face-challenges-to-find-workers

Small Business Mentor-Protege Program fuels cooperation

By

Small businesses are underutilizing a mentor-protégé program that streamlines their access to the federal marketplace, say government officials. Known as the All Small Mentor-Protégé Program, or ASMPP, the effort provides small businesses with a new avenue into federal contracting.

Developed by the Small Business Administration (SBA), the ASMPP fits a niche and fills a need that had been a gap for some time, said Lori Gillen, ASMPP director at the SBA. Sandi Clifford, ASMPP deputy director, explained at an AFCEA Small Business Committee presentation that it was modeled and expands on the SBA’s 8(a) mentor-protégé program by opening doors for non-8(a) firms under the umbrella of a single governmentwide program for all small businesses. It does not involve the Defense Department, which has its own mentor-protégé program, nor the Federal Aviation Administration, as neither comes under the purview of the Small Business Act.

“It helps streamline access for small firms to get into the federal marketplace; it helps enhance business capabilities and growth potential through mentoring with large—or other small experienced—federal contractors; it helps increase the protégé firm’s wealth and create jobs through government contracts; and it also helps large mentor firms develop and increase their supply chain through building capable small business contractors,” Clifford declared.

Keep reading this article at: https://www.afcea.org/content/small-business-mentor-protege-program-fuels-cooperation

FAR definition of “recruitment fees”: No means no

By

On December 20, 2018, the Federal Acquisition Regulation (FAR) was amended to clarify the FAR’s prohibition on assessing employees with recruitment fees in connection with federal contracts.  The rule provides a final definition of “recruitment fees” and clarifies the FAR’s broad prohibition on federal contractors or subcontractors assessing employees or potential employees with any such fees.

The final rule brings long-awaited clarity to the scope of the prohibition on recruitment fees, as the term has not previously been defined in anti-trafficking regulations.  Upon publication of a proposed rule change in January 2015, the FAR Council invited the public to comment on a draft definition of the term “recruitment fees” in a notice-and-comment process.  The final rule, which took effect on January 22, 2019, incorporates a definition that has been revised pursuant to comments received during that rulemaking process. Government contractors will need to take these new rules into account in their compliance efforts in connection with their supply chains.

Background

On January 29, 2015, DoD, GSA, and NASA issued a final rule amending the FAR to strengthen and enhance the human trafficking-related prohibitions applicable to all federal contracts. The final rule implemented Executive Order (E.O.) 13627, “Strengthening Protections Against Trafficking in Persons in Federal Contracts,” and Title XVII of the National Defense Authorization Act for Fiscal Year 2013, entitled “Ending Trafficking in Government Contracting.”  The amended FAR, which applied to all future contracts and orders under existing indefinite-delivery/indefinite quantity contracts, imposed significant responsibilities on federal contractors and subcontractors to prevent human trafficking and forced labor.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=768098

Who is a subcontractor under a federal government contract?

By

If you are a a vendor or supplier, are you a “subcontractor” under a federal government contract?

Sometimes the answer is easy — e.g., you are a subcontractor when a prime contractor contracts directly with a vendor or supplier (hereinafter “vendor”) to perform a federal contract.

But the lines become less clear when a prime contractor does not inform the vendor that the subcontract is being entered into in furtherance of a federal government contract or where the vendor supplies goods that the prime contractor uses to perform commercial and government contracts.

Subcontractor status is important to prime and subcontractors. A federal prime contractor is required to flow-down multiple Federal Acquisition Regulation (FAR) clauses to its subcontractors.

Keep reading this article at: https://governmentcontractsnavigator.com/2019/01/28/who-is-a-subcontractor-under-a-federal-government-contract/

Transparency in debriefs would improve competition, help small businesses

By

Taxpayers have the right to know how the government is spending their money.

After all, the insights gained from total transparency in the federal procurement process can hold agencies more accountable. For this reason, administrations and congresses have undertaken initiatives to boost transparency and improve oversight of federal government spending on a bipartisan basis.

A few efforts stand out, such as the Clean Contracting Act, USAspending.gov and the DATA Act, but outside of these select few, transparency is still lacking under Federal Acquisition Regulation Part 16 Indefinite Delivery, Indefinite Quantity task or delivery order awards. To fix this, it is time that federal agencies be required to provide post-award debriefings to all unsuccessful offerors, regardless of the value of the awarded IDIQ task or delivery order.

Keep reading this article at: https://washingtontechnology.com/articles/2019/01/02/insights-bunting-contract-transparency.aspx

How some contractors successfully weathered the shutdown

By

The 35-day government shutdown cost thousands of small- and mid-size businesses nationwide that supply services or technology to the federal government $2.3 billion in revenue and forced tens of thousands of layoffs.

As once-furloughed federal employees and contractors begin the slow business of reopening government, the cold reality is that another shutdown looms if a spending deal is not reached before Feb. 15.

It’s a time of “uncertainty” for contractors, according to David Berteau, who represents hundreds of companies as head of the Professional Services Council, and some contractors “may be in a holding pattern” while they wait and see whether the government shuts down again. In the interim, Berteau is advising contractors to proactively seek backed government invoices for money owed, sniff out new solicitations and bid on as many opportunities as they can.

Yet amid all the doom, gloom, and wall-to-wall news coverage, the longest government shutdown in history brought about pockets of optimism, innovation and strategy and teachable moments the contracting community that could serve thousands of businesses and 1 million-plus individual government contractors moving forward through future shutdowns or trying times.

Nextgov spoke with two small government contractors about their strategies for handling the shutdown and lessons learned.

Keep reading this article at: https://www.nextgov.com/cio-briefing/2019/01/how-some-contractors-successfully-weathered-shutdown/154568/

SBA disappoints many growing small businesses by stating that new statutory 5-year period for eligibility is not effective yet

By

Late last year, President Trump signed into law H.R. 6330, the Small Business Runway Extension Act of 2018 (the “Runway Extension Act”).  As detailed in our client alert on the Runway Extension Act, this law extends the measurement period for determining whether a contractor qualifies as a small business concern under revenue-based size standards from an average of the most recently completed five fiscal years, rather than the long-standing three-year measurement period. It is anticipated that many growing firms, which had or would soon come to exceed the revenue threshold applicable to their principal NAICS code(s), will gain additional years of “small business” status by including (often much lower) revenue totals from 4 and 5 years ago to determine their average annual revenue.

We noted that the Runway Extension Act amends the Small Business Act without expressly requiring implementation by the Small Business Administration (SBA), thereby allowing contractors reasonably to take the position that the Runway Extension Act is immediately effective, absent contrary guidance from the SBA.

In a move sure to disappoint the many small but growing services firms that Congress intended to help by passing the Runway Extension Act, SBA has now issued such contrary guidance.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=771894

See our earlier article on this subject at: https://gtpac.org/2018/12/20/bill-changes-small-business-size-measurement-term-from-3-to-5-years/ 

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More