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SBA’s IG questions eligibility of women-owned small businesses to receive contract set-asides

June 21, 2018 By Nancy Cleveland

Federal contracting officers, along with firms representing themselves as woman-owned small businesses (WOSBs) did not comply with federal regulations in 50 instances of sole-source contract awards.  As a result, there is no assurance that the contracts were awarded to firms eligible to receive sole-source awards under the WOSB program administered by the Small Business Administration (SBA).

That’s the conclusion reached by the SBA’s Office of Inspector General (OIG) in a report issued on June 20, 2018.

The OIG undertook its review of SBA’s WOSB program to determine whether the sole-source provisions that Congress included in the 2015 National Defense Authorization Act (NDAA) were being effectively implemented.   Congressional intent was to expand the number of federal contracts being awarded to WOSBs and streamline the process by which WOSB status could be validated.  Thus, in its review, the OIG wanted to determine whether sole-source contract awards comply with program requirements, and whether firms that receive the set-asides conform to the self-certification requirements.

The OIG selected a sample of 56 contracts, worth $55.7 million, to review.  The sample represented 81 percent of the sole-source contracts awarded to WOSBs between the period of Jan. 1, 2016 and Apr. 30, 2017.  The OIG determined that federal regulations were not followed by federal officials or the WOSB firms themselves in connection with 50 of the 56 contracts.  The 50 contracts were valued at $52.2 million.  Based on its findings, the OIG determined that there “was no assurance that these contracts were awarded to firms that were eligible to receive sole-source awards” under the WOSB program.

The weaknesses noted in the OIG’s report are similar to those noted in a review conducted in 2015.  Then, the OIG recommended that SBA should increase its training and outreach to both federal contracting officials and businesses regarding their responsibilities under the WOSB program.

Once again, in its latest report, the OIG makes a series of recommendations to SBA administrators to remedy the newly-identified problems.  Among them:

  • The SBA should prevent contracting personnel from awarding contracts to ineligible firms by implementing a certification process that includes “reviewing, analyzing, and making an affirmative decision that applicants are eligible to participate” in the WOSB program.
  • SBA also should strengthen controls in FPDS-NG to preclude agencies from using ineligible NAICS codes for the WOSB program’s contracts.

Overall, the OIG is recommending that the WOSB program should be operated more in line with other certification programs operated by the SBA.  In response to these recommendations, however, the SBA estimates that it will take at least another year before it implements a WOSB certification process.  SBA management also states it does not have the responsibility for improving the integrity of data in FPDS-NG.

The OIG concludes that since errors are likely to continue to be made in NAICS code selection and that WOSB firms will be allowed to continue to self-certify, the program is subjected to “unnecessary risks of fraud and abuse.”  In light of this condition, the OIG’s recent report offers six specific recommendations the SBA should take now to expand oversight and prevent agencies from awarding contracts to ineligible firms.

Filed Under: Contracting News Tagged With: certification, EDWOSB, eligibility, fraud, IG, OIG, SBA, set-aside, woman owned business, wosb

FAR Council finalizes rule imposing restrictions on contracting with companies with felony convictions and delinquent tax liabilities

October 27, 2016 By Nancy Cleveland

The FARThe Federal Acquisition Regulation (FAR) Council — comprised of the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) — recently finalized a rule that imposes significant restrictions on federal agencies in contracting with corporations that have federal tax liability or a recent federal felony conviction.  The final rule implements requirements created by the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235 (the CFCAA) and imposed by a December 4, 2015 interim FAR rule, which we wrote about previously.

The rule applies broadly to all DoD, GSA, and NASA procurements, and requires contractors to report any unpaid federal tax liabilities and to represent whether they have been convicted of a felony criminal violation within the previous twenty-four months.  In addition, for certain contracts in excess of $5 million, contractors must also certify that they:

  1. have filed all federal tax returns in the past three years;
  2. have not been convicted of a criminal offense under the Internal Revenue Code; and
  3. do not have any outstanding, unsatisfied federal tax assessments.

The rule imposes new requirements on procuring agencies as well: if a corporation discloses any tax delinquencies or felony convictions, the agency may only contract with it after first determining that suspension or debarment of the corporation is not necessary to protect the government’s interests.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/10/far-council-finalizes-rule-imposing-restrictions-contracting-companies-felony-convictions-delinquent-tax-liabilities/

Filed Under: Contracting News Tagged With: conviction, DoD, eligibility, FAR, federal contracting, felony, GSA, IRS, NASA, tax liabilities

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