Georgia Tech Procurement Assistance Center

SBA sneaks in rule on small business recertification

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The Small Business Administration (SBA) issued a Direct Final Rule on March 26, 2018 that appears to address a specific holding of SBA’s Office of Hearings and Appeals (OHA) related to small business recertification rules.

This rule went into effect on May 25, 2018.

In the recently issued Analytic Strategies, Inc., SBA No. VET-268, decision, OHA held that a service-disabled veteran-owned small business concern (SDVO SBC) that recertifies its status pursuant to an acquisition or merger remains eligible for set-aside task orders under an indefinite delivery, indefinite quantity contract (IDIQ), unless the contracting officer specifically requires recertification in connection with a specific task order. This holding affirmed the widely understood interpretation of the regulations. SBA opposed this interpretation of the rule in Analytic Strategies. For more information on this case, see an earlier blog post on Analytic Strategies.

What Is the Change?

In March 2018, SBA announced what it terms as a “technical correction” under a Direct Final Rule that may be an attempt to cast doubt on the Analytic Strategies decision. This new rule, however, may prove too much as it would apply to many of the small business programs administered by SBA and not just SDVO SBCs. On the other hand, if SBA’s goal was to make contractors that have recertified their status ineligible for future set aside task orders, it is not clear this rule does it.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=701646

Auditors criticize SBA’s management of small business programs

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In a report released on June 30, 2017, the Government Accountability Office (GAO) reaffirmed “long-standing management challenges” within the Small Business Administration’s operation of several small business contracting activities “resulting in inefficient program operations.”

The programs impacted include small businesses in the socioeconomic categories of small disadvantaged businesses (SDB), women-owned small businesses (WOSB), service disabled veteran-owned small businesses (SDVOSB), and historically underutilized business zone (HUBZone) small businesses.

For three of the small business programs, GAO specifically found:

HUBZone Program
  • There is no specific guidance or criteria for making requests for supporting documentation in connection with applications made as a part of the HUBZone certification process.
  • Because of shortcomings in the recertification process, there is not reasonable assurance that only qualified firms are allowed to continue in the HUBZone program.
  • Despite some automation put in place by the SBA, there is a backlog of firms in the recertification pipeline, required within a three-year time frame.
8(a) Program
  • There is an open issue involving the need to “clearly document [SBA’s] justification for approving or denying applicants into the 8(a) program, particularly when those decisions differed from lower-level recommendations.”  The SBA’s Office of Inspector General (OIG) intends to continue to flag this issue “until this practice is documented in an SOP or desk guide for the program.”
  • The OIG reports that it has received documentation on thirty 8(a)-certified firms that it earlier found did not meet all of the eligibility requirements, and plans to issue an analysis of that documentation in a forthcoming report.
WOSB Program
  • SBA validated an earlier OIG report by agreeing that 40 percent of the WOSB concerns that the OIG questioned were not, in fact, eligible to receive contracts under the WOSB program at the time of award.
  • While the FY15 National Defense Authorization Act (NDAA) eliminated SBA’s self-certification process for the WOSB program, the SBA has not yet implemented a process to eliminate self-certification.
  • “As a result of inadequate monitoring and controls, such as not implementing a full certification program, potentially ineligible businesses may continue to incorrectly certify themselves as WOSBs, increasing the risk that they may receive contracts for which they are not eligible.”
  • Until a new certification program required by the FY15 NDAA is implemented, “oversight of third-party certifiers and enhancing examinations of WOSB firms are needed to help ensure that only eligible businesses participate in the WOSB program.”

GAO’s complete report can be seen at: http://www.gao.gov/assets/690/685569.pdf.

Here is a list of earlier GAO audits of SBA’s small business programs, linked to the full reports:

 

Kingdomware doesn’t require recertification for GSA Schedule SDVOSB set-aside orders

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The Supreme Court’s landmark ruling in Kingdomware Technologies, Inc. v. United States does not require SDVOSBs to recertify their eligibility in connection with individual GSA Schedule task orders.

In a recent decision, the SBA Office of Hearings and Appeals held that Kingdomware doesn’t affect the SBA’s SDVOSB eligibility regulation for multiple-award contracts, which specifies that if a company qualifies as an SDVOSB at the time of the initial offer for a multiple-award contract, it ordinarily qualifies as an SDVOSB for all orders issued under the contract.

OHA’s decision in Redhorse Corporation, SBA No. VET-263 (2017) involved a GSA RFQ seeking transition ordering assistance in support of the Network Services Program.  The RFQ contemplated the award of a task order under the GSA Professional Services Schedule.  The order was set aside for SDVOSBs under NAICS code 541611 (Administrative Management and General Consulting Services).  The GSA contracting officer did not request that offerors recertify their SDVOSB eligibility in connection with the order.

After evaluating quotations, the GSA announced that Redhorse Corporation was the apparent awardee.  An unsuccessful competitor subsequently filed a protest challenging Redhorse’s SDVOSB status.  The SBA Director of Government Contracting sustained the protest and found Redhorse to be ineligible for the task order.

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/kingdomware-doesnt-require-recertification-for-gsa-schedule-sdvosb-set-aside-orders

Agencies need not recertify small business status at task order level

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On October 8, 2015, GAO upheld a $46.5 million IT task order awarded to OBXtek, Inc., finding that the U.S. Department of the Air Force was not required to recertify the contractor as a qualifying small business because OBXtek had small business status on the date of its proposal submittal.

With an estimated value of $46.5 million, this task order is well in excess of the $10 million threshold for GAO to hear protests related to the issuance of task orders under indefinite-delivery/indefinite-quantity contracts. See 10 U.S.C. § 2304c(e)(1)(B); 41 U.S.C. § 4106(f)(1).

OBXtek was listed in the System for Award Management (SAM) as a small business when it submitted its proposal for the task order  on December 19, 2014, but in February 2015, it changed its status in SAM to “other than small.” This change came after OBXtek had properly qualified under the Alliant government-wide acquisition contract, a service-disabled, veteran-owned small business (SDVOSB) indefinite-delivery/indefinite-quantity contract from the General Services Administration.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=441210

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