Georgia Tech Procurement Assistance Center

Construction firm pays $2.5 million to settle allegations of exploiting SDVOSB program

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Stronghold Engineering, Inc. (SEI) and its owners have paid the United States $2.5 million to resolve criminal and civil investigations into allegations the firm violated federal law through its involvement in federal government construction contracts obtained by a related company under a government program designated for small businesses owned by service-disabled veterans.

The United States today received the $2.5 million payment pursuant to a civil settlement and a non-prosecution agreement (NPA) with SEI.

Continue reading at:  U.S. Department of Justice

Construction company owners plead guilty to defrauding SDVOSB program

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Two Texas construction company owners have pleaded guilty in a long-running scheme to defraud the United States.

Michael Wibracht of San Antonio, Texas, the former owner of several companies in the construction industry, conspired to defraud the United States in order to obtain valuable government contracts under programs administered by the U.S. Small Business Administration (SBA) for which neither his nor his co-conspirators’ companies were eligible.  One co-conspirator, Ruben Villarreal, also of San Antonio, pleaded guilty on Nov. 20, 2020, to participating in the same conspiracy.

“For many years, this conspiracy undermined the integrity of the federal procurement process,” said Acting Assistant Attorney General Richard A. Powers of the Department of Justice Antitrust Division.  “This conduct robbed opportunities from honest businesses, especially those owned by historically disadvantaged individuals and service-disabled veterans.”

Continue reading at:  U.S. Department of Justice

Reminder: If pricing is too high, VA “rule of two” might not apply

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The VA Rule of Two, while a powerful motivator for setting procurements aside for service-disabled veteran-owned small businesses, does have its limits.

One of those exceptions was discussed in a recent ruling from the United States Court of Appeals for the Federal Circuit. The court confirmed that the VA may convert a service-disabled veteran-owned small business set-aside solicitation to a small business set-aside if the SDVOSB bids it receives are too high in price.

The VA Rule of Two, described in 38 U.S.C. 8127(d), requires the VA to set aside an acquisition for SDVOSBs when two or more verified and capable SDVOSBs are identified, provided the contracting officer has a reasonable expectation that two or more of those SDVSOBs will submit offers and that the award can be made at a fair and reasonable price that provides best value to the United States.

Continue reading at:  SmallGovCon

Georgia SDVOSB architectural firm owner doesn’t need architecture license, says OHA

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Recently, OHA determined that SDVOSB owners aren’t always required to personally possess the licenses required for their businesses.

In Veteran’s 1st Architecture, LLC, SBA No. CVE 122-A (2019), Veteran’s 1st appealed the VA CVE’s denial of its SDVOSB recertification application. The business, a Georgia architectural firm, was initially founded in December 2014 and first verified by CVE the following year. Three years later, the business applied for reverification, but was denied.

CVE denied Veteran’s 1st‘s reverification for three primary reasons, all based on the same fact: the service-disabled veteran owner of Veteran’s 1st Architecture was not a state-registered architect himself, though he did employ one. As a result, CVE held that a non-veteran architect “controlled” the architecture firm. OHA disagreed, holding that despite not possessing the license, the owner still maintained control.

CVE first found that because Veteran’s 1st‘s owner did not possess the “critical” architect license, he could not, and did not, control the company’s daily business operations. Relying on Georgia law, CVE determined that “the practice of architecture by a limited liability company “had to be under the “‘responsible control’ of a Georgia-registered architect.”

OHA held otherwise, stating that the “practice of architecture” composed only a portion of the business’s daily operations.

Continue reading at:  SmallGovCon

A reminder regarding the importance of SDVOSB control rules

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The recent decision in CVE Appeal of Valor Construction, Inc, SBA No CVE-121-A (June 3, 2019) provides a useful reminder to contractors regarding the difference between unconditional ownership and unconditional control, and the importance of assessing both when analyzing service-disabled veteran owned small business (“SDVOSB”) eligibility.  Specifically, the decision in Valor – which was issued by the Small Business Administration’s (“SBA”) Office of Hearings and Appeals (“OHA”) – demonstrates that an individual’s majority ownership of a SDVOSB, alone, does not vest that individual with unconditional control over the SDVOSB.  The Valor decision further reflects how the revised control regulations may cause eligibility problems for contractors.  Avoiding these pitfalls requires some background knowledge regarding the dual SDVOSB programs and the revision of the applicable regulations, a thorough understanding of the revised regulations themselves, and an awareness of the most common eligibility problems that contractors can face under these regulations.

Continue reading at:  Obermayer

Veterans: How to get started in government contracting

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Are you a veteran?  Do you own a small business?  Then you have an advantage over [non-Veteran Owned small businesses].  Specifically: Veteran-owned businesses have preference when bidding on government contracting jobs with the Department of Veterans Affairs.  Each year, the VA sends about $3 billion to small businesses.  Are you a plumber?  An engineer?  A landscaper?  [Then the VA may want to do business with your company.]

So what’s the catch?  To actually get [Verified with the VA as a Veteran-owned small business (“VOSB”) or Service-disabled Veteran Owned small business (“SDVOSB”)], you will have to navigate [a difficult paperwork process].

But do not worry: I have been through the process.  I am here to help you.

Continue reading at:  Clearance Jobs

CVE verification pointer: remember to provide truthful information

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In government contracting—as in life—it’s important to be honest.  And in our experience, most government contractors are honest.  Where a contractor is dishonest or untruthful, it can face significant sanctions.

So it was in a recent SBA Office of Hearings and Appeals decision, in which the OHA considered the cancellation of an entity’s SDVOSB status.  In CVE Appeal of Afily8 Government Solutions, LLC, SBA No. CVE-125-A (2019), the OHA affirmed the cancellation of Afily8’s SDVOSB verification based on concerns that Afily8 did not provide truthful information to the VA’s Center for Verification and Evaluation.

Continue reading at:  SmallGovCon

Congressional, executive, and legal developments for government contractors to consider

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Regulatory Developments

On June 24, 2019, the U.S. Small Business Administration (“SBA”) finally issued a proposed rule in response to the 2018 Small Business Runway Extension Act, which increased the time period over which receipts are averaged for purposes of calculating a concern’s size from three years to five.  The proposed rule specifies that it will go into effect only after the effective date of a final rule, confirming SBA’s intention to continue to apply the three-year averaging period to any certification submitted prior to the effective date of the final rule.

On May 20, 2019, the U.S. Department of Veterans Affairs (“VA”) issued a class deviation from Department of Veterans Affairs Acquisition Regulation (“VAAR”) 808.002, Priorities for Use of Government Supply Sources, and VAAR Subpart 808.6, Acquisition from Federal Prison Industries, Inc., the two provisions implementing the FAR Part 8 mandatory source priority of AbilityOne Procurement List and Federal Prison Industries contractors.  The class deviation effectively gives Veterans First providers priority over AbilityOne providers in all VA contract opportunities should two or more veteran-owned small businesses (“VOSBs”) or service-disabled veteran-owned small businesses (“SDVOSBs”) be capable of performing the contract at a reasonable price.  The newly implemented class deviation preempts the AbilityOne priority in all VA procurements in favor of a Veterans First priority.  However, “if an award is not made to an eligible . . . VOSB under VAAR Subpart 819.70, the priority use of AbilityOne applies, and supplies and services on the Procurement List are mandatory sources.”  The class deviation was immediately effective and to be implemented in all VA contracts.

On June 11, 2019, the House Armed Services Committee published the draft 2020 National Defense Authorization Act (“NDAA”).  Notable potential changes include a reduction in the monetary threshold for enhanced DoD post-award debriefing rights and a grant of permanent authority for DoD’s Mentor-Protégé Program.  The 2018 NDAA implemented “Enhanced Post-Award Debriefing Rights” for certain DoD procurements.  This change required defense agencies to provide the agency’s written source selection award determination for all small business contracts valued between $10 and $100 million, and all defense contracts valued over $100 million.  Section 828 of the draft 2020 NDAA would reduce the monetary threshold for these enhanced debriefings to only $50 million, significantly increasing the number of procurements for which they must be provided.  Section 881 of the draft NDAA permanently authorizes the DoD Mentor-Protégé Program and requires that the DoD’s Office of Small Business Programs establish mentor-protégé performance goals and periodic reviews.

Continue reading at:  Venable LLP

VA fails again to apply the ‘rule of two’

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In June 6, 2019, the Government Accountability Office (GAO) issued a decision in the matter of Veterans4You, Inc., deciding that the Department of Veterans Affairs (VA) must apply the “Rule of Two” even when it procures goods and services through other government agencies.

In the VA context, the Rule of Two is the commonly known name for a statutory provision of a 2006 amendment to the Veterans Benefits, Health Care, and Information Technology Act requiring that “the [VA] shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans” where the VA “has a reasonable expectation that two or more [such concerns] will submit offers,” and “the award can be made at a fair and reasonable price that offers best value to the United States.”  As discussed in an alert in 2018, VA has struggled to reconcile this mandate with myriad other mandates establishing preferential sources for government procurements.

Continue reading at:  Pillsbury

VA agrees that rule of two has priority over AbilityOne Procurement List

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In its most recent attempt to strike the appropriate balance between the Veterans First and AbilityOne programs, the U.S. Department of Veterans Affairs (“VA”) issued on May 20, 2019 a class deviation to the VA Acquisition Regulations (“VAAR,” 48 C.F.R. Chapter 8), instructing contracting officers to conduct a “Rule of Two” analysis before procuring from the AbilityOne Procurement List.

The Rule of Two is set forth in the Veterans Benefits Act of 2006 (“VBA”), 38 U.S.C. § 8127(d), which established the Veterans First program.  The Rule of Two requires that VA contracting officers determine whether two or more veteran-owned small businesses (“VOSBs”), including service-disabled veteran-owned small businesses, are capable of meeting the VA’s requirements at reasonable prices.  If two or more qualified VOSBs can satisfy the VA’s needs, the VA must procure those goods through those VOSBs that are awarded contracts.  The VBA also allows contracting officers to grant sole-source contracts to VOSBs under limited circumstances (38 U.S.C. §§ 8127(b)-(c)).

The new VA class deviation revises VAAR 808.002, Priorities for Use of Government Supply Sources, and subpart 808.6, Acquisition from Federal Prison Industries, Inc.—the two provisions that implement for the VA the FAR Part 8 mandatory source priority generally enjoyed by AbilityOne Procurement List and Federal Prison Industries vendors across government procurements.  The deviation instructs that the Veterans First priority displaces the AbilityOne priorities for “all VA contracts,” but that “if an award is not made to an eligible . . . VOSB under VAAR subpart 819.70, the priority use of AbilityOne applies and supplies and services on the Procurement List are mandatory sources.”  In this respect, the new VA class deviation reconciles the VA’s priorities for veterans and the separate, government-wide priority for AbilityOne nonprofit companies.

Continue reading at:  Government Contracts and Investigations Blog

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