Georgia Tech Procurement Assistance Center

Do small businesses lack a voice in the federal marketplace?

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Small businesses contractors testified before Congress July 16, asking lawmakers to improve the Small Business Act, remove barriers to federal procurement marketplace entry and increase the use of subcontractors.

Witnesses told the House Small Business Subcommittee on Contracting and Infrastructure of challenges they faced, as well as opportunities for improvement.  One major point was that subcontractors should be explicitly named in prime contractor’s subcontracting plans, to ensure that commitments and payments to small businesses are met.  Without proper identification in contracts, subcontractors often lose the opportunity to work on projects, even after helping the prime contractor win a bid.

“We’ve all been to large contractor’s meetings, we’ve been invited on projects, and then all the sudden [another subcontractor] comes in and says, ‘I can do this,’” said Thomas J. Depace — CTS, C.O.O. and senior engineering manager of Advance Sound Company, testifying on behalf of the National Electrical Contractors Association.

“It really limits our ability to support local labor … to continue to grow in the marketplace — somebody just taking the scope and the specification documents that we’ve pined over for a long period of time and just putting a number to it,” Depace said.  “Being named as a subcontractor from the start would be an advantage that would give us an opportunity to … make sure commitments are met.”

Continue reading at:  Federal Times

SBA is deleting ‘direct’ ownership requirement from HUBZone program

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HUBZone companies owned by U.S. citizens will no longer be required to demonstrate that the ownership is “direct.”

The SBA’s HUBZone program rules have long required that a HUBZone company owned by U.S. citizens be at least 51% directly owned by those citizens – as opposed to allowing the qualifying citizens to own those interests through legal vehicles like holding companies.  But the SBA has had second thoughts, and effective May 25, 2018, the direct ownership requirement will be eliminated.

In a direct final rule issued on March 26, the SBA writes that “[d]irect ownership is not statutorily mandated” by the portion of the Small Business Act governing the HUBZone program.  The SBA has concluded that “the purposes of the HUBZone program – capital infusion in underutilized geographic areas and employment of individuals living in those areas – may be achieved whether ownership by U.S. citizens is direct or indirect.”

Keep reading this article at: http://smallgovcon.com/hubzone-program/hubzone-program-sba-will-delete-direct-ownership-requirement/

SBA and GSA, OFPP not seeing eye-to-eye on ‘rule of two’ application

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SBA logoA major dispute is brewing in the small business community. Just four months after the Supreme Court’s June 16, 2016 unanimous decision on the Kingdomware case, the Small Business Administration (SBA) is taking a stand on the “rule of two” that is stressing out industry and agencies alike.

As a quick reminder, the nation’s highest court ruled in the Kingdomware case that the Veterans Affairs Department (VA) must continue to apply the “rule of two” for veteran-owned small businesses even if the agency surpassed its annual prime contracting goal. The “rule of two” states if an agency can find two or more qualified small businesses during market research of a contract under the Simplified Acquisition Threshold (SAT) — between $3,500 and $150,000 — it must set aside the solicitation.

Now the SBA is expanding that Supreme Court ruling to apply to all task and delivery orders under SAT if the request for proposals comes under the General Services Administration’s Schedules.

Keep reading this article at: http://federalnewsradio.com/reporters-notebook-jason-miller/2016/12/sba-gsa-ofpp-not-seeing-eye-eye-rule-two-application/

Here is a copy of the SBA’s memo telling its PCRs that the should apply small business preferences to all task orders and all delivery orders because they are considered contracts pursuant to the Kingdomware decision: http://www.wifcon.com/dgc_memo.pdf

Small businesses fear rule changes will crater federal contract chances

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The joint proposal from the Department of Defense, the General Services Administration (GSA) and NASA requires agencies to write a report when they choose not to buy supplies or services through existing government contracts.

Multi ethnic people's hands raised with speech bubble by concrete wall.

In the report, the contracting officer must compare the price of the goods or services selected with the prices offered through the Federal Strategic Sourcing Initiative (FSSI), a program the government created to streamline government purchases.

But small businesses say that what appears to be a simple administrative change could dismantle the Small Business Act.

“I’ve worked in government contracting for years, and to say to do something you will have to write a separate justification that someone has to sign off on ­­— no one is going to take that avenue,” said Belinda Guadarrama, president and CEO of GC Micro, a California-based software management company with 40 employees. “Everyone is going to buy off FSSI contracts. These are not small businesses.”

Keep reading this article at: http://thehill.com/regulation/business/291722-small-businesses-fear-rule-changes-will-crater-federal-contract-chances

In Congressional testimony, PTAC association says better compliance with subcontracting requirements is needed

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aptac 2Association of Procurement Technical Assistance Centers (APTAC) President Chuck Spence appeared before the U.S. House Small Business Committee’s Subcommittee on Contracting and the Workforce last week, testifying as part of the Hearing, “Hotline Truths: Issues Raised by Recent Audits of Defense Contracting.” Spence is Deputy Director of the Utah Procurement Technical Assistance Center (PTAC).

The hearing focused on Department of Defense Office of Inspector General (DoD OIG) reports that two key Marine Corps commands failed to meet their legally-mandated requirements for small business subcontracting plans, as part of the subcommittees efforts to help small firms better compete for contracts with DoD, providing value to the taxpayer and quality to the warfighter.

“The Small Business Act contains important protections for small companies that provide services to our men and women in uniform,” said Subcommittee Chairman Richard Hanna (R-NY). “Existing law ensures that we have a vibrant community of small contractors ready to provide innovative and cost effective solutions. However, if the statutory provisions of the Small Business Act are not observed, those benefits are lost.”

“The Marine Corps’ documented failure to comply with statutory requirements concerning the approval and oversight of small business subcontracting plans has resulted in significant harm to the small business community. Continued failure to provide mandatory oversight of small business subcontracting plans has real consequences,” Hanna added.

In his testimony, Spence confirmed that such oversight failures present a real problem. “We are not surprised by the OIG findings in response to Defense Hotline allegations. On the contrary, we suspect that the problems identified – lack of adequate policies for requiring subcontracting plan submissions and reports, insufficient training for contracting officials regarding their responsibilities for evaluating and administering subcontracting plans, and failure to monitor compliance with subcontracting plans – are common across all federal agencies, because the root causes are not unique.” He cited an unrealistic overreliance on contracting officers with insufficient resources to effectively enforce subcontracting compliance, as well as an inadequate disincentives for prime contractors, noting that no firm has been penalized for failure to comply in many years.

However, Spence went on to commend the House Small Business Committee for their efforts to tackle the problems, stating “We applaud Chairman Chabot, Ranking Member Velázquez, and the House Small Business Committee for the ambitious effort to address these issues through HR. 4341, The Defending America’s Small Contractors Act of 2016. The bill’s comprehensive approach to clarifying the language and definitions of contracting provisions in the Small Business Act – as well as promoting greater transparency in goaling and accountability in execution – is much needed.”

Procurement Technical Assistance Centers (PTACs) are deeply engaged with subcontracting issues, helping small businesses identify subcontracting opportunities, connect with and market to prime contractors, and generally become responsible, “procurement ready” subcontractors, as well as assisting large prime contractors with developing subcontracting plans and locating small business vendors that can meet their requirements. In 2014, PTACs helped over 57,000 small businesses win government contracts and subcontracts valued at over $12 billion.  APTAC is the professional organization of the 98 PTACs nationwide.

Click here to view a recording of the hearing.

Source: http://www.aptac-us.org/news/aptac-president-chuck-spence-testifies-subcontracting-issues/ 

Government small business data includes billions to Fortune 500 firms

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An analysis by the American Small Business League (ASBL) has uncovered 179 Fortune 500 firms and their subsidiaries received federal small business contracts in fiscal year 2014. The study was based on the most recent information available from the Federal Procurement Data System (FPDS).

The largest recipient of federal small business contracts was Verizon. Some of the other firms that received federal small business contracts in recent years include: Chevron, Apple, General Electric, AT&T, CVS, Hewlett Packard, UPS, Bank of America, Home Depot, Target, Microsoft, Wells Fargo, Pepsi, Coca-Cola, Boeing, Oracle, Raytheon, Lockheed Martin, General Dynamics, Northrop Grumman, Honeywell International, BAE Systems, Rolls-Royce, Sears and John Deere.

The ASBL research is consistent with the recent investigative report released by Public Citizen titled “Slighted: Accounting Tricks Create False Impression That Small Businesses Are Getting Their Share of Federal Procurement Money, and the Political Factors That Might Be at Play.”

ABC, CBS, NBC, CNN, CNBC, MSNBC, Fox News and RTTV along with dozens of stories in many of the largest newspapers in the country have all reported on the fraud and abuse in federal small business contracting programs.

As early as 2003, the Government Accountability Office uncovered over 5,300 large businesses were receiving federal small business contracts.

On June 26, the Pentagon and the SBA ignored the results of the May 6 Public Citizen report and held a joint meeting to claim 24.99 percent of all federal contracts were awarded to small businesses. Billions in contracts to Fortune 500 firms and their subsidiaries were included in that number.

sba-logoThe research by ASBL, Public Citizen and federal investigators has found the SBA’s data to be significantly inflated in two ways. The SBA uses a rule they fabricated called the “exclusionary rule” to use a much lower federal acquisition budget in calculating the percentage of awards to small businesses. The SBA also unlawfully created a “five year rule” to include billions of dollars in contracts to Fortune 500 companies and their subsidiaries in their small business data.

Both the “exclusionary rule” and the “five year rule” have no basis in law and are in direct conflict with the provisions of the Small Business Act. The Small Business Act defines a small business as having no more than 1500 employees and requires small businesses receive “not less than 23 percent of the total value of all prime contract awards for each fiscal year.”

The House Small Business Committee unanimously adopted an amendment to call for a new GAO investigation into fraud in federal small business contracting programs, based on research done by Chapman’s ASBL.

Senate Small Business Committee Chairman, David Vitter, has demanded that SBA Administrator Maria Contreras-Sweet provide him with a complete list of all firms that received federal small business contacts in fiscal year 2014 for an upcoming hearing on the issue.

Source: http://www.prnewswire.com/news-releases/government-small-business-data-includes-billions-to-fortune-500-firms-300108165.html

8(a) subcontracting limitations: Compliance oversight lacking

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Compliance with the limitations on subcontracting are not adequately being monitored by the contracting officers responsible for 8(a) contracts, according to a recent GAO report.

After reviewing a representative sample of ten 8(a) contracts, the GAO determined that contracting officers effectively monitored subcontracting limit compliance on two of those contracts.  In other cases, agency contracting officers failed to effectively monitor compliance, even in situations presenting a heightened risk of potential violations–such as where ineligible incumbents were serving as subcontractors.

The GAO report documents “confusion” among contracting officers regarding their obligations to ensure compliance with subcontracting limits.  Some contracting officers were confused about what sba-logothe FAR, Small Business Act, and SBA partnership agreements require.  Other contracting officers seemed to assume that their CORs were primarily responsible for ensuring compliance with the subcontracting limits – although all 10 of the CORs in question “stated that contracting officers have not delegated this responsibility to them and they do not take steps to monitor the amount of subcontracted work.”

Keep reading this article at: http://smallgovcon.com/statutes-and-regulations/8a-subcontracting-limitations-compliance-oversight-lacking/

Michigan subsidiaries of Georgia company to pay $3.8 million for falsely claiming DBE credits

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The Justice Department announced on Jan. 9, 2014 that two related entities, Michigan-based Cadillac Asphalt LLC (Cadillac) and Michigan Paving and Materials Co. (MPM), have agreed to pay $3.8 million to resolve allegations that they falsely claimed Disadvantaged Business Enterprise (DBE) credits on a number of federally funded transportation projects.  Both Cadillac and MPM are subsidiaries of Oldcastle Materials Inc., a construction material and services provider based in Atlanta.

“The Disadvantaged Business Enterprise program helps businesses owned by minorities and women to work on federally funded projects,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Those who falsely claim credits under the program to obtain federal funds victimize both the taxpayers and the businesses that the program is designed to assist.”

“The U.S. Attorney’s Office works with the Civil Division in Washington to use civil enforcement to recover funds for taxpayers,” said U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade.  “In this case, civil attorneys were able to recover more than $3 million that was obtained through false claims.”

The settlement announced today resolves allegations that Cadillac and MPM knowingly and falsely claimed DBE credit for asphalt purportedly supplied by a DBE known as BN&M Trucking Inc.  As a condition of federal funding, contractors, such as Cadillac and MPM, working on a federally funded project must make a good-faith attempt to meet DBE participation goals.  For the contractors to meet their DBE participation goal, a DBE employed by the contractors must be independently responsible for performing a portion of the work with its own employees and equipment.  Allegedly, BN&M Trucking was merely a pass-through company that did not supply any asphalt or perform any other commercially useful function.

“We remain steadfast in our commitment to maintaining the integrity of the U.S. Department of Transportation’s (USDOT) Disadvantaged Business Enterprise program,” said regional Special Agent-in-Charge of USDOT’s Office of Inspector General Michelle T. McVicker.  “Working with the Secretary of Transportation, other DOT leaders and our law enforcement colleagues, we will continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse and violations of law.”

The allegations resolved by the settlement involved numerous federally funded transportation projects in Michigan between 2006 and 2010, including a project to construct a new runway at Detroit Metropolitan Wayne County Airport in 2008 and 2009.  In November 2010, two other entities, John Carlo Inc. and Angelo Iafrate Construction Co. Inc., paid more than $1 million to resolve similar allegations related to the airport runway project.

This case was handled by the Justice Department’s Civil Division, Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Michigan and the Department of Transportation Office of Inspector General.  The claims settled in this case are allegations only; there has been no determination of liability.

New military spending deal includes help for small business contractors

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In unusually speedy fashion, Congress this week approved both a new federal budget and a military spending bill, both of which provide a sense of clarity to small business owners, particularly those who sell goods and services to the federal government.

But there’s also a little something extra for small business contractors in the latter deal, called the National Defense Authorization Act (NDAA), which authorizes military spending for the coming year and was approved by the Senate late Thursday. In fact, there are two little somethings.

The 2014 version of the legislation, which President Obama is expected to sign in the coming days, included two amendments born earlier this year in the House Small Business Committee, both of which are meant to help small firms in the procurement arena.

The first changes the way prime contractors are allowed to tally up the amount of subcontracting dollars they pass along to small businesses. Currently, the federal government can take into account every small business that works on a given project, even if they are a subcontractor to another subcontractor, when calculating the amount of federal awards that went to small companies in a given year.

Second, the bill includes a rule meant to clarify some confusion over rules concerning the amount of work small prime contractors are allowed to subcontract to large firms.

Keep reading this article at: http://www.washingtonpost.com/business/on-small-business/new-military-spending-deal-includes-help-for-small-business-contractors/2013/12/20/fe0270d2-6990-11e3-ae56-22de072140a2_story.html 

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