Georgia Tech Procurement Assistance Center

Federal Circuit dismisses SDVOSB appeal as moot

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On Nov. 20, 2018, the U.S. Court of Appeals for the Federal Circuit seemingly ended the Veterans Contracting Group line of cases.

As a refresher, in those cases, the contractor challenged the U.S. Small Business Administration’s (SBA) determination that it was an ineligible Service Disabled Veteran Owned Small Business (SDVOSB) and the U.S. Department of Veterans Affairs’ (VA) reciprocal removal from its SDVOSB database. The Federal Circuit dismissed the appeal as moot, noting that under the new SDVOSB regulations effective Oct. 1, 2018, the two sets of regulations are now uniform. While non-precedential in nature, the Federal Circuit’s decision also raises questions of the consequential nature of the newly promulgated regulations for decisions currently pending before courts and administrative forums.

By way of background, the Veterans Contracting Group line of cases highlight some of the many conflicts that existed between the SBA and VA rules prior to the release of new rules by each respective agency in October 2018. The decisions are also demonstrative of the consequential results for contractors due to the previous split between the regulations. In these lines of cases, the contractor received several conflicting decisions, often over facially slight differences between the regulations on ownership and “unconditional ownership” requirements. The Federal Circuit’s decision in Veterans Contracting Group v. United States et. al, No. 2018-1410 (Fed. Cir. Nov. 20, 2018) will likely become the final voice in the matter, and seemingly puts an end to appeals and differing opinions over these regulations—at least for the contractor.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=758386

Government contractors found guilty in $11 million veteran set-aside fraud scheme

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A federal jury has convicted Andrew Otero and his company, A&D General Contracting, Inc. (A&D), on charges that they fraudulently obtained $11 million in federal contracts specifically set aside for service-disabled veteran-owned businesses.  The jury’s decision was rendered on Nov. 21, 2018.

The evidence demonstrated that Otero had no military experience.  Yet Otero and veteran Roger Ramsey participated in a conspiracy to defraud the government by forming a joint venture (JV) – and falsely representing that Ramsey’s firm and the JV qualified as service-disabled veteran-owned small businesses (SDVOSB).  Based on the false claim to SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts or task orders with the Department of Veterans Affairs (VA) and the Army Corps of Engineers (ACE).

As proven at trial, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D.  To appear qualified, Otero and Ramsey initially executed an agreement to create the JV, which stated that Ramsey’s company would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.

However, as proved at trial, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply use the disabled veteran status of Ramsey’s firm to bid on contracts.  The side agreement also stated that A&D – not Ramsey – would run the construction jobs.  They also agreed that A&D would keep 98 percent of every payment.

In addition to the secret side agreement, the evidence demonstrated several ways in which the JV did not operate as a legitimate SDVOSB, but was essentially controlled by Otero and A&D.  For example, although Ramsey (a service-disabled veteran) nominally served as president of his firm and the JV, he actually worked full-time for a telecommunications company.  Otero and A&D, not Ramsey, controlled the day-to-day management, daily operation and long-term decision making of the JV. Among other things, Otero and A&D appointed an A&D employee as the project manager for every contract and task order.

“Our nation strives to repay the debt of gratitude we owe to our veterans by setting aside some government contracts for veterans with service-related disabilities,” said United States Attorney Adam Braverman.  “These unscrupulous contractors abused this program through a cynical and illegal ‘rent-a-vet’ scheme.  They are now being held fully accountable for robbing truly deserving vets of important economic opportunities.”

The defendants are also facing civil charges consisting of alleged violations of the false claims act based on the similar misconduct.  The defendants have been ordered to appear in U.S. District Court for sentencing on February 19, 2019.

Source: https://www.justice.gov/usao-sdca/pr/government-contractors-found-guilty-11-million-veteran-set-aside-fraud-scheme

SBA’s OHA clarifies negative control restrictions – But do the new SDVOSB regulations limit its impact?

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Between new regulations from the Small Business Administration (SBA) and decisions from the SBA’s Office of Hearings and Appeals (OHA), the limits of acceptable actions by small business owners set on maintaining their small business size status continues to change.

Most recently, OHA issued a noteworthy decision that clarifies restrictions on negative control of small businesses, including what actions it considers “extraordinary actions” and what actions are ordinary actions related to the daily control of a company. OHA’s decision in Size Appeal of Southern Contracting Solutions III, LLC, SBA No. SIZ-5956 (2018) is helpful in understanding the parameters of permissible negative control since OHA provided its clearest list to date of “extraordinary actions” and “ordinary” actions essential to the daily operation of the company.

However, it is important to note that the impact of the ruling, as far as service-disabled veteran-owned small businesses (SDVOSBs), will be limited in light of the new SBA and VA regulations.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=750078

In VA procurements, veteran-owned businesses trump all other contractors

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On October 17, 2018, the Federal Circuit ruled that the Department of Veteran Affairs (“VA”) must give priority to veteran-owned small businesses (“VOSB”) when awarding contracts.  (PDS Consultants Inc. v. U.S., et al., Nos. 17-2379 and 17-2512, 2018 WL 5019735 – Fed. Cir. Oct. 17, 2018).

At first blush, no one would argue with the foregoing statement.

But, this mandate became less clear when the VA was faced with awarding a contract to a VOSB or following an otherwise mandatory requirement for all federal agencies to buy a specific list of items made by nonprofits employing the blind and significantly disabled.

Here is the source of confusion. More than 40 years ago, Congress enacted the Javits-Wagner-O’Day Act (“JWOD”), which required federal agencies to buy certain items and services from nonprofits that employ the blind or people with other significant disabilities. Today, this mandatory procurement policy is implemented through the AbilityOne program.

In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act (“VBA”). As the U.S. Supreme Court stated in Kingdomware, the VBA made it mandatory in almost every procurement for the VA to follow the “Rule of Two.” The “Rule of Two” requires the VA to award a contract to a VOSB whenever at least two VOSBs can perform the work at a reasonable price.

Keep reading this article at: https://governmentcontractsnavigator.com/2018/10/18/in-department-of-veterans-affairs-procurements-veteran-owned-businesses-trump-all-other-contractors

New consolidated SDVOSB eligibility requirements: The good, the bad, and the downright ugly

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This article was written by Steve Koprince who is the author of the book entitled “The Small-Business Guide to Government Contracts.”

New, consolidated SDVOSB eligibility regulations kicked in on October 1.

The new regulations replace the old VA and SBA rules, which provided separate eligibility standards for SDVOSBs.

Veterans have long been confused by the fact that the Government operated two separate SDVOSB programs, each with its own standards.  The consolidated rule will eliminate that confusion, and that’s a very good thing.  There are also several other pieces of the new SDVOSB eligibility rule that veterans should like–but also some that aren’t so great, or that require further clarification as to how they’ll be applied.

My colleague Matt Schoonover provided a broader overview of the new regulations earlier last week.  Now it’s time for me to get on my soapbox.  Without further ado, here’s my list of the good, bad, and the downright ugly from the new SDVOSB regulations.

Keep reading this article at: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/new-consolidated-sdvosb-eligibility-requirements-the-good-the-bad-and-the-downright-ugly

Billions of dollars in construction funding in FY 2019 funding bills

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On Sept. 13, Congress passed a Fiscal Year (FY) 2019 appropriations bill — which the president is expected to sign into law —t hat will provide significant amounts of funding for military construction projects through the U.S. Army Corps of Engineers (USACE) and Naval Facilities Engineering Command (NAVFAC); hospital, medical clinic and cemetery projects through the Department of Veteran Affairs (VA); and harbor maintenance, lock, dam, levee and environmental restoration projects through the USACE Civil Works Program.

The bill provides a total of $10.3 billion for military construction projects. This is an increase of $241 million, or 2.4 percent, above the enacted FY 2018 level. The bill appropriates $1.6 billion to fund construction, operation, and maintenance of military family housing for fiscal year 2019. This is $173 million above the fiscal year 2018 level and the same as the president’s FY 2019 budget request.

Major and minor construction within the VA is funded at $1.8 billion. In addition, $2 billion is provided for infrastructure repair, with the funding allocated to major and minor construction and non-recurring maintenance. Within the infrastructure total funding, $750 million is targeted to seismic corrections at VA facilities nationwide.

Keep reading this article at: http://advocacy.agc.org/billions-of-dollars-in-construction-funding-in-fy-2019-funding-bills/

VA using SBA’s SDVOSB eligibility rules starting Oct. 1st

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The VA will begin using the SBA’s eligibility rules to verify service-disabled veteran-owned small businesses (SDVOSBs) and veteran-owned small businesses (VOSBs) beginning October 1, 2018.

In a final rule published Sept. 24th in the Federal Register, the VA confirms that the SBA’s eligibility requirements will apply beginning next week–but in my eyes, one very important question remains unanswered.

As regular SmallGovCon readers know, the differences between the government’s two SDVOSB programs have caused major headaches for veterans.  Because the two sets of regulations have different eligibility requirements, a company may be an eligible SDVOSB under one set of rules, but not the other.

In 2016, Congress addressed the problem.  As part of the 2017 NDAA, Congress directed the VA to verify SDVOSBs and VOSBs using the SBA’s regulatory definitions regarding small business status, ownership, and control.  Congress told the SBA and VA to work together to develop joint regulations governing SDVOSB and VOSB eligibility.  The VA published a proposed rule earlier this year to eliminate its separate SDVOSB and VOSB eligibility requirements.

Keep reading this article at: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/va-will-use-sba-sdvosb-eligibility-rules-starting-october-1-2018/

SBA reiterates that VetBiz verification is not required for non-VA SDVOSB contracts

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Despite a longstanding and very common misconception, the VA’s SDVOSB verification requirement doesn’t apply to non-VA SDVOSB contracts.

As the SBA Office of Hearings and Appeals recently reiterated, it was “simply not correct” to believe that a company was required to be verified in VetBiz to be awarded a non-VA SDVOSB contract.

Confusingly, the federal government currently runs two SDVOSB programs: one under the VA’s rules and the other under the SBA’s.

Keep reading this article at: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/vetbiz-verification-not-required-for-non-va-sdvosb-contracts-sba-oha-reiterates/

Former company owner sentenced for $13.7 million ‘rent-a-vet’ scheme

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A former operator of a Kansas City construction company, Patriot Company, Inc., was sentenced in federal court last week for his role in a “rent-a-vet” scheme to fraudulently obtain more than $13.7 million in federal contracts.

Jeffrey K. Wilson was sentenced to 18 months in federal prison without parole. Under the terms of his plea agreement, Wilson has also consented to the federal civil forfeiture of approximately $2.1 million.

On Jan. 31, 2018, Wilson pleaded guilty to one count of government program fraud. Co-defendant Paul R. Salavitch pleaded guilty to a misdemeanor charge of making a false writing and awaits sentencing.

Wilson, who is not a veteran, managed the day-to-day operations and the long-term decision-making of Patriot Company from September 2005 to January 2014. Wilson and Salavitch falsely certified that Salavitch, who is a service-disabled veteran, was involved in the day-to-day operations of Patriot Company. Salavitch’s purported active management qualified Patriot Company to obtain set-aside contracts to which it was not entitled.

Wilson admitted he used Salavitch’s veteran and service-disabled veteran status in a “rent-a-vet” scheme to obtain 20 government contracts for which Patriot Company received more than $13.7 million.  As a result of the fraud scheme, legitimate veteran-owned-and-run businesses were not awarded these contracts. In one instance, according to court documents, Wilson brazenly challenged the government’s award of a set-aside contract to a service-disabled veteran bidder and Patriot Company fraudulently obtained that contract.

Wilson’s plea agreement cites 20 contracts with the U.S. Department of Veterans Affairs and the U.S. Army, which were fraudulently obtained by Wilson, Salavitch and Patriot Company. The contracts, which ranged as high as $4.3 million, included construction projects in Missouri, South Dakota, Texas, Nebraska, Oklahoma, Michigan, Indiana, Tennessee, Iowa, Illinois and North Dakota.

In September 2013, the Veterans Administration conducted an unannounced site visit of Patriot Company. The site inspector discovered that Salavitch was working 40 miles away at his full-time job as a federal employee with the Department of Defense in Leavenworth, Kansas.

Wilson did not stop violating the law even after the government’s site visit.  Instead, Wilson and Salavitch fought cancellation of Patriot Company’s status. In November 2013, Salavitch falsely certified to the Missouri Division of Purchasing and Materials Management that Patriot Company was a legitimate service-disabled veteran-owned small business when he knew it was not because he did not actively run the company. In December 2013, the Veterans Administration de-certified Patriot Company.

This case was investigated by the Department of Veterans Affairs – Office of Inspector General – Criminal Investigation Division, and the General Services Administration – Office of Inspector General.

Source: https://www.justice.gov/usao-wdmo/pr/former-company-owner-sentenced-137-million-rent-vet-scheme

‘Cascading’ set-asides now authorized at the VA

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In what many will see as VA’s continued assault on its Veterans First Contracting Program post-Kingdomware, the Dept. of Veterans Affairs (VA) recently implemented “Cascading” set-asides.

The VA refers to these set-asides as “Tiered Evaluations,” noting they are also known as “Cascading” set-asides.

The VA issued Acquisition Policy Flash (No. 18-15), transmitting Procurement Policy Memorandum (PPM) No. 2018-04, dated and effective February 8, 2018.

The VA issued the PPM in response to requests from VA contracting officers requesting guidance and procedures for the use of tiered evaluations within a single synopsized solicitation when applying the “VA Rule of Two.”

Keep reading this article at: http://vetlikeme.org/its-official-cascading-set-asides-are-now-authorized-at-the-department-of-veterans-affairs/

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