Recent developments tim connelly


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Recent developments tim connelly

  1. 1. Recent  Developments  in    Small  Business  Contrac5ng   Connelly  Law  Office  PLLC   651.270.9346      
  2. 2. Agenda  •  Overview  of  Small  Business  Contrac5ng    •  Small  Business  Jobs  Act  Implementa5on  •  Teaming  Arrangements  Update  •  Evolu5on  of  VA’s  “Veterans  First”  Program  •  Ques5ons    
  3. 3. Small  Business  Contrac5ng  •  Federal  Policy  to  Promote  Small  Businesses   –  NAICS  Codes:  revenue  or  employee  based   –  CCR/ORCA/bid/proposal:  represent  size  &  status   –  Small,  Disadvantaged,  HUB  Zone,  8(a),  SDVOSB,   WOSB,  ED  WOSB  •  Federal  Prime  Contracts:  Par5al/full  set-­‐asides  •  Separate  VA  “Veterans  First”  Program    •  Subcontrac5ng  Assistance  Program  
  4. 4. Small  Business  Contrac5ng  •  Federal  Prime  Contrac5ng   –  VA  verifica5on  program  for  VOSB/SDVOSBs   –  Other  agencies  accept  “self-­‐cer5fica5on”  •  Federal  Subcontrac5ng  &  Teaming   –  Small  business  subcontrac5ng  program   –  Joint  ventures  with  small  businesses   –  Small  business  evalua5on  factors    
  5. 5. Small  Business  Contrac5ng  •  Concerns  with  Small  Business  Fraud  &  Abuse  •  DoD  IG  Report  29  Feb  12:   –  Found  fraud  and  abuse  in  SDVOSB  Program   –  Recommends  VA-­‐style  cer5fica5on  •  American  Small  Business  League  Report   –  Washington  Post  March  2012   –  Listed  large  firms  that  received  set-­‐asides  in  2010   –  Included  Honeywell,  Oshkosh  Truck,  Lockheed…    
  6. 6. United States v. John White•  New York contractor pleads guilty to defrauding VA and Army•  White falsely claimed to be disabled veteran•  Won $16 million in VA construction contracts•  Faces up to 75 years in prison; $3.75 million fines
  7. 7. Minnesota  Transit  Constructors  Inc.    •  Minnesota  TC,  Inc.  was  design/build  joint  venture   prime  contractor  for  Hiawatha  Light  Rail    •  Federally-­‐funded  contract  required  use  of  DBE  •  Minnesota  TC  claimed  DBEs  provided  supplies   and  services  actually  supplied  by  non-­‐DBE  subs    •  DBEs  were  “merely  extra  par5cipants  .  .  .  To   make  it  appear  as  if  a  DBE  had  performed.  .  .”  •  Minn  TC  7  “a  number  of  subcontractors”  agreed   to  pay  $4.6  million  to  senle  claims  under  the  FCA                                                            
  8. 8.   Small  Business  Jobs  Act   Implementa5on  
  9. 9. Small  Business  Jobs  Act  of  2010   Miscellaneous  Sec5ons  of  Interest    Sec.  1321  –  Preven5on  of  subcontrac5ng                                      misrepresenta5on    Sec.  1333  –  Encourages  agency  heads  to  promote  small                business  and  achieve  small  business  goals      Sec.  1342  –  Annual  recer5fica5on  of  small  business  size  &              status    Sec.  1343  –  Training  for  contrac5ng  and  enforcement                  personnel  to  properly  classify  small  businesses      Sec.  1347  –  Small  business  contrac5ng  parity  (HUB  Zone  Rule)  
  10. 10. Small  Business  Jobs  Act  of  2010   Sec5ons  Reviewed  Today    • 1331–    Authority  to  set  aside  of  MAS/FSS            orders    • 1344  –  Timely  payment  of  subcontractors    • 1341  –  Deemed  knowing  cer5fica5on  and            presumed  loss  rule    • 1322  –  Good  faith  effort  to  use  subcontractors        named  in  bid  or  proposal  
  11. 11. Small  Business  Jobs  Act  of  2010   Sec5on  1331  •  Reserva5on  of  Prime  Contract  Awards  For   Small  Business:   –  Agencies  may  set  aside  part(s)  of  MAS  contracts   –  Agencies  may  set  aside  FSS/MAS  orders  •   Implemented  by  Series  of  Interim  Clauses:   –  HUBZone,  8(a),  SDVOSB,  WOSB,  EDWOSB…   –  Allows  for  set-­‐side  orders  on  exis)ng  GSA  contract  
  12. 12. Small  Business  Jobs  Act  of  2010   Sec5on  1331  •  52.219-­‐3:  NOTICE  OF  HUBZONE  SET-­‐ASIDE  OR  SOLE  SOURCE  AWARD    •  52.219-­‐13:  NOTICE  OF  SET-­‐ASIDE  OF  ORDERS      •  52.219-­‐14:  LIMITATIONS  ON  SUBCONTRACTING    •  52.219-­‐27:    NOTICE  OF  SERVICE-­‐DISABLED  VETERAN-­‐OWNED  SMALL            BUSINESS  SET-­‐ASIDE      •  52.219-­‐29:  NOTICE  OF  SET-­‐ASIDE  FOR  ECONOMICALLY  DISADVANTAGED          WOMEN-­‐OWNED  SMALL  BUSINESS  (EDWOSB)  CONCERNS      •  52.219-­‐30:  NOTICE  OF  SET-­‐ASIDE  FOR  WOMEN-­‐OWNED  SMALL  BUSINESS          CONCERNS  ELIGIBLE  UNDER  THE  WOMEN-­‐OWNED  SMALL          BUSINESS  PROGRAM    
  13. 13. Small  Business  Jobs  Act  of  2010   Sec5on  1331  •  KO  set-­‐aside  analysis  at  the  order  level  •  KR  size  and  status  cer5fica5on  at  the  order  level      •  Large  businesses:   –  May  accept  new  clauses  in  GSA/MAS  contracts   –  Review  all  GSA  orders  for  set-­‐aside  language:     •  SF  1449  checkboxes   •  Presence  of  set-­‐aside  clauses  •  Take  steps  to  preserve  op5ons:   –  Procedure  required  to  prevent  bid  on  set-­‐asides   –  Take  steps  to  correct  invalid  cer5fica5ons   –  Lener  to  contrac5ng  officer    
  14. 14. Deemed  Cer5fica5on/Presumed  Loss   Small  Business  Jobs  Act  Sec5on  1341  •  Deemed  affirma5ve,  willful  and  inten5onal   cer5fica5ons:   –  Submission  of  bid  or  proposal  for  set-­‐aside  contract  or   subcontract   –  Submission  of  bid  or  proposal  for  contract  or  subcontract   otherwise  counted  as  small  business  award   –  Registra5on  on  electronic  database  –  ORCA,  CCR,  VetBiz  •  Presump5on  of  Loss   –  Full  contract  Price   –  No  Allowance  for  Delivered  Goods/Services  
  15. 15. Deemed  Cer5fica5on/Presumed  Loss   Small  Business  Jobs  Act  Sec5on  1341  •  Deemed  cer5fica5on  and  presump5on  are   irrefutable  •  Requires  signed  cer5fica5on  of  small  business   size/status  by  “authorized  official”  •  BUT  –  Contractor  can  limit  liability  by  showing:   –  Uninten5onal  error/technical  malfunc5on   –  Management  procedures  on  representa5ons   –  Unclear/ambiguous  requirement   –  Efforts  made  to  correct  invalid  cer5fica5on  
  16. 16. Payments to Subcontractors Small Business Jobs Act Section 1334•  Requires large prime to notify KO if payment to subcontractor is: –  reduced, or –  more than 90 days past due•  Prime cannot prohibit sub from talking to KO about payments•  KO can require prime to enter into funds control agreement•  Prime with unjustified payment history reported to FAPIIS
  17. 17. Payments to Subcontractors Small Business Jobs Act Section 1334  •  Exploring  other  opportuni5es  to  accelerate   payments  to  small  business  subcontractors  to   build  on  SBA’s  implementa5on  of  sec5on  1334  •  OMB  issued  government-­‐wide  guidance  to   agencies  on  September  14,  2011:   –  To  the  full  extent  permined  by  law,  agencies  shall   make  their  payments  to  small  business  contractors  as   soon  as  prac5cable   –  Goal  of  making  payments  within  15  days  of  receipt    
  18. 18.   Teaming  Arrangements  Update  
  19. 19. Overview   Teaming  Arrangements  •  A Teaming Arrangement is: –  Two or more companies form a partnership or joint venture to act as a potential prime contractor; or . . . –  A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified Government contract or acquisition program. FAR § 9.601•  Common way to combine resources to compete for a contract  
  20. 20. Government Recognition Teaming Arrangements•  Government will recognize integrity and validity of contractor team arrangements; provided - arrangements are identified and company relationships are fully disclosed in an offer or, - for arrangements entered after submission of an offer, before arrangement becomes effective•  The Government will not normally require or encourage the dissolution of contractor team arrangements FAR § 9.603
  21. 21. Government Recognition Teaming Arrangements•  Government reservation of rights: –  Require consent to subcontracts under FAR Part 44 –  Determine the responsibility of the prime contractor under FAR subpart 9.1, on the basis of the stated teaming arrangement –  Enforce policy on competitive subcontracting at any time during contract performance –  Look to the prime contractor as the party fully responsible for contract performance, notwithstanding any teaming arrangement FAR § 9.604
  22. 22. Enforceability Teaming Arrangements•  A contract is, “a mutually binding legal relationship obligating the seller to furnish the supplies or services … and the buyer to pay for them.” FAR § 2.101•  Requires “meeting of the minds” on basic terms of the contract: –  Price –  Subject matter –  Delivery Schedule
  23. 23. Enforceability Teaming Arrangements•  Teaming agreements generally not intended to be a binding contract between the parties. –  Forward looking and general – not likely to be a contract –  Detailed as to terms of payment, performance, and timelines – may be a contract•  Druar v. Ellerbee & Co., 222 Minn. 383, 24 N.W. 2d 820 (1946): Agreement to pursue military construction contracts unenforceable
  24. 24. Enforceability Teaming Arrangements•  Teaming agreements may be construed as a binding contract between the parties•  Contract formation in Virginia: (1) Scope of the work to be performed + (2) the compensation to be paid + (3) the terms of the agreement = Intent to enter into a contact•  EG&G Technical Services v. Cube Corporation, Fairfax County, VA: Small business prime bound to contract with Beltway sub for Navy baseops contract
  25. 25. Small  Business  Jobs  Act  of  2010   Sec5on  1322  •  Offeror  will  make  “good  faith  effort”  to   acquire  supplies,  services,  materials  from   small  business  “used  in  preparing  and   submirng”  bid  or  proposal  •  Offeror  will  “provide  to  the  contrac5ng  officer   a  wri0en  explana5on  if  the  offeror  or  bidder   fails”  to  acquire  supplies,  services,  materials   from  small  business  “used  in  preparing  and   submirng”  bid  or  proposal  
  26. 26. Small  Business  Jobs  Act  of  2010   Sec5on  1322  •  A  prime  contractor  “uses”  a  subcontractor  in   preparing  its  bid  if:   –  Proposal  or  bid  references  small  business,  or     –  Offeror  has  subcontract  or  agreement  in  principle  to   use  subcontractor  for  por5on  of  specific  contract,  or     –  Small  business  drased  part  of  proposal  or  offeror   used  small  business  cost/pricing  or  technical   exper5se,  and   –  There  is  “an  intent  or  understanding  that  SBC  will  be   awarded  a  subcontract…”      
  27. 27. Small  Business  Jobs  Act  of  2010   Sec5on  1332  •  Does  not  change  substan5ve  law  –   –  subcontract  forma5on  governed  by  state  law   “mee5ng  of  of  the  minds”  –  objec5ve  test   –  “Good  faith  effort”  alone  does  not  force  prime  to  use   subcontractor  unless  there  is  agreement  on  all   elements  of  subcontract    •  In  SBA’s  eyes  “good  faith  effort”  probably   requires  use  of  subcontractor  at  stated  price  •  Can  KO  refuse  to  approve  other  subcontractors   under  FAR  Part  44?  
  28. 28. Small  Business  Jobs  Act  of  2010   Sec5on  1332  •  Small  Business  Strategy:   –  Get  named  in  the  proposal   –  Dras  part  of  proposal   –  If  not  awarded  subcontract  FOIA  prime’s  “wrinen   explana5on”  to  KO  •  Large  Business  Strategy:   –  Clear  agreement  that  no  subcontract  is  guaranteed   –  Include  valid  business  reason  in  explana5on  to  KO   –  Avoid  doing  work  in  house/using  large  business  sub    
  29. 29. Brooks  Range  Contract  Serv.,  Inc.  CoFC,  Jan  6,  2012   Teaming  Arrangements  •  Post-­‐award  bid  protest  of  GSA  building   management  services  contract  •  Awardee  proposed  a  “Contractor  Teaming   Agreement”  under  solicita5on  &  GSA   guidance:   –  Joint  venture  must  have  own  GSA  contract   –  Each  member  must  have  schedule  contract  
  30. 30.   Brooks  Range  Contract  Serv.,  Inc.  CoFC,  Jan  6,  2012   Teaming  Agreements    •  Protestor  claimed:   –  Awardee’s  CTA  was  a  JV  under  Georgia  law   –  Award  to  JV  w/o  GSA  contract  not  allowed  •  CoFC  Replied  (in  dicta):   –  Protest  denied  on  “standing”  grounds,  but…         –  Contrac5ng  Officer  not  required  to  do  detailed   legal  analysis  of  Teaming  Agreement   –  This  Teaming  Agreement  complied  with  the   solicita5on  and  GSA  guidance      
  31. 31. Mentor  Protégé  Programs   Teaming  Agreements  •  Small  Business  Jobs  Act  Sec5on  1347:     –  New  authority  for  SDVOSB,  WOSB,  HUB  Zone   mentor-­‐protégé  programs   –  SBA  will  apply  special  affilia5on  rules  to  statutory   mentor-­‐protégé  programs  •  Calls  for  study  of  Mentor-­‐Protégé  Programs   and  report  to  Congress  
  32. 32.   Evolu5on  of  VA’s    “Veterans  First”  Program  
  33. 33. “Veterans  First”  Program   SDVOSB  Program  •  Agencies  may  set  aside  contracts  for   compe55on  among  SDVOSBs:   –  If  the  contrac5ng  officer  has  a  reasonable  belief   that  two  or  more  SDVOSBs  will  compete;  and   –  The  contract  will  be  awarded  at  a  fair  market  price    •  Agencies  may  also  award  contracts  on  a  sole   source  basis  to  SDVOSBs  •  VOSB  subcontrac5ng  opportuni5es  exist      
  34. 34. “Veterans  First”  Program   Kingdomware  Tech.  Inc.,  Nov  10,  2011  •  Dept.  of  Educa5on  requirement  for   no5fica5on  system  with  “social  media   emergency  no5fica5on  capability”  •  Unrestricted  RFQ  issued  to  GSA  federal  supply   schedule  contractors  •  Previous  successful  protest  of  a  brand-­‐name   RFQ  issued  to  Schedule  70  contractors  
  35. 35. “Veterans  First”  Program   Kingdomware  Tech.  Inc.,  Nov  10,  2011  •  RFQ  for  emergency  no5ce  to/from  employees   through  IM,  Facebook,  Twiner,  etc.  •  “go/no  go”  evalua5on  factor:  “Small  Business”  •  Protest  claimed  that  DOE  was  required  to  set   aside  RFQ  for  Small  Business,  specifically,   SDVOSBs  •  Protest  denied:  Under  the  FAR,  FSS  purchases   are  excluded  from  set-­‐aside  requirements      
  36. 36. Veterans  First  Contrac5ng  Program   “[T]he  contrac5ng  officer  shall  set  aside   [contracts  for  ]    SDVOSB  concerns  upon   a  reasonable  expecta5on  that:    (1)  Offers  will  be  received  from  two  or  more  eligible  SDVOSB  concerns  and;    (2)  Award  will  be  made  at  a  reasonable  price  
  37. 37. “Veterans  First”  Program Aldevra, B-405271, Oct. 11, 2011•  VA unrestricted RFQ for kitchen equipment from FSS contract holders•  Protest: VA must set aside all procurements for VOSB/SDVOSB subject to rule of 2•  GAO: Sustained. –  The Vets First statute has no exceptions for FSS contract procurements –  VA must conduct market research to find SDVOSBs
  38. 38. “Veterans  First”  Program Aldevra, B-405271, Oct. 11, 2011  •  VA  RFQ  to  FSS  contractors  for  cooking  pans/ skillets  for  Chicago  &  Wilkes-­‐Barre  VA  •  VA  followed  FAR  Part  8.4  procedures  and   issued  RFQ  on  an  unrestricted  basis    •  Aldevra  protest  claimed  that  was  required  to:   –  conduct  market  research  to  find  SDVOSB/VOSB   –  limit  compe55on  to  SDVOSB/VOSB  
  39. 39. “Veterans  First”  Program Aldevra, B-405271, Oct. 11, 2011  •  VA  agreed  there  were  two  SDVOSB  that  could   perform  Chicago  RFQ  (but  not  Wilkes-­‐Barre)  •  VA  argued  that  it  had  discre5on  to  use  FSS   without  following  SDVOSB  rules  •  Protest  sustained:   –  VA  Act  &  VAAR  state  that  VA  “shall”  award   contracts  to  VOSB/SDVOSB   –  There  is  no  excep5on  for  FSS  purchases  for  VA   –  VA  must  set  aside  Chicago;  research  Wilkes-­‐Barre  
  40. 40. “Veterans  First”  Program Alterna5ve  Contrac5ng  Enterprises,  Mar.  26,  2012  •  VA  awarded  purchase  orders  for  surgical  gloves  to  Bosma   Industries  for  the  Blind,  of  Indianapolis  •  Javits-­‐Wagner-­‐O’Day  Act  requires  non-­‐compe55ve  use  of   non-­‐profit  agencies  employing  the  blind  &  disabled  for  items   on  “procurement  list”  of  approved  items/services    •  2009  VA  Rulemaking  acknowledged  that  JWOD  Act  s5ll  gave   priority  to  non-­‐profit  agencies  for  item/services  on   procurement  list  •  Held:    VA  reasonably  interpreted  VA  Act  and  JWOD  Act  to   allow  for  priority  to  non-­‐profit  agencies  for  procurement  list   items/services  
  41. 41. “Veterans  First”  Program  •  Dras  Proposed  Rule  to  Implement  VA’s   Restric5ve  View  of  VOSB/SDVOSB  Authority  •  Set-­‐aside  authority  would  not  apply  to:   –  FSS  contract  orders/RFQs   –  JWOD  “Ability  One”  Program   –  Government  prin5ng  office  orders   –  Orders  under  ID/IQ  contract  (FAR  art  16.5)  •  Interim  rule  not  yet  published    
  42. 42. “Veterans  First”  Program  •  April  18:  Proposed  rule  to  require  electronic   payment  requests  •  “VA  determined  would  improve  the  accuracy  and   efficiency  of  payment  processing.”  •  Interim  Clause  allows  but  does  not  require   electronic  invoicing  by  EDI  or  EIPPS  •  VA  contractors  would  be  required  to  submit   payment  requests  electronically  under  final  rule  •  Comments  due  June  18,  2012  
  43. 43. Commandeer  Construc5on  Company   LLC,  Dec.  29,  2011  •  VA  IFB  for  renova5on  of  med  center  in  Ohio  •  IFB  included  VAAR  devia5on  clause  804.1102,   requiring  VA  to  “fast  track”  approval  of   “apparently  successful  offeror”  •  CCC  LLC  was  low  offer,  but  did  not  receive   award  –  VA  had  “cancelled”  fast  track  •  GAO:  Solicita5on  required  VA  to  fast  track  CCC  •  VA  is  considering  new  “fast  track”  rule        
  44. 44. H.R.  1657  •  Mandatory  5  year  debarment  for  company   that  misrepresents  its  Veteran-­‐owned  status   to  the  VA  •  Includes  “all  principals  of  the  concern”  •  VA  must  begin  proceedings  in  30  days    •  VA  must  complete  proceedings  within  90  days  •  Referred  to  Senate  24  May  11;  no  cosponsors   in  House  
  45. 45. “Veterans  First”  Program   CS-­‐360,  LLC  Case  •  VA  denied  CS  360’s  applica5on  for  the  VetBiz   database  –  Opera5ng  Agreement  included   supermajority  vo5ng  •  CS  360  quickly  made  changes  to  its  opera5ng   agreement  to  sa5sfy  VA  concerns    •  VA  then  denied  CS  360’s  request  for   reconsidera5on  –  because  they  were  made  too   quickly  •  DC  District  Court  reversed  VA  –  no  ra5onal  basis   for  decision;  take  another  look  
  46. 46.     What  are  your  ques5ons?  
  47. 47. Recent  Developments  in    Small  Business  Contrac5ng   Connelly  Law  Office  PLLC   651.270.9346