Small Business

Last week, the Federal Acquisition Regulation (“FAR”) Council issued a Final Rule to implement regulations adopted by the Small Business Administration in 2013.  The Final Rule significantly amends FAR Parts 19 and 52 by imposing additional small business-related obligations on prime contractors and clarifying the consequences of failing to satisfy those obligations.  The Final Rule largely tracks the proposed rule, which we previously discussed.  It will be effective November 1, 2016.
Continue Reading Changes to Small Business Subcontracting On the Horizon

As we discussed in a recent post, the Supreme Court’s decision in Kingdomware Technologies, Inc. v. United States left a number of questions unanswered regarding the implementation of set-aside requirements for veteran-owned small businesses under Federal Supply Schedule (“FSS”) contracts.  The decision has already had repercussions outside the set-aside context, with the Court of Appeals for the Federal Circuit recently applying Kingdomware’s reasoning in Coast Professional, Inc. v United States to confirm bid protest jurisdiction under the Tucker Act for orders placed under FSS contracts.

Congressional testimony subsequent to Kingdomware also now confirms that a number of agencies are considering whether the Supreme Court’s decision has broader implications for other small business programs.  Specifically, the U.S. Small Business Administration (“SBA”) has publically recognized that the Supreme Court’s reasoning may extend beyond a relatively narrow statute governing U.S. Department of Veterans Affairs (“VA”) set asides and require significant changes to long-standing principles established under the Small Business Act.  As result, the VA’s and the SBA’s interests may no longer be aligned as the agencies attempt to reconcile currently differing implementations of related set-aside programs.Continue Reading SBA Considers Potential Consequences of Kingdomware Technologies

The Small Business Administration (“SBA”) has released a final rule revising many small business size and contracting program regulations found in 13 C.F.R. Parts 121, 124-127, effective on June 30, 2016.  The revisions, which implement reforms required by the FY2013 National Defense Authorization Act, include the following:
Continue Reading Final Rule Revises Many SBA Regulations

The U.S. Small Business Administration (“SBA”) recently issued a notice detailing proposed amendments to the policy directives governing the Small Business Innovation Research (“SBIR”) and Small Business Technology Transfer (“STTR”) programs.  The notice indicates that the SBA intends to implement significant changes to the current data rights provided under SBIR/STTR awards, as well as the method by which program participants—or their successors in interest—receive preferences in the third phase of efforts to develop technologies under either program.

The proposed changes open up new possibilities for a company’s competitors to benefit from its participation in the SBIR/STTR programs. However, the changes also provide additional certainty that may encourage increased participation by small research and development companies and investors that are currently unsure as to whether SBIR/STTR awards can effectively be used to commercialize new technologies.Continue Reading SBA Proposes New Data Rights and Phase III Preferences under SBIR/STTR Awards

On January 20, 2016, the FAR Council published a proposed rule calling for changes to FAR Parts 19 and 52 that address payments to small business subcontractors.  The proposed changes, which are intended to implement regulations adopted by the Small Business Administration (SBA) in 2013, will expand the range of small business-related obligations imposed on prime contractors.

The proposed rule stems from the Small Business Jobs Act of 2010, which, as noted in a previous post, called for regulations governing prime contractors’ compliance with their small business subcontracting plans.  Among the Act’s requirements was that prime contractors notify their contracting officer if they pay a “reduced price” or make an “untimely payment” to a small business subcontractor.  Although the SBA adopted regulations implementing this statutory directive in July 2013, the Far Council is taking on the task for the first time.Continue Reading FAR Council Adds New Layer to Small Business Subcontracting Rules

On November 6, 2015, the Department of Veterans Affairs (“VA”) issued a proposed rule (the “Proposed Rule”) to clarify the byzantine verification process for veteran-owned small businesses (“VOSB”) and veteran-owned service-disabled veteran-owned small businesses (“SDVOSB”)1 who want to participate in the VA’s Veterans First Contracting Program.  VA Veteran-Owned Small Business Verification Guidelines, Proposed Rule, 80 Fed. Reg. 68,795 (to be codified at 38 C.F.R. Part 74). The Proposed Rule revises a 2013 advanced notice of proposed rulemaking and considers 39 public comments received in response to the prior notice.  Comments on the latest proposed rule are due on or before January 5, 2016.

Under the Veterans First Contracting Program, the VA offers set-asides and sole source opportunities to certified VOSB and SDVOSB firms.  Unfortunately, the program has struggled to gain a foothold in the government procurement landscape because its VA-administered regulations are confusing and the set-aside opportunities are limited to VA procurements.  At the same time, the Government Accountability Office and the VA’s Office of the Inspector General have targeted the program for pervasive fraud, and stakeholders have criticized the verification program as unnecessarily rigorous when compared against other socio-economic programs administered by the Small Business Administration (“SBA”).

As a result, through its Proposed Rule, the VA “seeks to find an appropriate balance between preventing fraud . . . and providing a process that would make it easier for more VOSBs to become verified.”  The VA attempts to strike this balance by significantly amending the VOSB ownership regulations to make them easier to understand, and bringing many of the requirements in line with SBA interpretations of similar requirements under similar programs.Continue Reading VA Proposes to Make VOSB Verification Easier Under the Veterans First Contracting Program

Recent decisions by the Small Business Administration (“SBA”) Office of Hearings and Appeals (“OHA”) and the Court of Federal Claims offer important advice to anyone in the process of drafting and negotiating a mentor/protégé joint venture agreement:  Be specific.  Those agreements, in many cases, are the crown jewel of the mentor-protégé program enabling mentors and protégés to work together on set-aside opportunities that they would not otherwise have been eligible.  And like anything of great value, it should not be taken for granted.  Instead, as a matter of meeting both regulatory requirements and best practice, mentor/protégé joint venture agreements should specifically list all resources, equipment and facilities (and their estimated values) that each party will provide and detail how work will be shared between the joint venture members.
Continue Reading OHA and COFC Agree: Mentor/Protégé JV Agreements Must Be Specific to Avoid Affiliation

Last month, we discussed Information Technology (IT) Schedule 70, one of the largest contract vehicles administered by the U.S. General Services Administration (GSA). GSA now is evaluating whether Schedule 70 should be made more accessible to certain small contractors, new IT providers, and other, similarly situated firms.
Continue Reading GSA Seeks Input on Eliminating IT Schedule 70’s Two-Year Experience Requirement

In Size Appeal of NMC/Wollard Inc., SBA No. SIZ-5668, the Small Business Administration Office of Hearings and Appeals (“OHA”) clarified the three factor test used to determine whether a small business qualifies as a manufacturer of the end item being procured.  The decision confirmed that no single factor has greater weight than the others, and that a small business can be a manufacturer despite contributing a small percentage of the value of the end item if the contribution was essential to the end item’s function.

Under applicable SBA regulations, a small business manufacturer “is the concern which, with its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired.”  13 C.F.R. § 121.406(b)(2).  The regulations set forth a three factor test to determine whether a small business is the manufacturer of the end item:

  1. The proportion of total value in the end item added by the efforts of the concern, excluding costs of overhead, testing, quality control, and profit;
  2. The importance of the elements added by the concern to the function of the end item, regardless of their relative value; and
  3. The concern’s technical capabilities; plant, facilities and equipment; production or assembly line processes; packaging and boxing operations; labeling of products; and product warranties.

13 C.F.R. § 121.406(b)(2)(i)(A)-(C).Continue Reading SBA OHA: In Three-Factor Test to Determine Small Business Manufacturers, No Single Factor is Determinative

The FAR Council has released a proposed rule calling for significant revisions to the provisions in FAR Parts 19 and 52 addressing small business subcontracting plans.  The proposed changes, which are intended to implement regulations adopted by the Small Business Administration (SBA) in 2013, should serve as a not-so-subtle reminder of the range of small business-related obligations imposed on prime contractors, as well as the consequences of failing to satisfy those obligations.
Continue Reading FAR Council Beefs Up Small Business Subcontracting Rules