I’m very pleased to share that I will be presenting at the JAMIS Summit 2019’s Government Contract Industry Forum. My presentation will focus on the current state of M&A within the industry.
The JAMIS Summit gathers experts within the finance/accounting, program/project management, purchasing, business development, human resources, and executive leadership arenas to network, learn and exchange insight on current trends and industry knowledge.
On February 15, 2019, the Government Accountability Office (GAO) issued a consequential decision for those contractors who will compete for federal contracts as part of a mentor-protégé joint venture. In Ekagra Partners, LLC, B-408685.18, Feb. 15, 2019, the GAO partially sustained the protest on the basis of an improper limitation on the submission of teaming agreement member past performance, and partially denied the protest finding that agencies can limit the number of past performance experience projects that can be submitted in a mentor-protégé joint venture’s proposal in reliance on a large business mentor firm.
In Ekagra, the protestor challenged the terms of the request for proposals (RFP) seeking to award additional Multiple Award Task Order Contracts (MATOCs) under the General Services Administration’s (GSA) One Acquisition Solution for Integrated Services (OASIS) Small Business (SB) Pool 1. OASIS SB Pool 1 MATOC covers a wide variety of professional services including, but not limited to, consulting, logistics, engineering, scientific, management consulting, project management, and other professional services.
Members of the Bass, Berry & Sims Government Contracts team successfully represented B&O JV in multiple actions brought by a competitor to challenge the awarding of a contract to our client. B&O JV is an 8(a) small business joint venture based in Dallas, TX.
In October 2017, the Federal Law Enforcement Training Center (FLETC) issued a request for proposal (RFP) for dorm maintenance services at its training facility in Glynco, Georgia, as a competitive 8(a) set-aside. The important services support training of federal law enforcement officers and FLETC has repeatedly determined that the services cannot be interrupted.
The incumbent, SRM Group, Inc., was not eligible to compete for the contract, having graduated from the 8(a) program in 2013, but formed an 8(a) joint venture, Safeguard, which did compete for the work. Bass, Berry & Sims’ client, B&O JV, was ultimately awarded that contract and has been performing the work since October 1, 2018.
December of 2018 brought many potential changes to the U.S. Small Business Administration’s (SBA) regulations that impact small businesses. First, on December 4, 2018, the SBA issued a lengthy proposed rule implementing several provisions of the National Defense Authorization Acts (NDAA) of 2016 and 2017, and the Recovery Improvements for Small Entities After Disaster Act of 2015 (RISE Act), as well as other clarifying amendments. Then, on December 17, 2018, President Trump signed Public Law No. 115-324, the Small Business Runway Extension Act, which modifies the method for determining the size standards for small businesses.
The SBA’s proposed rule offers clarification on numerous topics, including but not limited to, recertification requirements, material breach of subcontracting plans for failure to comply in good faith, the inclusion of indirect costs in commercial subcontracting plans, setting aside an order under a set-aside multiple award contract (MAC), the status of independent contractors as employees in certain situations, and limitations on subcontracting compliance. Comments on the proposed rule are due on February 4, 2019. Some of the most significant proposed rules are summarized below.
On December 21, 2018, the U.S. Government Accountability Office (GAO) published a report analyzing contract and grant awards of Small Business Innovation Research (SBIR) funding to small businesses owned by multiple venture capital (VC) companies, hedge funds, or private equity firms between 2015 and 2018. In 2011, agencies were given the authority to award SBIR funds to small businesses owned by multiple venture capital companies, hedge funds, or private equity firms (investment companies and funds), however these awards were not to exceed either 25% or 15% of the agencies’ SBIR budgets depending on which agency was making the award. The GAO found that of the 11 federal agencies participating in the SBIR program, only three agencies (the Department of Health and Human Services’ National Institutes of Health (NIH), the Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E), and the Department of Education’s Institute for Education Sciences) awarded contracts or grants to small businesses majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms. These three agencies made a total of 62 awards and obligated $43.6 million to such businesses from 2015 to 2018, only amounting to 0.1% to 2.7% of the three agencies’ total SBIR awards.
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On November 5, 2018, the Federal Circuit held in a precedential decision that bonding requirements in FAR 52.228-15, “Performance and Payment Bonds—Construction,” were read into all construction contracts by operation of law at the time of award, pursuant to the Christian doctrine. FAR 52.228-15 requires an offeror in any construction contract valued over $150,000 to furnish performance and payment bonds:
Performance and Payment Bonds—Construction (OCT 2010)
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(b) Amount of required bonds. Unless the resulting contract price is $150,000 or less, the successful offeror shall furnish performance and payment bonds to the Contracting Officer as follows:
(1) Performance bonds (Standard Form 25). The penal amount of performance bonds at the time of contract award shall be 100 percent of the original contract price.
(2) Payment Bonds (Standard Form 25-A). The penal amount of payment bonds at the time of contract award shall be 100 percent of the original contract price.
I recently authored an article for Strategic Consulting Solutions, Inc. (SCS) GovCon Advisor – a monthly news source for the government contracts industry. The article outlines the requirements of the Small Business Administration’s (SBA) All Small Mentor-Protégé Program (ASMPP), focusing on the Mentor-Protégé Agreement (MPA) and the recent Hendall case. As I point out, “The
When acquiring or selling small businesses, government contractors need to be cognizant of the Small Business Administration’s (SBA) “present effect rule.” Under this rule, SBA will find that certain letters of intent (LOI) or other agreements to merge have a “present effect” on the buyer’s ability to control the small business seller. Numerous decisions by the SBA’s Office of Hearings and Appeals (OHA) have discussed the acceptable parameters of LOIs.
In a recent decision, OHA further refined the elements considered in the determination of whether an LOI amounts to an “agreement in principle.”
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On September 24, 2018, the U.S. Department of Veterans Affairs (VA) issued a final rule that alters its regulations governing the Veteran-Owned Small Business Verification Program. The final rule, “VA Veteran-Owned Small Business (VOSB) Verification Guidelines,” will go into effect on October 1, 2018. This new rule brings much awaited clarity and uniformity to the regulations governing the VA’s ownership and control requirements for VOSBs and Service-Disabled Veteran-Owned Small Businesses (SDVOSBs).
The rule places exclusive authority to implement VOSB verification regulations in the Small Business Administration (SBA), and goes so far as to seek the removal of all references to “ownership” or “control” from VA regulations. Additionally, the rule provides clarification on certain portions of the VA verification process, and outlines the circumstances that will allow a company to qualify as a VOSB or SDVOSB under a surviving spouse or active employee stock ownership plan (ESOP).
On July 31, 2018, the Interagency Suspension and Debarment Committee delivered its annual report to Congress on the status of the suspension and debarment system. The report shows a continued high level of activity relative to the last decade and serves as a reminder that exclusion from the federal marketplace continues to be a risk for contractors that do not “cut square corners” with the government.
The FY2017 report shows a modest decrease in the number of suspensions, proposed debarments, and debarments from the last fiscal year, a trend that has continued since the high-water mark set in FY2014. But it also notes that the number of exclusions in FY2017, over 3,000, are almost double those reported when the Committee first began formally tracking the data in FY2009, approximately 1,800.