Small Business Regulations and Programs

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Last night the Senate passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), by a vote of 96 to 0.  This rescue package will now be considered by the House, which, according to the latest reports, will likely vote on the legislation this Friday.

The bill, which is 883 pages long, will provide immediate assistance to American workers and companies impacted by the COVID-19 pandemic.  For the 3.28 million Americans who filed initial unemployment claims last week, this is welcome, and much-needed legislative action that includes extended unemployment benefits, direct cash payments, small business loans, among other emergency assistance.

Like any complex legislation that is passed so quickly, it will take time to fully digest the implications of all of the provisions, many of which have not been debated or widely discussed.  Among them is a section that has received little notice to date that, if included in the bill when it is signed into law by the president, gives agencies the authority to provide relief to government contractors by authorizing them to pay contractors for paid leave, including sick leave, to maintain employees in a ready state during the shutdown.

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The federal government has taken and will continue to take a host of actions to deal with the COVID-19 crisis.  Our Government Contracts Practice Group at Bass, Berry & Sims is carefully monitoring these developments and will keep you updated through our blog and through our Firm’s COVID-19 Response website page.

While the health of our citizens is, as it must be, the primary focus of the response, Congress and the Executive Branch are scrambling to ensure that companies have sufficient liquidity to continue operations, and continue employing people, notwithstanding the global economic shutdown that could run for months.  Given that the federal procurement budget is in the hundreds of billions of dollars and government contracting involves hundreds of thousands of workers nationwide, our government procurement workers play an important role in facing this crisis.

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On November 8, 2019, the Small Business Administration (SBA) released an expansive proposed rule to merge its two mentor-protégé programs, while also modifying a number of rules applicable to participants in the program. Under the proposed rule, the SBA will combine its 8(a) Mentor-Protégé Program into its All Small Mentor-Protégé Program (ASMPP).

The 8(a) program is about two decades old and is reserved for 8(a) firms, while the ASMPP was created in 2016 and is open to any small business. According to the SBA, the benefits to participants in both of the programs are identical and the merging of the two programs is being done to “eliminate confusion regarding perceived differences between the two programs, remove unnecessary duplication of functions within SBA, and establish one, unified staff to better coordinate and process mentor-protégé applications.” Below is a summary of the material proposed changes and new recertification rule that could have a big impact on who qualifies for set-asides under unrestricted multiple award contracts.

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In line with recent actions taken across the government to enhance the resilience of the nation’s cybersecurity apparatus, the Cybersecurity Infrastructure Security Agency (CISA) recently released a set of best practices for small businesses.  These Cyber Essentials, according to CISA, are intended as a starting point to nurture a “culture of security, and specific actions for leaders and their IT professionals to put that culture into actions.”

The Cyber Essentials provide guidance for both organization leaders and IT professionals across six elements:

  • Yourself
  • Your Staff
  • Your Systems
  • Your Surroundings
  • Your Data
  • Your Actions under Stress.

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In 2016, the Small Business Administration (SBA) established a new government wide mentor-protégé program for small businesses called the All Small Mentor-Protégé Program (ASMPP). The purpose of the program was for established government contractors to serve as mentors to protégé small businesses by providing business development assistance and to improve the protégé’s ability to successfully compete for federal contracts.

This relationship between the two companies is intended to be mutually beneficial. For protégés, the program creates a framework under which firms obtain valuable technical, management, financial, and contracting assistance from established government contractors. For mentors, one of the benefits was the ability to form a joint venture with their protégé to pursue small business set aside contracts without the two companies being considered affiliated for purposes of SBA’s small business size standards.

Three Findings from SBA’s OIG Review of ASMPP

The SBA’s Office of Inspector General (OIG) reviewed the ASMPP with the objectives of determining whether SBA implemented effective controls to ensure that it conducted initial application reviews and annual evaluations in accordance with the program regulations and if the SBA successfully measured program success.

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I am looking forward to presenting at ETEBA’s 2019 Business Opportunities & Technical Conference (BOTC) which takes place at the Knoxville Convention Center on October 8-10, 2019. More than 400 participants will gather at the 20th annual BOTC to learn about upcoming opportunities with prime contractors and government procurement officials in the energy, environmental and…

Bass, Berry & Sims attorneys Todd Overman and Sylvia Yi will be presenting on key government contracting issues for small businesses.

We are excited to be presenting on key government contracting issues for small businesses on July 17, 2019 at The Tower at Peabody Place in Memphis, Tennessee. The presentation, titled, “Government Contracting Law Overview,” will discuss the pros and cons of business entity types, requirements of the SBA’s All Small Mentor Protégé Program, protecting partnerships…

In an article published on April 9, 2019 in CO—, a new digital platform by the U.S. Chamber of Commerce, I provided insight on the process of securing federal contracts for small businesses.

Once a business has searched for contracting opportunities and has completed all the necessary registration requirements, it can begin bidding on contracts. Though before bidding, it is important that the company can handle the job the contract requires and that it can meet all of the regulatory requirements – otherwise the contract could ultimately be terminated. “Don’t overpromise in your technical proposal, that becomes part of your contract and you’re going to have to deliver to those technical specs,” I explained.

Additionally, the proposal should include pricing information and according to Todd, the company will want to be realistic and not overcharge while also keeping in mind that the government sometimes chooses the best value over the lowest price.

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Late last month, the Small Business Administration’s (SBA) Office of Hearings & Appeals (OHA) issued a decision adhering to its prior line of cases discussing when present effect will be given to an indication of interest (IOI) between a small business and its potential large business acquirer for size determination purposes.  As with prior cases, OHA conducts a fact-intensive analysis to determine whether the parties had an agreement in principle at the time the small business submits its bid on a federal procurement.  The case, Size Appeal of Enhanced Vision Systems Inc., SBA No. SIZ-5978, offers some helpful tips on how to avoid an affiliation finding when negotiating an IOI and still pursuing small business set-aside opportunities.

Background

On October 5, 2017, the U.S. Department of Veterans Affairs, Office of Acquisition Operations – Strategic Acquisition Center (VA) issued a small business set-aside RFP for in-home video magnification closed-circuit televisions.  The solicitation had a 1,250 employee size standard.  Proposals were due on December 12, 2017.  Enhanced Vision Systems, Inc. (EVS) timely submitted its proposal and was subsequently acquired by Freedom Scientific, Inc., a subsidiary of VFO Holdings, BV.  The contracting officer notified bidders that EVS was the apparent successful offeror.  In response, FedBiz IT Solutions LLC (FedBiz), an unsuccessful offeror, challenged the awardee’s size arguing that EVS had already entered into negotiations at the time of its initial offer, and therefore should be considered affiliated with VFO, the acquiring large business.  The Area Office sustained the protest, finding EVS and VFO affiliated, and therefore exceeded the employee size standard for the procurement.

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Taylor Hillman and I recently discussed how small Alabama businesses can enter the world of federal contracts. The All Small Mentor-Protégé Program (ASMPP) was established by the Small Business Administration (SBA) to extend business development assistance to all small businesses and help them achieve success in competing for federal government contracts. Only 20 of the 511 approved Mentor-Protégé Agreements had Alabama addresses as of May 5, 2018, despite one of the ASMPP’s top 10 district offices being located in Alabama, showing the potential for growth of the program within the state.

The SBA created an all-inclusive program with the Service Disabled Veteran Owned Small Businesses, Women Owned Small Businesses, HUBZones, and others, to streamline and enhance the program. Protégés can learn valuable lessons from mentors, including financial support; assistance in navigating the federal procurement bidding, acquisition and performance processes; business development advice including strategic planning and opportunity identification; and guidance on internal business management systems. …
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